In August 1993, the U.S. Department of Health and Human Services and U.S. Department of Agriculture approved Iowa's request for waivers of certain federal regulations governing the Aid to Families with Dependent Children (AFDC) program and the Food Stamp Program. Acting under these waivers, the state implemented its welfare reform program, known as the Family Investment Program (FIP), on October 1, 1993. The reforms embedded in FIP are numerous and comprehensive. They encourage and require welfare applicants and recipients to take specific steps toward self-sufficiency. These steps may include participating in job search or training activities, obtaining employment, and accumulating assets. The reform program stops short of actually requiring welfare recipients to achieve self-sufficiency.(1) Nonetheless, there is an implicit expectation that by following the required steps most of them will eventually leave cash assistance.
Several key provisions of FIP illustrate the emphasis in Iowa's welfare reform on movement toward self-sufficiency. To encourage employment, as well as the formation and preservation of two-parent families, FIP removes the 100-hour cap that the former AFDC program imposed on the number of hours per month that a parent could work for pay while the family remained eligible for cash assistance. To further encourage employment, a greater percentage of earnings is disregarded in determining eligibility and benefits under FIP than under AFDC. To encourage asset accumulation, the amount of assets that an eligible family may hold is higher under FIP than under AFDC, and interest and dividend income are excluded from the determination of FIP eligibility. To ease the financial burden of fully exiting from cash assistance, FIP offers former welfare recipients who obtain employment two years of child care assistance, rather than the one year that was available under AFDC. To promote planning for the future and positive steps toward self-sufficiency, FIP requires welfare recipients who are capable of working to develop plans for achieving self-sufficiency and to participate in the PROMISE JOBS employment and training program. Recipients who do not meet these requirements are assigned to the Limited Benefit Plan (LBP), a short-term alternative assistance program under which cash benefits are reduced and then terminated. The LBP provision of FIP is the subject of this study.
This chapter introduces the PROMISE JOBS employment and training program; briefly describes the LBP and its function within PROMISE JOBS; and discusses the origin, purpose, and methodology of the LBP Study.
Since 1989, welfare recipients in Iowa have been required to participate in the PROMISE JOBS (Promoting Independence and Self-Sufficiency Through Employment, Job Opportunities, and Basic Skills) program. PROMISE JOBS implements the Job Opportunities and Basic Skills (JOBS) program in Iowa, as mandated by the federal Family Support Act of 1988. It is designed to increase the availability of employment and training opportunities for welfare recipients. The requirement for welfare recipients to participate in PROMISE JOBS has been strengthened under FIP; fewer welfare recipients are now exempt from the participation requirement, and the consequences of unauthorized nonparticipation are more immediate and severe than under the former AFDC program.
Generally, all adult participants in FIP are required to participate in PROMISE JOBS. Exemptions from this requirement are granted for five classes of FIP clients:
Given these exemptions, the expectation is that FIP clients who are mandatory participants in PROMISE JOBS have the time and ability to benefit from the employment and training services provided.
The LBP is a short-term alternative assistance program introduced under Iowa's welfare reform program. In the LBP, a case's cash benefits are reduced and then terminated for a fixed period of time after which the case can reapply for benefits. FIP recipients are usually assigned to the LBP as a result of not meeting FIP requirements relating to PROMISE JOBS participation.
Under FIP, able-bodied adults who are not caring for infants and are not working 30 or more hours per week at the time of FIP application are required to develop, sign, and carry out a contract called the Family Investment Agreement, or FIA, under the auspices of the PROMISE JOBS program. The FIA specifies the steps that will be taken to achieve self-sufficiency and a date by which this goal will be achieved; this date can be revised if life circumstances change. Failure to develop, sign, or follow through with the FIA results in assignment to the LBP. Welfare clients or applicants may also volunteer for assignment to the LBP. Heads of families who believe that their need for assistance is temporary or who prefer to avoid dealing with PROMISE JOBS may be especially inclined to volunteer for assignment. Opportunities to return to FIP through cancellation of an LBP assignment are strictly limited for all LBP assignments.
