Keeping Vulnerable Americans on Track
Solutions for a broken system
Our fellow citizens deserve an efficient, user-friendly, less time-consuming safety-net system that addresses their needs more holistically. The failure of government-run welfare programs to efficiently move work-capable recipients to self-sufficiency traps citizens in poverty.
A redesigned system must address the current fragmentation of programs. All program administration must be coordinated to avoid conflicting rules and inconsistent treatment of people between programs. From the perspective of the recipients, these reforms will eliminate the need to go to multiple agencies to get help. By consolidating and combining systems, state policymakers will also streamline administrative costs and facilitate case management to address recipient needs and prevent abuse of the system.
Providing low-income recipients with a seamless experience requires state agencies to work hard behind the scenes to improve and streamline processes, especially in dealing with multiple federal programs and federal reporting requirements.
Solving the Problems
Low-income recipients have a daunting task in navigating the safety-net system. It is inefficient, time-consuming, duplicative, and frustrating. As summarized in the opening paragraph on “Welfare” in the Concise Encyclopedia of Economics:
The U.S. welfare system would be an unlikely model for anyone designing a welfare system from scratch. The dozens of programs that make up the “system” have different (sometimes competing) goals, inconsistent rules, and over-lapping groups of beneficiaries. Responsibility for administering the various programs is spread throughout the executive branch of the federal government and across many committees of the U.S. Congress. Responsibilities are also shared with state, county, and city governments, which actually deliver the services and contribute to funding.
Every hour a safety-net recipient spends finding their way through the system is an hour they can’t spend finding their way out of it. State lawmakers should make the experience easier by streamlining government programs. From an administrative point of view, streamlining reduces redundancies, conflicts, and costs. This will ultimately save taxpayers’ money.
Programs are rarely coordinated, sending potential recipients on a goose chase. It is difficult to know where to get specific services. When they do find the right office, they must resubmit the same information multiple times and even then, eligibility is determined by conflicting rules. They may end up with multiple plans and multiple caseworkers. Reform requires a holistic approach.
Streamlining government programs can only be achieved through coordination and consolidation. It requires states to use every tool available to integrate eligibility systems and eliminate duplicative, conflicting, and redundant rules and procedures for application and reapplication. These tools include seeking federal statutory waivers to program rules, changing state plans pursuant to block grants, and making other changes that states can do without federal involvement.
Utah is the only state in the nation that has integrated human services with workforce services.1Mason M. Bishop, Utah Department of Workforce Services: A system integration model (American Enterprise Institute, 2020), https://www.aei.org/research-products/report/utah-department-of-workforce-services-a-system-integration-model.These services in Georgia, Louisiana, and Texas lack coordination. The number of programs under workforce services and human services is overwhelming. There are over 80 federal safety-net programs, many of which include workforce programs.2U.S. Government Accountability Office, “Federal Low-Income Programs: Multiple Programs Target Diverse Populations and Need” (U.S. Government Accountability Office, 2015), https://www.gao.gov/products/gao-15-516.
The solution lies in developing a specific, comprehensive state plan to begin the streamlining process. There are opportunities to undertake multiple approaches simultaneously. The state legislature can require the executive branch—or the executive agencies can move forward if they already have been given the legislative authority—to apply technology to coordinate eligibility systems of all programs under the state’s control. These can become a single portal to handle all human services and workforce development services. Legislators can require independent efficiency audits of all the programs to find common ground for consolidation and streamlining. The plan must evaluate agencies’ physical spaces to consolidate facilities, along with cost and saving estimates. With enough creativity, those programs without sufficient common ground for consolidation, or that might require federal approval for consolidation, can be coordinated behind the scenes to present constituents a seamless system as noted below.
How to implement
Integrate eligibility systems:
- Pass legislation and make administrative changes until all programs are integrated, which will make it easier for applicants and potential recipients on the front end by coordinating safety-net recipient information on the backend for the various programs.
- The legislative and administrative actions should require the administering agencies to share information among themselves, provided the recipients approved the sharing of such information.
- The legislative and administrative actions should establish a “no wrong door” policy so that any administrative office can help recipients with all programs and to find work, effectively allowing multiple channels to the integrated system.
Integrate workforce services with human services:
- Pass legislation and make administrative changes to merge human services with workforce services. Every time a work-capable recipient interacts with a workforce or human service office, information on how to improve employability and find jobs should be readily accessible. This will allow them to explore options and opportunities, including referrals to nonprofit organizations to help with job search and placement.
- Furthermore, the integration must adopt a work-first policy where applicants and potential recipients are actively encouraged to find work, unless there are circumstances where it is unnecessary, or would be inadvisable.
- Adopt a global strategy to consolidate programs into five categories:
○ Food assistance
○ Cash assistance
○ Shelter assistance
○ Medical assistance
○ Dependent care.
- Pass legislation requiring state agencies to work with the federal government to consolidate programs into these categories and, in the meantime, to administratively handle the various programs within each category in a coordinated manner.
