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Chapter 1

Introduction

Time limits on benefit receipt are among the most dramatic and controversial changes characterizing welfare reform in the 1990s, and they may figure prominently in discussions about the reauthorization of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996.

This report provides a comprehensive summary of what has been learned to date about time limits: about state policies, about the implementation of time limits, and about the effects of time limits on families. It is designed to serve as a resource for policymakers, administrators, advocates, journalists, researchers, and other interested parties at the federal, state, and local levels. The report was produced for the U.S. Department of Health and Human Services (HHS) by the Manpower Demonstration Research Corporation (MDRC) and The Lewin Group.

The Evolution of Time Limits Before 1996

Welfare has always been time-limited in the sense that adults could never receive Aid to Families with Dependent Children (AFDC) benefits after they no longer had any dependent children. The notion of placing a time limit on benefits for families with children was not widely discussed until 1992, when presidential candidate Bill Clinton promised to “end welfare as we know it” by placing a two-year time limit on AFDC benefits and providing subsidized jobs, if necessary, to recipients whose benefits ended.

In 1993 and 1994, HHS began granting waivers of AFDC rules that allowed states to impose time limits on benefit receipt.1   Many of these early time-limit policies did not apply statewide, and various categories of recipients were exempted from the limits. In addition, many of the waiver programs did not include time limits that resulted in cancellation of a family’s entire AFDC grant (that is, termination time limits).2   In fact, most of the waivers granted before October 1994 included work requirement time limits: Recipients who reached the limit were required to work and were allowed to continue receiving benefits if they cooperated. (In many of these programs, the state provided subsidized jobs or work experience slots to recipients who were unable to find unsubsidized jobs.)3   Other states imposed reduction time limits in which only a portion of the family’s grant (usually the adult portion) was eliminated at the time limit. Over time, the generally accepted meaning of the term “time limit” evolved toward termination and reduction time limits.4

By August 1996, a total of 15 states had received waivers authorizing a termination time limit, and four others had been granted waivers for a reduction time limit.5 Many of the early reduction and termination time limits were not lifetime limits but, rather, periodic time limits that allowed a certain number of months of benefit receipt within a longer calendar period (for example, 24 months of receipt in any 60-month period) or required people who reached the time limit to remain off welfare for a specified period of time, but not permanently.

Finally, in approving waivers with termination time limits, HHS followed the principle that families who “play by the rules” should not be penalized for circumstances beyond their control. Thus, states were required to provide benefit extensions or other continuing assistance to recipients who “substantially met all program requirements, made a good faith effort to find a job, yet could not find a job.”6

Time Limits Under the 1996 Welfare Reform Law

PRWORA made time limits a central feature of federal welfare policy. The law abolished the Aid to Families with Dependent Children (AFDC) program and created the Temporary Assistance for Needy Families (TANF) block grant. Under the law, states are prohibited from using federal TANF funds to provide assistance to families with an adult recipient for more than 60 cumulative months. (The time limit does not affect eligibility for other public assistance programs, such as Food Stamps and Medicaid.) The “clock” started when each state implemented the TANF program (between September 1996 and July 1997).

Although the five-year time-limit provision is well known, several key elements of the policy are not as widely understood:

  • Welfare cases with an adult accrue months toward the federal time limit as long as they are receiving assistance that is funded with federal TANF dollars. However, the time limit does not apply to “child-only cases” in which no adult is included in the welfare grant; such cases now account for around one-third of the national welfare caseload.7

  • States can provide federally funded TANF assistance beyond 60 months to up to 20 percent of the state caseload, based on hardship. For example, if a state’s average monthly caseload is 50,000, it could use federal TANF funds to provide assistance to as many as 10,000 families who are beyond the 60-month point.8

  • The 60-month time limit applies only to payments or services that meet the definition of “assistance” — generally, cash or noncash payments (for example, vouchers) designed to meet a family’s ongoing basic needs for food, clothing, shelter, and household expenses. Many other types of services (for example, child care subsidies for working families) are not considered assistance.9

  • States are not required to impose time limits on assistance provided with state “maintenance-of-effort” (MOE) funds.10   Such funds may be used in a separate state program that is not part of the TANF program or may be segregated as state funds within the TANF program. Thus, states can stop the federal time-limit clock by paying for a family’s benefits with state funds, or they can use state funds to assist families who pass the federal limit and exceed the 20 percent cap.

  • Fifteen states received waivers to delay implementation of the federal time-limit requirements for at least some families. The federal time clock did not start before September 2001 in three of the states, and certain categories of recipients were exempted from the federal limit in the others.11

The fact that the federal limit does not apply to state MOE funds gives states broad flexibility in designing time-limit provisions. States can establish a 60-month time limit, a shorter time limit, or no time limit at all. They can designate certain categories of families as exempt from their state time limit (while an exemption applies, months of benefit receipt do not count toward the time limit), or they can allow benefit extensions to families who reach the limits.