Although it is the individual who is assigned to the LBP, the FIP case to which he or she belongs is greatly affected by the assignment; most notably, the entire case's cash assistance is reduced and then terminated as a result of the LBP assignment.(3) Under the former AFDC program, the consequences for nonparticipation in PROMISE JOBS were less severe than in the LBP and applied to fewer welfare recipients. The new policies reflect the philosophy behind welfare reform in Iowa that the choices individuals make have real consequences that may affect the entire family.
As originally designed and implemented, the LBP was a twelve-month plan. It provided cases with three months of cash assistance at the same level as under FIP, three months of reduced cash assistance,(4) and six months of ineligibility for cash assistance. After twelve months, LBP participants could reapply for cash assistance. Throughout the full twelve-month period, LBP participants could continue to qualify for and receive Medicaid and Food Stamps as long as they met the eligibility requirements for these programs. However, they could not receive the Transitional Child Care assistance or Transitional Medicaid that were (and are) provided to former FIP clients whose eligibility for cash assistance has ended as a consequence of increased income from employment. As part of the LBP, registered nurses or social workers employed by local public health agencies would attempt to conduct two "well-being" visits with LBP families to inquire about the children, to ask parents whether they need information about their rights and responsibilities, and to provide referrals to community agencies.
A redesigned LBP, eliminating the initial three months of level benefits, was implemented in February 1996. The redesigned LBP is a nine-month plan, which provides reduced cash assistance during the first three months, followed by six months of ineligibility for cash assistance. In redesigning the LBP, a policy for second or subsequent LBPs was also implemented. Specifically, any second or subsequent LBP is a six-month plan in which benefits are canceled immediately for the entire case with no reconsideration option. Most other provisions of the redesigned LBP are unchanged from the original LBP design. Results presented in this report pertain to cases whose experiences with the LBP occurred under the original design.
PROMISE JOBS began assigning welfare clients to the LBP approximately half a year after the implementation of FIP. The first assignment was made in April 1994. Approximately 700 clients per month were assigned to the LBP in the remainder of 1994 and in 1995. Beginning in October 1994 and continuing through 1995, approximately 150 to 175 active cases per month reached the seventh month of the LBP, when all cash assistance was terminated. The magnitude of these flows were such that the Iowa Department of Human Services (DHS), which administers FIP and the LBP, perceived a need to know more about the cases in the LBP: What are their characteristics? Why were they assigned to the LBP? How are they faring without cash assistance? However, DHS's existing contract for a broad evaluation of its welfare reform program included no provision for a focused study of the LBP.
By the spring of 1995, the national press had become aware that Iowa was terminating cash assistance for some welfare cases. Interest by the national press in this process and in the affected cases was heightened by the then-active debate on federal welfare reform and, more specifically, by the issues of time-limited cash benefits and work requirements that were central to that debate. Despite the temporary nature of the LBP's benefit termination and its restriction to PROMISE JOBS-mandatory cases that do not meet employment and training requirements, these organizations saw Iowa's experience as an indication of how welfare recipients might be affected by the sudden loss of cash benefits, as would occur under broader time limits. Reporters from The Wall Street Journal and The Los Angeles Times inquired as to whether the evaluation of welfare reform in Iowa had produced information on LBP cases whose cash assistance had been terminated. They were told that it had not. Finding little information on LBP cases whose cash assistance had ceased, reporters from The New York Times and The Chicago Tribune visited Iowa and, with considerable difficulty, located and interviewed several such cases. These efforts by the national press to gather information on the LBP and the affected welfare cases made DHS aware that interest in the LBP extended well beyond Iowa's borders.
