State’s Welfare Rolls Stubbornly High

As welfare rolls plummet across the country, California’s population of social aid recipients remains stubbornly high, putting the state--and its poor residents--at a disadvantage in the new federal welfare reform funding formula, a congressional panel reported Thursday.

After several years of modest increases, California’s welfare caseload dropped 4.19% between 1995 and 1996, and is expected to have dropped by 11% by the end of 1998, the House Ways and Means Committee estimates in a report assessing the state-by-state impact of the 1996 welfare reform bill.

California’s modest pace stands in stark contrast to some of the fast movers in the nation’s welfare reform sweepstakes. Maryland and Wisconsin have driven their welfare rolls down by more than 28% apiece in the past two years, and Oregon’s rolls fell by more than 22% in the same period.

In September 1996, the latest period for which information is available, California maintained 870,200 households--about 2.5 million people--in the federally funded Aid to Families With Dependent Children program, down from 900,000 households in September 1995.

Sacramento’s failure to decrease welfare caseloads more dramatically means that California will see a very modest increase in the amount of federal funds it has to spend on each family that remains on the rolls. Under the bill, which transfers federal welfare funds to the states in the form of block grants, the size of a state’s block grant will be based in most cases on the amount of federal aid a state received in 1994.

As a result, states that succeed in reducing their welfare rolls significantly from the 1994 level will have more federal funds to spend on the families still on welfare. The congressional report on state welfare caseloads indicates that while virtually all other states will see substantial increases in that aid-per-family index, California’s remaining welfare recipients will get an increase of just 14% in federal aid available.

Only Alaska, Hawaii and the District of Columbia fared worse on this measure of progress.

The slow decline in California’s welfare rolls, and the wide disparity among different states’ records in this area, rekindled debate on one of the central questions of welfare reform: What makes people give up public assistance?

Rep. Clay Shaw (R-Fla.), one of the chief architects of the welfare reform bill passed last year, on Thursday called the declines “remarkable” and said no factor has been more important in driving down welfare rolls than the “signal effect” from the political debate over welfare. Confronted with the prospect of strict work requirements and lifetime limits on benefits, Shaw said Thursday, those on welfare and those considering applications have gotten out--often ahead of statutory deadlines--and sought work or some other alternative to public assistance to make ends meet.

Shaw credited existing state welfare reform initiatives, which were undertaken with waivers from the federal government, as another important factor in reducing caseloads. Although the upturn of the economy has contributed to the trend, Shaw suggested that it was third in importance, behind political and policy shifts.

President Clinton, in a recent news conference, reckoned that policy changes and the economy’s resurgence have had roughly equal effects on the nation’s welfare rolls.

With few formal evaluations in place, the relative weight of these factors remains a topic of heated debate among economists, policymakers and politicians. In the absence of hard data, observed one government policy expert, “This is a politician’s dream: You can say anything you want to.”

The decline of welfare rolls in states that have been aggressive in reforming their programs--particularly among those that have instituted work-oriented welfare reform programs--appears to add weight to the argument that policy changes have had the greatest impact. In addition to Wisconsin, Oregon and Maryland, Virginia, Massachusetts and Michigan also have experienced substantial drops in their rolls.

But some economists cautioned that the sluggish decline in California’s rolls suggests the strong influence of a state economy that has yet to fully recover from recession. While the nation’s unemployment rate hovers around 5.4%, joblessness in California remains close to 7%.

“California should not be lashing itself for its failure. If the state had a better unemployment rate, it’d look better on this count too,” said Gary Burtless, an economist who studies the impact of welfare reform at the Brookings Institution in Washington.

Burtless said that historically, policy changes do appear to play a lead role in pushing welfare rolls up or down, often at times when economic circumstances would suggest otherwise. But in cases where aid recipients are being pushed into the job market, the strategy is successful only if jobs are there for them, he noted.

Burtless cited two reasons for California’s slow paring of its welfare rolls. First, the state shifted relatively late from a welfare reform program that emphasized basic education to a work-oriented approach. Second, the state’s economy has not created the necessary jobs.

In 1998, according to the congressional study released Thursday, California will probably get $4,973 a year in federal funds to spend on each household on public assistance--an increase from the $4,282 spent per welfare family in 1994.

Experts said Thursday that beyond holding down an increase in the state’s funds-per-family, California’s stubbornly high welfare rolls have another effect: Because more than one in five aid recipients in the nation lives in the Golden State, California’s inability to pare its welfare rolls more dramatically holds down the national average.

“California,” said one Republican congressional aide, “is the 800-pound gorilla of welfare reform.”