- Report Published -
|Virginia's Welfare Reform Initiative: Follow-Up of Participant Outcomes|
|Joint Legislative Audit and Review Commission|
|Appropriation Act - Item 16 M. (Regular Session, 1999)|
|In 1998, JLARC completed an evaluation of Virginia's welfare reform program that was passed into law in 1995. That review focused on the changing caseload trends and the labor market outcomes of participants who were required to participate in the employment component of the Virginia's welfare reform program. Based on the significant reductions witnessed in the State's welfare caseloads and the higher employment levels observed among recipients of cash assistance, the preliminary findings from the review were positive overall.|
At the same time, the persistently high levels of unemployment among certain categories of welfare recipients, and the generally low earnings levels observed for those recipients who found work, raised some concerns about the capacity of the State's welfare reform program to achieve its stated long-term goal of self-sufficiency for many welfare recipients. Based on some of these concerns, the General Assembly passed Item 16M of the 1999 Appropriation Act directing JLARC to conduct an annual follow-up review of the labor market experiences and welfare participation rates of the VIEW participants selected for the original study. This study provides an update of the outcomes reported in JLARC's initial study through the use of 12 additional months of wage and benefits data.
The general findings of this review indicate that the caseload reductions that have characterized the early success of the program have continued (see figure, top of page II). Since welfare caseloads reached an apex in 1995- averaging 73,000 recipients per month - they have fallen by nearly 50 percent and now average slightly more than 36,500 recipients per month. Additionally, the welfare participation rate among the original cohort of recipients tracked by JLARC for this study had fallen to 25 percent as of July 1999.
From the standpoint of participant self-sufficiency, whether due to the welfare policies, a strong economy, or both, a movement toward a greater reliance on income rather than TANF payments has continued for many recipients. This trend is evidenced by a strong increase in the average percent of recipient resources that is from income and a strong decrease in the average percent of recipient resources that is from TANF payments (see figure, bottom of page II).
However, as with JLARC's first study of this issue, an examination of the economic outcome indicators also reveals some limitations in what recipients have achieved. The post-program employment rate for the study group that once reached 54 percent in the previous review has declined to 47 percent in the second year of follow-up. While the income earned by recipients, on average, has been sufficient to replace TANF benefits, the average quarterly total resources of the group has not improved. Moreover, 77 percent of the total sample of recipients who worked in 1998 still earned wages that were below the poverty level. The percent with earnings below the poverty level was less for the group with two or more years since their VIEW assessment than the group with just one or two years since their assessment (74 percent compared to 80 percent). These recipients do, however, receive other benefits such as food stamps or daycare assistance, which are not reflected in their earnings.
Finally, the most significant challenge faced by the Department of Social Services (DSS) remains with those welfare recipients who have multiple barriers to employment. This group includes those recipients for whom at least three of the four following "risk" factors were observed: (1) no employment in the year prior to VIEW, (2) four or more children, (3) on welfare for 70 percent or more of the time since the birth of the oldest child, and (4) non-high school completion. Comparing the fourth quarter prior to VIEW with the fifth quarter post-VIEW, the "hard-to-serve" group made considerable progress in both employment and earnings. The employment rate improved from about three percent to about 32 percent (and moved to 37 percent by the seventh quarter), and average quarterly earnings improved from $74 to $977 (see figure, page IV).
The challenge for DSS is to address the high proportion of this group that continues to be unemployed. Even with the progress observed, 63 percent of this "hard-to-serve" group were not employed in the seventh quarter post-VIEW. Further, their earnings level, which is typically less than half the amount of their counterparts, did not improve from the fifth to seventh quarters. Two years after their initial assessment for VIEW, on average, only 29 percent of the total resources for this "hard-to-serve" group could be attributed to earned income. Perhaps related to this trend was an increase in the proportion of hard-to-serve recipients who returned to the public assistance rolls at the end of the two-year follow-up period.
These findings underscore the challenge DSS faces in its efforts to ensure that welfare recipients are able to find and retain employment at levels that will minimize their financial hardships when their benefits expire. For the hard-to-serve population, the agency has developed a strategic plan that is designed to "improve and enhance" the VIEW service model, which presently emphasizes job search. However, the strategic plan prescribes a broad set of criteria to identify the hard-to-serve population, and this could lead to the mistargeting of resources. Also, as many of the services described in the strategic plan are provided by agencies outside of the department, DSS officials must take a number of actions in the coming months to ensure that the plan is implemented.
Recommendation. The Department of Social Services should modify its strategic plan by providing more prescriptive criteria for identifying welfare recipients who are considered "hard-to-serve."