Income Assistance Before and After PRWORA A Comparison of Benefit Policies

1
Income Assistance Before and After PRWORAA
Comparison of Benefit Policies Parameters
Gilbert L. Crouse, Sr. Ph.D. Office of the
Assistant Secretary for Planning and
Evaluation U.S. Department of Health and Human
Services 202-690-5876 voice 202-690-6562
fax email gilbert.crouse_at_hhs.gov
National Association for Welfare and Statistics
Annual Meeting, Oklahoma City, Oklahoma (August
22 - 25, 2004)
2
Overview I
AFDC benefit expenditures increased sharply in
the early 1990s.
3
Overview II
Increases in AFDC expenditures in the early
1990s were driven by caseload increases.
4
Overview III
Average Benefits
After increasing in the 1980s, average benefits
showed little to no growth in the early 1990s.
5
Overview IV
Decreases in AFDC expenditures after 1994 were
driven by caseload decreases.
Caseload
Total Benefit Expenditures
6
Overview V
OBRAs monetary constraints reduced recipiency
despite increased poverty during the early 1980s
twin recessions.
7
Overview VI
WINs monetary incentives stimulated employment
only marginally after 1970 recession.
OBRAs constraints plus recession
severely reduced employment as well as recipiency.
8
Overview VII
Average earnings have nearly doubled since 1993.
Average Earnings (current dollars)
Average Benefits (current dollars)
Average benefits have decreased in both
current and constant dollars since 1992.
9
Overview VIII
Monetary constraint of did not halt the early
1990s caseload growth driven by economic and
demographic conditions.
Caseload
Average Benefits (current dollars)
Average Benefits (1985 dollars)
10
Overview IX
Higher benefit cut-off levels of earnings
contributed
Benefit Cut-Offs
Percent of adult recipients employed
to significant increases in employed adult
recipients.
11
Overview X
Under TANF reforms, economic recovery produced
far larger reductions in poverty recipiency
than previously under AFDC.
12
Outline of Paper
13
Figure X. Recipiency Rate of Basic Caseload
Poverty Rate of Female Headed Households with
Children
Source U.S. Bureau of the Census and U.S.
Department of Health and Human Services.
14
Fig X. Employment Status of Adult Female AFDC
Recipients
Source U.S. Department of Health and Human
Services.
15
Figure X. Total Federal and State AFDC/TANF Cash
BenefitsIn Current and Constant 1982 Dollars
Source U.S. Department of Health and Human
Services.
16
Figure X. Total Federal and State AFDC/TANF Cash
BenefitsIn Current and Constant 1982 Dollars
Source U.S. Department of Health and Human
Services and U.S. Department of Labor.
17
Figure X. Annual Cumulative in Change Total
Cash Benefits Since 1984In Current Dollars
Source U.S. Department of Health and Human
Services.
18
Figure X. State Share of Program Costs In
Current Dollars
Source U.S. Department of Health and Human
Services.
19
Figure X. Annual Change in State Share of Program
Costs In Current Dollars
Source U.S. Department of Health and Human
Services, Administration for Children and
Families.
20
Partition of theGrowth Rate of Total Benefits
Growth Rate of Caseload
Growth Rate of Average Benefits
Percent change in total benefits (a)
Percent change in caseload (b) Percent
change in average benefits (c) Percent
change in caseload Percent change
in average benefits
21
Figure X. Partition of the Growth rate of Total
Benefits 1988-96
Source U.S. Department of Health and Human
Services.
22
Figure X. Partition of the Growth rate of Total
Benefits1996-2002
Source U.S. Department of Health and Human
Services, Administration for Children and
Families.
23
TOTAL BENEFIT EXPENDITURES
AFDC/TANF CASELOAD
AVERAGE BENEFIT
24
AVERAGE BENEFIT
25
Figure X. Average Monthly AFDC/TANF Benefit per
FamilyIn Current Dollars
Source U.S. Department of Health and Human
Services.
26
Figure X. Average Monthly AFDC/TANF Benefit per
FamilyIn Current and Constant Dollars
Source U.S. Department of Health and Human
Services and U.S. Department of Labor.
27
Figure X. Average Monthly AFDC/TANF Benefit per
FamilyAnd Average Earnings of Employed Adult
RecipientsIn Current Dollars
Average Earnings (current dollars)
Average Benefits (current dollars)
Source U.S. Department of Health and Human
Services.
28
AFDC/TANF CASELOAD
Recipiency Rate Of Families
Number of Families with Children
29
Figure X. AFDC/TANF Families Receiving Income
Assistance
Source U.S. Department of Health and Human
Services.
30
Figure X. AFDC/TANF Families Receiving Income
AssistanceAnd Average Benefits in Current and
Constant Dollars
Caseload
Average Benefits (current dollars)
Average Benefits (1985 dollars)
Source U.S. Department of Health and Human
Services and U.S. Department of Labor.
31
AFDC Need Standard
Gross Income Limit
32
Countable Income
AFDC Earnings Disregards
33
AFDC Payment Standard
Ratable Reduction
34
Statutory Maximum
Benefit Formula
35
Two Eligibility Constraints
Gross Income Limit 1.85 Need Standard
Benefit Eligibility Cut-Off level of Earnings
The Minimum Benefit Payment 10 thus we seek
the level of earnings where 10 Payment
Standard (Earnings 120) (1 1/3)
or Earnings 120 (Payment Standard - 10) /
(1 1/3)
36
Determination ofMaximum Benefit Paymentwith
zero income
Maximum Benefit Payment lesser of

