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FY1998 Annual Report - Appendix H

Office of Child Support Enforcement

Published: December 1, 1998

Fact Sheets and News Releases

Date: Wednesday, June 24, 1998
FACT SHEET
Contact: ACF Press Office (202) 401-9215
CHILD SUPPORT ENFORCEMENT:
A CLINTON ADMINISTRATION PRIORITY

Overview

The goal of the Child Support Enforcement (CSE) program, established in 1975 under Title IV-D of the Social Security Act, is to ensure that children are supported financially by both parents.

Designed as a joint federal, state, and local partnership, the program involves 54 separate state and territory systems, each with its own unique laws and procedures. The program is usually run by state and local human service agencies, often with the help of prosecuting attorneys and other law enforcement officials as well as officials of family or domestic relations courts. At the federal level, the Department of Health and Human Services provides technical assistance and funding to states through the Office of Child Support Enforcement and also operates the Federal Parent Locator System, a computer matching system that locates non-custodial parents who owe child support.

Despite recent record improvements in paternity establishment and child support collections, much more needs to be done to ensure that all children born out-of-wedlock have paternity established and that all non-custodial parents provide financial support for their children. Currently, only about one-half of the custodial parents due child support receive full payment. About twenty-five percent receive partial payment and twenty-five percent receive nothing.

For that reason, President Clinton proposed, and Congress passed, legislation to strengthen and improve state child support collection activities. These provisions, included in the Personal Responsibility and Work Opportunity Act of 1996, could increase child support collections to over $24 billion in 10 years: a national new hire reporting system, streamlined paternity establishment, uniform interstate child support laws, computerized state-wide collections, and tough new penalties, such as driver's license revocation.

Clinton Administration Increases and Innovations

President Clinton has made improving child support enforcement and increasing child support collections a top priority. Since taking office, the President has cracked down on non-paying parents and strengthened child support enforcement, resulting in record child support collections: In FY 1997, the federal-state partnership collected an estimated $13.4 billion from non-custodial parents, an increase of $5 billion since 1992. The number of families that are receiving child support has increased to 4.2 million in 1997, an increase of 48 percent since 1992.

Encouraging State Innovations. In October, 1997 HHS announced the award of $1.5 million in demonstration grants to 17 states to support innovative projects to improve the nation's child support enforcement program. The projects will test:

  • cooperation with child support requirements by Temporary Assistance to Needy Families (TANF) applicants and recipients;
  • new models for coping with domestic violence in the context of child support enforcement; models of collaboration between child support enforcement, Head Start and Child Care programs at the state and local levels;
  • collaborations to facilitate family preservation between child support and child welfare programs;
  • reviewing and adjusting child support orders; the effect of child support collections on welfare recipient income; and,
  • models for making the child support enforcement program responsive to the needs of low-income noncustodial fathers to encourage greater parental responsibility.

In December, 1997 HHS announced approval of a child support waiver to allow the State of Washington to use federal funds normally used for child support enforcement to fund "Devoted Dads," an innovative public/private partnership to promote the responsible roles of fathers in the

financial and emotional support of their children. The project, which serves the Tacoma, Washington Enterprise Community, intends to reach non-custodial parents, particularly young and at-risk fathers. This demonstration is the first child support waiver granted for an enterprise community.

Executive Action. While working toward comprehensive improvement of child support enforcement, President Clinton used his executive authority to increase child support collections. Since taking office, the President has directed the Treasury Department to activate a centralized, streamlined Federal system to offset child support debts against most Federal payments; ordered Federal agencies to take necessary steps to deny loans, loan guarantees, or loan insurance to any individual who is delinquent on child support debt; implemented a new program that will help track non-paying parents across state lines; proposed new regulations requiring women who apply for welfare to comply with paternity establishment requirements before receiving benefits; and issued an executive order to make the federal government a model employer in the area of child support enforcement. The Clinton Administration granted welfare reform waivers to 43 states, and more than two-thirds of these states used their waivers to pursue innovative child support reforms.

Increasing Resources. President Clinton has proposed annual expansions in child support enforcement, increasing resources by 53 percent since taking office. HHS has also launched an initiative and given demonstration grants to states to promote improved performance, service quality and public satisfaction in the child support program. The President's FY 1999 budget

proposal allocates $3.2 billion to state child support enforcement programs, a 19 percent increase over FY 1998.

