Despite these challenges, the devolution of government and the emphasis on local control over the design and execution of social programs create a unique opportunity to reinvent the manner in which such services are provided. In particular, states and communities have an opportunity to restructure and coordinate the current array of aid programs to make them more consistent and effective in serving the needs of families. If they become less encumbered by federal restrictions, states will be able to tailor social service efforts, make policy tradeoffs that are based on cost-benefit criteria, and approach regional and local problems in a strategic rather than piecemeal fashion.
For this to happen, state and community leaders will have to think about social services in a whole new way. They will have to abandon "stove-pipe" approaches to policymaking, restructure social service agencies, and collaborate across traditional policy domains in order to make sound decisions. In addition, they will have to develop institutional mechanisms for creating and sharing information, establishing oversight, and evaluating alternative policy options. The greatest challenge, however, may come from the need to define overall strategic goals, without which an integrated strategy cannot be designed and implemented effectively.
In this paper, we first provide a brief description of the existing welfare program as well as other social services that have administrative links (for example, via eligibility requirements) or otherwise serve the same or overlapping populations. We then review the most recent versions of legislation and describe the key programmatic attributes that are likely to emerge. Next, we identify some of the most important issues that states and communities will have to address in response. We conclude with a discussion of some of the more interesting options already adopted by some states and review the available evidence concerning the likely efficacy of alternative approaches to welfare reform.
Families qualify for AFDC under one of two categories: AFDC-FG (i.e., Family Group), which consists of single-parent families, and AFDC-U (i.e., Unemployed Parent), which consists of two-parent households in which at least one parent is unemployed. Currently, in California, only about 15 percent of the AFDC caseload qualifies for assistance under the AFDC-U category. However, cash grants are typically higher to those in the AFDC-U category because these families are larger and therefore have greater need. As a result, assistance to AFDC-U households accounts for about 25 percent of all cash grants made through the AFDC program. In total, approximately 907,000 households, or 2,660,000 individuals, received AFDC assistance in California in August 1995, which is 8.3 percent of the state's population (California Department of Social Services, 1995a).
Eligibility and the amount of assistance received under AFDC is determined by a number of factors that are set by each state. In California, the amount of assistance increases by roughly $100 per month for each additional child in the family, and the benefits decrease (on a dollar-for-dollar basis) with the amount of labor market income earned by the mother. Applicants are not eligible if they hold assets of more than $1000 (excluding their home and the value of their car up to $1500), and many children are not eligible if both the mother and father live with the child.
In California, the maximum benefit for a mother with two children is $607 per month in cash assistance plus an additional grant of about $214 in food stamps, totaling approximately $9852 annually. Although these combined benefits still leave the family's income about 15 percent below the poverty line, they are higher than the benefits in all but three states. The median maximum combined AFDC and food stamp payments across all states is $7932 annually. However, California is a state with a relatively high cost of living. Compared with New York, a state that probably has a similar cost of living, California's benefits are about the same.[1] It is worth noting, however, that while in the average state the maximum benefit has decreased by 47 percent (in real terms) over the past 25 years, California's benefits have eroded by only 13 percent, which is the lowest decline registered among all states. However, between 1989-1990 and 1995-1996, the maximum benefit fell by 26 percent, so that changes in benefits in the last five years have been distinct from the changes in the earlier period (U.S. House of Representatives, 1995).
In California, the federal, state, and local governments all play a role in the AFDC program. The federal government prescribes overall rules regarding eligibility, benefit standards, and administrative requirements for the program. The state provides additional administrative guidelines, sets benefit levels, and allocates state and federal money to counties. California is one of a minority of states in which local governments also play a significant role in welfare delivery, with counties being responsible for implementing and delivering the services to applicants.
The cost of the program in California is shared by all three levels of government. In California, the federal government pays 50 percent of the costs of the benefit payments and administration of the program.[2] California's 50 percent contribution is the highest in the nation, with other states averaging 46 percent. States with the lowest per-capita income receive as much as 80 percent of the benefit costs from the federal government. Out of expenditures not reimbursed by the federal government, counties contribute 5 percent of benefit payments (primarily for special assistance) and 30 percent of local administrative costs. The state pays for 100 percent of the administrative expenses incurred at the state level that are not reimbursed by the federal government. In total, government expenditures on AFDC in California were about $6.7 billion in 1995, with about 50 percent, 46 percent, and four percent derived from federal, state, and local funds, respectively (U.S. House of Representatives, 1995).
