HOUSE BILL REPORT

E2SHB 448

BYHouse Committee on Ways & Means (originally sponsored by Representatives Brekke, Winsley, Braddock, Dellwo, H. Sommers, P. King, Wang, Holm, B. Williams, Haugen, Fuhrman, Heavey, L. Smith, Miller and Barnes; by request of Governor Gardner)

Establishing the family independence program.

House Committe on Human Services

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (9)

     Signed by Representatives Brekke, Chair; Scott, Vice Chair; Leonard, Moyer, Padden, H. Sommers, Sutherland, Wang and Winsley.

House Staff:Jean Wessman (786-7132)

Rereferred House Committee on Ways & Means

Majority Report:     The second substitute bill be substituted therefor and the second substitute bill do pass.  (21)

     Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Appelwick, Basich, Braddock, Ebersole, Fuhrman, Grant, Hine, Holland, Madsen, McLean, McMullen, Peery, Rust, Sayan, L. Smith, H. Sommers, Sprenkle, B. Williams and Winsley.

Minority Report:     Do not pass.  (5)

     Signed by Representatives Allen, Belcher, Brekke, Locke and Nealey.

House Staff:    Sandi Gray (786-7154)

AS PASSED HOUSE MARCH 17, 1987

BACKGROUND:

The Aid to Families with Dependent Children Program (AFDC) was created by the Social Security Act of 1935 partly as a response to the continuing levels of nationwide poverty created by the Depression, but also because the federal government had decided that there should be an ongoing source of support for those who were unable to support themselves.

During the 1950's, AFDC caseloads began to rise dramatically and the federal government began to take an interest in changing the focus of who should receive assistance and who should be required to work.  The Aid to Families with Dependent Children Program was beginning to be seen as a policy that had not helped to alleviate poverty and perhaps was contributing to increased dependency.

By the early 1980's the federal government, while not successful in passing national legislation requiring work in exchange for benefits, had passed legislation allowing the states to develop their own work and training programs.

Interest remains high among most of the states and at the national level to develop programs that successfully encourage AFDC recipients to seek self-sufficiency and economic independence.  Consensus has yet to be reached on the best approach to be taken or on how success should be defined or measured.

The Reagan administration has been soliciting proposals from a number of states for five year demonstration projects which will encourage welfare recipients to become self-sufficient.  The Office of the Governor, Department of Social and Health Services and Employment Security Department have proposed the Family Independence Program to meet that goal.

SUMMARY:

The Family Independence Program (FIP) is intended to aid in breaking the "cycle of poverty" and provide needy families with opportunities for economic independence.  A five-year demonstration project is established within the framework of Title IV-A of the Social Security Act as an alternative to the current Aid to Families with Dependent Children (AFDC), Food Stamps and Medicaid programs.

Objectives of the program are:  1) a reduction in number of children in poverty; 2) the opportunity for enrollees to enter the economic mainstream; 3) the provision of a basic level of financial and medical assistance for those unable to participate; and 4) the provision of financial incentives for participants in education, training and work programs.

An executive committee is established consisting of five members, the secretary of the Department of Social and Health Services (DSHS), the commissioner of the Employment Security Department (ESD), the senior official from each of those agencies responsible for the program and an official from the Office of Financial Management (OFM).  An advisory committee of from 10 to 20 members is established for the executive committee.  The executive committee is responsible for directing DSHS and ESD to do the following: 1) promulgate rules and procedures; 2) determine eligibility and sanction criteria; 3) manage the program within legislative funding levels; 4) carry out job development and employment subsidization activities; 5) establish due process procedures; 6) determine social service, child care and health benefit provisions; 7) determine administrative methods; 8) determine implementation of the program; 9) establish job creation conditions, terms and contracts; and 10) mandate participation in the program, once the program has operated for two years.  Mandatory participation may be required for discrete groups of enrollees or specific areas of the state.

Training and education activities will be available, within funding limitations, for basic remedial education, vocational or skills training and higher education.  Receipt of a financial incentive for education and training will be determined by the Department of Social and Health Services and Employment Security Department.

Due process rights are to be no less than that presently conferred upon recipients in AFDC, Food Stamps and the WIN Program and shall include written notice guidelines on changes in benefits, fair hearing rights, and timely processing of applications and assistance.

When a family ceases to be eligible for FIP cash benefits due to income exceeding the maximum level, child care and medical benefits shall continue to be provided for one year.  Copayments, not to exceed 25 percent of the cost of the benefit or 25 percent of the amount the family's income exceeds the maximum, which ever is less, may be required.

