Welfare-to-Work Block Grants: Are They Working?

Executive Summary

The combination of the booming economy and the strict new welfare law passed in 1996 has led to dramatic welfare caseload declines – nationally, welfare rolls have dropped by more than one-third since January 1997. With these precipitous declines in the welfare rolls, the most capable and work-ready recipients have left welfare for the workforce, and many of those remaining on the rolls and facing time limits are the so-called “hard-to-serve” who face serious barriers to work: illiteracy, mental or physical disabilities, drug problems, or a lack of work experience. Recipients with such multiple barriers to work will not likely make easy and lasting transitions to work without supports. To target resources to this challenging population, and to the cities in which they tend to live, Congress created a $3 billion “Welfare to Work” grants program in 1997.

This paper reviews the early implementation and effects of the Welfare to Work (WTW) program in four cities: Chicago, Indianapolis, Philadelphia, and San Francisco. This review is particularly timely in light of the proposed reauthorization of WTW, which is now pending in Congress. The Clinton Administration has proposed an additional $1 billion for the program in FY 2000 as well as several important modifications.

The review focuses on the innovations and challenges that have arisen locally thus far. It also offers policy recommendations for the upcoming reauthorization and tackles the broader question of which system – welfare or workforce – is best suited to assist the hard-to-serve population.

Key Findings

The four cities paint an uneven picture of the implementation of the Welfare to Work grant program. Two of the four cities – Chicago and Philadelphia – are now enrolling substantial numbers of participants in their programs and placing significant numbers of those participants in jobs. The start-up phase in the other two locales – San Francisco and Indianapolis – has been marked by problems. In both of these cases, WTW enrollments have been well below the levels anticipated, and program contractors have had too few enrollees to assess the effectiveness of their program models or make refinements.


The WTW program is a fertile ground for substantial innovation because its statutory guidelines provide greater flexibility in design and operations than previous job training/job placement programs. The four cities studied took advantage of this flexibility in the following ways and pursued the following strategies:

  • Integrated Service Delivery: Integrated service delivery is a critical goal for the WTW program, because the program effectively operates in the interstices of two huge systems: welfare and workforce. The success of WTW hinges largely on how well these systems can work together to deliver a set of seamless and comprehensive services to hard- to-serve welfare recipients. The first year of WTW operations yielded mixed results but widespread interest in strategies to facilitate cross-system collaboration and eliminate bureaucratic barriers to efficient, uniform and streamlined service delivery. In particular, Philadelphia standardized its delivery and package of services offered by its seven regional service centers. Each of these regional centers provides a full spectrum of employment services, as well as specially designed programs for homeless, teen parent and other “special needs” TANF recipients. Chicago also incorporated an integrated approach to services, encouraging and sometimes mandating WTW providers to connect TANF recipients to a wide range of partners including employers, substance abuse specialists, housing providers, mental health providers, and other supportive service organizations.
  • Marketing and Outreach: Many cities are experiencing difficulties in coordinating welfare referrals to WTW programs. In response, a number of cities studies are pursuing aggressive efforts to identify and attract eligible program participants. The city of Philadelphia has undertaken a multi-media advertising campaign -including print, broadcast, and direct mailing -targeted at both TANF recipients (encouraging them to participate in Greater Philadelphia Works) and employers (encouraging them to hire TANF recipients). Staff in Indianapolis regularly recruit participants by visiting community meetings, recreation facilities, liquor stores, check-cashing facilities and canvassing door-to-door in public and assisted housing developments and other low-income neighborhoods.
  • Post-Employment Services: The most consistently-mentioned innovation in the four cities studied is the inclusion of some post-employment services for the purposes of job retention, second and third job placement, and, albeit to a much lesser extent, post-employment supplemental education and training services. These services have not been widely offered by job training providers, and WTW program officials and contractors are clearly still developing their service delivery approaches, not without difficulty. Contacting participants after they had taken jobs is a new activity for most case managers and many are not making it their top priority. Likewise, some participants do not appreciate the potential benefits of post-employment services and prefer to be free of their case manager’s continued intervention.
  • Programs for Non-Custodial Parents: The WTW program is the first large-scale federal program to make non-custodial parents a key targeting priority serving TANF families. All of the sites are struggling to recruit non-custodial parents into their programs. The most common obstacle to attracting fathers into these programs, program officials noted, are large arrears in child support obligations, which if repaid would offset state welfare expenditures rather than increase the disposable income of the child being supported and the custodial parent. In addition, program officials indicate that they and their contractors have little experience in recruiting this population. In Indianapolis, several agencies intend to work with inmates before they are released and then to work closely with the parole offices once ex-offenders are released.
  • Wage-Based Community Service/Supported Work Jobs: Three of the four sites had introduced innovative wage-based transitional work or community service employment programs. These programs focus on the least-job ready clients and provide them an opportunity to work for wages in a transitional setting as preparation for mainstream employment. For instance, San Francisco’s wage-based Community Service pilot gives participants work experience along with training, mentoring and job market preparation that will allow them to find unsubsidized jobs. Wages are set at the minimum wage and are paid from a combination of sources: diversion of what would otherwise be the participant’s monthly TANF grants, and an additional wage subsidy covered by San Francisco’s WTW competitive grant. Participants are eligible for the federal Earned Income Tax Credit.