- The consolidation should include strategies to amend program rules for eligibility and benefit calculations to allow the elimination of costly safety-net benefit cliffs and marriage penalties. Note the section on empowerment accounts would substitute for this consolidation if and when the pilot projects successfully demonstrate the principle and efficacy.
Workforce and Human Services – Utah. During the 1990s, Utah successfully merged human services with workforce services to create better coordination. The Utah Department of Workforce Services integrated programs so that recipients could access services through one door, receiving one plan and one caseworker. Utah also integrated federal and state funds for these services.3Bishop, Utah Department of Workforce Services
Gateway – Georgia.
There have been some significant efforts to consolidate eligibility processes in other states. For example, Georgia created the Georgia Gateway, a web portal for accessing certain safety-net benefits, to consolidate eligibility systems for food stamps; Women, Infants, and Children (WIC) food packages; medical assistance (Medicaid, PeachCare, or Planning for Healthy Babies); subsidized childcare services; and Temporary Assistance for Needy Families (TANF). The state departments of Community Health, Human Services, Early Care and Learning, and Public Health coordinated to create the system.4Georgia Gateway (website), Georgia Department of Human Services, accessed December 2, 2021, https://gateway.ga.gov/access/.
Although the system brings those programs into one place, it does not address conflicts or unify the eligibility rules themselves. It leaves out many other programs. For example, Section 8 housing must be obtained through the Department of Community Affairs or local public housing authorities, depending on where the applicant lives. School meal assistance is obtained through the school district. Cash assistance comes from either the Social Security Administration (SSA) or the Internal Revenue Service (IRS). Disability income is obtained from SSA or Department of Veterans Affairs. Medical assistance can also come from tax credits issued by the IRS to purchase health insurance through the government-controlled health insurance exchanges per the federal Affordable Care Act.
Streamlining and improving safety-net programs alone will do little to promote prosperity unless we also put systems in place to ensure that the programs achieve their purposes. Lawmakers should regularly monitor the programs and system using independent efficiency audits to ensure the programs fulfill their missions and maintain integrity. The International Organization of Supreme Audit Institutions (INTOSAI) defines an efficiency audit as an “independent, objective and reliable examination of whether government undertakings, systems, operations, programmes, activities or organisations, are operating in accordance with the principles of economy, efficiency, and effectiveness.”1International Organization of Supreme Audit Institutions (INTOSAI), Fundamental Principles of Performance Auditing (INTOSAI, n.d.), 2, accessed December 5, 2021, https://www.intosai.org/fileadmin/downloads/documents/open_access/ISSAI_100_to_400/issai_300/issai_300_en.pdf. Efficiency audits go deeper than regular financial audits by comparing the investment of taxpayer resources to outcomes actually generated for intended beneficiaries.2Ellen Troxclair, “Troxclair- Efficiency Audits,” The Gilmer Mirror, April 24, 2019, retrieved from https://www.texaspolicy.com/efficiency-audits/. This type of audit also provides recommendations for ways to improve outcomes with less investment by identifying waste, duplication of efforts, and opportunities for consolidation or outsourcing. It is critical to conduct efficiency audits on a regular basis (at least every four to six years) by an independent third party.
Additionally, efficiency audits should examine whether the mission and objectives of the programs are being met—namely, effectively moving eligible recipients off the program and to self-sufficiency—while giving operational and systemic recommendations for a more effective, efficient, and robust system.
The primary goal of an efficiency audit is to “promote economical, effective and efficient governance.”3INTOSAI, Fundamental Principles, 3. By implementing them, policymakers can also improve outcomes and organizational viability, determine how resources are being used to achieve organizational goals, and make operations more efficient.4MG, Performance Auditing (KPMG, 2013), https://assets.kpmg/content/dam/kpmg/pdf/2016/05/Performance-Auditing.pdf; “Using Efficiency Audits To Help Schools Succeed,” April 17, 2019, Texas Public Policy Foundation livestream, https://www.youtube.com/watch?v=rMhkkzGm4EI.
How to Implement
- Pass legislation requiring periodic efficiency and performance audits of all safety-net and workforce service programs and their key state administering agencies. Efficiency and performance audits should be completed at least once every four to six years to ensure compliance and sustain transformation.
- Time efficiency and performance audits so that results are published in advance of state legislative sessions. This will provide lawmakers with time to consider recommendations and progress when allocating limited taxpayer resources and benchmarks pursuant to comprehensive plans of safety-net and workforce service reform.
- Audits should focus on outcomes for intended recipients of programs.
- Appoint a legislative oversight committee from within the relevant committees to ensure follow through.
Government Efficiency Audit Commission – Wyoming.