Fair labor guarantees and practices are included in the Family Independence Program to preclude displacement of current workers, provide employee protection and benefits to the extent available to current workers, protect the rights of current workers, and assure compliance with personnel procedures and collective bargaining agreements.  Compensation for enrollees placed in employment is guaranteed at the highest of the following, minimum wage, prevailing rate of pay, minimum entrance rate, or prevailing rate for similar positions with the same employer.

Cash assistance levels are pegged to a bench mark standard established by the legislature.  The bench mark standard is equal to the AFDC payment for that size family plus the cash equivalent of Food Stamps for which a family of that size would be eligible.  Those enrollees in training or education would receive 105 percent of the bench mark standard.  Those enrollees working half-time would receive 115 percent.  Enrollees working full-time would receive 135 percent.  Those enrollees who are exempt from participation in work or training due to good cause shall receive 100 percent of the bench mark standard. Those persons who fail to cooperate with mandatory requirements without good cause, shall be sanctioned and their needs deleted from the Family Independence Program benefit payment.  Protective payees may be established by the Department of Social and Health Services. The executive committee may increase or decrease the incentive payments but in no case lower than 100 percent of the bench mark.

The client's right to receive no less under the Family Independence Program than under the Aid to Families with Dependent Children and Food Stamp Program in effect January 1, 1988 is protected.  The treatment of certain types of income is enumerated similarly to current AFDC regulations.

Enrollees in the Family Independence Program are required to register for work, training or education activities unless they are exempt.  Persons are exempt as follows:

1)  One parent with a child under six months of age;

2)  Persons under sixteen or, over sixty-four;

3)  Persons over sixteen who are in high school;

4)  Persons who are incapacitated, temporarily ill or are needed at home to care for an impaired person;

5)  Persons in the third trimester of pregnancy.

Required registrants shall be assessed and a jointly developed employability plan written subject to the approval of the Department of Social and Health Services.  Appropriate child care and other supportive services shall be available.  Good cause criteria for failure to participate is enumerated.

The executive committee is required to submit implementation plans to the legislature relating to child care, employment, and assisting high school students who are pregnant or parents.  Quarterly reports detailing caseloads and expenditures are required, as well as annual reports analyzing the extent to which education, training, and support services have led to employment.  A legislative study is required at least one year prior to implementation of mandatory participation requirements.

The program can be implemented only by specific authorization of the legislature.  The executive committee must provide a plan outlining federal/state agreements no later than February 7, 1988.  If the federal/state agreements are not completed by February 1, 1988, and implementation plan including any proposed agreements is to be submitted for ratifications.

EFFECT OF SENATE AMENDMENT(S):  The delegation of authority to the governor is narrowed to allow negotiation of proposed federal-state contracts for restructuring the AFDC funding relationship.  These contracts must be submitted to the legislature with the implementation plans before authority is delegated to complete the agreements.  Implementation of the program shall occur only in counties where the average unemployment rate is less than twice the state average.

Mandatory participation may be required only in regions where more than 50 percent of job-ready participants are being placed within three months after they become job-ready.  In addition, the original incentive benefits must still be in effect.  Caretaking parents are exempt until the youngest child is three years old, unless the recipient has been on assistance longer than three years, in which case the exemption is only until the youngest child is six months old.  No recipient who is on assistance for the first time may be required to participate for six months after becoming eligible for assistance.

A system of family opportunity councils will be established in each of the six DSHS regions, to select members to the advisory committee and to assist in providing services to enable public assistance recipients achieve self-sufficiency.

The executive committee is expanded to include two nonvoting former public assistance recipients who have been successful in achieving economic independence.  The executive committee must consult with the advisory committee on matters relating to contracts with service providers, modifications of incentive payments and all reports to the legislature.

Fiscal Note:    Attached.

House Committee ‑ Testified For:     (Human Services)  Jule Sugarman, Secretary, Department of Social and Health Services, Isiah Turner, Commissioner, Employment Security Department, Ernest LaPalm, Deputy Commissioner, Employment Security Department; Barbara Flaherty, Assistant Commissioner, Employment Security Department; Gerald Reilly, Assistant Secretary, Economic and Medical Services Administration, Department of Social and Health Services; Nona Johnson, Independent Business Owner; Audrey Gruger, Seattle; Tom Dixon, Tacoma Urban League; Joanne Asaba, Family and Youth Services, City of Seattle;  Kathleen Clark, Washington State Dietetic Association; Linda Evans, Pierce County Coalition; Cecilia Funkhouser, Washington Women's Employment and Education of Tacoma/Pierce County, Inc.; and Nona M. Brazier, Northwest Recovery Systems, Inc.

