New Welfare Law: The Personal Responsibility and Work Opportunity Reconciliation Act of 1996

New Welfare Law: The Personal Responsibility and Work Opportunity Reconciliation Act of 1996

96-687 EPW
Updated November 21, 1996
CRS Report for Congress
Received through the CRS Web
New Welfare Law: The Personal Responsibility
and Work Opportunity Reconciliation Act of 1996
Vee Burke, Joe Richardson, Carmen Solomon-Fears, Karen Spar,
and Joyce Vialet
Education and Public Welfare Division
This report briefly summarizes provisions of The Personal Responsibility and Work
Opportunity Reconciliation Act, signed into law August 22, 1996 (Public Law 104-193).
This Act dramatically reshapes cash and food welfare programs, affecting Aid to Families
with Dependent Children (AFDC), Food Stamps, Supplemental Security Income (SSI),
child support enforcement, child care, child nutrition, and Title XX social services. It also
imposes a citizenship requirement for many benefits.
The Act replaces the AFDC program with capped block grants to states for a
program called Temporary Assistance to Needy Families (TANF). It imposes a general
5-year time limit on duration of family cash welfare, requires work in order to receive
benefits after 2 years, establishes a new work requirement for Food Stamps, cuts food
stamp benefits, expands states’ authority over food stamp operations, restricts SSI
eligibility for disabled children, ends benefits for most aliens, expands child care funding,
strengthens child support enforcement, and repeals the program of Job Opportunities and
Basic Skills Training (JOBS) for AFDC recipients. The Congressional Budget Office
(CBO) has estimated that the Act will reduce federal spending by net totals of $3 billion
in FY1997 and by $54.1 billion over the FY1997-FY2002 period. Restrictions on benefits
for noncitizens account for 44% of total savings, and revisions in Food Stamp law for
43%. The major increased cost of the Act is for welfare-related child care. CBO projects
that replacement of AFDC and JOBS by TANF will increase direct federal outlays for
“family support payments” by $3.7 billion over the first 6 years, largely because of
increased child care funding, but that family support outlays will fall below levels of
current law in the 6th year.
AFDC Replacement by Block Grant Program. TANF will end the 61-year old
AFDC program and its education, work, and training program, known as JOBS, effective
July 1, 1997, sooner at state option. (As of November 19, 1996, 35 states had submitted
TANF plans, and 11 state plans had been certified by the Department of Health and
Human Services (DHHS). States will be allowed to continue waiver-based programs
approved before enactment until their scheduled expiration, even if terms are inconsistent
with the Act. The legislation requires TANF recipients, after 2 months of benefits, to
engage in community service, with hours and tasks set by the state, effective 1 year after
enactment (unless the state opts out by notice to DHHS). After 2 years of benefits
Congressional Research Service ˜ The Library of Congress

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(sooner, if the state judges them work ready) recipients must engage in “work,” as defined
by the state. The legislation forbids states to pay benefits from TANF funds to any
member of a family that includes a person who, as an adult, received TANF aid for 60
months, but permits exemptions for 20% of the caseload. TANF requires participation in
specified “work activities” by 25% of all families and 75% of two-parent families in
FY1997. The minimums (which are to be decreased if caseloads decline below FY1975
levels) increase to 50% of all families by FY2002 and to 90% of two-parent families in
FY1999. Under TANF, work activities that count toward a state’s participation
requirement exclude education, except for high school dropouts; (vocational education
training is countable for a limited proportion of the caseload and for 1 year only). In
contrast, 19% of JOBS participants in FY1994 were engaged in higher education, not
countable under TANF. States that fail participation standards are subject to loss of funds.
Under TANF, required work hours generally will rise from an average of 20 hours
weekly (the JOBS standard) in 1997 to 25 hours in 1999 and ultimately increase to 30 (in
2000). Exceptions: required hours for parents with a child under 6 will remain at 20; and
two-parent families must work at least 35 hours. TANF exempts no one from work
requirements, but permits states to exempt single parents caring for a child under 12
months old. JOBS exempts parents with a child under 3, those who are aged, ill, caring
for a disabled person, and others. TANF forbids a state from penalizing for work refusal
a single parent unable to obtain needed care for a child under 6, but JOBS requires states
to guarantee child care for all AFDC parents who need it to work or study.
Ineligible for TANF are: unwed mothers under 18 unless they live in the home of an
adult relative or in another adult-supervised arrangement (AFDC law permits states to
require these mothers to live with an adult); unwed mothers under 18 without a high
school diploma whose youngest child is 12 weeks old unless they attend school; persons
convicted after enactment of a drug-related felony (states may opt out or limit the duration
of ineligibility). Under TANF, states will decide what categories of children to aid. Under
AFDC, states must aid all families with children that are in a class eligible under federal
rules unless their income is above state-set limits. TANF explicitly disallows any claim of
entitlement to cash aid.
AFDC law entitles states to unlimited federal matching funds for state-set benefits and
administration, Emergency Assistance, and child care for AFDC recipients and for others
who have worked their way off AFDC. It provides capped entitlement funds for JOBS
and “at-risk” child care, which subsidizes care for families needing it to avert AFDC
eligibility. In contrast, TANF will provide a fixed block grant based on recent federal
funding ($16.4 billion annually through FY2002) plus expanded child care funding in a
new block grant. To receive the basic block grant each year, a state must have spent in
the previous year on behalf of TANF-eligible families a sum of its own funds equal to what
it spent in FY1994 on AFDC and related programs—its “historic” level. The required
spending level is 75%, but 80% if a state fails to meet work participation minimums. (At
the 75% level, states would have to spend about $10.4 billion annually of their own funds.)
In making this “maintenance-of-effort” calculation, states may count their spending on
families no longer eligible for TANF because of the 5-year time limit.
The legislation also provides four kinds of extra TANF funds: (1) supplemental
grants—grants for above-average population growth and below-average federal welfare
funding per poor person; (2) contingency funds—matching grants of up to 20% of a

