INTRODUCTION
What compels many to seek or continue to rely on public assistance is not a need for the ongoing support of monthly welfare payments, but rather for a far more limited form of financial support to address specific "emergency" needs. Welfare agencies can address these emergency needs through the use of financial assistance prior to welfare receipt, or coverage of employment-related expenses to assist in the transition to work. While monthly welfare checks have historically encouraged dependency, this form of limited and targeted financial assistance more directly promotes self-sufficiency. Welfare agencies that have made use of this type of targeted financial assistance are generally finding it a low-cost and effective way to provide minimal support yet reap a sizable benefit through reduced caseloads.
This section provides information on and addresses the following questions related to a financial emergency faced by welfare recipients:
Definition
A financial emergency caused by an unexpected shortage of funds can be both a barrier to employment and a trigger for a new, renewed, or continued reliance on public assistance. States have defined what constitutes a financial emergency largely on an individual basis and then tailored assistance accordingly. Assistance can be provided to (1) potential welfare recipients, to address emergency financial needs expressly to prevent the need for public assistance (frequently referred to as diversionary assistance or lump sum payment), or (2) to current welfare recipients, to address financial needs faced in the transition from welfare to work in order to assist the progress toward independence (such assistance is frequently referred to as work-related payments or loans).
For both forms of assistance, the financial emergency usually must be immediate and one-time (as opposed to ongoing) and generally cannot be the result of failure to accept an offer of employment or a job termination. States vary as to what expenses they cover. Some cover employment-related expenses only (commonly, uniforms and tools); others cover expenses for household (including rent and utilities), transportation (including car repairs), relocation, child care, other assistance programs, or, at the discretion of the individual case manager, other needs that, when addressed, will reduce the likelihood of welfare dependence.
The amount and form of financial assistance varies. The final amount is often negotiated between the individual and the caseworker, and the maximum allowable varies. In general, the amount provided to potential welfare recipients in diversionary assistance is greater than the amount provided to current recipients for work-related expenses.
Diversionary assistance is most commonly either a set amount (such as $3,000) or a multiple of what would otherwise be the monthly welfare grant. The assistance can be provided as cash, vouchers, or third-party payments. Recipients are often also eligible for other forms of transitional support (such as child care and Medicaid) but are generally required to repay the diversionary allowance if they later go on welfare.
Work-related payments vary in amount: they can be restricted to less than $100 or amount to more than $1,000. Often the work-related expense must occur within a set period of time after employment (within the first week to within the first three or four months). There is substantial variability as to how often a client can receive either a diversionary or a work-related payment; sometimes frequency is not specified, sometimes it is restricted to a single payment, and sometimes it is multiple payments, such as one per year.
| State/local estimates: | <5 to 20 percent |
| State/local estimates: | 47 percent |
There are no real estimates of the percentage of the welfare population faced with a financial emergency as a barrier to employment. Tables 10 and 11 report percentages of potential welfare recipients who have received diversionary assistance and the percentage of active recipients who availed themselves of work-related payments in one demonstration program, respectively. These figures reflect "take-up" rates: the percentage of the population that took advantage of either diversionary or work-related financial assistance. With diversionary assistance, there are several means of calculating take-up rates, and it is not always clear what method is used. In Utah, the rate calculation appears sound; it is based on the number of cases approved for diversionary assistance as a percentage of all approved TANF cases (which includes those approved for diversionary assistance) over a twelve-month period, averaged across the state.
The range in figures above is due primarily to two factors: (1) characteristics of the allowance, and (2) agency or caseworker discretion in promoting this option. There will be some variation in how many potential or current clients receive emergency financial assistance based on the program characteristics discussed above: the amount of the allowance, the types of financial needs that qualify, the conditions of assistance, and the extent of supplemental support. The more restrictive programs will naturally tend to have lower rates of use.
Agency or caseworker discretion and experience in offering the option of diversionary assistance will also affect the estimates. Clients are dependent upon caseworkers to become informed about this form of assistance. Because clients who accept it often become temporarily ineligible for TANF and must abide by conditions for repayment of the grant, their comfort in electing this option can be highly dependent upon how it is presented. If an agency or a caseworker actively promotes this option, the take-up rates are likely to be higher; if not, they will probably be quite low.(1)
Welfare Agency Approaches
The two critical program features of an agency's approach to addressing financial emergencies faced by potential or current clients are (1) determining client eligibility, and (2) deciding on the type of assistance to provide.
Client Identification
In general, states consider two issues when determining eligibility for emergency financial assistance: (1) an applicant's employment and welfare status, and (2) the nature of the financial emergency.