The AFDC program serves a wide array of people in different predicaments. About 75 percent of all new episodes of welfare dependence were precipitated by a personal "event" such as the birth of a child (30 percent) or the loss of a spouse (45 percent were the result of a divorce or separation). The average age of single mothers on AFDC in California is 31, and only 3.3 percent of the mothers are currently teenagers. However, national estimates suggest that almost one-half of all AFDC recipients had a teen birth (Maynard, 1994). Forty-one percent of current participants have just one child, and only 11.2 percent have more than three children, which is counter to the myth that AFDC recipients have unusually large numbers of children (California Department of Social Services, 1995b). About one-half of AFDC recipients nationally have less than a high school degree, and 40 percent did not work at all in the previous two years (Ellwood, 1986).
One-quarter of California's population is foreign-born and about 17 percent are not U.S. citizens, which has unique ramifications for the state's AFDC program. About 10 percent of persons in the AFDC-FG assistance units are not U.S. citizens, while among AFDC-U assistance units the share is 31.2 percent. In addition, approximately 30 percent of recipients do not speak English as their primary language. Thirty percent of recipients are (non-Hispanic) white, while 37 percent are Hispanic, 18 percent are black, and the remainder come from a variety of other ethnic backgrounds (California Department of Social Services, 1995b).
AFDC is the primary source of cash income for most participants, with only 17 percent of California recipients reporting cash income from other sources (California Department of Social Services, 1995b). Some mothers physically cannot work--an estimated 19 percent report that a disability limits their ability to work (Ellwood, 1986). This is an important factor when considering that the proposed federal legislation requires that at least 50 percent of AFDC-FG recipients work, and that many of these families may not be eligible for aid after receiving assistance for five years in total over their lifetimes.[3] At the same time, about one-half of AFDC recipients use the program for more than five years during their lifetimes, and 30 percent are on for eight or more. Just 30 percent of all recipients are enrolled for less than two years over their lifetimes (Ellwood, 1986). In addition, counter to popular belief, although caseloads have increased nationally, the length of time that participants remain enrolled in AFDC has, if anything, decreased between the early 1970s and late 1980s (which is the latest available data), and there is no evidence that the duration of welfare use among long-term users has increased (Hoynes and MaCurdy, 1993).
Most AFDC participants are also affected by other government programs. All states are required to maintain a job opportunities and basic skills program, whose purpose is to facilitate transition off welfare and into the workforce. In California, this program is called Greater Avenues for Independence, and the monthly GAIN caseload in 1995 was estimated at 78,000 (California Department of Social Services, 1996). Families receiving AFDC are automatically eligible for Medi-Cal, which is California's version of Medicaid. Although the bulk (about 75 percent) of the $89 billion cost of Medicaid goes to paying for the long-term care of disabled and elderly populations, this program also provides basic health care for 26 million poor individuals nationally, including all AFDC recipients. Some 85 to 90 percent of California AFDC recipients participate in the federal food stamp program, increasing the basic package of assistance (i.e., cash assistance plus food stamps) by about 30 percent (California Department of Social Services, 1995b). Child care assistance is also available, with the government covering up to 75 percent of the regional market rate for child care (California Department of Social Services, 1996).
Although the federal government sets basic AFDC guidelines, since 1962 the law (Section 115 of the Social Security Act) has given states the option to apply for waivers that have allowed them to experiment with alternative AFDC structures. As a result, welfare reform has been implemented, albeit at a limited level, in a large number of states. California, in particular, has been granted a number of waivers. For example, one waiver increases the asset limit from $1000 to $2000, permits families to own an automobile valued at $4500 instead of just $1500, and allows families to retain up to $5000 in a restricted savings account. Money from the savings account can be withdrawn only for the purchase of a home, education of children in the assistance unit, or to start a new business. Another waiver allows California to reduce benefits for recipients who can be expected to work (e.g., those without disabilities). In addition, to stimulate work the waiver increases the earnings disregard and removes the limitation on two-parent families working more than 100 hours per month. A waiver has also been received that ties benefit levels to schooling performance. Under the Cal-LEARN program, pregnant and parenting teens receive rewards for completing high school and receiving good grades.
Various nutrition programs (e.g., the National School Lunch and Breakfast programs and Women Infants and Children program) are currently provided by the federal government as entitlements to low-income children and adults. States determine the income eligibility guidelines (within federally mandated limits). Much of the assistance is in the form of actual food items or nutritional screening services. The Conference agreement makes no cuts in school lunch or school breakfast programs and maintains the Women, Infants, and Children program. However, it does allow as many as seven states to receive their allocations in the form of nutrition block grants.