Recommendations from a 2018 statewide audit in Wyoming found more than $85 million in cost savings/avoidance for the 2021-2022 biennium.5“Government Efficiency Commission Forwards Recommendations to Legislature,” Office of the Governor of Wyoming, November 8, 2019, https://governor.wyo.gov/media/news-releases/2019-news-releases/government-efficiency-commission-forwards-recommendations-to-legislature; Wyoming Spending and Government Efficiency Commission, “2019 Report to the Governor, Management Council and the Joint Appropriations Committee: Commission Activities and Recommendations” (Wyoming Legislature, 2019), 79, https://wyoleg.gov/InterimCommittee/2019/SGE-2019110820191104DraftforCommisisonReview-Updated.pdf. The state paid $1.8 million for the audit, resulting in a net savings of $83.2 million.6Tom Coulter, “Experts: Legislature will need to spend money to save money,” Wyoming Tribune Eagle, February 9, 2020, https://www.wyomingnews.com/news/local_news/experts-legislature-will-need-to-spend-money-to-save-money/article_e9050bb9-3f1f-5f2b-82f6-42a3135b4507.html
1992 Workforce Program Audit – Utah.
As previously mentioned, the successful integration of human services and workforce services in Utah began with a 1992 legislative audit of the state’s 23 workforce programs.7Bishop, Utah Department of Workforce Services.
Efficiency Audit – Kansas. A 2016 audit identified 105 recommendations with the potential of generating more than $2 billion in savings over 5 years.8Alvarez & Marsal, Kansas Statewide Efficiency Review (Alvarez & Marsal, 2016), 1, http://www.kslegresearch.org/KLRD-web/Publications/AppropriationsRevenue/KansasStatewideEfficiencyInterimRpt2016Jan12.pdf. A 2019 progress report on the Kansas efficiency audit found that 43 of the 105 recommendations had been implemented with an additional five in progress.9Justin Stowe, “Progress Report on the 2016 Alvarez & Marsal Efficiency Recommendations” (Memorandum, Legislative Post Audit, December 9, 2019), https://www.kslpa.org/wp-content/uploads/2019/12/AM-Memo-2019.11.pdf. Implementation of these recommendations resulted in an estimated cost savings/avoidance of nearly $50 million.10Stowe, “Progress Report.” However, a number of agencies reported that they “will not implement” certain recommendations, underscoring the need for close oversight of agencies following the efficiency audit.
Recently passed efficiency audits – Texas.
The state of Texas recently implemented efficiency audits of their TANF program and child welfare system. While it will take some time for the results and impacts of these audits to inform decisions and recommendations in other states, the legislation and the research that informed it are available now as a template.
- TPPF research on efficiency audits and their application in child welfare space.11Andrew Brown, Using Efficiency Audits to Improve Child Welfare (Texas Public Policy Foundation, 2020), https://www.texaspolicy.com/using-efficiency-audits-to-improve-child-welfare.
- Texas HB 1516 (2021) – TANF Efficiency Audit Legislation.12HB 1516, 87th Texas Legislature (2021), https://capitol.texas.gov/tlodocs/87R/billtext/html/HB01516F.htm.
- Texas HB 2374 (2021) – child welfare efficiency audit legislation.13HB 2374, 87th Texas Legislature (2021), https://capitol.texas.gov/tlodocs/87R/billtext/html/HB02374F.htm.
Rather than measuring outcomes by how successful programs are in promoting people to self-sufficiency, the current government-run system often operates under negative incentives. Success is currently measured by the number of individuals served by the programs, creating a negative incentive.
Former President Ronald Reagan stated, “We should measure welfare’s success by how many people leave welfare, not by how many are added.”1Social Security Amendments of 1971: Hearings on H.R.1 Before the Committee on Finance, United States Senate, 92nd ,Cong. 1925 (February 1, 1972)(testimony by Ronald Reagan, governor of California), https://www.google.com/books/edition/Social_Security_Amendments_of_1971/JqbG8iMMQo8C?hl=en&gbpv=1. Success must not be measured by those served, but those who achieve and maintain self-sufficiency.
In general, there are three categories of metrics not being collected or reported that will enable a better evaluation of program success.
- Program participation intersection data
No database exists that can tell policymakers how many programs people are benefiting from at any given time or even the total unique number of people who receive one benefit or another across all programs. The only reports available are incomplete estimates from statistical surveys. State administering agencies can help solve this problem by producing program participation intersection data. The reports will show not only participation for each program but also display multiple program participation. For example, it will show the number of individuals who are receiving both Supplemental Nutritional Assistance Program (SNAP) and Medicaid at the same time; or SNAP and subsidized childcare services; or SNAP, Medicaid, and WIC food packages; or any other combination. All means-tested programs administered by the state need to be included in the report, and since the state also collects financial data from enrollees, the report should include participation in means-tested programs not administered by the state, such as the Earned Income Tax Credit, Section 8 housing, public housing, etc., to the extent possible.
