Welfare

A welfare system with integrity for taxpayers and recipients alike, structured to transition people quickly and effectively from assistance to gainful employment.

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THE CONTEXT

Few issues are more emotional than welfare. Everyone seems to know someone — or have a story about someone — who is taking advantage of “the system.”

The young unmarried mother who brags about getting more money for having another baby. The boyfriend who sits at home collecting unemployment, while the businessman down the street has jobs he can’t fill. The family that moves here from another state or country and immediately signs up for all kinds of assistance. The employee who doesn’t want a raise or more hours, because she will lose more in welfare benefits than she will get in higher wages.

It almost doesn’t matter anymore if many of these stories are only partially true or the abuses are exaggerated. At a time when many Maine families and small businesses are struggling just to get by, stories of those who are receiving benefits at taxpayer expense, yet do not work or will not work, only magnify the anger and resentment of – as President Reagan once put it – those “pulling the wagon” towards those “riding in the wagon.”

Wherever you have government programs that involve large sums of money, from welfare to defense contracting, there will be abuses. But that doesn’t make it acceptable. Government at all levels has a sacred trust to use our hard earned tax dollars fairly, efficiently and effectively, and we must reform our welfare system in Maine to ensure that such basic criteria are met.

There is legitimate concern that the Department of Health and Human Services (DHHS) in recent years has lost its proper focus on transitioning able-bodied people off assistance so they can rejoin the workforce. Between 2002-2008 when Maine experienced only moderate population growth and there was no national recession, the number of families enrolled in the food supplement program increased by almost 50% to 119,000 families, and the number of individuals enrolled in Medicaid/MaineCare increased almost 25% to 344,000. Even more troubling is that federal statistics for the most recent available year (2008) – statistics not clearly reported in DHHS’s own “Reference Book” – show that workforce participation rates for Maine families receiving TANF are less than one-fourth the similar rates achieved by our neighboring states of Massachusetts and New Hampshire and only one-third the national average. Our lagging performance does not suggest that Maine has a reputation for encouraging work among welfare recipients.

In Maine, like in all states, we share our streets, stores, schools, places of worship, hospitals and homes with people of all walks of life, all stages of life, and all levels of ability and health – and at any one time some proportion of Maine families, especially some single mothers and children, will be in legitimate and dire need of economic assistance – welfare.1

Difficult economic times – like the one we are currently enduring – push many more unwilling and potentially industrious families into real poverty, at least for a short period of time. Some Maine towns have reported that the number of people seeking food and rent assistance has doubled in the past year. This is why we must find ways to reduce the cost of living and doing business in Maine, so that more investment and jobs flow into our state. Our failure to do so will only worsen the current welfare situation. Many of these families seeking assistance have young children and some of the parents have serious disabilities. Many are single parent households. Real involuntary destitution in our community diminishes each and every one of us. And we are each part of Maine.

We decided long ago as a nation and as a state that we should extend decent and modest help to our fellow citizens in temporary economic distress, and also to those who – for reasons beyond their control such as childhood, advanced age, physical or mental disability or serious illness – cannot fully fend for themselves. That is the basis of all legitimate programs of welfare – and the common decency of our state supports this principle.

Some individuals will inevitably “take advantage” of our welfare system, by using false documentation, by under-reporting income, by seeking to be paid for work “under the table”, by hiding assets, or even by disguising their true family or living arrangements. This fraud and abuse – and rumors of such abuse – create a social harm much greater than mere economic waste. It fosters distrust, suspicion and resentment among taxpayers and families who play by the rules, which then undermines our common notions of both decency and respect. This abuse violates common fairness – not just fairness to legitimate recipients of welfare, but fairness to the taxpayers who – let’s face it – must pay for all these programs.

Ever since the welfare reforms of the late 1990’s, the primary program for aid to families with dependent children – now called Temporary Assistance for Needy Families (TANF) – has imposed work requirements on adult recipients. These conditions have been viewed widely as effective in moving people from welfare to work. However, other important federally mandated welfare programs – such as the food stamp program known as SNAP, and the programs for subsidizing public housing – do not currently require recipients to look for work or provide volunteer hours. There is legitimate concern that the availability of government assistance in the absence of strong work requirements can produce a culture of dependency lasting, in some cases, for more than a generation.

Another problem with today’s system is that current welfare rules (federal and state) effectively often impose strong economic penalties on people who are trying to transition from welfare to work or maintain two parent households. Those receiving assistance may fear that childcare, transportation and health care benefits can be lost suddenly (the so called “cliff effect”) when working income rises – long before the working person or family reaches a sustainable income. For instance, and simplifying somewhat, when the effects of complicated interlocking benefits programs and income tax credits are considered together, a single mother of two children gains almost zero economic benefit from increasing her working hours from 30 to 40 per week. In addition, many benefits are put at risk if both (biological or legal) parents of the dependent children live under one roof. These disincentives to work and to keep viable families together violate common sense.

A welfare policy based on common decency and common sense and common fairness must dispel some common misconceptions and recognize some common facts. Generally, only a very small percentage of TANF recipients in Maine recently have come from another state – and, it turns out, many of those people are Mainers returning home. The Supreme Court has held that states may not condition welfare benefits on newly arrived applicants satisfying a duration of stay.

A typical family receiving TANF is led by a single mother with one or two children. (This situation describes more than 60% of TANF cases.) About 16% of our children in Maine (about 40,000 children), live below the federal poverty line (which the federal government sets at $1,467 per month for a family of three), and about 17% of our children have disabilities. The maximum monthly TANF payment to a family of three is $485, and the maximum monthly food stamp allowance for the same family is about $490. The total maximum TANF and SNAP (”food stamps”) assistance for that family of three is thus about $975 per month, which is about 2/3 of the federal poverty level.