Supplemental Security Income (SSI) will remain a federal program (with optional state supplementation), but it will undergo change. Individuals who are currently eligible for SSI assistance because of drug or alcohol addiction will no longer receive benefits. The eligibility requirements for children are likely to change, perhaps reducing the number of eligible children. In addition, parents' resources will not be counted against children in determining their eligibility. Currently, unless a child is institutionalized, the parents' income is counted against the child, which provides an incentive for parents to move their children into institutionalized care.
Child support enforcement will continue as a matching grant program, with the federal government currently reimbursing each state 66 percent of the costs of administering its Child Support Enforcement program. (Ninety percent of the states' costs for developing and improving management information systems is reimbursed by the federal government.) The Conference agreement will permit states to withhold, suspend, or restrict the use of driver's licenses, professional or occupational licenses, and recreational licenses of people not abiding by child support laws. Passports will be refused to those owing $5000 or more. The agreement expands the Federal Parent Locator Service to better track down deadbeat parents. In addition, states must establish an Automated Case Registry for each case in which services are provided, including the names, Social Security numbers, and dates of birth of both parents. States would also be required to work with financial institutions to retrieve financial data on delinquent child support payers. A lien may be placed on the assets held by the institution. Those who owe child support will not be eligible for food stamps.
Under child protection services, foster care and adoption maintenance payments remain open-ended entitlement programs receiving matching funding from the federal government. A Child Protection Block Grant will focus on prevention of abuse and services to abused children. A Child and Family Services Block Grant will be established to replace the Child Abuse Prevention and Treatment Act, the Abandoned Infants Assistance Act, adoption opportunities under the Child Abuse Prevention and Treatment and Adoption Reform Act, family support centers under the McKinney Homeless Assistance Act, and the temporary Child Care and Crisis Nurseries Act. Federal funding for the block grants will increase from $2.047 billion in 1987 to $2.766 billion in 2002. Each state's share of these resources will be determined by the share they have received historically. Clearly, this will hurt states that experience an increase in eligible populations.
Finally, for child care, a Child Care Block Grant will be established as part of the Child Care and Development Block Grant (CCDBG). As in other block grants, each state will receive a grant equal in size to the amount it currently receives from the total of AFDC Child Care, transitional Child Care, and At-Risk Child Care programs.
Benefits and eligibility for immigrants will be reduced in most social service programs. Legal resident aliens and those arriving after the enactment of the legislation may not receive SSI or food stamps unless they have worked in the United States for 10 years or until they receive citizenship. States will have the option of providing benefits to legal aliens under the Temporary Assistance for Needy Families Block Grant, Medicaid, and Title XX programs. Legal noncitizens arriving in the future will be denied benefits under all federal means-tested programs (except emergency medical services under Medicaid, short-term emergency disaster relief, school lunch, foster care and adoption, and immunization) for five years after their entry into the United States. (Refugees, asylees, veterans, and those working in the United States for at least 10 years are exempted.) Those who remain legal noncitizens after being in the United States five years will continue to be denied SSI and food stamps; states will have the option of providing these immigrants with cash welfare and Medicaid and Title XX services.
As indicated earlier, Medicaid is viewed as an entitlement, providing basic health care coverage to poor children, including all AFDC recipients. However, recent proposals seek to limit Medicaid costs, which have grown over 400 percent since 1985. By giving states lump-sum block grants, future funding is expected to be limited even though demand for services is likely to grow along with eligible populations of destitute children. Also, as insurance coverage via private sector employment is reduced, many more children of employed parents will require Medicaid. State options to save money include reducing benefits, reducing eligible populations, and mandating (or encouraging) employer-based coverage. In the face of budget pressures, states are more likely to maintain coverage for the very poor, nonworking families. In contrast, the benefits received by poor working families are more vulnerable to reduction or eventual elimination. This could enhance the attractiveness of AFDC relative to employment, thereby working against the reform goals of reducing long-term dependence by encouraging welfare recipients to work.