Many states--though not all--require that the person either be currently employed or have the promise of employment and in every other respect be eligible to receive welfare. In the case of diversionary assistance, there is some variation. In at least one state (Utah), only those applicants who are single parents or come from a two-parent family where one parent is incapacitated are eligible. In some jurisdictions in Maryland, applicants are not required to be eligible for TANF.
The nature of the financial emergency--and in particular its relationship to a client's employment status--affects a client's eligibility for assistance as well. In some cases, this relationship must be close and direct: the applicant must need financial assistance which, when provided, will directly facilitate the obtaining or maintaining of employment (such as transportation to a job interview). In other cases (truer of work-related expenses than diversionary assistance), the connection can be fairly loose, and the financial assistance is only indirectly related to employment (such as assistance with rent or child care costs).
Because the amount of diversionary assistance tends to be greater than the amount provided for employment-related expenses, screening of potential welfare recipients for diversionary grants or loans often entails a more rigorous determination of employment status or prospects for employment. Screening current welfare recipients for financial assistance (usually for work-related expenses) is less rigorous and focuses more on verification of the expense than screening of the client.
Program Strategies
Our review of programs to address emergency financial needs suggests that there are two important dimensions on which to distinguish programs, both of which have been previously discussed: (1) the point in time when the assistance is provided, and (2) whether assistance must be repaid (as it must in a loan program).
Applicant Versus Current Recipient Assistance. As discussed earlier, assistance can be provided either to divert applicants from needed sustained assistance (what we generally refer to as diversionary assistance) or to help clients move from welfare to work (assistance with work-related expenses). In our program descriptions at the end of this chapter, we categorize these two types of programs as either applicant or current recipient assistance, to indicate the point in time when assistance is provided. Because both are usually provided to address work-related expenses, the important dimension is really when the assistance is provided.
Repayment Required Versus No Repayment. Financial assistance is sometimes provided as a loan, with an obligation to repay (either in cash or occasionally through volunteer work), other times as a grant. Though the term grant suggests that clients do not have to repay it, repayment of diversionary assistance is often expected if certain agreed-upon conditions are broken (such as leaving a job without good cause). Acceptance of a diversionary grant also often entails an agreement not to apply for public assistance for a certain period of time, which shifts much of the burden of financial risk onto the client.
Program Outcomes
We were unable to find any evidence concerning the effectiveness of programs that provide work-related assistance to address the emergency financial needs of current welfare recipients in either improving employment outcomes or shortening the length of need for public assistance. Analysis from the Postemployment Services Demonstration, a federal demonstration designed to test the effect of enhanced case management services and payments for work-related emergencies on clients' employment outcomes (see further description under Program Models), will examine the correlation between the use of these supportive payments and employment-related outcomes, but information from this evaluation is not yet available.
The only evidence available on the effectiveness of diversionary financial assistance provided to welfare applicants pertains to the rates of subsequent application for welfare support. Reported percentages of those who were provided diversionary assistance and did not subsequently apply for public assistance give an indication of the success of this approach in reducing reliance on welfare. The assumption is that these clients have become gainfully employed. One note of caution with these figures, however, is that the period of time used to measure the return to welfare is often unclear. Clearly, a high percentage of those who have not applied for welfare after a long period of time is more encouraging than a high percentage that occurs only a few months after receipt of diversionary assistance. There is no information on employment outcomes for this group, however, so while we know something about the rate of success in diverting individuals from welfare, we do not know whether, with assistance, they are more likely to find employment, find employment sooner, or find employment at a higher wage, for example.
Effect of Diversionary Grant Assistance on WELFARE RECEIPT
Program Costs
Financial assistance provided to welfare applicants to discourage sustained reliance on welfare is often cost-effective. Because most welfare agencies exchange diversionary assistance for a period of exclusion from welfare, agencies can recover funds spent on diversion. Even the administrative costs of program operation can be quickly recovered if clients stay off public assistance long enough for the amount they would have received in monthly TANF payments to exceed the amount of the diversionary payment. One pilot site in Iowa has projected savings of anywhere from 18 to 45 percent, based on a comparison of overall expenditures for diversion to potential expenditures if clients had become welfare recipients.
Operations are somewhat different in Hamilton County, Ohio, where the welfare agency has contracted out for diversionary assistance. In this case, the welfare agency makes a direct payment per client for each month (up to three) that a client has been successfully diverted (further details are provided under Program Models). Under this arrangement, both agencies share the desire to increase the length of time that clients do not need public assistance. However, under these circumstances the clients themselves do not incur any of the financial risk--they are neither obligated to pay back the loan nor precluded from receiving welfare for a certain period of time. In this case, it will take longer before the welfare agency recovers the money it spends to divert a client from public assistance (though none of the money will be recovered if the client applies for assistance within a short period of time).