• Need Standard,
• Payment Standard,
• Payment Standard multiplied by the Ratable
  Reduction percentage (100 or less),
• Statutory Maximum

37
Figure X. Nominal Change in Maximum Benefit From
Previous Year
California
Source U.S. Department of Health and Human
Services.
38
Figure X. Nominal Change in Maximum Benefit From
Previous Year
Number of states reducing maximum benefit
0
2
1
5
4
3
2
3
7
1
0
0
0
0
1
Source U.S. Department of Health and Human
Services.
39
Figure X. Percent Change in Maximum Benefit From
Previous Year
Source U.S. Department of Health and Human
Services.
40
Figure X. Real Maximum AFDC/TANF Benefits for a
Three-Person Family
Source U.S. Department of Health and Human
Services and U.S. Department of Labor.
41
Figure X. Real Maximum AFDC/TANF Benefits for a
Three-Person Family
Source U.S. Department of Health and Human
Services and U. S. Department of Labor.
42
Maximum Benefitwith zero income
Statutory Maximum
Ratable Reduction
Payment Standard
Need Standard
43
Figure X. Weighted Average Need Standard, Payment
Standard and Maximum Benefit For a Three-Person
Family
Source U.S. Department of Health and Human
Services, Administration for Children and
Families.
44
Figure X. AFDC Need Standards versus Payment
Standards 1988
Source U.S. Department of Health and Human
Services.
45
Figure X. AFDC Need Standards versus Payment
Standards 1996
Source U.S. Department of Health and Human
Services.
46
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in California
Source U.S. Department of Health and Human
Services.
47
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in Tennessee
Source U.S. Department of Health and Human
Services.
48
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in Arizona
Source U.S. Department of Health and Human
Services.
49
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in Iowa
Source U.S. Department of Health and Human
Services.
50
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in New Jersey
Source U.S. Department of Health and Human
Services.
51
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in Missouri
Source U.S. Department of Health and Human
Services.
52
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in Ohio
Source U.S. Department of Health and Human
Services.
53
Figure X. Need Standard and Payment StandardFor
a Three-Person Family in Washington
Source U.S. Department of Health and Human
Services.
54
Table X. Weighted Average Need Standard, Payment
Standard and Maximum Benefit For a Three-Person
Family
Source U.S. Department of Health and Human
Services.
55
Figure X. Missouri Benefit Function For a
Three-Person Family Without Child Care 1988
Source U.S. Department of Health and Human
Services.
56
Figure X. Missouri Benefit Function For a
Three-Person Family With Child Care Expense of
100 and 200 1988
Source U.S. Department of Health and Human
Services.
57
Figure X. Missouri Benefit Function For a
Three-Person Family With Child Care Expense of
100 and 200 1993
Source U.S. Department of Health and Human
Services.
58
Two Eligibility Constraints
Gross Income Limit 1.85 Need Standard
Benefit Eligibility Cut-Off level of Earnings
The Minimum Benefit Payment 10 thus we seek
the level of earnings where 10 Payment
Standard (Earnings 120) (1 1/3)
or Earnings 120 (Payment Standard - 10) /
(1 1/3)
59
Weighted Average of Benefit Cut-Off Level of
EarningsIn Current Dollars and Constant Dollars
Source U.S. Department of Health and Human
Services and U.S. Department of Labor.
60
Benefit Cut-Off Level of EarningsIn Current
Dollars
Source U.S. Department of Health and Human
Services and U.S. Department of Labor.
61
Figure X. AFDC Gross Income Limits versus
Eligibility Cut-Off Levels of Earnings Months
1- 4
Source U.S. Department of Health and Human
Services.
62
Figure X. AFDC Benefit Cut-Off Constraint versus
Gross Income Limit 1988
Source U.S. Department of Health and Human
Services.
63
Figure X. AFDC Benefit Cut-Off Constraint versus
Gross Income Limit 1996
Source U.S. Department of Health and Human
Services.
64
Figure X. Weighted Average Gross Income Limits
Benefit Cut-Off Levels In Current Dollars
Source U.S. Department of Health and Human
Services.
65
Figure X. Weighted Average Gross Income Limits
Benefit Cut-Off Levels In Current Dollars
Source U.S. Department of Health and Human
Services.
66
Employment Effectsof Benefit Parameter Changes
Benefit Cut-Off Level of Earnings is determined
by