Prosecuting non-payers. Billions of dollars more in support is owed to children whose parents have crossed state lines to avoid paying. Under the Child Support Recovery Act, the Justice Department is investigating and prosecuting such cases. At President Clinton's direction, the Justice Department submitted legislation to Congress in September 1996 that would make it a felony offense to cross state lines to evade a child support obligation if the obligation has remained unpaid for longer than one year or is greater than $5,000; or to willfully fail to pay a child support obligation for a child living in another state if the obligation has remained unpaid for a period longer than two years or is greater than $10,000. The President signed the bill into law on June 24, 1998.

Seizing tax refunds. The Federal government collected $1.1 billion in delinquent child support by intercepting income tax refunds of non-paying parents for tax year 1996. The amount was 10 percent higher than the previous year, and up 66 percent since 1992. Nearly 1.3 million families benefited from these collections.

Improving paternity establishment. The Clinton Administration has made paternity establishment a top priority. In FY 1997, an estimated 1.26 million paternities were established and acknowledged by parents. Of these, nearly 48,000 were in-hospital paternities voluntarily acknowledged. Since the inception of the voluntary program in 1993, acknowledgments have grown nearly six-fold. The number of paternities established in 1997 exceeded the number of out-of-wedlock births during the year, meaning paternities are being established for children born in earlier years. In 1992, paternity was established for just 40 percent of children born out-of-wedlock.

U.S. Postal Service Posts "Wanted Lists." The U.S. Postal Service is working with states to display post office "Wanted Lists" of parents who owe child support. The President has challenged every state to create such a "Wanted List" to expand efforts to track down parents who owe support and send the strongest possible message that evasion of child support responsibilities is a serious offense.

Action through the Internet. HHS's Office of Child Support Enforcement now has a home page on the Internet that provides information on the child support enforcement program, tells parents where they can apply for child support assistance, and provides links to states that have their own home pages.

Improvements Under the Personal Responsibility and Work Opportunity Act of 1996

At President Clinton's urging, the new welfare reform law includes the child support enforcement measures the President proposed in 1994 -- the most sweeping crackdown on non-paying parents in history. Under the new law, each state must operate a child support enforcement program meeting federal requirements in order to be eligible for Temporary Assistance to Needy Families (TANF) block grants. Provisions include:

National new hire reporting system. The law establishes a Federal Case Registry and National Directory of New Hires to track delinquent parents across state lines. It also requires that employers report all new hires to state agencies for transmittal to the National Directory of New Hires. This builds on President Clinton's June 1996 executive action to track delinquent parents

across state lines. The law also expands and streamlines procedures for direct withholding of child support from wages. Since the implementation of the National Directory (to be fully operational by October 1, 1998), over 1 million parents who are not now paying child support to the children have been identified. They would not have been found without the National and State Directories. Location information is passed to the states for action.

Streamlined paternity establishment. The new law streamlines the legal process for paternity establishment, making it easier and faster to establish paternities. It also expands the voluntary in-hospital paternity establishment program, started by the Clinton Administration in 1993, and requires a state affidavit for voluntary paternity acknowledgment. These affidavits must meet minimum requirements set by the Secretary of HHS. In addition, the law mandates that states publicize the availability and encourage the use of voluntary paternity establishment processes. Individuals who fail to cooperate with paternity establishment will have their monthly cash assistance reduced by at least 25 percent.

Uniform interstate child support laws. The new law provides for uniform rules, procedures, and forms for interstate cases.

Computerized state-wide collections. The new law requires states to establish central registries of child support orders and centralized collection and disbursement units. It also requires expedited state procedures for child support enforcement.

Tough new penalties. Under the new law, states can implement tough child support enforcement techniques. The new law will expand wage garnishment, allow states to seize assets, allow states to require community service in some cases, and enable states to revoke driver and professional licenses for parents who owe delinquent child support.

"Families First." Under a new "Family First" policy, families no longer receiving assistance will have priority in the distribution of child support arrears. This new policy will bring families who have left welfare for work about $1 billion in support over the first six years.

Access and visitation programs. In an effort to increase noncustodial parents' involvement in their children's lives, the new law includes grants to help states establish programs that support and facilitate noncustodial parents' visitation and access to their children. In October, 1997, HHS announced the award of $10 million in grants to all 50 states, the District of Columbia, and U.S. territories to promote access and visitation programs. The minimum allotment per state for FY 1997 is $50,000.