- Dependence on government assistance data
A report2“Indicators of Welfare Dependence: Annual Report to Congress,” Office of the Assistance Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, accessed December 5, 2021, https://aspe.hhs.gov/indicators-welfare-dependence-annual-report-congress.submitted annually to Congress. States could produce reports using real enrollment data as opposed to statistical estimates for just a few select programs. This will provide policymakers with more accurate and comprehensive data on how dependent families and individuals are on government programs.
3. Follow-the-person data
Follow-the-person data links statistics on educational attainment with post-education workforce outcomes. For example, state-created and funded Education Research Centers (ERCs) in Texas store de-identified education and employment data provided by state agencies for comparative analysis.3Anthony Jones and Erin Davis Valdez, Filling in the Gaps: Ensuring Workforce Data Transparency to Improve Training Pathways (Texas Public Policy Foundation, 2021), https://www.texaspolicy.com/filling-in-the-gaps-ensuring-workforce-data-transparency-to-improve-training-pathways. The other two categories of metrics cannot show whether recipients are better off once they have exited a program, but this is the only way to know whether programs succeed at being a “hand up” instead of merely a “hand out.” This not only enables policymakers to measure how well people are doing once they leave the system, but also provides information to answer criticisms that the reforms may be simply reducing enrollment by neglecting the needs of people who still require assistance.
Where states already collect wage information, one successful method is for safety-net agencies to coordinate with employment insurance systems where the states already collect wage information.4Jones and Valdez, Filling in the Gaps. (See the examples section below.) This method enables the production of reports matching recipients with wage data to analyze if they are indeed better off after exiting programs. Additionally, safety-net recipients can sign agreements to be followed for a period of time after they graduate from or come off a program. As a matter of principle, these agreements need to be voluntary to respect the rights of individuals to make their own choices. Explaining the importance of the data to improve the effectiveness of the program should go a long way in encouraging participation.
In addition to those reports measuring dependence on government assistance and successful exiting from those programs, accountability metrics need to be regularly collected and made publicly available for not only administering agencies operations and program integrity efforts but also for other organizations providing case management services. The metrics need to be tracked over time to allow intertemporal comparisons and to ensure sustained positive performance. Nonprofits and other contracted service organizations that fall below specified performance metrics would be placed on probation with increased monitoring of their performance. If an organization were to fall below performance thresholds during consecutive or multiple years, it would lose its contract as a case management entity.
How to implement
- To the extent allowable by state law, governors should require all safety-net administering agencies to cooperate among themselves and begin producing program participation intersection reports, dependence on government assistance reports, and follow-the-person reports.
- In addition to executive action, pass state legislation requiring all safety-net and workforce administering agencies to cooperate among themselves and begin producing program participation intersection reports, dependence on government assistance reports, and follow-the-person reports.
- Nonprofits providing case management services should be regularly assessed and held accountable to beneficiary-focused metrics. These metrics should be tracked over time (year-to-year comparison) to ensure sustained positive performance.
All contractors will collect outcome data that should be easy to understand and analyze, including:
- Percentage of people served who achieved part-time or full-time employment
- Percentage of people served who increased their annual wages
- Percentage of people served who increased their net income
- Percentage of people served who obtained stable housing
- Percentage of people served who came off of welfare programs due to increase in income
- Churn rate (How many beneficiaries end up back on welfare programs?)
- How long beneficiaries were self-sufficient before coming back onto welfare Average time to:
■ Part-time employment
■ Full-time employment
- Exiting welfare program(s)
■ Average increase in annual wages
■ Average increase in net income
- All contracting agencies and organizations will agree to have their outcome data reviewed and analyzed by a third party.
- Nonprofits that meet the specified performance metric should have their capability increased in the following year, while those that fail should not have their contracts renewed.
Public Welfare Secretary Gary Alexander’s Intersection Data.
When Gary Alexander was Pennsylvania’s public welfare secretary in 2011 to 2013, he used intersection data to show how many persons were receiving which combination of programs for all programs under the control of his department.5Erik Randolph, one of the contributors to this report, was a special assistant to Public Welfare Secretary Gary Alexander and regularly reviewed intersection data that were produced monthly for executive staff.
Annual Welfare Indicators and Risk Factors Report to Congress.
Per the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, the HHS Office of the Assistant Secretary for Planning and Evaluation publishes a Welfare Indicators and Risk Factors report that shows, among other things, the percent dependency for the TANF, SNAP, and SSI programs.6“Indicators of Welfare Dependence: Annual Report to Congress,” Office of the Assistance Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, accessed December 5, 2021, https://aspe.hhs.gov/indicators-welfare-dependence-annual-report-congress.
Kansas and Maine ABAWD Data Collection.