In light of its own need for information on the LBP and strong national interest in the program, DHS was receptive to a proposal submitted by its welfare reform evaluation contractors--Mathematica Policy Research, Inc. (MPR) and the Institute for Social and Economic Development (ISED)--for a focused, systematic study of the LBP. DHS, MPR, and ISED presented the proposal to several potential sources of funding for the study. These organizations responded enthusiastically to the proposal. Four foundations and two federal government agencies provided financial support for the study, which began in October 1995. The sponsors of the LBP Study are:
At the most general level, the objectives of the LBP Study are to improve our understanding of the characteristics of FIP cases that are assigned to the LBP, why they are assigned, and how they fare when their benefits are terminated. Achieving these objectives requires rigorous, empirically based descriptions of LBP processes and cases. However, purely quantitative evidence cannot fully describe the LBP. Qualitative information is necessary to convey a more intimate picture of the families affected by the LBP. Therefore, this study uses both quantitative and qualitative information to describe the LBP and the cases assigned to it.
At a more specific level, the LBP Study has three sets of objectives, each of which is addressed through a different research methodology. The first set of objectives for the study is to describe the flow of FIP cases through the LBP. This includes documenting the routes by which FIP cases enter and exit the LBP, describing the characteristics of all cases assigned to the LBP and of subsets of cases who pass through certain components of the program, and documenting the cash assistance and Food Stamps received by LBP cases during and immediately after their time in the LBP. To accomplish this set of objectives, we conducted descriptive quantitative analyses of data from DHS administrative files. These administrative files provide a relatively small amount of information on case characteristics and program outcomes for a relatively large number of LBP cases (more than 4,000).
The second set of objectives for the study is to describe the experiences of families that lose cash assistance under the LBP, focusing on the changes in status surrounding the loss of cash assistance, income sources and employment during the six-month period of no cash benefits, coping strategies during that period, and perceptions of the LBP. These objectives constitute the core of this study. A survey specially designed for this study (the LBP Survey) provides a relatively large amount of information on these topics for a relatively small number of families (137) whose cash assistance ended in their seventh month on the LBP. We conducted descriptive quantitative analyses of the LBP Survey data to develop a comprehensive picture of these LBP families.
The study's third and final set of objectives is to present the personal stories of a small, purposefully selected, group of LBP families about how they came to be assigned to the LBP, their interactions with program administrators, how their lives changed following the cessation of cash assistance, and how they are coping with those changes. Structured individual follow-up discussions with 12 families who participated in the LBP Survey provide the information necessary to achieve this set of objectives. We present this information in the form of a narrative analysis.
This report is organized around the three sets of objectives of the LBP Study and their associated research methodologies. The next chapter is an overview of welfare reform in Iowa, giving special attention to the LBP and PROMISE JOBS. It provides the programmatic context necessary to understand the findings from the three component analyses. Chapter III describes the characteristics of LBP cases and their flow through the program. This description is based on analyses of DHS program data. Chapter IV introduces the LBP Survey of 137 families whose cash assistance had ended in their seventh month on the LBP. Chapters V and VI present findings from descriptive empirical analyses of the survey data. The former describes the status of LBP cases before and after their cash assistance ended; the latter describes their programmatic experiences while on FIP and the LBP. Chapter VII gives the personal stories of a small number of families who were assigned to the LBP, describing their efforts to adapt to life without cash assistance. Chapter VIII summarizes the findings from the LBP Study and presents the conclusions that we have drawn from them.
1. As we discuss in more detail below, welfare recipients who are capable of working are required to develop plans for achieving self-sufficiency, including a date by which they will meet this goal; however, this date can be amended if life circumstances change.
2. As of November 1, 1996, this exemption was changed to a child under 3 months of age.
3. Because the LBP has major implications for the FIP case to which an assigned individual belongs, this report uses the phrase assigned to the LBP to refer to either an individual or the FIP case to which that individual belongs.
4. The reduced amount of assistance was computed using the FIP benefit schedule but excluding adults in the FIP case from the determination of the benefit amount. In other words, the reduced benefit amount was based only on the dependent children in the FIP case.