New State Incentives. Current law provides for HHS to make incentive payments to states for their child support enforcement systems, but these payments are based on only one factor: cost-effectiveness. Under the new welfare reform law, HHS was authorized to prepare an alternative incentive plan. On March 13, 1997, Secretary Shalala submitted a proposal to Congress which was designed to further improve the performance of state child support enforcement programs by linking federal incentive payments to states to their performance in five key areas: establishment of paternities, establishment of child support orders, collections on current child support owed, collection on previously or past due child support owed, and cost-effectiveness. To reinforce the goal of achieving self-sufficiency, states will be rewarded for collection in all child support cases, but with a stronger emphasis on welfare and former welfare cases. On September 16, 1997, Secretary Shalala joined Rep. Clay Shaw, chairman of the House Ways and Means Subcommittee on Human Resources, and Rep. Sandy Levin, the ranking minority member of the subcommittee, in announcing legislation that is drawn from the HHS proposal. The House of

Representatives passed the bill on September 30, 1997, followed by the Senate. The legislation is awaiting final action by the Congress.

U.S. Department of Health and Human Services
Administration for Children and Families
FACT SHEET

Child Support Enforcement Program

The goal of the Child Support Enforcement (CSE) Program, which was established in 1975 under Title IV-D of the Social Security Act, is to ensure that children are financially supported by both their parents. Welfare reform legislation that President Clinton signed in 1996 provided strong measures for ensuring that children receive the support due them:

  • States were required to enact uniform interstate laws by January 1, 1998.
  • State and Federal CSE programs provide registries of newly hired employees.
  • Paternity establishment has been streamlined.
  • States will have computerized state-wide support collection and disbursement centers by October 1998.
  • Tough new penalties, such as license revocation and seizure of assets, will be available when child support obligations are not met.

The 1996 legislation also recognizes the importance to children of access to their noncustodial parent: the new law includes grants to help States establish programs that support and facilitate noncustodial parents' visitation with and access to their children.

The CSE program is usually run by state and local human services departments, often with the help of prosecuting attorneys, other law enforcement agencies, and officials of family or domestic relations courts.

Child Support Enforcement services are available automatically for families receiving assistance under the new Temporary Assistance for Needy Families (TANF) programs. Any current child support collected reimburses the state and federal governments for TANF payments made to the family.

Child support services are also available to families not receiving TANF who apply for such services. Child support payments that are collected on behalf of non-TANF families are sent to the family. For these families, states must charge an application fee of up to $25, but may pay this fee from state funds. Some states may also charge for the cost of services rendered.

The most recent census data show that, in the Spring of 1992, 11.5 million families with children had a parent living elsewhere. Custodial parent families, 86 percent of which were headed by women and 14 percent headed by men, comprised one third of all families with their own, never married children under 21. Of the 11.5 million, only 6.2 million (54 percent) of the custodial parents had awards or agreements for child support. Of the total $17.7 billion owed for child support in 1991, $5.8 billion was not paid. Among those due support, about half received the full amount, about a quarter received partial payment and about a quarter received nothing.

During FY 1997, about $13.4 billion in child support payments was collected, and services were provided in over 19.3 million cases through the Program. Paternity was established for more than l.29 million children that year through CSE Program and voluntary in-hospital acknowledge-ments, providing vital links between the children and their noncustodial parents. Almost 1.2 million new child support orders child support orders were established through the Program in FY 1997. The Federal government collected a record $1.1 billion in delinquent child support by intercepting income tax refunds of non-paying parents for tax year 1996.

The Child Support Enforcement Program provides four major services: locating noncustodial parents, establishing paternity, establishing child support obligations, and enforcing child support orders.

Locating Absent Parents - Child support enforcement officials use local information and resources of State and Federal Parent Locator services to locate parents for child support enforcement, or to find a parent in parental kidnapping/custody disputes. About four million cases are processed annually by the Federal Parent Locator Service.

Establishing Paternity - Establishing paternity (legally identifying a child's father) is a necessary first step for obtaining an order for child support when children are born out of wedlock. Establishing paternity also provides access to Social security, pension and retirement benefits; health insurance and information; and interaction with members of both parents' families.

Many fathers voluntarily acknowledge paternity. Otherwise, father, mother, and child can be required to submit to genetic tests. The results are highly accurate. States must have procedures which allow paternity to be established at least up to the child's eighteenth birthday.

Establishing Support Obligations - States must have guidelines to establish how much a parent should pay for child support. Support agency staff can take child support cases to court, or to an administrative hearing process to establish the order. Health insurance coverage can also be ordered.