California and all other states will not have the incentive to supplement cash welfare funding at the same level as they have in the past. In the past, the federal government matched state funding levels. As indicated earlier, the match was between 50 to 80 percent, depending on the income of the state. This match disappears under block granting, which implicitly increases the state's price of an additional dollar of welfare spending and might be expected to lead to a decrease in the amount of assistance the state wishes to allocate to welfare.[6] In the past, Governor Wilson has sought decreases in benefits through waivers, and the reduction in federal requirements may provide some opportunity to make these changes. On the other hand, there is currently a requirement that states must spend at least 75 percent of their 1994 level of spending; states that are most successful in moving families off of welfare will be allowed to reduce spending below 75 percent.
Currently, state agencies are structured and organized to parallel the narrow and restricted funding streams provided by the federal government. State and local agencies are, for the most part, charged with implementing predetermined policies and adhering to a cumbersome set of administrative regulations. State and local officials are mostly concerned with following the rules, avoiding risk, counting the number of families served, and keeping the federal funding flowing. There is little room for innovation, coordinated service delivery, new program design and evaluation, or comprehensive strategic planning across traditional functional domains. However, if states are to meet the new challenges and opportunities posed by block grants, fundamental reform must be made in the way social services are provided. This will require enhanced flows of information, new decision rules, and broader criteria for evaluating policy options. At the very least, California will have to establish new mechanisms for facilitating interactions across programs and make complex decisions based on multiple, often conflicting objectives. It is likely that organizational barriers, bureaucratic inertia, and deeply imbedded cultural resistance will make the requisite changes difficult to accomplish without a complete restructuring of social service agencies and the way in which they conduct their business. Unfortunately, there are no obvious examples of comprehensive reform of similar organizations that could provide a useful blueprint for implementing such dramatic change.
One of the attractions of the legislation is that it moves the decisionmaking closer to the problem, which will hopefully lead to more innovative and effective policies. However, it is not clear that the state government will be much better in addressing California's problems. California is a large, diverse state whose needy population has differing problems. Perhaps the decisionmaking needs to be shifted down to a lower level, but it is unlikely that the state legislature will willingly give up control. As a result, tension between California and the federal government may simply be replaced by the tension between Sacramento and the localities.
California is one of a handful of states in which local communities are currently involved in the welfare delivery system, which can be an asset for the state. However, if local agencies currently implement federal policies merely as part of a bureaucracy--a way of doing business that will need to be overhauled, their involvement may be viewed as an additional barrier to effective reform. Whether the state will build on this existing infrastructure to meet its goals remains an open question. Alternatively, perhaps other institutions, such as private organizations, would be better suited to contract with the state to deliver welfare services.
Although jobs and training programs may reduce welfare dependency and save money in the long run, some states may be reluctant to pursue these options. Clearly, such programs require an initial investment of tax money, with benefits unlikely to be forthcoming until several years later. The up-front investment is likely to be even greater if the effort is supported by other programs designed to enhance the attractiveness of employment and/or job preparation activities. These include transportation and child care subsidies. Rather than make such an investment, California might prefer the 5-percent penalty on federal funds in the event that it does not achieve federal targets.
Some AFDC recipients cannot work because of physical or mental health problems. What will happen to these individuals when their two-year time limit expires? To what extent are job agencies, with no experience in working with needy populations, equipped to serve these people? Failure of these programs will likely cause enrollment in other programs, such as SSI or homeless assistance, to expand. What will happen to the children of mothers who become ineligible for benefits? There may be a rise in the demand for child care services for the low-income population. If the mother cannot find work, a growing number of children may become wards of the state, entering foster care or institutionalized care, which is often expensive. These cross-program effects are likely to be quite important.
Some 75 percent of all initial welfare applicants apply following the birth of a child or the break up of a marriage. However, there is little evidence that such events are, in fact, induced by the prospects of receiving welfare. For example, women are eligible for AFDC only if they have a child (or are pregnant), and the amount of the benefit increases with the number of children, providing, in theory, an incentive for women to have children. A number of empirical studies testing this claim with alternative approaches have found no consistent evidence that women have children because of the generosity of welfare benefits. (See reviews of the evidence by Moffitt, 1992, and Robbins and Fronstein, 1993, and new evidence from Jackson and Klerman, 1995). There are several reasons why welfare benefits may not induce women to have children. As summarized by Jackson and Klerman (1995), women (and men), especially teens, may not make childbearing decisions using rational, forward-looking calculations based on the costs and benefits of having a child. Second, the amount of assistance received under welfare may be so small that it does not provide enough of an incentive to have a child. Third, the observed differences in welfare payments across states and over time within states are not large enough to induce changes in childbearing. However, if benefits were altered by a much larger amount (e.g., if they were completely eliminated), then we may observe changes in childbearing.