Under loan programs, the bulk of the financial risk rests with clients and, in those cases where there is an external lending agency, with these organizations. Under this type of program, welfare agencies incur minimal administrative costs and face little financial risk.
Data from the Postemployment Services Demonstration provide some information on average costs per client spent on work-related payments to help clients address needs faced in the transition from welfare to work. The average work expense payments per client ranged from just over $100 to about $250 (Haimson and Hershey 1997).(5) If findings from an evaluation of this program determine that this support is related to improved employment outcomes, these payments are likely to be cost-effective.
Program Implementation
Our synthesis of various agency approaches to provision of emergency financial assistance suggests very few issues or obstacles for agencies to address in implementing emergency financial services, in the form either of diversionary assistance to welfare applicants or of work-related payments to current welfare recipients. Implementation of programs that provide work-related payments to current welfare recipients appears quite straightforward. Implementation of programs to divert applicants from a sustained need for welfare assistance should focus on issues related to program staff.
Program Staff
If program implementation is to be successful, agencies must devote resources to staff training. The extent to which clients opt to receive diversionary assistance appears to be largely a function of whether the agency promotes use of the policy and whether individual caseworkers are comfortable and skilled in promoting it. Agencies that have been successful at diverting welfare applicants from ongoing assistance have provided staff training on the use of assistance, determination of client eligibility, and how the program fits into the agency's overall approach to welfare reform. In the absence of focused staff training in this area, caseworkers are unlikely to inform clients of this option or explain its benefits and requirements carefully, and clients in turn are unlikely to choose this one-time assistance in place of ongoing welfare dependency.
The following programs are presented alphabetically by state. The reader can determine the relevance of a program by noting its primary program strategy and geographic location and then refer to the brief descriptions and contact information on the subsequent pages. We have used primary objective(s) to assign program strategies, though a program may have many objectives.
Maryland Department of Human Resources
Welfare Avoidance Grants (WAG) Program
Baltimore, Maryland
Program strategy: Welfare applicants; no repayment
Location: Statewide
State of Montana Department of Public Health and Human Services
Job Supplement Program
Helena, Montana
Program strategy: Welfare applicants; no repayment
Location: Statewide
Hamilton County Department of Social Services
Accountability and Credibility Together (ACT) program
Hamilton County, Ohio
Program strategy: Welfare applicants; no repayment
Location: One urban county
Virginia Department of Social Services
Employment-related expenses of VIEW participants
Richmond, Virginia
Program strategy: Current welfare recipients; no repayment
Location: Statewide
Wisconsin Department of Workforce Development
Job Access Loans
Madison, Wisconsin
Program strategy: Welfare applicants; repayment
Location: Statewide
Postemployment Services Demonstration
Riverside, California; Chicago, Illinois; Portland, Oregon; San Antonio, Texas
Program strategy: Current welfare recipients; no repayment
Location: Four urban sites
Program Name/Contact
| Maryland Department of
Human Resources Welfare Avoidance Grants
Family Investment Program Baltimore, Maryland |
Mark Millspaugh, Program Analyst
Maryland Department of Human Resources 410-767-8558 |
| Program strategy: Welfare applicants;
no repayment
Location: Statewide |
Brief Program Description
The Maryland Department of Human Resources has designed a diversionary assistance component, Welfare Avoidance Grants (WAGs), which provides a one-time cash payment to meet an immediate need related to employment or family self-sufficiency. In calendar year 1997, WAGs were issued to 643 people (or about 1 percent of the state's caseload), and only 5.4 percent required ongoing cash assistance afterward.
The WAG is cash assistance to a family with children for the family's immediate and limited needs. The program is offered to those who are employed or are in the process of getting a job and who may qualify for only a small cash benefit. The total amount of the grant cannot exceed three times the maximum monthly amount allowable for the number of individuals in the assistance unit, or three months' worth of Temporary Cash Assistance. If the local department determines the situation to be a crisis, then the WAG may be the equivalent of up to 12 months of Temporary Cash Assistance (TCA), the Maryland TANF program.
In Maryland, WAG programs are designed locally. Some local departments of social services have arrangements with county governments for customers to use WAG funds to purchase used automobiles from the county fleet. Others are working with day care providers or housing agencies to assist customers in times of crisis. As a result of the department's intent to provide maximum local flexibility, the WAG program has no statewide coordination between agencies.