In reality, the federal time limit is not a limit on benefit receipt for individual families; rather, it is a funding constraint that shapes state policy decisions. If a recipient’s welfare case was closed because she accumulated 60 months of federally funded benefits, the case was not closed because the family reached the federal time limit but, rather, because the state chose to impose a time limit that follows the federal limit. Chapter 2 describes state time-limit policies and how they use federal and state funds.

Other Welfare Reform Policies That Interact with Time Limits

Other provisions of state welfare reform efforts can interact with time limits in complex ways. Key examples, discussed below, are earned income disregards, work requirements, and sanctioning policies.

Earned Income Disregards

During the 1990s, most states expanded earned income disregards or other policies that allow welfare recipients to keep all or part of their grant when they go to work. These policies provide a work incentive and raise the income of parents working in low-wage or part-time jobs. Although the maximum monthly welfare grant for a family of three is below $500 in most states, Appendix Table A.1 shows that recipients in 26 states can earn more than $900 per month and continue to qualify for at least some benefits. (A recipient working 35 hours per week for $6 per hour would earn about $900 per month).12

Because of these policies, recipients who find jobs are more likely to be eligible to stay on welfare today than in the past. But any month in which a recipient receives even a partial grant counts toward the federal time limit (and most state time limits). Although both time limits and earnings disregards are designed to encourage work, the interaction between these two policies can complicate the “message” that caseworkers need to transmit to recipients (see Chapter 4). Expanded disregards can also shape the size and characteristics of the group of recipients who reach time limits. For example, in states with generous disregards, recipients who are employed (mixing work and welfare) may account for a large proportion of those who reach the time limit.

Work Requirements

All states require welfare recipients to work or participate in activities to prepare for work. In most states, however, certain categories of recipients — for example, recipients with medical problems or those with very young children — are temporarily excused from these requirements. In a number of states, the exemption rules for work requirements and time limits do not match. Thus, for example, there may be recipients who are excused from work-related mandates but whose time-limit clocks are running.13

In the 1990s, most states redesigned their welfare-to-work programs to emphasize rapid job-finding, as opposed to education and training activities. However, some states have continued to encourage or allow education and training as a work activity, at least for certain categories of recipients. The presence of a time limit — particularly a short limit — can determine which types of activities are possible or advisable.

Sanctions

Another prominent feature of the 1990s welfare reforms is “full-family sanctions” — penalties that close a recipient’s entire welfare case if she or he fails, without good cause, to cooperate with work (or other) requirements. Under AFDC, sanctions involved reducing, rather than eliminating, the grant. Almost half the states received waivers prior to August 1996 allowing them to impose full-family sanctions; PRWORA requires states to terminate or reduce benefits pro rata in response to noncompliance, but the amount and duration of the sanctions are not otherwise specified. According to a survey conducted for this project (discussed below), 36 states use full-family sanctions, and at least 14 of them impose full-family sanctions on the first instance of noncompliance (see Appendix Table A.1).14

The presence of full-family sanctions can dramatically shape the size and characteristics of the group of families who reach time limits. There is wide variation in the implementation of sanctions, even in states where full-family sanctions are possible. However, in theory, if full-family sanctions are imposed aggressively, the only families who reach time limits will be those who cooperate with requirements but are unable to find jobs and those who are working enough to satisfy requirements but are earning too little to lose eligibility for benefits.

As discussed in later chapters, full-family sanctions can complicate the task of measuring how many families have their cases closed because of time limits. In many states, time-limit extensions are available to recipients who cooperate with program requirements but cannot find jobs. Individuals who are deemed noncompliant are denied extensions, but, depending on the precise timing of the noncompliance, it is not always clear whether the reason for the case closure was the time limit or a sanction. Similarly, some individuals are granted extensions and then later fail to comply with program rules and have their case closed (or are denied a second or third extension). Some states might consider this closure attributable to the time limit, while others might define it as a sanction.

Key Questions About Time Limits

Time limits have generated great controversy. Critics argue that many adults on welfare have very low skills, significant health problems, or other issues that limit their ability to support their families without welfare for extended periods. Thus, they argue, time limits may cause harm to vulnerable families. Proponents argue that time limits are necessary to send a firm signal — to both recipients and the welfare bureaucracy — that welfare is transitional and temporary. They contend that most recipients have the capacity to survive without assistance and that states can make exceptions for those who do not.

Key questions addressed in this report include:

  • What are states’ current time-limit policies? How many and what kinds of families are reaching time limits?

  • How do time limits affect patterns of employment, welfare receipt, income, and other outcomes among current and potential welfare recipients?

  • How are states implementing time limits? What messages are they sending to recipients about time limits? Are they granting many exemptions and extensions? What processes are used to determine which families qualify for these exceptions?

  • How are families faring after time limits? Are they better or worse off than when they received welfare? How do these families compare with other families who left welfare “voluntarily”?

It is too early to draw final conclusions about time limits. The federal 60-month time limit has taken effect only in some states, and relatively few families in those states have reached the federal limit. Moreover, most families reaching shorter state time limits have done so during a period of exceptionally strong economic growth. Nevertheless, as discussions about the reauthorization of PRWORA begin, it is critical to take stock of what we know about time limits today.