Enforcing Child Support Orders - A parent can be required to pay child support by income withholding. The new welfare reform legislation establishes State and Federal registries of newly hired employees to speed the transfer of wage withholding orders. Overdue child support can be collected from federal and state income tax refunds. Liens can be put on property, and the property itself may even be sold with the proceeds used to pay child support arrearages. Unpaid child support should be reported automatically to credit reporting bureaus, and drivers, professional, occupational and recreational licenses can be suspended if the obligated parent is not paying support as required.

For further information, contact the Office of Child Support Enforcement on Internet site /programs/cse. The site provides links to States that have their own home pages.

PRESS RELEASE
FOR IMMEDIATE RELEASE
Thursday July 10, 1997
Contact: Michael Kharfen
(202) 401-9215

Clinton Administration Reports Record Year of Child Support, Progress on Tough Child Support Enforcement Initiatives

The Department of Health and Human Services Administration for Children and Families announced dramatic improvement in the most critical areas of child support enforcement. According to the 20th Annual Report to Congress on Child Support Enforcement issued by HHS today, the federal/state child support enforcement program has made record increases in child support collections, paternity establishments, and families receiving collections.

For fiscal year 1995, $10.8 billion was collected from non-custodial parents. Preliminary data for fiscal year 1996 shows that the federal/state partnership collected a record $12 billion, surpassing the estimate of $11.8 billion that the President announced in September 1996. Since 1992 child support collections have increased by $4 billion, or 50 percent.

The report issued today also shows a dramatic increase in paternity establishment since President Clinton took office. In fiscal year 1995 over 900,000 paternities were established, exceeding the Administration's previous estimates of 735,000 paternities. Further, preliminary data for fiscal year 1996 shows that the number of paternities established rose to nearly 1 million, almost double, from 516,000 in 1992. The increase is attributable to paternities established as part of the Clinton administration's voluntary in-hospital paternity establishment regulation.

The report describes collections and other child support activities nationwide during fiscal year 1995 (October 1994- September 1995). It also contains state-by-state financial and program data. Highlights of some of the findings are:

  • paternity establishment for 903,451 children in 1995 compared with 670,177 in 1994, an increase of 35 percent
  • cases with a collection were 3.7 million in 1995 compared with 3.4 million, an increase of 9 percent

New estimates for fiscal year 1996 show more improved results for children. Cases with a collection increased to nearly 4 million, an increase of 43 percent over 2.8 million in 1992. Paternity establishments rose to nearly 1 million, an increase of 50 percent over 0.5 million in 1992.

HHS calculates the cost-effectiveness of the child support program by determining how much child support is collected per dollar of administrative spending. This ratio measures the management efficiency of the program and how effective it spends administrative funds. The program improved its cost-effectiveness ratio from 3.59 in 1995 to an estimated 3.94 in 1996, an increase of 10 percent. The result for children is more collections by a better-managed program.

"No parents should or will evade their responsibility to support their children," said David Gray Ross, deputy director, office of child support enforcement. "We, the states and the federal government, now have both the will and the way to find any parent, at home or at work, to collect child support and help their children to a stronger and brighter future."

The child support enforcement program serves families receiving assistance under the Aid to Families with Dependent Children Program and the Temporary Assistance to Needy Families Program, as well as other families who apply for service.

Note: The report is available from the HHS Administration for Children and Families, Office of Child Support Enforcement, 370 L'Enfant Promenade, S.W., Washington, D.C. 20047. Both this press release and the report is also available on the ACF world wide web site at /news/.

August 22, 1997
Contact: HHS Press Office
(202) 690-6343

CLINTON ADMINISTRATION MOVING FORWARD ON THE PROMISE OF WELFARE REFORM

On August 22, 1996, President Clinton signed into law "The Personal Responsibility and Work Opportunity Reconciliation Act of 1996," a comprehensive bipartisan welfare reform plan that has dramatically changed the nation's welfare system into one that requires work in exchange for time-limited assistance. The law contains strong work requirements, a performance bonus to reward states for moving welfare recipients into jobs, state maintenance of effort requirements, comprehensive child support enforcement, and supports for families moving from welfare to work - including increased funding for child care and guaranteed medical coverage.

The Clinton Administration has taken numerous steps to ensure the success of the law. In the past year, the Clinton Administration has provided assistance to states and communities in implementing the law; created partnerships with the business, religious and non-profit communities to hire and train welfare recipients; and delivered on the President's pledge to invest in moving people from welfare to work and fix provisions in the law that had nothing to do with welfare reform. As a result of the Clinton Administration's focused efforts this year -- and throughout the last four years -- the welfare caseload fell by 3.4 million recipients, from 14.1 million in January 1993 to 10.7 million in May 1997, the largest welfare caseload decline in history.