• Payment Standard,
• Flat and variable Earnings Disregards,
• Gross Income Limit
• (a) Need Standard
• (b) Poverty Line

67
Fig X. Employment Status of Adult AFDC/TANF
Recipients
Note The percent for 1997 is estimated based on
percentage of families with wages. Source U.S.
Department of Health and Human Services.
68
Fig X. Employment Status of Adult AFDC/TANF
RecipientsAnd Weighted Average of Benefit
Cut-Off Levels of Earnings at 2 Months
Benefit Cut-Offs
Percent of adult recipients employed
Note The percent for 1997 is estimated of
percent employed is based on percentage of
families with wages. Source U.S. Department of
Health and Human Services.
69
Fig X. Labor Force Participation Rates of Women
with Children under 6
Source U.S. Bureau of Labor Statistics,
Bulletins 2307 and 2340 and unpublished data
from the March Annual Demographic Supplement of
the Current Population Survey.
70
AFDC/TANF CASELOAD
Recipiency Rate Of Families
Number of Families with Children
71
Figure X. AFDC/TANF Recipiency Rates of Families
and Children
Source U.S. Department of Health and Human
Services and U.S. Department of Labor
72
Figure X. AFDC/TANF Recipiency Rates of
Children,Poverty Rate of Children in Female
Headed Households, Unemployment
Source U.S. Department of Health and Human
Services and U.S. Department of Labor
73
Figure X. Number of Families with Children under
18 by Marital Status
Source U.S. Bureau of the Census.
74
Figure X. Cumulative Change in Number of
FamiliesWith Children under 18 Since 1970
Source U.S. Bureau of the Census.
75
Figure X. Cumulative Change in Number of
Single-Parent Families With Children under 18
Since 1988
Source U.S. Bureau of the Census.
76
Figure X. AFDC/TANF Child Recipiency Rates, U.S.
and Selected States
Source U.S. Department of Health and Human
Services.
77
Figure X. Change in Child Recipiency Rates From
Previous Year
Source U.S. Department of Health and Human
Services.
78
Figure X. Poverty Rate, Eligibility Rate and
Recipiency Rate of AFDC/TANF Families
Source DHHS, Administration for Children and
Families caseload tabulations, and unpublished
AFDC/TANF participation rates tabulated using
theTRIM3 microsimulation model .
79
Figure X. Eligible and Participating AFDC/TANF
Families
82
86
78
78
48
Source DHHS, Administration for Children and
Families caseload tabulations, and unpublished
AFDC/TANF participation rates tabulated using
theTRIM3 microsimulation model .
80
Figure X. AFDC Child Recipients by Reason of
Eligibility of Parents
Source U.S. Department of Health and Human
Services.
81
Figure X. Cumulative Change from 1988 to 1996 in
the Number of AFDC Child Recipients By Reason of
Eligibility of Parents
Source U.S. Department of Health and Human
Services.
82
Figure X. Children Receiving Means-Tested
Benefits
Source U.S. Department of Health and Human
Services.
83
Conclusion
Twin Goals of Welfare Assistance
Since the expansion in the 1960s of the original
Aid to Dependent Children program policy makers
have tried to balance two goals
84
CASH ASSISTANCE EXPENDITURES
Average Benefits
AFDC/TANF Caseload
Needy Families with Children
Recipiency Rate
Maximum Benefit
Need Standard
Take-up Rate
Percent Eligible
Payment Standard
Gross Income Limit
Single Parents
Economic Conditions
Labor Force Participation
Earnings Disregards
Married Parents
EarningsCut-Off Limit
EITC
Demographic and Social Conditions
Immigration
85
AFDC/TANF Families, Food Stamp Participants,
Unemployment
Source U.S. Department of Health and Human
Services.
86
State Flexibility Under TANF Has Paid Off
Higher benefit cut-off levels of earnings
contributed
Benefit Cut-Offs
Percent of adult recipients employed
to significant increases in employed adult
recipients.
87
Bottom Line on TANF Lower Child Poverty
Under TANF reforms, economic recovery produced
far larger reductions in poverty recipiency
than previously under AFDC.