The Wisconsin Way

Last month Gov. Tim Pawlenty announced "the next generation of welfare reform." The overhaul he proposed was modeled on Wisconsin's much-touted public-assistance program, which has seen its caseload plummet from 52,000 in 1996 to just 9,600 last year. Former governor Tommy Thompson rode welfare reform all the way to Washington, where he now oversees the Department of Health and Human Services. "Real welfare reform began in Wisconsin," President Bush declared when announcing Thompson's appointment.

One other thing about Wisconsin's welfare program: It's a dismal failure. It has failed to help people move out of poverty; dramatically increased the need for emergency food and shelter; and discriminated against minorities and people with disabilities. And welfare in Wisconsin has been plagued with financial corruption by the private companies contracted to administer it.

In fact, the state's program, known as Wisconsin Works or W-2, has been such a disaster that the state is now in the process of quietly revamping it.

"It's interesting that your governor is talking about trying to be like Wisconsin, because Wisconsin has even stopped trying to be like Wisconsin," says Karyn Rotker, an attorney with the Wisconsin chapter of the American Civil Liberties Union. "It is kind of shocking that someone is talking about instituting the kinds of things that Wisconsin has now found to have serious problems."

The one area of welfare reform where Wisconsin has clearly succeeded is in reducing caseloads. This was accomplished by declaring the vast majority of people who applied for benefits "job ready" and then denying them cash benefits. Unfortunately, those people who have left the rolls largely remain mired in poverty and reliant on emergency services. According to a 2001 study by the Legislative Audit Bureau, the average annual wage of former welfare recipients, based on income tax filings, was $12,000--barely more than one would earn working a full-time minimum wage job. This figure may even overstate their wealth, however, because only two-thirds of the former welfare recipients actually filed tax returns. It is impossible to determine how much income, if any, the remaining people earned.

To augment their meager paychecks, Wisconsin's poor depend more and more on assistance from social-service agencies. According to a 2002 study by the University of Wisconsin-Milwaukee and two nonprofit groups, use of emergency services was up dramatically in every area from medical care to housing. The number of calls to Milwaukee's hotline for homeless people increased by 88 percent between 1998 and 2000. A women's shelter that opened in 1997 (the year that W-2 was implemented statewide) for use during the winter months now operates year-round because of high demand. There has also been a dramatic increase in the number of people requiring food assistance. According to the Hunger Task Force of Milwaukee, the number of visitors to area food banks has increased from a monthly average of 26,814 in 1995 to 41,518 last year, a 54 percent jump.

"You're talking about putting stress on many other social systems," says Kathleen Mulligan-Hansel, of the Institute for Wisconsin's Future, and author of numerous W-2 studies. "It doesn't help the state; it doesn't help the budget; it doesn't help the kids."

The most radical change that Pawlenty has proposed for Minnesota is making poor people wait four months before they receive any cash aid. During the intervening period, applicants would be eligible for job-search assistance and help with child care, but no money. This requirement is actually stricter than that of Wisconsin. Applicants there who are deemed "job ready" can be denied cash assistance, but that decision must be reviewed if the person is still unemployed after one month.

Pawlenty also wants to impose a stiffening of sanctions for people who have not abided by the rules of the program. Currently, in Minnesota, poor people can be docked up to 30 percent of their assistance check if they don't comply. Under Pawlenty's proposal this would increase to 100 percent.

Wisconsin is one of the strictest states in terms of sanctioning welfare recipients--and the program has been plagued with problems. According to a study released in December by the Legislative Audit Bureau, more than 1,000 W-2 participants have been inappropriately sanctioned since 1997, resulting in underpayments of more than $100,000. The program has also been proven to disproportionately punish minorities: 47 percent of blacks and Hispanics saw their assistance docked, while only 23 percent of whites were penalized.

Amy Stear, an organizer at 9 to 5, National Association of Working Women, in Milwaukee, remembers one black client whose daughter was murdered. When the woman called her welfare caseworker to cancel an appointment that conflicted with the funeral, she was told that the meeting couldn't be rescheduled. "The caseworker says, 'You'll be here or we'll sanction you,'" Stear recalls. "They sanctioned her, they stopped her check, and they took her off the program. Un-fucking-believable."

Under the Pawlenty plan, there would also be almost no exemptions from work requirements for welfare recipients. Right now about 12 percent of parents who receive public assistance in Minnesota don't have to comply with work rules, in most cases because they have disabled kids who need intensive care. Pawlenty's proposal would limit exemptions to minors and senior citizens.

Such strict enforcement of work requirements has proven problematic in Wisconsin. Last year the Wisconsin chapters of the ACLU and the NAACP filed a complaint with the federal Office for Civil Rights charging that the state's welfare program discriminates against people with disabilities. A similar complaint was filed by Legal Action of Wisconsin. The organizations allege that Wisconsin is violating the Americans with Disabilities Act by failing to screen people for mental and physical disabilities. They estimate that at least a third of W-2 participants suffer from some kind of mental or physical handicap that contributes to their inability to hold down a job. The Office for Civil Rights is investigating the allegations.

The only clear beneficiaries of Wisconsin's revamped welfare system are the private companies and nonprofit groups paid to administer it. Employment Solutions, a nonprofit group that operated W-2 services in parts of Milwaukee County, received $204.6 million in government contracts over five years. A 2001 state audit determined that, among other abuses, the group improperly spent $270,000 in Wisconsin tax dollars on marketing efforts to attract welfare business in other states. Maximus, another Milwaukee County contractor, failed to properly document more than 70 percent of its financial transactions, according to another state audit. Among the taxpayer-supported expenses that were documented: $23,000 paid to singer Melba Moore for a speech and three concerts.

"They've made millions in profits, and every year there's a new fiscal scandal," says Pamela Fendt, a professor at the University of Wisconsin-Milwaukee's Center for Economic Development. She argues that abuses have been slow to seep out because former governor Thompson had staked so much of his national reputation on the purported success of Wisconsin's welfare reform program. "He wasn't going to have monitoring of the program that would air any of the dirty laundry," she argues.

Ironically, at the very moment that Minnesota is looking to emulate Wisconsin's policies, some changes are starting to take place in that state's welfare system. This spring, for example, the state will begin assessing W-2 applicants to see if they have disabilities that prevent them from working. Advocates for the poor are optimistic that the new governor, Democrat Jim Doyle, may be more responsive to their criticisms.

Perhaps the greatest irony of Pawlenty's proposal to overhaul the welfare system is that Minnesota now has in place one of the more successful programs. Advocates for the poor praise it for balancing work requirements with child care and transportation subsidies that help smooth the transition off welfare. Instead of simply knocking people off the dole, it attempts to help them escape poverty. "It's actually heartbreaking that your program is under attack because you had one of the more humane, innovative welfare programs in the country," says Stear.

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