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CNS News...
States
Exploit Loophole to Meet Spending Requirements to Get Federal Welfare
Money
By Matt
Cover
May 21,
2012
(CNSNews.com)
– States are exploiting a loophole in the federal welfare reform law
enacted in
1996 in order to meet the state spending requirements to get a full
dose
federal welfare funds, Rep. Geoff Davis, chairman of the House Ways and
Means
Subcommittee on Human
Resources.
“Many
States have scoured their budgets to find other current program
spending--such
as for Pre-K, child care, and after school programs--they could report
as TANF
spending,” Davis said at a hearing on Thursday. “Others began counting
third-party spending--such as assistance offered by food banks and Boys
and
Girls clubs--as TANF spending. One
State
even apparently found a way to count the value of volunteer hours by
Girl Scout
troop leaders as State TANF ‘spending.’
“Now, I
want to be clear that this is not illegal,” said Davis. “But that does
not make
it right. “
The
Government Accountability Office delivered a report on the practice to
Davis’s
subcommittee on Thursday.
When
Congress reformed federal welfare programs in 1996 it included a
requirement
that 50 percent of people on a state’s welfare rolls be working at
least some
of the time.
States that
do not meet this requirement can have their federal TANF payments
reduced.
TANF also
includes an incentive for states to reduce their welfare rolls,
allowing those
that reduced the number of people on welfare to apply those reductions
as
credits when calculating the percentage of welfare recipients who were
working.
Known as a caseload reduction credit, the provision allows states that
have
reduced their welfare rolls to meet the 50 percent work requirement,
even if
fewer than 50 percent of recipients actually hold a job.
States can
also meet their work requirements if they increase their own welfare
spending –
known as Maintenance of Effort (MOE) spending – beyond the federal
minimum.
However, states have increasingly been using a loophole in this
provision to
meet their work requirements without actually reducing welfare spending.
The
loophole works because states are allowed to count outside spending and
so-called new spending as MOE spending, applying this new-found
spending toward
their caseload reduction credits.
The effect
is that states do not have to increase their own welfare spending, get
their
full federal welfare grants, and fewer welfare recipients have to work.
“In fiscal
year 2009, 32 of the 45 states that met their required work
participation rates
for all TANF families claimed excess state MOE spending toward their
caseload
reduction credit,” GAO said in its report. “Sixteen of these states
would not
have met their rates without claiming these expenditures.”
Those
states accounted for significant reductions in their work requirements
– some
as much as 20 percentage points.
“Among the
states that needed to rely on excess state MOE spending to meet their
work
participation rates, most relied on these expenditures to add between 1
and 20
percentage points,” the report said.
States can
count outside spending as their own, and apply it toward reducing their
actual
work requirements, as long as it meets one of the four broad goals of
TANF:
providing assistance to needy families, promoting job training and
employment,
preventing or reducing out-of-wedlock pregnancies, and encouraging
two-parent
families
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