Evaluation
The University of Maryland's School of Social Work is conducting a three-year evaluation of the Family Investment Program, scheduled to begin in 1998. The evaluation is designed to document the assessment process and to measure its impacts. All 24 jurisdictions in Maryland will be included.
Findings
No findings are available yet from this evaluation.
Program Name/Contact
| Montana Department of
Public Health and Human Services
Job Supplement Program Helena, Montana |
Jan Paulsen
Department of Public Health and Human Services 406-444-4139 |
| Program strategy: Welfare applicants;
no repayment
Location: Statewide |
Brief Program Description
The State of Montana's Department of Public Health and Human Services has designed the Job Supplement Program (JSP) to divert TANF-eligible people from dependence on public assistance. As of October 1997, 3,944 people received JSP assistance (approximately 17 percent of the caseload in 1997).
The JSP provides recipients with various forms of support other than cash on a monthly basis in order to divert them from welfare dependency. The financial assistance consists of up to $3,000 for an employment-related expense. Other forms of support provided to those diverted from ongoing public assistance include (1) Child Support Enforcement Division (CSED) assistance; (2) up to $200 in child care allowance per child (paid by voucher); (3) a $200 work expense disregard; (4) a 25 percent disregard on remaining income; (6) exclusion of one vehicle of unlimited value; (5) participation in an HMO where available or, where not available, provision of basic medical coverage; (6) full Medicaid coverage for children and pregnant women; (7) extended Medicaid coverage; (8) extended child care assistance; (9) referrals to appropriate community resources; (10) information about and assistance in applying for the Earned Income Tax Credit; and (11) Food Stamps.
Evaluation
An evaluation is currently being conducted.
Findings
No findings are available yet from this evaluation.
Program Name/Contact
| Hamilton County
Department of Human Services
Accountability and Credibility Together (ACT) Program Hamilton County, Ohio |
Lora Jollis
Welfare Reform Executive 513-946-1238 |
| Program strategy: Welfare applicants;
no repayment
Location: One urban county |
Brief Program Description
The Hamilton County Department of Human Services (DHS) has contracted with a group of local service providers to dispense diversionary assistance to potential welfare recipients through the Accountability and Credibility Together (ACT) program.
DHS caseworkers make initial referrals to ACT, which then further screens clients for program eligibility. Once clients are accepted into the program, ACT staff provide whatever services they determine are necessary to help the client stay off welfare, for example, referrals for substance abuse treatment and help in locating means of transportation.
DHS pays ACT up to $900 for each client successfully diverted from public assistance. ACT is paid $300 if a family has not applied for TANF after 30 days, an additional $300 if the family has not applied for TANF after 60 days, and a final $300 if the family has not applied for TANF after 90 days. The program has been in operation for several months and currently serves 22 clients.
Evaluation
An evaluation of this program is planned.
Program Name/Contact
| Virginia Department of
Social Services
Employment-related expenses of VIEW Participants Richmond, Virginia |
Marsha Sharpe
TANF and Employment Services Manager 804-692-1730 |
| Program strategy: Current welfare
recipients; no repayment
Location: Statewide |
Brief Program Description
The Virginia Department of Social Services offers financial assistance to cover both program participation and work-related expenses to participants in its VIEW program (Virginia's Initiative for Employment Not Work). Expenses are covered to help current welfare recipients continue participating in a VIEW component or to accept or maintain employment. There are slight differences in what expenses are covered, depending upon a client's employment status. Whether for program participation or work-related needs, however, covered expenses include equipment and tools, uniforms and other clothing, professional fees and licensing costs, and car repairs. Case workers have discretion to extend financial assistance to other areas of need. There is no maximum amount, whether expenses covered are for program participation or for work-related needs.
Local agencies individually determine their availability of funds and local resources to cover these expenses. As a result, each local agency in the state determines additional policy and procedures for approving expenses.
Evaluation
The Virginia Department of Social Services, in conjunction with Virginia Tech and Mathematica Policy Research, Inc., is currently evaluating the VIEW program. The evaluation will not isolate the independent effects of these forms of financial assistance, however.
| Wisconsin Department of
Workforce Development
Job Access Loans Madison, Wisconsin |
Leonor Rosas DeLeon
Bureau of Welfare Initiatives Division of Economic Support 608-267-9022 |
| Program strategy: Welfare applicants;
repayment
Location: Statewide |
Brief Program Description
The State of Wisconsin Department of Workforce Development has designed the Job Access Loans (JAL) program to meet expenses related to obtaining or maintaining employment. JALs are designed for a person needing assistance because a discrete financial crisis cannot be resolved with personal resources and other funding sources are either unavailable or exhausted. As of the end of February 1998, there were 235 current participants statewide.