About the Project and This Report

This project includes three components to obtain a diverse set of information about time limits:

  • Survey. A survey of state welfare administrators was conducted to obtain up-to-date information about time-limit policies, the use of state and federal funds, and the states’ experiences with time limits to date. The survey was distributed to all 50 states and the District of Columbia. After states responded, they were contacted by phone to clarify the meaning of the data they provided.15  The survey was designed by HHS staff with assistance from MDRC and The Lewin Group, and it was administered and analyzed by The Lewin Group.

  • Site visits. MDRC staff conducted site visits to five states (Georgia, Louisi-ana, Massachusetts, New York, and South Carolina) to obtain information on the day-to-day implementation of time limits. Each visit included discussions with senior welfare administrators and with line staff in two local welfare offices. The five states were selected because they have had substantial experiences with time limits (four of them have limits of fewer than 60 months) and because they have not been the subject of a detailed study of time-limit implementation.

  • Literature review. MDRC reviewed, summarized, and synthesized the results of all major studies of time limits that have been conducted to date. This includes formal evaluations of welfare reform programs that included time limits, surveys of individuals whose cases were closed because of time limits, and other kinds of studies.

The report describes the results and findings from all three study components and is organized as follows:

  • Chapters 2 and 3 report on the results of the survey of states. Chapter 2 focuses on state policies, and Chapter 3 focuses on states’ experiences with time limits to date.

  • Chapter 4 discusses key issues involved in implementing time limits. The discussion draws from studies of time-limit implementation conducted as part of other research projects and from the site visits conducted as part of this project.

  • Chapter 5 summarizes and synthesizes the available evidence on how time limits affect employment, welfare receipt, income, and other outcomes.

  • Chapter 6 summarizes and synthesizes data on how families are faring after reaching time limits and having their benefits canceled. It draws primarily on eight state or federally funded follow-up studies targeting time-limit leavers.

  • The appendices provide further information on the material covered in the chapters. Appendix A contains detailed results from the survey. Appendix B describes the site visits and includes a brief profile of each state discussed in Chapter 4. Appendix C includes information on the state and federally funded surveys that are discussed in Chapter 6. Appendix D lists research reports and other sources of information about time limits.



1In January 1994, Florida received waivers to operate the Family Transition Program (FTP), a pilot project that included time limits of 24 months (in any 60-month period) or 36 months (in any 72-month period), depending on clients’ characteristics. Some of the waivers that were granted earlier included provisions that might be described as time limits. For example, under a waiver granted to Iowa in October 1993, recipients were required to develop a self-sufficiency plan that included an individually based time frame for achieving self-sufficiency.(back)

2The glossary at the front of the report includes definitions of key terms related to time limits.(back)

3Greenberg, Savner, and Swartz, 1996.(back)

4Chapter 2 introduces one other type of time limit a replacement time limit, in which families who reach the limit have their cash assistance benefits replaced by another form of assistance (for example, vouchers).(back)

5U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, 1997.(back)

6U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, 1997.(back)

7In about one-half of child-only cases, the children are living with a relative who is not part of the welfare case. In others, the parent may be living with the children but is ineligible for welfare because he or she receives Supplemental Security Income (SSI), is a noncitizen who is not eligible for benefits, or is excluded for some other reason. In addition to child-only cases, the law excludes months during which a parent or pregnant woman received assistance as a child, provided that she was not the head of household or married to the head of household, and months of assistance received by an adult living on an Indian reservation or in an Alaskan native village with high unemployment.(back)

8States can use either the current year’s caseload or the previous year’s caseload as the base in calculating the 20 percent. Also, the base includes child-only cases, even though such cases are not subject to the time limit. Thus, in all states, the percentage of cases with an adult that will be permitted to receive assistance beyond 60 months is greater than 20 percent. See Falk et al., 2001.(back)

9“Assistance” was defined in regulations issued by HHS, which became effective in late 1999.(back)

10Under PRWORA, states are required to spend at least 75 percent (80 percent, in some cases) of what they spent on AFDC and related programs in 1994.(back)

11States were permitted to continue waivers that were granted before PRWORA passed, and, if the terms of the waivers were inconsistent with TANF provisions, the waiver provisions were allowed to take precedence. For example, several states exempted certain categories of families from their waiver time limits. If such a state elected to continue its waiver program, such families were exempt from the federal time limit until the waiver expired. Fifteen states claimed waiver inconsistencies related to time limits; many of these waivers have already expired, and most of the others will expire by 2003.(back)

12Disregards are temporary in some states; the $900 refers to the earnings eligibility limit in the fifth month of employment.(back)

13Very few categories of cases are exempt from the federal time limit, but many states exempt additional groups from their state time limits.(back)

14Appendix Table A.1 identifies 14 states that impose full-family sanctions on the first instance of noncompliance (referred to as “immediate” full-family sanctions). Four other states Kentucky, Michi-gan, Pennsylvania, and Wisconsin also might have been placed in this category because they use immediate full-family sanctions under certain circumstances.(back)

15All states and the District of Columbia responded to the survey, although several states were unable to provide all of the information the survey requested. The tables in Appendix A indicate when specific data were not available.(back)

 

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