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state’s basic TANF grant for periods of high and rising unemployment or increasing Food
Stamp caseloads; to qualify a state would have to first spend 100% of its historic level; (3)
out-of-wedlock bonus—for states that reduce the number of babies born outside marriage
and decrease the rate of abortions; and (4) performance bonus—for states that receive a
score for achieving “the goals” of TANF equal to a threshold to be set by the DHHS
Secretary. States may transfer up to 30% of TANF funds to the child care and
development block care (CCDBC) and Title XX social services (see Social Services
below) and may reserve TANF funds for use in a later year. The Act also offers Indian
tribes and native Alaska organizations their own tribal assistance grants, from amounts set
aside from the regular state TANF grant. The Act requires states to give Medicaid to
families who meet the July 16, 1996 income standards for AFDC and to provide medical
assistance for 1 year to families who lose eligibility for cash aid because of earnings.
Finally, it authorizes states to administer TANF through contracts with charitable,
religious, or private organizations. For estimated state allocations of the block grant, see
CRS Report 95-377. For a comparison of AFDC and TANF, see CRS Report 96-720.
Alien Eligibility for Welfare. The Act bars legal immigrants from Food Stamps and
SSI (unless they have worked 10 years, are veterans, certain active duty personnel and
their families, or—for 5 years—are refugees and asylees). Current recipients will be
screened during a 1-year period after enactment. The Act permits states to exclude legal
aliens who entered the United States before enactment from TANF, Medicaid, and Title
XX social services, beginning January 1, 1997. It bars legal immigrants who enter the
United States after enactment for 5 years from the three latter programs and most other
federal means-tested programs (except for emergency medical services, disaster relief,
public health assistance, community level services, school lunch, child nutrition, foster care
and adoption assistance, Head Start, certain job training, and certain education assistance).
After 5 years, the bar to TANF, Title XX, and Medicaid becomes a state option. Also
after the 5-year bar, under most needs-based programs, the sponsor’s income will be
deemed to be available to immigrants entering after enactment until they naturalize or
become eligible for Social Security after working for 10 years without public assistance.
Assistance exempted from both the 5-year bar and the subsequent deeming requirement
for sponsored immigrants includes emergency medicaid, school lunch and child nutrition
programs, and higher education benefits. The Act bars illegal aliens, currently ineligible
for major income-tested benefits, from most other federal benefits and forbids states and
localities to enroll illegal aliens in their own nonfederally funded programs unless the state
legislature expressly endorses the aid. It ties eligibility of illegal aliens for subsidized
school meals to states’ decisions as to whether to offer them free public education and
makes their eligibility for other child nutrition programs subject to state decisions. CBO
has estimated that the alien provisions will reduce direct federal outlays over 7 years by
$23.7 billion: SSI, $13.3 billion; Medicaid, $5.3 billion; Food Stamps, $3.7 billion; and
Earned Income Tax Credit (EITC), $1.4 billion. For details, see CRS Report 96-617.
Food Stamp Revisions. The Act increases states’ role in the Food Stamp program,
adds new work and other non-financial eligibility requirements, significantly restricts future
benefits and eligibility, expands penalties for violations of rules, increases oversight of
unlawful trafficking in Food Stamps, and encourages electronic delivery of benefits.
Compared to current law, net federal Food Stamp outlay savings (including savings
derived from the new ban on aliens and both savings and costs imposed by provisions that
alter other welfare programs) are estimated at $23.3 billion through FY2002. Direct food