After the Great Recession, the states of Kansas and Maine lead the nation in reinforcing the SNAP Able Bodied Adults Without Dependents (ABAWD) work rule. Both states utilized the unemployment insurance systems to track the individuals after losing food stamps to demonstrate that most of the individuals were better off from employment rather than being on food stamps.7Jonathan Ingram and Nic Horton, The Power of Work: How Kansas’ Welfare Reform Is Lifting Americans Out of Poverty (The Foundation for Government Accountability, 2016, https://thefga.org/wp-content/uploads/2016/02/Kansas-study-paper.pdf; and Paul Leparulo and Amanda Rector, “Preliminary analysis of work requirement policy on the wage and employment experiences of ABAWDs in Maine” (Governor’s Office of Policy and Management, April 19, 2016), https://digitalmaine.com/ogvn_policy/1/.
Workforce Innovation and Opportunity Act (WIOA) Tracking.
WIOA requires reporting on the performance of federally funded workforce programs. Performance indicators include information on how many participants are employed and at what wage level after exiting the program.8“WIOA Performance Indicators and Measures,” Employment and Training Administration Advisory System, U.S. Department of Labor, accessed December 3, 2021, https://www.dol.gov/agencies/eta/performance/performance-indicators; “Aligning Performance Accountability Reporting, Definitions, and Policies Across Workforce Employment and Training Programs Administered by the U.S. Department of Labor” (Guidance letter No. 14-18, U.S. Department of Labor, March 25, 2019).
Temporary Assistance for Needy Families – U.S.
Government-run systems measure success by the number of individuals enrolled in the programs rather than by the beneficiary’s self-sufficiency. The Temporary Assistance for Needy Families program (TANF), one of the six major U.S. welfare programs, exemplifies this. Under TANF, states are given “flexibility in operating programs designed to help low-income families with children achieve economic self-sufficiency.”9“Temporary Assistance for Needy Families (TANF),” Office of Family Assistance, Administration for Children and Families, U.S Department of Health and Human Services, accessed December 5, 2021, https://www.acf.hhs.gov/ofa/programs/temporary-assistance-needy-families-tanf. Benefits are provided through “cash payments, vouchers, and other forms of benefits designed to meet a family’s ongoing basic needs.”10“Reader’s Guide to Federal Temporary Assistance for Needy Families (TANF) and State Maintenance-of-Effort (MOE) Financial Data,” Administration for Children and Families, 2020, 2, https://www.acf.hhs.gov/sites/default/files/documents/ofa/tanf_financial_data_fy_2019_91020.pdf. TANF was originally intended to help needy families achieve four goals:11“About TANF,” Office of Family Assistance, Administration for Children and Families, U.S Department of Health and Human Services, accessed December 5, 2021, https://www.acf.hhs.gov/ofa/programs/tanf/about; “Temporary Assistance for Needy Families (TANF),” Office of Family Assistance.
1) Ensuring that children can be cared for in their own homes or the homes of relatives
2) Ending dependence on government benefits by promoting job preparation, work, and marriage
3) Preventing and reducing the incidence of out-of-wedlock pregnancies
4) Encouraging the formation and maintenance of two-parent families.
Unfortunately, numerous studies of TANF reveal that the program spending isn’t dedicated to its stated goals. A July 2020 study by Stateline, for example, found that states are directing only about 11% of TANF dollars to work-related activities.12Jenni Bergal, “States Raid Fund Meant for Needy Families to Pay for Other Programs,” Stateline, Pew Charitable Trusts, July 24, 2020, https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2020/07/24/states-raid-fund-meant-for-needy-families-to-pay-for-other-programs. Moreover, many states spend TANF dollars on programs unrelated to the core goals of TANF and that are used by families who are not in poverty. The Stateline study found that just one in four TANF cases closed because participants found sustainable employment.
States must ensure that only the eligible enroll in safety-net programs. As an example, improper federal and state Medicaid spending reached approximately a record $150 billion in fiscal year (FY) 2020.1“Biden-Harris Administration Announces Medicare Fee-For-Service Estimated Improper Payments Decline by Over $20 Billion Since 2014,” press release, Center for Medicaid and Medicare Services, November 15, 2021, https://www.cms.gov/newsroom/press-releases/biden-harris-administration-announces-medicare-fee-service-estimated-improper-payments-decline-over. The improper rate is applied to the total cost of Medicaid in 2020, available at “Federal and State Share of Medicaid Spending,” State Health Facts, Kaiser Family Foundation, accessed December 7, 2021, https://www.kff.org/medicaid/state-indicator/federalstate-share-of-spending/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D. The food stamp program also had a high error rate at $4 billion (7.36%) in FY 2019.2“Supplemental Nutrition Assistance Program: Payment Error Rates Fiscal Year 2019,” U.S. Department of Agriculture, July 7, 2020, https://fns-prod.azureedge.net/sites/default/files/resource-files/FY2019SNAPQCPaymentErrorRateChartGeneric.pdf. Total $4 billion is author’s calculation based on FNS data of 2019 benefit cost, Food and Nutrition Services, “SNAP Data Tables, FY18 through FY21 (National view summary),” data as of November 5, 2021,https://fns-prod.azureedge.net/sites/default/files/resource-files/34SNAPmonthly-11.pdf. These programs are just two examples, but the issue is consistent across all other programs.