(Ways & Means)  Jule Sugarman, Secretary, Department of Social and Health Services; Isiah Turner, Commissioner, Employment Security Department.

House Committee - Testified Against: (Human Services)  Ann Rogers and Linda Averill, Seattle Radical Women; Jan Thorsteinson, Citizen; Margie Reeves, Washington Association for the Education of Young Children; Pat Thibaudeau, Washington Women United; Karen Patjens, Olympia Child Care Center; Candy Patayar, Snohomish County Welfare Rights; Kathleen Karimi, Mary deRosas, Deborah Williams, Barbara Green,  Holly Nordahl,  Welfare Rights Organizing Coalition; Betty Leonard and Thom O'Connor, Neighborhood House; Karne Fleming, Cathy Campbell and Judy Graham, Tacoma Head Start; Steve Bauck, Ecumenical Metropolitan Ministry; Nancy Niccum, AFDC Recipient;  Jan Secor, Pierce County Coalition for Welfare Reform;  Lonnie Johns-Brown, Washington State Chapter of the National Organization for Women;  Carol Steckler, Fair Budget Action; Liz Schott, Evergreen Legal Services; and Ivy Alston, Central Area Human and Welfare Rights Organizing Committee.

(Ways & Means)  Sean Bleck, Evergreen Legal Services; Carol Steckler, Fair Budget Action Campaign; Pat Thibaudeau, Washington Women United.

House Committee - Testimony For:     (Human Services)  The current federal programs such as Aid to Families with Dependent Children (AFDC), Medicaid and Food Stamps do not assist in helping families become economically independent and may increase dependency.  The Family Independence Program (FIP), by radically restructuring the federal programs through an emphasis on employment, education and training programs and the provision of incentive payments and supportive services above the regular, and in addition to, the AFDC grant for participants in those programs will encourage increased self-sufficiency and shorten the length of time families receive public assistance.  Opportunities for abusing the current system are reduced, under-funded benefit levels are raised, the taxpayers' burden is reduced along with the dependency on a degrading inefficient and administratively complex system, and the lot of many children below the poverty level will be improved.  By increasing child support collections and placing people into jobs more rapidly, the Family Independence Program will not require any additional funds beyond the funding level for the current programs.  The Family Independence Program will increase opportunities to improve skills through education and training.  It will increase the number of jobs in the state.  It will provide quality, and the quantity needed, child care and provide continued health care benefits for one year after a family is at the maximum incentive level.  It will not be a block grant program but remain within the framework and protections of Title IV-A of the Social Security Act.  The legislature will have the opportunity to approve the federal/state agreements that are made.

(Ways & Means)  Although there are risks that caseload or employment projections may not occur, there are many ways to manage the program within funding levels, most notably through controlling the number of subsidized jobs, or reducing incentive payments.

House Committee - Testimony Against: (Human Services)  It is felt that the FIP program should remain a voluntary program throughout the five year life of the demonstration project.  The six month age of child requirement for participating is too low and does not allow for proper nurturing.  It should be raised to three years or left at six years of age. It should stay part of the federal entitlement system.  Child care must be reimbursed at an adequate rate.  There are not adequate child care slots available for FIP Enrollees.  The Department of Social and Health Services has underestimated the cost of child care.  The economy will not be able to provide adequate numbers of jobs for FIP enrollees.  The jobs provided will not get a family out of poverty or provide any chances for advancement.  The jobs may result in displacement of current employees and job seekers, as well as, creating a two-tier system whereby the current employee has less disposable income than the FIP enrollee.  When the non-cash benefits, child care and medical care, cease after one year, these families may re-cycle back on public assistance because of inadequate wages to provide these benefits for themselves.  Not enough training and education is guaranteed.  More than short-term job skill training is necessary to acquire a job that will pay enough to get out of poverty.  It is questionable whether the program can remain budget neutral.  The end goal of this program is seen as continued poverty for these families but no longer at government expense.

(Ways & Means)  The program should remain voluntary.  Additional training should be provided.  If caseload reductions predicted for this program are not attained, the ultimate price of the program will be much greater than now envisioned.

VOTE ON FINAL PASSAGE:

     Yeas 92; Nays 5; Excused 1

Voting Nay:     Representatives Allen, Belcher, Hargrove, Jacobsen and Niemi

Excused:   Representative C. Smith