The challenge of successfully implementing WTW is immense: quickly forging unprecedented levels of cooperation between two large systems around one small program, when each of those systems is independently undergoing large-scale change.

  • Lack of Inter-System Coordination: The most frequently cited administrative challenge was coordinating relationships and procedures between welfare and workforce offices. The coordination requires an inter-system collaboration between the welfare and workforce systems, as well as coordination between two different levels of government, as welfare systems are typically administered by the state, and WTW programs administered by city agencies and Private Industry Councils or PICs. This problem was most evident in the lack of welfare office referrals to WTW programs.
  • Low Referrals and Enrollment: In addition to coordination problems, several factors have hindered referrals to and enrollment in WTW programs. TANF caseworkers often have a difficult time staying abreast of the large array of different program options. Other factors include narrow eligibility rules for enrollment and sharp reductions in caseloads resulting in smaller pools of eligible participants. Perhaps most importantly, in some locales, participation in WTW programs does not count towards meeting the state’s TANF work participation requirements, while TANF-administered programs often do. In these instances, participation in a WTW program could leave the recipient without a TANF benefit check.

  • Burdensome Reporting Requirements: The other near universal concern expressed by WTW contractors were the heavy and changing reporting requirements for the program. These reporting requirements are made more cumbersome by the need for interaction between welfare and workforce agencies. DOL has been attentive to these concerns and has already modified certain reporting requirements.
  • Duplicative Program Efforts: In many cases, the same contractors were providing the same services to both the TANF program and to the local WTW program, rather than honing programs and services to the needs of the hardest-to-serve cases. Such competition for referrals can have negative consequences, resulting in disincentives for providers to make appropriate referrals to each other based on “fit” of service and customer need. Without an adequate client base, it is extremely difficult for administrators and contractors to maintain adequate staffing levels, build and preserve strong relationships with employers, and provide quality services to customers. It was clear that case managers had difficulty keeping abreast of all program offerings available under both TANF and WTW, resulting in haphazard referrals to whichever program the caseworker happened to be most familiar with.
  • Other Programmatic Challenges: These include: an uneven pace of implementation in each city, affecting the overall design and effectiveness of the WTW program; a reluctance on the part of administrators and contractors to accept the work-first paradigm; severe client barriers to work; a lack of child care for newly working families, especially non-traditional childcare (such as off-hour care and care for sick children); and continued client denial about the implication of time limits and the potential loss of benefits.

Implications for Reauthorization

The Clinton Administration has proposed reauthorization of the Welfare to Work Program in FY 2000, with an additional $1 billion in funding. Congressman Ben Cardin (D-MD) and Senator Daniel Akaka (D-HI) have introduced legislation that largely embodies the Administration’s proposals. The reauthorization proposes three important changes to the existing program that would affect program administration in large cities.

Substantial Relaxation of Eligibility: In response to state and local officials, the Cardin-Akaka legislation proposes to simplify and expand the definition of the least job ready welfare recipients. Program administrators unanimously supported these proposals, though some felt the eligibility requirements should be further streamlined to make more recipients eligible for WTW services and to ease administrative burden.