There are many aspects to program integrity. In general, there needs to be a commitment from the administering agencies to periodically and regularly review eligibility. From a recipient’s point of view, it will mean periodic reviews of their status to ensure they still qualify for the program. (This is in addition to the requirement that the recipient report any changes in circumstance that may change their eligibility status.) From the point of view of the administering agency, eligibility reviews would be continuous and spread throughout the year.
In addition to reviewing sources of income, the reviews need to look at excess assets. The key word is “excess”—recipients should be able to build assets to help them achieve self-sufficiency. However, the excess test is needed to prevent people who could be living off their significant resources from receiving benefits.
Traditionally, safety-net programs look not only at income but also at resources or assets owned by applicants. If an applicant has excess resources, those resources may disqualify them from assistance. Typically, a primary residence, personal belongings, first automobiles, and other vehicles required for work or to get to work are not defined as excess resources. However, if an applicant has a vacation home or additional vehicles above a certain value, these assets may count as “excess” resources that must be liquidated before qualifying for safety-net payments. These tests also establish amounts and types of savings that are not considered to be excess, such as savings for education or retirement. These excess asset tests have not been updated in years and need to be re-evaluated so they effectively direct program funds to where they are needed.
Other program integrity methods include detection of outright fraud (such as assuming multiple names to get extra benefits and other falsification of information) and controls to prevent recipients from selling their benefits for cash.
How to implement
- Should require annual reviews of program integrity measures to ensure administering agencies are continuously implementing the most efficient and up-to-date methods.
- Should be required to run risk analysis software on IT systems and verification checks by caseworkers.
- Should be required to operate and develop regular data exchanges with other governmental agencies (such as Social Security death records) to verify identities, catch double-dipping, and prevent other abusive practices.
State legislation should also require state agencies to:
- Opt out of SNAP’s Broad-Based Categorical Eligibility options that would negate excess resource tests or extend participation without adequate checking of income or resources (such as extending SNAP benefits to a person just because they requested and received a TANF brochure).
- Opt out of the existing application (Texas, Louisiana, Georgia) for USDA Food and Nutrition Services (FNS) COVID-19 administrative and program-integrity flexibilities that create safety-net cliffs or otherwise undermine safety-net program reform.
- Require individuals to self-report changes in eligibility status when their income changes—e.g., within 10 days for food stamps and 30 days for Medicaid.
- Implement mandatory photo ID on electronic benefit transfer (EBT) cards, excluding the elderly, the disabled, children under 18, and other beneficiaries with substantial difficulties that would make obtaining a photo ID impractical.
- Use pay-for-outcomes contractors to ensure enrollment integrity.
- Prioritize investigation of food stamp retailer fraud.
Texas SNAP Certification.
In Texas, the legislature streamlined the Supplemental Nutrition Assistance Program’s (SNAP) certification process by reducing the amount of paperwork required for applicants over 60 and the disabled.3SB 224, 87th Texas Legislature (2021), https://capitol.texas.gov/BillLookup/History.aspx?LegSess=87R&Bill=SB224.
Louisiana Medicaid Audit.
In Louisiana, a 2018 audit found that 82 out of 100 selected Medicaid recipients didn’t qualify for the program.4Daryl Purpera, Nicole B. Edmonson, and Karen LeBlanc, Medicaid Eligibility: Wage Verification Process of the Expansion Population (Louisiana Department of Health, 2018) https://www.lla.la.gov/PublicReports.nsf/1CDD30D9C8286082862583400065E5F6/$FILE/0001ABC3.pdf.This was due to people going to Healthcare.gov and incorrectly or falsely reporting zero income. For people who lived in Louisiana, the income information they provided was sent to Louisiana Medicaid, and they were automatically enrolled in the program without further vetting.
Pennsylvania Internal Review. Former Pennsylvania Public Welfare Secretary Gary Alexander (who held the position between 2011 and 2013) initiated a major internal review outlining known tactics of fraud, waste, and abuse along with all program integrity features. The review team put together a list of measures to address weaknesses and beef up program integrity. Keeping on top of program integrity is not a one-time-done effort. It requires a continuous effort not only to implement the provisions but also to keep up with the latest efforts to fraudulently use benefits.5Gary Alexander, “Restoring Integrity to State’s Welfare System,” The Tribune-Democrat, November 27, 2011: https://www.tribdem.com/opinion/columns/gary-alexander-restoring-integrity-to-state-s-welfare-system/article_49f1d819-7800-5120-a7ec-b0429b4d282b.html and Pennsylvania Department of Public Welfare “Pennsylvania Department of Public Welfare Earns National Award for Efforts to Eliminate Waste, Fraud and Abuse,” press release, July 25, 2012: https://www.prnewswire.com/news-releases/pennsylvania-department-of-public-welfare-earns-national-award-for-efforts-to-eliminate-waste-fraud-and-abuse-163719516.html.