TRANSFORMING THE BROKEN WELFARE SYSTEM:

Overhauling the Welfare System Nationwide: On July 1, the historic welfare law that the President signed last August went into effect in every state, making work and responsibility the law of the land. The Department of Health and Human Services has certified welfare plans for each state. In accordance with the welfare law, all plans require and reward work, impose time limits, and demand personal responsibility.

Building on the Administration's Welfare Reform Strategy: Even before welfare reform, many states were well on their way to changing their welfare programs to jobs programs. By waiving certain provisions in federal statutes, the Clinton Administration allowed 43 states -- more than all previous Administrations combined -- to require work, time-limit assistance, make work pay, improve child support enforcement, and encourage parental responsibility. A vast majority of states have chosen to continue or build on their welfare demonstration projects approved by the Clinton Administration.

Largest Caseload Decline in History: The welfare caseload fell by 3.4 million recipients, from 14.1 million in January 1993 to 10.7 million in May 1997, a drop of 24 percent since President Clinton took office. Forty-eight out of fifty states have seen their caseloads decline, with ten states reducing their rolls by 40 percent or more in the last four years. This is the largest welfare caseload decline in history and the lowest percentage of the population on welfare since 1970. According to the Council of Economic Advisors (CEA) analysis, the reduction in the welfare rolls can be attributed to the strong economic growth during the Clinton Administration, the waivers granted to states to test innovative strategies to move people from welfare to work, and other factors, which may include the Administration's expansion of the Earned Income Tax Credit, strengthened child support enforcement, and increased funding for child care.

Mobilizing the Business Community: To make welfare reform a success and help move a million people from welfare into the workforce by the year 2000, President Clinton has enlisted the business community's leadership. At the President's urging, the Welfare to Work Partnership, chaired by United Airlines CEO Gerald Greenwald, was launched in May 1997, to lead the national business effort to hire people from the welfare rolls. So far 800 companies, large and small, have accepted the President's challenge to forge a national effort to help move those on public assistance into jobs in the private sector. In August 1997, the Welfare to Work Partnership launched: a toll-free hotline (1-888-USAJOB1), a web page (www.welfaretowork.org), a "Blueprint for Business" manual to help companies across the nation hire people off welfare; and a city to city challenge to help promote innovative and effective welfare to work initiatives in 12 cities with high levels of poverty during the next year.

Helping Welfare Recipients Get Off and Stay Off Welfare: The Vice President created the Welfare to Work Coalition to Sustain Success, a coalition of civic groups committed to helping former welfare recipients stay in the workforce and succeed. Tailoring their services to meet welfare recipients' needs and the organizations' strengths, the Coalition will focus on providing mentoring and other support services. Charter members of the Coalition include: the Boys and Girls Clubs of America, the Baptist Joint Committee, the United Way, the YMCA, and fourteen other civic groups.

Federal Government's Hiring Initiative: As the nation's largest employer, the federal government is also doing its fair share to hire people from the welfare rolls. In March 1997, the President directed each head of a Federal agency or department to develop a plan to hire and retain welfare recipients in jobs in the government. The President asked the Vice President to oversee this initiative, in which the federal agencies have agreed to directly hire at least 10,000 welfare recipients in the next four years without displacing current employees.

ADDRESSING BARRIERS TO MOVING FROM WELFARE TO SELF-SUFFICIENCY

Increasing Funding for and Improving Quality of Child Care: The welfare law increased child care funding by nearly $4 billion over 6 years, providing child care assistance to low-income working families and parents moving from welfare to work. In October 1996, HHS released the child care block grant funds for FY 1997 providing up to $1.92 billion to states, a significant increase over the estimated FY 1996 level of $1.35 billion. The Clinton Administration also has taken steps to ensure the health and safety of child care. In July 1997, President Clinton proposed new child care regulations, which include a new approach to help more children in child care receive the immunizations they need on time.

Developing Strategies to Address Transportation Issues: In May 1997, President Clinton announced Department of Transportation grants to 24 states to develop welfare to work transportation strategies. The President also urged Congress to adopt a six-year, $600 million grant program in his NEXTEA transportation bill that would support flexible, innovative transportation systems in rural, urban and suburban areas to get people to jobs.