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stamp outlay reductions (including savings from the ban on aliens, but not including the
cost effects of other provisions in the Act) are put at $27.4 billion through 2002.
State control over Food Stamps is increased by allowing a “simplified” program
(under which states can use TANF rules in determining food stamp benefits for their
TANF recipients), removing a number of federal directives about state operations,
allowing states to levy food stamp penalties on recipients who violate TANF rules, and
easing limits on the extent to which waivers from federal rules can be granted (however,
no block grant authority is included). In addition, states may opt to disqualify individuals
for failure to comply with child support obligations or cooperate with child support
enforcement agencies. A new work requirement applies to persons who are aged 18-50
and without dependents. They are ineligible if, during the previous 36 months, they
received food stamps for 3 months while not working or participating in a work/training
program (not counted are months before recipients are notified of the new rule, or the first
3 months after enactment). By working or engaging in work/training for at least a month,
they could regain eligibility, and be eligible for another 3 months without work/training
once during any 36-month period. Major benefit restrictions include (1) an across-the-
board reduction in basic food stamp benefits (a 3% cut in maximum benefits based on the
Agriculture Department’s “Thrifty Food Plan”), (2) limiting the degree to which
households with very high shelter expenses are given extra food stamp benefits, and (3)
freezing indexation of the amount of income (the “standard deduction”) that is disregarded
when calculating benefits. As a result, benefits normally scheduled for a significant
increase in October 1996 will increase only slightly, and future benefit increases will be
significantly smaller than under current law. The Act increases penalties for and control
over trafficking in Food Stamps, adds new disqualification penalties (e.g., for those
convicted of a drug-related felony, for those who reduce work effort), and increases
incentives for states to implement “electronic benefit transfer” (EBT) systems. Provisions
generally take effect October 1, 1996. For details, see CRS Report 95-366.
Child Nutrition Programs.. The Act significantly reduces federal subsidies for
meals and snacks served by (1) family/group day care homes that are not operated by low-
income providers or are in middle- or upper-income areas and (2) summer food service
program sponsors. It also removes a number of “overly prescriptive” federal requirements
on state and local operations, ends special funding for expansion of the school breakfast
and summer food service programs, and requires that subsidies for “full-price” school
meals (served to non-poor children) be rounded down to the nearest cent when indexed
for inflation (rather than rounded to the nearest quarter cent). Compared to current law,
estimated savings through FY2002 are $2.9 billion, some 85% of which is derived from
reductions in subsidies to day care homes. Provisions generally take effect with the next
scheduled change in federal subsidies. For details, see CRS Issue Brief 95047.
Child Care. The Act combines four major child care programs for low-income
families into a single block grant to states. An expanded Child Care and Development
Block Grant (CCDBG) will become the primary federal child care subsidy program and
will replace child care activities previously authorized under Title IV-A of the Social
Security Act (AFDC child care, transitional child care for former AFDC recipients, and at-
risk child care for very low-income working families). The new law authorizes a total of
$20 billion in both entitlement and discretionary funding for child care during FY1997-
FY2002 ($14 billion in entitlement funds in a new child care block grant and $6 billion in
discretionary funding). CBO estimates that the Act will increase federal outlays for child