In the current safety-net system, self-sufficiency remains elusive. For example, in 2020, the poverty rate in Texas was 13.6%.1“Texas Report 2020,” Poverty Rate, Talk Poverty, accessed December 5, 2021, https://talkpoverty.org/state-year-report/texas-2020-report. Welfare programs in Texas during the fiscal year 2019 had an estimated 4.4 million individuals enrolled and a total cost of $7.5 billion.
The current system is rife with inefficiencies. According to the Temporary Assistance for Needy Families (TANF) program, basic assistance is defined as, “Cash payments, vouchers, and other forms of benefits designed to meet a family’s ongoing basic needs.”2“Reader’s Guide to Federal Temporary Assistance for Needy Families (TANF) and State Maintenance-of-Effort (MOE) Financial Data,” Administration for Children and Families, 2020, 2, https://www.acf.hhs.gov/sites/default/files/documents/ofa/tanf_financial_data_fy_2019_91020.pdf. Texas spends about $1 billion on TANF, with only 4% dedicated to basic assistance.3“State Fact Sheets: How States Spend Funds Under the TANF Block Grant,” Center on Budget and Policy Priorities, updated January 12, 2021, https://www.cbpp.org/research/family-income-support/state-fact-sheets-how-states-spend-funds-under-the-tanf-block-grant; Vance Ginn (@VanceGinn), “2/ @CenterOnBudget provides brief on #TANF in #Texas,” Twitter, March 16, 2021, 12:30 p.m., https://twitter.com/VanceGinn/status/1371876481752793091. Another $350 million of TANF’s $1 billion budget is dedicated to Pre-K/Head Start programs, falling outside TANF’s “four broad purposes.”4“State Fact Sheet,” Center on Budget and Policy Priorities; “About TANF,” Office of Family Assistance, Administration for Children and Families, U.S Department of Health and Human Services, accessed December 5, 2021, https://www.acf.hhs.gov/ofa/programs/tanf/about.
Empowering safety-net recipients by giving them much greater flexibility in how they may use their government assistance payments can help them meet their current needs while setting them up better for self-sufficiency later.
State policymakers can help achieve this by creating empowerment accounts (EAs). EAs would provide the safety-net funding to certain eligible recipients on a debit card. To qualify, people would need to be working, training, or following an education program while meeting with a community case manager and attaining financial literacy and savings opportunities along the way to pay for specified items.
EAs could start as a pilot program in a desired location with 500 to 1,000 recipients. The pilot would consolidate the numerous safety-net programs and test whether they can function better as a hand up to financial independence rather than payments from multiple programs with delineated and restrictive rules. If this is proven to work well, an EA program should be scaled up to more recipients.
People on safety net programs are no different in dignity, ingenuity, and capacity than people not on programs. By giving people flexibility through an Empowerment Account (EA), we are providing choices to create their own unique path out of poverty, along with life skills of budgeting for when they come off the programs.
An EA will restore the natural incentive for individuals to get ahead in life, in contrast to the current system. Keep in mind that the EA is not a new benefit. It consolidates benefits from multiple programs that the individuals already qualify for and replaces them with a single Empowerment Account on a debit card. To qualify, people would need to be working, training, or following an education program while meeting with their community case manager.
How can a state pilot an EA program? State legislation could use available federal block grants for limited eligible recipients and areas, and the pilot could also be supplemented with private donations and state money.
So, how would an EA program help reform the nation’s welfare system? It would condense and replace the overstretched, wasteful programs into one consolidated, more effective whole program. By cutting down on bureaucratic bloat and streamlining payments, more of the resources for safety nets would go to the EAs and thus to families. Payments would be determined according to income and based on a time limit, rather than via an income threshold. There would also be requirements tied to work, training, or education, structured to limit or even eliminate costly safety-net benefit cliffs. The EA allows low-income individuals to maximize their desires and set themselves on a path toward prosperity while substantially reducing administrative costs of government intervention in redundant safety-net programs. If fully enacted, EAs would replace some, if not all welfare programs to help divert people into financial independence.
State policymakers should also consider stepping outside of the failing and flawed safety-net system. The goal of the EA pilot program is to support low-income individuals when they are in need and prepare them for self-sufficiency through work-related requirements, financial literacy and connecting with a community case manager. This combination of work and community will help build the hope and social capital too often lost with the current safety-net system.
Safety-net recipients are often discouraged from earning an additional dollar because of welfare or benefit cliffs—the point at which additional income for a recipient would cause them to lose all or many of the benefits or payments they currently rely on. Losing this assistance can put a recipient back to square one, creating a perpetual cycle of poverty. Programs must not create negative incentives or cliffs which leave little chance for recipients to return prosperity.
The section on streamlining safety-net programs and integrating with workforce services, includes a recommendation to consolidate safety-net programs to five categories, such as food assistance. These categories were chosen partly because the current political climate may not accept a complete consolidation into one program.
