Welfare Reform: Competitive Grants in the Welfare-to-Work Grant Program

Welfare Reform: Competitive Grants in the Welfare-to-Work Grant Program

Order Code RS20207
Updated November 8, 2001
CRS Report for Congress
Received through the CRS Web
Welfare Reform: Competitive Grants in the
Welfare-to-Work Grant Program
Shannon Harper and Christine Devere
Domestic Social Policy Division
Summary
The Balanced Budget Act of 1997 (P.L. 105-33) made funding available for a
welfare-to-work program to assist “hard-to-serve” welfare recipients with the transition
to work. In addition to formula grants awarded to the states, the Department of Labor
awarded 191 competitive grants totaling $712 million directly to local workforce
investment boards, city and county governments, and private or non-profit entities in
FY1998 and FY1999. The Consolidated Appropriations Act of 2001 (P.L. 106-554)
gave grantees an additional 2 years from the date of award to expend welfare-to-work
funds, allowing available welfare-to-work expenditures (which would otherwise expire
in FY2002) to continue through FY2004. The most common work activities planned by
the competitive grant awardees have been skills training and job placement assistance.
Title VIII of the Consolidated Appropriations Act of FY2000 (P.L. 106-113) contained
amendments to the welfare-to-work program, but did not provide for additional welfare-
to-work funding in FY2000. These amendments modified eligibility and expanded the
allowable welfare-to-work activities effective January 1, 2000 for competitive grantees.
This report will be updated to reflect any program developments.
The Welfare-to-Work Grant Program
The Balanced Budget Act of 1997 (P.L. 105-33) made funding available for a
welfare-to-work program to assist “hard-to-serve” welfare recipients with the transition
to work.1 The welfare-to-work program is administered by the Department of Labor
(DoL). After set-asides for Native American tribes, evaluations, and a high performance
bonus to the states, 25% of available welfare-to-work funding was awarded in competitive
grants directly to local workforce investment boards (LWIBs), city and county
governments, and private or non-profit entities. The remaining 75% of welfare-to-work
1 P.L. 105-33 made available $3 billion for the welfare-to-work program. While subsequent
legislation has reduced this amount, these reductions did not impact the amount available for
competitive grant funding. For a discussion of the welfare-to-work program, see CRS Report
RS20134, Welfare Reform: Brief Summary of the Welfare-to-Work Grant Program by Christine
Devere.
Congressional Research Service ˜ The Library of Congress

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funding (approximately $2 billion) was awarded in formula grants to the states. States
receive welfare-to-work formula grants in addition to $16.5 billion received annually under
the block grant program of Temporary Assistance for Needy Families (TANF),
administered by the Department of Health and Human Services (HHS).
All available competitive grant funding ($712 million) has been awarded by the DoL
in 191 competitive grants in three rounds of competition. As of March 31, 2001,
approximately $333.8 million of awarded competitive grant funding had been spent,
serving 102,098 participants.2 The Consolidated Appropriations Act of 2001 (P.L. 106-
554) gave grantees an additional 2 years from the date of the award to expend welfare-to-
work funds, allowing available welfare-to-work expenditures (which would otherwise
expire in FY2002) to continue through FY2004. Round 1 competitive awards will be the
first to expire in May, 2003. Round 2 funding must be spent by November, 2003, and
Round 3 funds must be spent by September, 2004.
Competitive Welfare-to-Work Grants
Selection of Competitive Grant Awardees. Competitive welfare-to-work
grants were awarded directly to localities by the DoL. The DoL took into consideration
characteristics of the applicant, the proposal, the population to be served, and the
distribution of the funds in making the competitive grant awards. In soliciting the
applications, the DoL expressed interest in proposals targeting the following populations:
individuals requiring substance abuse treatment, individuals with learning and other
disabilities, noncustodial parents, public housing residents, victims of domestic violence,
and individuals with limited English proficiency. Awardees that planned to target only one
of these populations were given special consideration in the second and third round of
competitive grant applications.
The DoL used similar criteria to evaluate the applicants in all 3 rounds of
competition. Its most recent solicitation for the grants that were awarded in the final
round (Round 3) indicated that the following criteria would be used: 1) the relative need
for assistance in the area proposed to be served; 2) the extent to which the project
proposed innovative strategies for moving welfare recipients into lasting work; 3) the
quality of the proposed outcomes of the project; 4) the degree that the project was
coordinated with other services; and 5) the demonstrated capability of the grant applicant.
The DoL also aimed to distribute approximately 70% of the competitive welfare-to-work
funds for projects that would serve cities with large concentrations of poverty and 30%
for projects that would serve rural areas. Applicants that agreed to participate in a random
assignment evaluation and applicants that proposed to serve Empowerment Zones or
Enterprise Communities were also given special attention.3
2 This information was provided by the Department of Labor.
3 U.S. Department of Labor. Employment and Training Administration. Welfare-to-Work
Competitive Grants: Notice of Availability of Funds; Solicitations for Grant Applications. Federal
Register, v.64, no. 16, January 26, 1999. p.4010-4023.