The AFDC eligibility criteria provide an incentive to remain unmarried, or once married, to divorce. Some of the empirical evidence does find an effect of AFDC on female household headship, but the magnitude of the effect is small. (See Moffitt, 1992, for a review.)
As discussed, policymakers have expressed concerns that differences in generosity might induce women to migrate to states with higher benefits. However, the empirical evidence does not support this claim either (Roan, 1996; Walker, 1994). As is the case with fertility, it may be that there is no effect because the differences in benefits across states are not large enough to offset the costs of moving, which may include losing ties to family members who are important resources. However, welfare-motivated migration may occur in major cities that straddle state lines, where the cost of migrating is lower. California does not have any major metropolitan areas along its borders, which minimizes this problem. However, if the design of programs is eventually left to the discretion of individual counties, this could emerge as a future issue.
In theory, increases in AFDC benefits should reduce labor force participation as well as the hours worked by employed women who receive welfare[9] because earned income merely reduces the level of assistance on a dollar-for-dollar basis. On this topic, the evidence in fact suggests that AFDC reduces the number of hours of work. Using the mid-point of the range of estimates reviewed by Danziger et al. (1981), Moffitt (1992) calculates that if AFDC were completely eliminated, the number of hours worked would increase by about 5.4 hours per week.[10] Moreover, the studies find that very few women who would not be eligible for AFDC in the absence of the program change their hours of work enough to become eligible in the presence of the program. Or, as stated by Moffitt (1992, p. 17): "95 percent of those on the AFDC rolls would, if off the program, retain eligibility for benefits." At the same time, Moffitt (1996) notes that if participation in job training programs is basically voluntary and the programs are valuable, then offering training may increase the welfare caseload. On the other hand, if job training is mandatory, which is the direction in which current proposals are moving, and some potential AFDC participants would rather not have to enroll in job training, then welfare caseloads may decrease when job training is expanded.
California's job training program, GAIN, currently enrolls about 78,000 participants monthly. The Manpower Demonstration Research Corporation completed an evaluation of the program in 1994, with some encouraging findings (MDRC, 1994). In some counties, GAIN increased participants' earnings by 49 percent and decreased their welfare payments by 15 percent. And the return on the investment was about $3 for every $1 spent by the government. Although the positive effects in other counties were not as large, they were still substantial in many settings.
With an estimated one-half of all AFDC recipients having had a teen birth, addressing the special problems faced by teenagers provides perhaps the most significant leverage point for increasing self-sufficiency.[11] Summarizing the work on teenagers, Maynard (1994) finds that employment is the primary avenue out of poverty, and that support services such as child care and transportation are effective in promoting education and employment. At the same time, financial penalties (such as reduced benefits), in conjunction with an outreach effort by case managers to those who have violated the rules, also play an important role in achieving positive results.
Despite the daunting challenge, the wave of welfare reform can be viewed as a unique opportunity to reinvent the manner in which social services are provided. Short of a complete organizational overhaul (an ultimate outcome that may indeed be desirable), reformefforts will, at the very least, require the use of information technologies, common data sets, and mechanisms for enhanced communication across agency boundaries and different levels of influence, including government, private industry, and the nonprofitsector. Effective reform will also require a dramatic change in the values, objectives, and culture of policymakers in state and local government. In the past, the provision of social services has focused narrowly on expanding budgets, meeting administrative requirements, avoiding controversy, and counting the number of program recipients. In the future, it may be possible to link previously independent efforts, plan strategic approaches that span traditional departments, and design more innovative programs that respond and listen to the populations they are intended to serve.
Clearly, such a complete overhaul will be difficult to accomplish and there exists no convincing evidence that it will succeed. Thus, as an intermediate solution between the status quo and instantaneous systemic change, expansion of the current waiver system should be considered. Over two-thirds of the states have been granted waivers that allow them to experiment with alternative program designs. Recent evaluations of these changes have begun to inform decisionmakers of the efficacy of a variety of policies. Perhaps an expansion of the waiver system, including expediting states' requests for waivers and lengthening the time for experimentation, would be a judicious direction for policy. As the federal and state governments learn from these changes, they can implement on a broader scale the policies that have been proven to be successful.
California Department of Social Services (1996). Proposed Redesign of the Welfare System--Key Facts Booklet, January.
------ (1995a). Public Welfare in California, Information Services Bureau, Health and Welfare Agency, Statistical Series PA3-431.
