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Archive for Sunday, January 27, 2002

Recession provides test to overhaul of welfare

January 27, 2002

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— The easy days of welfare overhaul are over.

For seven years, caseloads declined at record rates. Now welfare rolls are rising in 33 states, because of the recession.

Job cutbacks and hiring freezes make it harder for people on welfare to find work. Many who did have been laid off, and are finding that they earned too little or worked too briefly to qualify for unemployment benefits.

The problems present challenges for welfare that could worsen in a recession.

"There's tremendous reason to worry that the convergence of these factors will deepen poverty over the next six months," said Deepak Bhargava, director of the National Campaign for Jobs and Income Support, a coalition of anti-poverty groups.

Most experts expected a recession to test the 1996 federal welfare-overhaul law, which Congress must reapprove or rewrite this year. The landmark legislation transformed welfare from a lifetime entitlement program into a temporary assistance program.

It placed time limits of up to five years on federal cash assistance and forced welfare recipients to look for jobs. The law also provided $16.5 billion each year in federal funds to help states provide cash assistance to needy families. States continue to cover additional expenses with their own money.

The law along with a strong job market has helped trim national welfare rolls by 57 percent, about 7 million people.

But if the sour economy continues to stifle job creation, caseloads will grow, as will pain from the welfare law's harsher provisions.

Welfare officials are concerned but aren't panicking.

"We're watching it closely to keep track of these kinds of trends, but at the same time I don't anticipate a substantial longer-term rise in actual caseload numbers," said Andy Rich, director of the Office of Family Assistance at the U.S. Department of Health and Human Services.

That optimism is harder to find in the three states where caseloads increased the most from 2000 to 2001: Nevada (38 percent), Indiana (25 percent) and West Virginia (22 percent).

With unemployment rising and the state welfare system facing a $90 million deficit next year, officials in West Virginia fear a long recession will drain the state's welfare resources.

"It's a real frightening thing," said John Law, a spokesman for the state welfare department. "It's something that our legislature and our governor are both very concerned about."

Nationally, more than 121,000 families in at least 20 states have reached their time limits and lost cash assistance, according to Bhargava's group.

By July, thousands more families could face similar fates in Washington, D.C., and 13 states.

Still, only a small percentage of welfare families exhaust their time limits. And states have the option of using federal money to continue payments in hardship cases, for up to 20 percent of a state's welfare families.

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