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Eligibility for Welfare-to-Work Services
Title VIII of the Consolidated Appropriations Act for FY2000 (P.L. 106-113)
amended the welfare-to-work program, but did not provide for additional welfare-to-work
funding for FY2000 as proposed by the Administration. These amendments, which make
significant changes to the welfare-to-work program, took effect for competitive grant
awardees on January 1, 2000.
Under the original welfare-to-work program, at least 70% of welfare-to-work funds
were to be spent on long-term welfare recipients, defined as individuals who have received
assistance (AFDC or TANF) for at least 30 months (not consecutive) or individuals who
would become ineligible for assistance within 12 months because of a time limit. In
addition, these long-term welfare recipients had to possess two of three specified barriers
to employment: 1) lacks a high school diploma or GED and has low math or reading skills;
2) requires substance abuse treatment prior to employment; and/or 3) has a poor work
history. Up to 30% of the welfare-to-work funds were to be spent on individuals with
characteristics associated with long-term welfare receipt, as defined by the grant awardee.
The Title VIII amendments expand the population eligible for services under the
welfare-to-work program. Under these amendments, the welfare-to-work program will
continue to serve long-term welfare recipients, but these recipients will no longer be
required to possess barriers to employment (as previously defined). In addition, up to 30%
of welfare-to-work funds can still be spent on individuals in other groups. The
amendments add to these groups: 1) welfare recipients with significant barriers to self-
sufficiency as defined by their local workforce investment board; 2) youths between 18 and
24 years of age who were in foster care before their 18th birthday); and 3) custodial parents
with incomes below the poverty line who are not recipients of assistance under their state
TANF program.
Noncustodial parents who met the former eligibility requirements could be served
with welfare-to-work funds. However, the 1999 amendments modify eligibility
requirements to allow welfare-to-work funds to be spent on noncustodial parents who are
unemployed, underemployed, or who are having difficulty paying child support obligations.
To be eligible, the minor child of the noncustodial parent must meet certain requirements,
and the noncustodial parent must commit to pay child support in some manner. The
amendments also give state agencies responsible for enforcing child support orders the
authority to disclose the names, addresses, and telephone numbers of eligible noncustodial
parents to LWIBs, but this information may only be used to identify eligible noncustodial
parents.4
Populations targeted. Noncustodial parents were one of the populations the DoL
expressed interested in during the solicitation of grant proposals (as discussed above).
Table 1 illustrates the number of grant awardees targeting each of the populations of
special interest to the DoL. Because awardees may target more than one special
population, the column totals do not equal the total number of grants awarded.
4 For a more detailed discussion of changes made by this legislation, see CRS Report RS20134
Welfare Reform: Brief Summary of the Welfare-to-Work Grant Program, by Christine Devere

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Table 1. Number of Awardees Planning to Target
Populations of Interest
Target population
Round 1
Round 2
Round 3
Total
Domestic violence victims
8
3
10
21
English-as-a-second-language
0
9
18
27
Learning or other disabilities
12
17
12
41
Noncustodial parents
13
43
21
77
Public housing residents
17
40
3
60
Rural residents
17
30
9
56
Source: Table prepared by the Congressional Research Service (CRS). Round 1 awards were coded by the
DoL. Round 2 and 3 awards were coded by CRS using information provided by the DoL. The numbers
take into consideration the description of the projects provided by DoL.
Welfare-to-Work Activities and Services
Work Activities. Welfare-to-work funds must be spent on the following work
activities: community service programs, work experience programs, job creation through
wage subsidies, on-the job training, job readiness and placement services, job retention
services, post-employment services, and supportive services for employed recipients (if
otherwise not available). The Title VIII amendments included in P.L. 106-113 expand this
list to include vocational education or job training for a maximum of 6 months. In
addition, under the original welfare-to-work program rules, entities conducting welfare-to-
work projects were required to contract out for job readiness, placement, and post-
employment services. The Title VIII amendments allow all entities, except the LWIBs, to
directly provide these services.
Table 2 shows the breakdown of the type of work activities that competitive grantees
planned to offer. Because awardees may provide multiple services, the numbers in each
column do not total to the number of grants awarded. Table 2 was prepared using
information submitted prior to the Title VIII welfare-to-work amendments. Therefore,
vocational education or job training for a maximum of 6 months are not included.
Table 2. Number of Awardees Planning to Provide
Specified Work Activities
Work activity/service delivery
Round 1
Round 2
Round 3
Total
Job creation
8
10
6
24
Job placement
21
38
40
99
Job readiness
19
19
33
71
Job search
13
19
6
38
Skills training (includes on-the-job training)
26
46
39
111
Work experience (includes community
20
21
21
62
service programs)