    By all accounts, a relaxation of eligibility requirements is necessary to allow the program to enroll larger numbers of hard-to-serve welfare recipients. The specific provisions included in the Clinton Administration proposals appear to be adequate to accomplish this purpose. However, to ease administrative burdens, policy makers may want to consider further expanding eligibility to include any recipients who meet the long-term welfare receipt criteria. It is not likely that this would substantially increase the numbers of recipients who would qualify, but would make it much easier for program administrators to verify eligibility.

    Greater Focus on Serving Non-Custodial Parents. The Cardin-Akaka reauthorization proposal includes several provisions to target additional resources to non-custodial parents. First, the proposal requires states to spend 20 percent of their formula allocations on non-custodial parents. There are also proposed changes to the eligibility criteria for non-custodial parents.

    While all the sites visited were taking some steps to serve non-custodial parents, all sites were struggling to recruit eligible participants. Program officials support efforts to serve this population, but uniformly felt that it would be extremely difficult to utilize 20 percent of their funds for this purpose, even with the relaxed eligibility requirements.

      The limited experience that states and localities have had with non-custodial parents demonstrate that they are not ready to expand funding for such programs to 20 percent. While states will likely need further incentives or directives to better serve non-custodial parents, policymakers should consider a more reasonable requirement of 5 percent or 10 percent of formula funds. Alternately, the legislation could simply encourage localities to spend more money on non-custodial parents without specifying a percentage of funding for that purpose. For instance, incentive awards could be made to localities that reach certain benchmarks of enrollment and placement of single men.

      Stand-Alone Education and Training: The Cardin-Akaka reauthorization proposal also includes a provision that would make pre-employment basic education, vocational and job skills training an eligible use of WTW funds. This proposal would substantially expand the range of activities that are allowed to be provided to recipients before a recipient is working.

      Program administrators- reactions to this proposal varied dramatically and covered the full range from strong support to strong opposition. Supporters emphasized the critical need for greater flexibility in providing services to a target population with serious education and skill deficits. Opponents believed that this flexibility would undermine the work-first paradigm that they were struggling to get contractors to implement.

        Recommendation: Some clients would clearly benefit from pre-employment education and training and WTW programs should be in a position to respond. One possibility for avoiding too great a reliance on pre-employment education and training efforts that are not tied to work would be to limit the percentage of WTW funding that could be spent on these activities.

        Other Recommendations for Reauthorization: Two important items are not included in the Cardin-Akaka reauthorization bill: spending time limits and oversight/evaluation. First, under current law, cities must spend down their WTW funds within three-years of receiving the money. Otherwise, the funds must be returned to the Treasury. Given problems with low enrollments and slow start-ups, it appears that many cities will not be able to spend their allocated funds within the time period specified by the law.

          Recommendation: It is crucial to extend the three-year deadline for spending down WTW funds, at least for those cities that are making some measurable progress in achieving the program goals.

          The second issue that is not addressed in the reauthorization bill is the critical oversight and technical assistance roles of the Department of Labor. None of the existing program reviews, evaluations and technical assistance activities are providing the kind of widely available, real-time information sharing and assistance that program operators need to help shape their programs in the immediate term. Moreover, the Department of Labor has limited resources to have staff do site visits.

            Recommendation: Any reauthorization measure enacted by Congress should include additional resources for the Department of Labor to provide greater oversight and technical assistance to its local formula grantees. These resources would substantially enhance the quality of programming being carried out at the local level.

            Longer-Term Issues for Consideration

            The welfare-to-work program offers important lessons about the systems that serve the employment needs of low-income workers. In this fast-changing policy environment, decision-makers should take time to critically reevaluate the respective roles of the welfare and workforce systems. Which federal state and local system -welfare or workforce- should have the primary responsibility for helping welfare recipients with substantial barriers to employment prepare for, find and keep jobs and develop careers? While arguments can be made for either system, the workforce development system seems most appropriate, given the pre-existing employment expertise and the ability to offer services to welfare recipients long after they have transitioned off of welfare. In fact, by expanding the availability of post-employment services, the WTW program may be setting a precedent for serving a larger number of low-wage working poor people who have no connection to TANF at all. Over the long term, the workforce development system could evolve into one which provides much more comprehensive post-employment services to all low-wage workers to help them advance their careers, earn higher wages and become financially self-sufficient.