------ (1995b). Aid to Families with Dependent Children Characteristics Survey. Information Services Bureau, Health and Welfare Agency, Program Information Series Report 1995-04.
Danziger, Sheldon, Robert Haveman, and Robert Plotnick (1981). "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, 19:975-1028.
Ellwood, David T. (1986). Targeting Would-Be Long-Term Recipients of AFDC, Mathematica Policy Research, Inc., Reference No. 7617-953.
Hill, Elizabeth G. (1996). Analysis of the 1996-97 Budget Bill, Legislative Analyst's Office, State of California, Sacramento, California.
Hoynes, Hilary Williamson, and Thomas MaCurdy (1993). "Welfare Spells Over the Last Two Decades: Do Changes in Benefits Explain the Trends?" Mimeo, University of California, Berkeley.
Jackson, Catherine A., and Jacob Alex Klerman (1995). "Welfare and American Fertility," paper presented at National Bureau of Economic Research Summer Institute, Cambridge, Mass., July 1995.
Klerman, Jacob Alex, and Arleen Leibowitz (1993). Employment Continuity Among Young Mothers, RAND Labor and Population Program Working Paper Series, DRU-504-NICHD.
Manpower Demonstration Research Corporation (1994). Final Report: Benefits, Costs, and Three-Year Impacts. Manpower Demonstration Research Corporation, New York.
Maynard, Rebecca (1994). "Teenage Childbearing and Welfare Reform: Lessons from a Decade of Demonstration and Evaluation Research," mimeo, University of Pennsylvania, July 29, 1994.
Moffitt, Robert (1992). "Incentive Effects of the U.S. Welfare System," Journal of Economic Literature, 15(1):1-61.
Moffitt, Robert A. (1996). "The Effect of Employment and Training Programs on Entry and Exit from the Welfare Caseload," Journal of Policy Analysis and Management, 15(1): 32-50.
Roan, Carole E. (1995). "The Role of AFDC Benefits in Location Choice," Mimeo, Brown University.
Robbins, Philip K., and Paul Fronstein (1993). "Welfare Benefits and Family-Size Decisions of Never-Married Women," Institute for Research on Poverty Disccusion Paper 1022-93, University of Wisconsin, September.
U.S. House of Representatives, Committee on Ways and Means, (1995). Overview of Entitlement Programs, Washington, DC: Government Printing Office.
Walker, James R. (1994). "Migration Among Low-Income Households: Helping the Witch Doctors Reach Consensus," Institute for Research on Poverty Discussion Papers Dp 1031-94.
[2] Administrative expenses represent about 8 percent of all AFDC-related costs in California. This compares with the U.S. average of just over 11 percent, primarily reflecting California's higher level of benefits per capita.
[3] Most versions of welfare reform allow for some percentage of the population (e.g., those with disabilities) to be exempt from the limitations on duration. However, the allowable percentage is likely to be significantly less than 19 percent.
[4] It is worth noting that the political clamor for welfare reform is pervasive at all levels of government. As our earlier discussion suggests, several states have received federal waivers and are initiating the process of change in advance of the federal legislation. Thus, these issues have current relevance even if the welfare reform bills remain bogged down.
[5] The work requirements will be reduced (on a percentage-for-percentage basis) for states that successfully get families off public assistance. If this were not the case, states would be penalized if the most employable individuals left the welfare roles, thereby making it more difficult to meet federal targets for work participation.
[6] In theory, the total effect of reform on the level of state-provided funding is uncertain. In the past, states have generally not altered funding levels in response to federal budget cuts. Of course, if the state is truly given more flexibility to design more innovative programs, the resulting gains in effectiveness could lead to increases in supplemental funding.
[7] Becoming married is another major pathway off of welfare.
[8] As we note below, there is little solid evidence to support this claim.
[9] Of course, there may be work-related benefits and costs that are independent of income. The former may include untaxed fringe benefits or on-the-job human capital development. Costs include transportation costs, disutility of time working or absence from the home, or daycare expenses.
[10] Although the complete elimination of AFDC is an unlikely policy scenario, it is clear that certain populations will be entirely cut off after reaching the time limitation on the duration of assistance. The question of what happens to these people (and to their children) is partially addressed by knowing how many of them are likely to be motivated and successful at finding work.
[11] We are not arguing that teen births are necessarily the root cause of subsequent welfare dependency. Indeed, the correlation between such births and the subsequent need for assistance may result from other factors.