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Source: Table prepared by the Congressional Research Service based on information provided by the
DoL. The numbers take into consideration the description of the projects provided by DoL.
Supportive Services. Welfare-to-work funds may be used to provide supportive
services for employed recipients, if those services are not otherwise available. Table 3
illustrates the number of competitive grants that plan to provide three supportive services:
child care, substance abuse treatment, and transportation. Because awardees may provide
multiple services, the numbers in each column do not total to the number of grants
awarded.
Table 3. Number of Awardees Planning to Provide
Supportive Services
Supportive service
Round 1
Round 2
Round 3
Total
Child care
19
36
25
80
Substance abuse treatment
20
38
20
78
Transportation
16
42
29
87
Source: Table prepared by the Congressional Research Service. Round 1 awards were coded by the DoL.
Round 2 and 3 awards were coded by CRS using information provided by the DoL. The numbers take into
consideration the description of the projects provided by DoL.
Awardees plan to use these funds to provide transportation vouchers, to coordinate
van pools, and in some instances, to provide funds for limited car repairs and insurance.
Some awardees plan to provide child care at non-traditional hours. And, since welfare-to-
work funds cannot be used for medical substance abuse treatment, the range of substance
abuse treatment services planned includes group and individual counseling, as well as other
non-medical forms of assistance.
Entities Receiving Competitive Grants
Coordination with LWIBs/Governor. Welfare-to-work competitive grant funds
are meant to complement formula grant activities. Entities other than LWIBs or a political
subdivision of the state (entities not receiving formula grant funds) must have consulted
with the LWIBs in developing their application to ensure that the activities proposed in the
application will be consistent with, and will be coordinated with, the welfare-to-work
efforts of the LWIBs/political subdivision. All applicants must also submit their
applications to the Governor for review and comment.
Under the Workforce Investment Act (WIA) of 1998 (P.L. 105-220), states are
required to establish One-Stop Centers to coordinate the delivery of employment and
training services. Welfare-to-work competitive grant awardees are mandatory partners of
their state’s One-Stop Centers.5 Under the One-Stop system, WIA-eligible welfare-to-
work clients will be able to access WIA services.
5 The Workforce Investment Act (WIA) of 1998 repeals the Job Training Partnership Act (JTPA)
effective July 1, 2000. See Department of Labor interim final regulations in the Federal Register,
v. 64, no. 72, April 15, 1999. p. 18662-18764.

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Competitive Grant Entities. One hundred and sixteen grants were awarded to
private or non-profit entities (examples include faith-based organizations). Twenty-eight
grants were awarded to LWIBs. City and county government entities were awarded 45
grants.6
Competitive grant awardees may receive welfare-to-work money from more than one
source. Of the formula funds awarded to the states, the Governor may retain 15% for
projects that move long-term recipients into unsubsidized employment. In California, the
Governor has chosen to award this money competitively. For example, Goodwill
Industries of Southern California received $1.0 million in a grant from the Governor of
California. Goodwill was also awarded $4.1 million from DoL as a competitive grant.
The remaining 85% of the formula grant funding is passed-through directly to the
LWIBs based on each individual state’s substate allocation formula. While many LWIBs
have been awarded competitive grants from DoL, these LWIBs may already receive
formula grant funds (of at least $100,000) from their state.7
Competitive welfare-to-work funds were awarded in most states. However, in eight
states and territories (Delaware, Guam, Idaho, Nevada, North Dakota, Oregon, the Virgin
Islands, and Wyoming), no entities have received competitive grant funds. In FY1999,
Delaware, Idaho, North Dakota, and Wyoming also opted out of the formula grant
program. Several competitive grants have been awarded to entities planning national
projects, so individuals in these states may still be served by competitive welfare-to-work
funds.
Census Enumerator Award. On May 14, 1999, the DoL (in partnership with the
Department of Commerce) announced a special round of competition under the welfare-
to-work competitive grant program to facilitate the employment of welfare recipients as
Census 2000 enumerators. In awarding the grant, emphasis was placed on finding a
national organization with an established system of local affiliates throughout the states.
On September 28, 1999, Goodwill Industries, International was awarded $20 million to
train and place as many as 10,000 welfare-to-work participants in unsubsidized census
jobs. The 2000 Census Jobs are expected to last 8 to 12 weeks, and will pay between $8
and $18 per hour. Goodwill Industries will also be responsible for providing supportive
services and for helping place these participants in permanent employment at the end of
the program.
6 The 191 competitive grants were awarded to 189 different entities. Two entities received 2
grants.
7 If a LWIB is eligible for less than $100,000 based on this formula, the Governor may retain these
funds.