For example, the food stamp program has controls to help ensure that the payment is only used for food. Consequently, it is illegal to sell an EBT card for cash. The fear is that a person would use that cash to purchase non-food items. This is a paternalistic approach that does not allow for individual responsibility and budget flexibility, such as spending less for food to purchase needed clothing.
Empowerment accounts provide more flexibility and responsibility. There will be restrictions on what the recipient can purchase with an EA based on the five categories approved by the state (similar to the way an education savings account limits parents to spending related to education). However, the EA provides more opportunities to purchase items than something like an education savings account or food stamps. EA recipients will be able to purchase a broad range of items that fit into the different categories and budget according to their needs.
How to implement
Pass legislation to implement a pilot program for the Empowerment Account experiment at the state level.
- The legislation could use federal grants for the EA pilot for specific, limited eligible recipients and areas through available block grants but could also supplement with private donations and state money.
- Available block grants can include:
▪ Temporary Assistance to Needy Families (TANF), currently appropriated at $16.5 billion for all states.
▪ Social Services Block Grant (SSBG) is $1.7 billion distributed to states to increase self-sufficiency and independence.
▪ Community Services Block Grant (CSBG) distributes nearly $700 million in federal funds annually to more than 1,000 local anti-poverty programs through a state formula.
▪ Community Development Block Grant (CDBG) distributes over a $1 billion to states to provide housing assistance for low-income families.
- There would be a single, consistent eligibility criterion based on income, assets, children, and other factors, which would be modeled on the replaced safety-net programs. The pilot program would have a requirement for work, training, or education.
- This EA pilot program would provide a debit card to meet basic needs, similar to a health savings account (HSA) or education savings account (ESA) for a specified, limited number of low-income individuals who qualify for other safety-net programs (for instance SNAP, Housing, WIC, and TANF programs). The EA would replace the payments from the recipients’ current safety-net programs. The recipient would agree to be removed from those programs during the EA pilot.
- The EA debit card would be combined with a financial application or literacy course that would allow the recipient to learn budgeting and improve their financial independence.
- The amount of EA funding would taper over a specified amount of time to avoid welfare cliffs. New recipients would receive an increasing amount over time based on the chained consumer price index (CPI), like the income tax brackets in the federal tax code.
- Any amount left over in the EA will remain with the recipient to help with the welfare cliff and incentivize savings.
- The program would connect recipients with a case manager from a nonprofit organization that will provide support and connections to a community that could last long past their time on the EA.
- Eventually, states could request waivers from the federal government to run a state-wide project that better serves low-income citizens who currently qualify for federal programs while also saving federal funds. Reduced administrative costs are just one example of savings from a streamlined EA program. In fiscal year 2019, the state of Texas spent $684.8 million in administrative costs for some eligible welfare programs (WIC, SNAP, TANF, housing) based on the authors’ calculations. The less states spend on administrative costs, the more money they can use for its intended purpose: to serve the neediest Texas families.
- Because the EA program provides recipients with tools to achieve financial self-sufficiency and not return to safety-net programs, it will reduce expenditures over time as need declines.
- After examining the effects of the EA program at the state level, pass federal legislation to replace strictly federal safety-net programs, such as Medicare and Social Security, with an EA program.
The EA is substantially different from a universal basic income (UBI).
The idea of a UBI has been around for a while but became popularized most recently by then Democrat presidential candidate Andrew Yang, who proposed a Freedom Stipend of $1,000 per month to eligible Americans. Individuals receiving welfare payments had the option to receive the stipend in lieu of current welfare program payments or opt out of the stipend and continue receiving welfare. A crippling problem with most UBI proposals is the expense. Yang estimated a cost of $2.8 trillion per year on top of the normal federal budget outlays.5Kyle Pomerleau, “Does Andrew Yang’s ‘Freedom Dividend’ Proposal Add Up?” Tax Foundation, July 24, 2019, https://taxfoundation.org/andrew-yang-value-added-tax-universal-basic-income/. UBI would bankrupt any state that tried to implement it in this form and hurt incentives to work across the income spectrum, slowing economic growth and opportunities to prosper. Economists Friedrich Hayek and Milton Friedman supported a UBI to different degrees but only as a replacement for the safety-net system.
Unlike EAs, a UBI is for everyone and in some cases (like that proposed by Yang) does not replace current safety-net programs. Specific safety-net programs, such as TANF and SNAP, would be replaced by an EA program, but those recipients would continue to receive payments under a more streamlined system. The programs replaced by the EA payments should be determined for each pilot program so that each EA program is consistent in the eligibility criteria and what purchases are covered. A UBI typically increases taxes and the size of government, especially when other safety-net programs are not eliminated and the number of eligible people is greatly expanded. But the EA can reduce government spending over time due to streamlining, less bureaucracy, and more people graduating from the program with work experience, training or education; community (through a nonprofit case manager); and financial literacy needed for self-sufficiency.