Families receiving TANF and SNAP often also receive other forms of assistance – for instance, MaineCare, federal subsidies for public housing and earned income tax credits – which together can approach the levels of total income earned by some lower income working families who neither receive nor apply for government assistance. It is therefore important that welfare be structured to encourage recipients to work, seek work or volunteer for a significant amount of their time each week. This isn’t just a matter of economics, but of self-respect and common fairness.

But the state’s welfare burden is large and growing. In the current fiscal year, the state is expected to manage annual Medicaid/MaineCare expenditures of close to $2.8 billion and TANF and food stamps expenditures of close to $150 million. After accounting for the federal portion of these expenditures, more than $1 billion must come from Maine taxpayers.

THE OBJECTIVES

• The best welfare program is a good job. Employing more people for more hours at higher paying jobs will create more family income and lift more people above the poverty line.
• The first priority of DHHS should be to transition people to work.
• Our welfare system should reach the truly needy, inspire those able to work to find and keep jobs as soon as possible, and provide economic incentives to transition from welfare to work.
• Our welfare system should be transparent, easy to understand, and administered to keep both administrative costs and incidence of fraud and abuse low. The number of outside service providers (currently numbering in the thousands) should be reduced to provide more efficient and cost-effective delivery and to allow better monitoring of the program and cost savings in administration.
• A welfare system should be creative and humane in treating the causes that perpetuate poverty. Attention should be paid to early childhood development programs, health education for teenagers, more effective initiatives to treat substance abuse and behavioral health issues, continuing adult education, and child care and other assistance to make it easier for parents to work or pursue the study of new skills.

GUIDING PRINCIPLES

Common Decency: Help the temporarily distressed and the truly disadvantaged or disabled, with a focus on the very young, the very old and the very ill.

Common Sense: Promote a program of tiered reductions in welfare benefits to ensure that recipients are always better off when they work and contribute more to the community. A program that provides economic incentive to increase levels of work – and avoids a “cliff effect” (or drop in benefits) once a certain income level is reached – will result in fewer long-term recipients, better social health, and thus lower taxes for all.

Common Fairness: Ensure that only those eligible by law receive benefits and that those who can work are both given the opportunity – and required – to do so. Ensure that employers and employees who play by the rules by declaring their income and paying their taxes will not be forced to compete against those who work under the table, conceal income or disguise their true circumstances. This will create a level playing field and reduce the natural resentment and harm to the civic culture and social fabric, which traditionally has been strong in Maine and which we should continue to foster.

Common Opportunity: Continue programs that provide childcare and transportation subsidies and health care assistance to allow parents to attend vocational and community colleges or acquire on-site training for permanent and well-paying jobs. Coordinate among DHHS, the Department of Labor and local employers, towns, and the community college system.

Common Facts: Seek to keep the legitimate public debate about welfare policy based on facts, not emotion. We must view the welfare issue as part of the larger picture – not as a distraction from the larger problems we all face together.

THE MEANS TO THESE ENDS

As Governor, I will seek reform of the welfare system in the following ways:

Tighten scrutiny and investigate fraud and abuse. We must ensure that there are sufficient numbers of investigators in each regional DHHS office to verify eligibility, available assets, family situation, and income levels of recipients. Mainers need to know that if they follow the rules the programs are there to help them, and if they don’t follow the rules, there will be consequences.

Strengthen work requirement. Maine should impose more effective job search and employment activity requirements by applicants (including community service) as a threshold condition for receiving assistance. Maine should look for guidance to the programs of states with much higher work participation rates.

Verify residency. Government assistance supported by Maine taxpayers should only go to legitimate residents of Maine who do not have a domicile in another state, and Maine welfare officials should ensure this is the case.

Promote a tiered approach to ensure people are better off when they work. We need to ensure that people can go back to work without moving backwards financially. As earned income goes up, welfare benefits should be reduced to zero gradually – not suddenly and drastically as so often happens in the current system.

Access to essential health benefits. We must manage the implementation of federal health care reform (the Affordable Care Act) such that recipients of MaineCare and their children continue to have access to essential health care services as parents make their transition into the workforce, rather than threatening sudden loss of coverage once earned income reaches a certain level.

Five year limit to TANF. All able-bodied adults should be limited to receiving TANF benefits for five years during their lifetime.

Level the playing field for Maine residents. Under current state law, newcomers to Maine who have violated conditions of government assistance (for instance, illegal drug use in public housing) can receive benefits that may exceed those that a similar Maine resident would receive. This “see no evil” approach violates common sense and must be changed in the interest of common fairness to Maine taxpayers.

Give DHHS a performance-based budget. DHHS currently must manage claims from around 7,000 contract care providers in the welfare system. It is routinely criticized for poor performance, yet we tie its hands with very complex budgets and thousands of pages of rules. We need to set clear performance standards for DHHS, direct it to move toward a more efficient structure of supervision, give it greater freedom to act, and reward the agency financially when it meets our goals of independence, health and productivity.

Make DHHS accountable to the taxpayers. Currently DHHS does a poor job of making available to interested citizens the data on its programs that allow informed and objective debate. DHHS should be required to prepare an annual report addressed to taxpayers detailing its success in moving people from assistance to work, and comparing Maine’s performance with the performance of other states based on data provided by law to the federal government.