Welfare Reform Delays May Cost State $4 Billion

By MELISSA HEALY and VIRGINIA ELLIS

Sept. 21, 1997 12 AM PT

TIMES STAFF WRITERS

SACRAMENTO —

With two of welfare reform’s first deadlines bearing down on states across the nation, California officials are scrambling to explain failures that could cost the state more than $4 billion in federal funds.

Less than a month after the state adopted its own sweeping $6-billion reform plan, the Wilson administration is trying to avert federal penalties that could throw its precariously balanced budget deep into the red.

The penalties also could prove to be a political embarrassment for Gov. Pete Wilson, who has positioned himself as one of the nation’s foremost welfare reformers.

The Clinton administration, which will decide whether to enforce the full extent of the penalties, is talking tough. But as the law faces one of its first nationwide tests, legislators are considering relaxing some of the terms.

Eloise Anderson, the director of the state’s Department of Social Services, predicted in an interview that although the state may escape the full brunt of the law’s punitive sanctions, “I think we’re going to take a hit.”

Anderson conceded that under the terms of the law, federal officials are entitled to exact penalties ranging to $4 billion.

“But is that really what they want to do?” asked Anderson, echoing arguments made in Washington by California legislators across the political spectrum. “Because any sanction you give us takes money away from the very people we want to help.”

The federal welfare reform law enacted last year sets out two key requirements: Each state must have 25% of its overall welfare caseload and 75% of its two-parent welfare families engaged in work activities by Oct. 1; and each must have in place an integrated statewide system to track down and collect child support payments from absent parents.

With 33% of the adults on welfare now working, California officials say they will easily satisfy the work requirements for the state’s overall caseload. But with less than 20% of adults in two-parent families in jobs, officials concede they are far from meeting the targets.

They also readily acknowledge that in spite of $344 million in federal and state expenditures to date, the goal of building a centralized, statewide system for child support collections remains a distant target, possibly years away.

Under the federal welfare reform law, the state’s failure to meet its two-parent family work requirement could prompt the federal government to withhold roughly $185 million in welfare payments. The law allows Health and Human Services Secretary Donna Shalala substantial latitude to continue payments if the state provides either compelling reasons why it couldn’t meet the target or a satisfactory correction plan.

But the state’s failure to meet the deadline for establishing a statewide program for collecting child support payments could prove far more costly--and federal law provides no escape hatches.

A state that fails to implement a federally approved system by Oct. 1 faces the withdrawal of funds earmarked for that project--an estimated $340 million this year in California. The state also faces loss of its entire block grant for Temporary Aid to Needy Families--$3.7 billion in 1997.

On Capitol Hill, the severity of that penalty--paired with the fact that many other states will probably fail to meet the impending deadlines--has prompted a flurry of efforts to push back deadlines and rewrite some rules.

Sen. Dianne Feinstein (D-Calif.) has urged colleagues and the Clinton administration to call a six-month moratorium on penalties stemming from failure to meet the deadline for a child-support enforcement system. The Oct. 1 deadline already represents a two-year extension from the first target date Congress set under previous legislation.

Rep. Clay E. Shaw Jr. (R-Fla.), one of the chief authors of the welfare bill, promised last week that he would spearhead an effort to alter the law so penalties would be more “proportional to the sins” of the state.

“It is nuts to withhold [welfare block grant] funds--$3.7 billion in the state of California--because of the failure to meet the computer model [deadline],” Shaw said.

Although Congress probably would not correct the problem until June or July, Shaw said, the deadline compliance process is so lengthy that California and other states are not expected to suffer financial hardship before then.

“I want to make it clear that California is not going to lose $4 billion,” Shaw said. “In fact, I would doubt that they will end up in the long run losing anything.”

The Clinton administration, however, has been far less reassuring.

“The states have known for over a year they’ve had to do these things. They are not a surprise, not a new development,” said Health and Human Services Department spokesman Michael Kharfen.

The department, said Kharfen, is prepared to impose the penalties called for in the law.

Shalala has said she would work with legislators to redraft some of the penalty provisions in the law, but will not support a bid to delay the deadlines, according to the spokesman.

“We want to ensure there’s still accountability of states, that there’s a timely completion of projects, and that if they’re not making progress, there are consequences to that,” Kharfen said.

Many state officials, including those from California, have complained that delays in the release of federal welfare guidelines have left states clueless on how to proceed.

In addition, many state officials have dismissed the goal for two-parent families as unrealistic, given the special difficulties of this population of recipients.

Corinne Chee, a Department of Social Services spokeswoman, said the state will probably argue that it has had too little time to implement a requirement that only became effective in July.

The state also will point out that two-parent families, which represent 137,964 of the 788,975 families on welfare in California, tend to have unique barriers to employment. Henry Brady, director of UC Data Archive and Technical Assistance in Berkeley, said his studies of the population have shown a substantial number of immigrants who don’t speak English, have little or no work history and suffer from persistent health problems.

Efforts to build a child support computer system, originally mandated by the federal government in 1988, has been plagued with equally daunting problems, officials say. Defects in the system have caused cost overruns and delays.

Kharfen suggested that the federal government may be unsympathetic. He noted that although state officials have not been shy about seeking changes in provisions they deemed unrealistic in the past, they have raised no objections either to the two-parent family work requirement or the child support deadline.

Efforts to ease some welfare requirements are meeting stiff resistance from a newly formed band of conservative legislators who call themselves the Preserve Real Welfare Reform Working Group.

“I’m against any effort to weaken the bill,” said Sen. Lauch Faircloth (R-N.C.). “The whole welfare reform is an excuse factory.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Child Support Compliance

The federal welfare reform law of 1996 requires that by Oct. 1, 1997, each state have a federally approved plan for a centralized, automated state system to establish paternity and collect child support payments from absent parents. The following are the current dispositions of states relative to that deadline:

Have certified plans

Arizona

Colorado

Connecticut

Georgia

Idaho

Louisiana

Mississippi

Montana

New Hampshire

Oklahoma

Utah