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care by $3.5 billion in outlays over 6 years, compared to projections with no change in
law. The first $1.2 billion of annual entitlement funds will be allocated according to
amounts states received in earlier years under the three AFDC-related child care programs,
and will require no state match. Remaining entitlement funds will be allocated according
to each state’s population of children under age 13, subject to maintenance-of-effort and
state matching requirements. States must spend at least 70% of entitlement funds for
services for TANF recipients who are trying to achieve self-sufficiency through work
activities and very low-income working families at risk of welfare dependence. Substantial
portions of the remaining funds, including discretionary amounts, must be used for other
low-income working families with incomes up to 85% of state median.
As under current law, discretionary CCDBG funds, which require no state matching
funds, will be allocated to states according to a formula based on children in low-income
families and state per capita income. Indian tribes and tribal organizations will receive
between 1% and 2% of all child care funds appropriated. The Act imposes a new
requirement (replacing a different setaside of funds) that at least 4% of all funds must be
used for activities to improve the quality and availability of child care. The Act continues
requirements that states have child care licensing standards and health and safety
requirements. It also requires states to submit periodic data reports to HAS. Provisions
take effect on October 1, 1996. For details, see CRS Report 96-780.
Child Welfare. The Act contains four amendments to existing child welfare laws
under the Social Security Act. However, unlike the House-passed version and earlier
legislation, it contains no child protection block grants and makes no significant changes
in current programs. Grants to states for child welfare services, and capped entitlement
grants for family preservation and family support, will continue unchanged, and open-
ended entitlements for foster care and adoption assistance and capped entitlement grants
for independent living services will remain intact. Likewise, the Act makes no
amendments to the Child Abuse Prevention and Treatment Act or related programs.
The legislation makes these changes: allows for-profit child care institutions to
participate in federally funded foster care; requires states to consider giving preference to
an adult relative over a non-related caregiver, when determining a placement for a child,
as long as the relative meets child protection standards; and provides $6 million a year in
entitlement funding (FY1996-FY2002) for DHHS to conduct a national random sample
study of child welfare. It also extends through FY1997 an enhanced federal matching rate
of 75% for certain child welfare data collection costs. This enhanced matching rate
(increased from 50%) has been available since FY1994 to help states automate their
information systems, and was due to expire at the end of FY1996. CBO estimates that the
child welfare provisions will increase direct federal outlays by $232 million over 6 years.
(However, in subsequently enacted legislation, P.L. 104-208, Congress rescinded the
appropriations for national random sample studies in FY1996 and FY1997.) Provisions
take effect upon enactment. For details, see CRS Report for Congress 96-823.
Social Services Block Grants. Under Title XX of the Social Security Act, the
permanent entitlement ceiling for Social Services Block Grants (SSBG) is $2.8 billion,
although appropriations legislation reduced this ceiling by 15% to $2.38 billion for
FY1996. The Act sets the annual SSBG ceiling at $2.38 billion in FY1997-FY2002 and
returns it to $2.8 billion in FY2003 and later years. The legislation also allows states to
use SSBG funds for vouchers for services to families, including those who lose eligibility

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for TANF cash benefits because of time limits or state-imposed family caps. Under TANF,
states may transfer up to 10% of their allotments to SSBG, but these transferred funds
must be used for families with incomes no higher than 200% of federal poverty guidelines.
CBO estimates that the SSBG provisions will reduce outlays by $2.5 billion during
FY1997-FY2002. (However, in subsequently enacted appropriations legislation, P.L. 104-
208, Congress overrode the welfare reform provisions and appropriated $2.5 billion for
the SSBG in FY1997.) For details, see CRS Report 94-953.
Supplemental Security Income (SSI). The Act establishes a separate disability
definition for children. It discontinues the “individualized functional assessment” disability
determination procedure (under which persons whose impairments are not equivalent to
those in the federal “Listing of Impairments” are reviewed under a less stringent process).
But it continues cash aid, based on the full SSI benefit standard, to all eligible children
meeting the new childhood disability definition. It requires a review of the disability status
of certain categories of children and authorizes $250 million in additional administrative
funding for the Social Security Administration (SSA) to conduct SSI continuing disability
reviews and redeterminations. It provides that large past-due SSI benefits must be made
in installments and that parents must establish a trust/account for children who receive
them; the trust is to be disregarded in determining SSI eligibility and be used only for such
purposes as education, job skills training, and medical treatment. Further, it applies the
personal needs allowance (i.e., monthly SSI benefit of $30) to hospitalized children whose
private medical insurance pays for their care. The Act also requires an annual report on
SSI by SSA and an SSI study by the General Accounting Office (GAO). Finally, it
attempts to assure that prisoners do not receive SSI by allowing SSA to compensate
correctional institutions that provide relevant data. Provisions about children’s eligibility
generally take effect on July 1, 1997; most of the others, on the date of enactment. CBO
has estimated that revisions in the SSI program itself will reduce direct federal outlays by
$8.6 billion over the 6-year period, FY1997-FY2002, and that the new alien rules will
reduce SSI outlays by $13.3 billion. For a comparison of new and old SSI law, see CRS
Report 96-753.
Child Support Enforcement (CSE). The Act requires the federal government and
the states to establish automated registries of child support orders and a directory of new
employees so as to quickly track and locate absent parents. It also requires states to:
operate an automated centralized collection and disbursement unit, streamline the paternity
determination process, establish paternity for more children, and implement expedited
procedures that allow them to secure assets of a debtor parent to satisfy an arrearage in
child support payments by intercepting or seizing periodic or lump sum payments (such
as unemployment and workers’ compensation, lottery winnings, awards, judgements, or
settlements, and assets of the debtor parent held by public or private retirement funds, and
financial institutions). It requires states to implement procedures to withhold, suspend, or
restrict the use of driver’s licenses, professional and occupational licenses, and recreational
licenses of debtor parents, and it authorizes the Secretary of State to deny, revoke, or
restrict passports of debtor parents. These provisions generally take effect on October 1,
1996. CBO has estimated that they will increase federal outlays over 6 years by $712
million. For details, see CRS Report 95-401.