Continuing to Strengthen Child Support Enforcement: Due to the President's unprecedented and sustained campaign to make noncustodial parents pay the child support they owe, the Clinton Administration collected a record $12 billion in child support in 1996, an increase of 50% since 1992. Paternity establishment almost doubled to nearly 1 million cases in FY 1996, from 516,000 in 1992. And the number of families actually receiving child support rose to 4 million cases with collections, an increase of 43 percent, over 2.8 million in 1992.

Implementing the Provisions in the Welfare Law: The welfare law included tough child support measures long-supported by the President, including: a national new hire reporting system; streamlined paternity establishment; uniform interstate child support laws; computerized state-wide collections; and tough new penalties. So far over half the states have enacted these provisions. The President has urged all states to put these enforcement tools in place to ensure that children and families get the support they need. These measures are projected to increase child support collections by an additional $24 billion over the next ten years.

Executive Actions: While working toward comprehensive improvement of child support enforcement, President Clinton used his executive authority to increase child support collections. Since taking office, President Clinton has: directed the Treasury Department to collect past-due child support from Federal payments including Federal income tax refunds and employee salaries; taken steps to deny Federal loans to any delinquent parents; and made the Federal government a model employer in the area of child support enforcement.

Preventing Teen Pregnancy: As a result of the Administration's focused effort since President Clinton took office, the national birth rate for teens aged 15-19 has continued to decline four straight years in row, decreasing by eight percent between 1991 and 1995. Significant components of the President's comprehensive effort to reduce teen pregnancy were included in the welfare law. The welfare law requires unmarried minor parents to stay in school and live at home, or in an adult-supervised setting; supports the creation of Second Chance Homes, which will provide teen parents with the skills and support they need; and provides $50 million a year in new funding for state abstinence education activities, beginning in FY 1998.

  • Launching a National Strategy: In January 1997, the Clinton Administration launched a new comprehensive effort to prevent teen pregnancy and encourage adolescents to remain abstinent. The initiative, led by the Department of Health and Human Services, responded to a call from the President and Congress for a national strategy to prevent out-of-wedlock teen pregnancies and to a directive, under the new welfare law, to assure that at least 25 percent of communities in this country have teen pregnancy prevention programs in place. The strategy sends the strongest possible message to all teens that postponing sexual activity, staying in school, and preparing for work are the right things to do. It strengthens ongoing efforts across the nation by increasing opportunities through welfare reform; supporting promising approaches; building partnerships; improving data collection, research, and evaluation; and disseminating information on innovative and effective practices. The national strategy places a special emphasis on encouraging abstinence, especially among 9- to 14-year-old girls, through HHS' new Girl Power! campaign, which was launched in November 1996.
  • Providing Resources to Promote Abstinence: The welfare law included $50 million a year in new funding for state abstinence education activities. In July, 1997 every state applied for this money to build on their state efforts to prevent teen pregnancy.

BALANCED BUDGET HELPS MOVE MORE PEOPLE FROM WELFARE TO WORK

The balanced budget that the President signed on August 5, 1997 delivered on the President's pledge to fulfill the promise of welfare reform by investing in moving people from welfare to work and fixing the provisions in the law that had nothing to do with welfare reform. Specifically:

$3 Billion to Help Move 1 Million People from Welfare to Work. As a result of the President's leadership, the balanced budget includes the total funding he requested to create a $3 billion Welfare to Work Jobs Challenge fund. This program will help states and local communities move long-term welfare recipients into lasting, unsubsidized jobs. These funds can be used for job creation, job placement and job retention efforts, including wage subsidies to private employers, and other critical post-employment support services. The Labor Department will provide oversight but the dollars will be placed in the hands of the localities who are on the front lines of the welfare reform effort.

A Welfare to Work Tax Credit. This provision will give employers an added incentive to hire long-term welfare recipients by providing a credit equal to 35 percent of the first $10,000 in wages in the first year of employment, and 50 percent of the first $10,000 in the second year, paid for new hires who have received welfare for an extended period. The credit, administered by the Treasury Department, is for two years per worker to encourage not only hiring but retention.

Focusing the Welfare Law on Work. The budget includes $12 billion to restore both disability and health benefits to legal immigrants who are currently receiving benefits or become disabled in the future, and to continue Medicaid coverage for currently disabled children receiving SSI. The budget bill will help 350,000 legal immigrants (in FY 2002) who would otherwise have been denied assistance. It also extended the SSI and Medicaid eligibility period for refugees and asylees from 5 years after entry in the country to 7 years to give these residents more time to naturalize. In addition, the budget bill improves the food stamp provisions in the welfare law by creating work slots and preserving food stamp benefits for those who are willing to work, but through no fault of their own, have not found employment.