To be eligible for the program, a person must meet nonfinancial and financial eligibility conditions, need the loan to address an immediate and discrete financial crisis, need the loan to obtain or continue employment, not be in default with respect to the repayment of any other financial obligations, and not be a migrant worker. In addition, the applicant must be able to verify that he or she cannot reasonably obtain payment for the specific items through any other source. All TANF-eligible individuals will be eligible for JALs except minor teen parents, unless they will turn 18 within two months and the loan is imperative for obtaining or maintaining employment.
Approved JAL uses include (1) car loans; (2) fees for obtaining a driver's license; (3) clothing/uniforms for work; (4) rent or security deposits, to prevent eviction and enable the person to obtain or maintain employment; and (5) moving expenses (only as they relate to obtaining or maintaining employment). JALs may be extended to a maximum credit line of up to $1,600, based on need, for a 12-month period. JALs typically are to be repaid within a 12-month period, which can be extended up to a maximum of 24 months.
Evaluation
Evaluation of the JAL program is scheduled to occur as a part of the general TANF program evaluation.
Program Name/Contact
| Postemployment Services
Demonstration
Riverside, California; Chicago, Illinois; Portland, Oregon; San Antonio, Texas |
Anu Rangarajan
Project Director, Mathematica Policy Research, Inc. (MPR) 609-936-2765 |
| Program strategy: Current welfare
recipients; no repayment
Location: Four urban sites |
Brief Program Description
The Postemployment Services Demonstration (PESD) was initiated by the Administration for Children and Families of the U.S. Department of Health and Human Services in 1993 in the welfare agencies of four sites around the country: Riverside, California; Chicago, Illinois; Portland, Oregon; and San Antonio, Texas. The demonstration's purpose was to test ways of promoting job retention among welfare recipients and to collect systematic information on employment paths out of welfare. Services included (1) extended case management for employed welfare recipients, which was flexible and nonbureaucratic and included reemployment services; and (2) support service payments to cover temporary employment-related emergencies.
Some form of financial assistance under the JOBS program was already provided to welfare clients in each of the four sites. PESD expanded this assistance by increasing the amount provided and/or allowing greater flexibility in coverage. The payments for work-related expenses were authorized by case managers and designed to cover temporary expenses associated with job search, employment, and other emergencies that can affect employment. The assistance was expected to prevent small difficulties from leading to job loss. The amounts provided, expenses covered, and periods of eligibility ranged across the four sites. In Chicago, for example, regular JOBS participants could receive up to $400 in employment expenses, but this had to be within the first 30 days after the start of employment. PESD participants could be reimbursed for up to $1,000 of employment-related expenses per year, which could cover not only strict work-related expenses but also rent, phone and utility bills, and moving expenses, and payments could be issued at any time. In San Antonio, in contrast, JOBS participants were eligible for a single payment of no more than $65, with only one such payment allowable per year. PESD participants could receive several $65 payments for uniforms, clothing, or tools in a single year, and those who lost their jobs could also receive a small daily transportation allowance while in job search, education, or training.
Evaluation
MPR is currently evaluating the PESD program. This study uses a random assignment design to examine the combined effects of extended case management and enhanced financial support payments on employment and welfare over a two-year period after job start. The evaluation will not examine the independent effect of work-related payments, since the design was not set up to examine the effects of financial payments in isolation. However, the study will examine simple correlations between the use of supportive service payments and employment-related outcomes.
Findings
Findings will be available in the summer of 1998.
Further information on issues related to substance abuse is available in the following
Documents
Social Research Institute at the University of Utah. "Evaluation of the Utah Single Parent Employment Demonstration Program." Salt Lake City, UT: Social Research Institute, 1997.
This document provides information on the implementation and impacts of the Single Parent Employment Demonstration in Utah, the first state to implement a diversion program. `
1. Take-up rates are reportedly higher than the 20 percent statewide average in Utah in those agencies that have offered this type of assistance longer and have more caseworker experience.
2. Data are based on a personal communication with staff from the Maryland Department of Human Resources, April 1998.
3. Data are based on an internal document from the Virginia Department of Social Services.
4. Data are based on a personal communication with staff from the Utah Department of Workforce Services, April 1998.
5. These data are for three of the four demonstration sites.
6. For an explanation of how programs were selected, please refer to the discussion included in the Introduction under the paragraph heading "Program Models."