Caution: Penalties Ahead for California

California has come a long way since federal welfare reform was enacted in August 1996. Thanks to a strong economy and unprecedented investment in work and child care programs for families on welfare, the state’s welfare caseload has dropped more than a quarter to 1.9 million people. California also is meeting welfare reform’s overall work requirement, with a fifth of all families on welfare, or 112,000 cases, working in fiscal year 1997.

But the news is not all good. Even as welfare reform shows signs of success in California, two-parent families on welfare are not meeting federal requirements that they engage in work a certain number of hours. Under the federal welfare reform law, California was required to place 68% of its 113,000 two-parent welfare families--married couples with dependent children--in work activities in fiscal year 1997. To meet the requirement, one parent must be engaged in work activity, which can include education, job training or work experience, for 35 hours each week. As an alternative, both parents can work part time for a total of 35 hours.

The state missed this goal by a mile--less than a quarter of these families met the work requirement. The federal welfare reform law ultimately will require 90% of all two-parent families--more than 100,000 cases--to be working, so California could fall even farther behind.

If California does not dramatically improve its performance at moving two-parent families into work situations, the state could lose hundreds of millions of dollars in federal welfare block grant funds. These funds, with the goal of moving recipients permanently from welfare to work, help pay for time-limited cash aid, welfare-to-work programs, subsidized child care, education and counseling for welfare recipients.

The penalties start small; the state stands to lose just $7 million of its $3.7-billion federal welfare block grant this year. But if 90% of two-parent families are not working by 2002, the state could be penalized an alarming 21% of its block grant--$770 million. A penalty of this magnitude would devastate the state’s welfare-to-work and subsidized child care programs, not to mention the state budget.

California is not alone in failing to meet the two-parent work requirements. Seventeen other states missed the mark this year. But our placement rate is among the lowest nationwide, and our challenge is greater, since more than half of the nation’s 209,000 two-parent families on welfare live in California.

If the state is to meet the requirements, it needs to:

* Make sure that all two-parent families on welfare are working enough hours. The state Department of Social Services estimates that 10,000 two-parent families who actually are working don’t meet the federal work requirement because they aren’t working 35 hours a week. If these families hit that target, then California’s two-parent work rate would be more than a third instead of barely a quarter. California still would be far from meeting the 68% requirement, but it would be closer.

* Continue moving families off welfare rolls into full-time employment. For every family that leaves the welfare rolls, California gets a credit that reduces the work requirement targets for both single parent and two-parent families. Already, California’s success at lowering its welfare caseload has dropped work requirements for two-parent families still on the rolls by 7%. It may sound like circular logic, but the better California does at getting welfare families into full-time jobs that are not subsidized by the government, the lower the work targets will be for families still on welfare.

* Target programs and services to immigrant families. More than half of California’s two-parent families on welfare do not speak English. This is a tremendous barrier to employment, particularly for non-Spanish speaking immigrants. California’s welfare reform law gives counties broad latitude in designing welfare-to-work programs, but these programs should be required to put more emphasis on language classes and job training programs for non-English speakers.

At the end of third quarter 1998, California had yet to use nearly $500 million of its federal welfare block grant. I urge the new governor, Gray Davis, and the state Legislature to spend some of those excess funds on language immersion and job training programs for two-parent families.

* Finally, California needs to conduct an in-depth assessment of who its two-parent families on welfare are. Do they need help only seasonally or during recessions? Would better language skills and job training services move them into work more quickly? Do they have more serious barriers to employment, such as mental illness, substance abuse or domestic violence?

Surprisingly, no one seems to have conducted such studies, either in California or nationwide. Answers to these questions are essential in determining whether we are asking states to meet impossible goals.

One thing is certain: The clock is ticking for California, and the penalties for failing to address the two-parent work requirement rise dramatically with time. The state needs to act soon or every Californian will be paying the price.