March 15, 2000

The Honorable Don Siegelman
Governor of Alabama
State Capitol
600 Dexter Avenue
Montgomery, AL 36130-2751

Dear Governor Siegelman:

As you may recall, I wrote last year urging you and other governors to increase the rate at which TANF money is spent, because there is so much states can do to increase self sufficiency. After 60 years of failed attempts to bring people out of poverty by giving them noncontingent benefits, we have turned a new page and expect - even demand - reciprocity. Using taxpayer money, government helps low-income families, but only on the condition that they work towards self sufficiency. As a result, welfare rolls are down, earnings by former welfare mothers are up, and child poverty is down -way down. This reform has been a triumph for the states. But too many people remain on the rolls, a great deal remains to be done to help those who have left welfare but don't work, and we can and must do more to help people who leave welfare get better jobs through both experience and training. All these activities cost money, and I urged you to spend your surpluses accordingly.

I am happy to report to you that the Congressional Budget Office's new baseline shows that you and your fellow governors are responding exactly as I had hoped. Here's the data. Last year CBO testified before my Subcommittee that at the end of 2002, states would have built up TANF reserves of $22.8 billion. Under the January 2000 baseline, less than a year later, CBO is estimating, based on updated information on state spending, that the balance at the end of 2002 will be only $14.2 billion. Moreover, CBO estimates that by 2002, states will be spending 96 percent of their TANF dollars. Thus, states have now begun to use more of their block grant money and, if the results reviewed above are a measure, to use it wisely.

I am writing again this year to report your progress in using federal resources and to urge you to continue the productive spending in which you are now engaged. We have reviewed the spending patterns in many states and have found a significant change in state spending since 1994. Before states began implementing welfare reform, they often spent 95 percent of their funds on cash benefits and administration. Now many states spend less than 50 percent on cash benefits and spend 40 percent or more on child care, job preparation, transportation, and other activities designed to help families get and keep jobs. These are highly appropriate changes in state spending. They signal that TANF is no longer primarily a welfare program - but a work program.

To push the program further in the direction of work, I hope you and other governors and state legislators will continue making such remarkable investments in activities that promote work. Based on our hearings and discussions with researchers and state officials around the country, I would like to bring four areas to your attention that seem to be strong candidates for additional funding. First, we have learned that a very high percentage of mothers who leave welfare for work have difficulty retaining jobs. Programs that show how mothers can be followed and helped to retain their employment after they leave welfare will provide an example for the rest of the country to follow. Second, no one has yet shown that they can have a significant impact in helping mothers move up the employment ladder to more demanding and better paying jobs. Successful investments in on-the-job training, community college courses, and training mothers for jobs available in their own communities will also be the object of national attention. Third, it has been reported that a large percentage of the mothers left on welfare have serious barriers to work such as addictions, personality problems, and intellectual and educational shortcomings. Again, states that show how mothers with barriers to employment can be better prepared to enter the labor force will provide an example for other states to follow. Finally, we have barely scratched the surface of reducing illegitimate births. Although we have provided $20 million bonuses to five states that reduced their illegitimacy rates, we need to learn much more about actions which government can take to reduce births outside marriage or, equally important, to promote marriage. Similarly, we seem to be at the beginning of a movement to help fathers improve their employability and become better parents as well as better marital partners. I urge all of you to focus on these goals and share with this Committee the programs you have developed that are working.

In reviewing these and similar investments for your own state, I hope you will be careful to avoid supplanting TANF funds. By supplantation, I mean replacing state dollars with TANF dollars on activities that are legal uses of TANF funding. Supplantation, of course, is perfectly legal under the TANF statute. However, if the savings from supplanted federal funds are used for purposes other than those specified in the TANF legislation, Congress will react by assuming that we have provided states with too much money. As the reauthorization of the TANF legislation in 2002 approaches, it would be a shame if a few states followed the suggestions of their budget officials and replaced state dollars with TANF dollars in order to provide tax cuts, build roads or bridges, or in general use funds for non-TANF purposes. It has become increasingly clear that the media, child advocates, Congressional committees, and, at my request, the General Accounting Office, are watching to see if states supplant TANF funds. Thus, it is likely that jurisdictions that do so will become widely known and criticized. Equally important, these jurisdictions could provoke Congress to take actions that would hold serious consequences for every state.

Under the leadership of state governments, with far more flexible federal funding than at any time in our history, we are moving with impressive speed to greatly reduce the nation's longstanding problem with poverty. States have made this progress because we have turned away from noncontingent handouts and emphasized employment and self-sufficiency. By supplementing the income of low-wage workers with public benefits such as Medicaid, food stamps, housing, and above all, the Earned Income Credit, we have reduced child poverty 25 percent in the past four years. Now, again understate leadership, we must bring the advantages of self-sufficiency to the families that remain on welfare, help keep these low-skill parents productively employed, and find new ways to help them advance to better jobs.

To achieve these new and even revolutionary goals, we must retain all the federal and state resources in the TANF block grant, the U.S. Employment Service, the Workforce Investment Act, and other employment programs. If you and your fellow governors will continue to productively use these resources to help low-income families achieve independence, we will continue to do everything possible here in Washington to insure that the federal resources continue unabated and that we provide you with more and more flexibility in the use of these resources.

 

Sincerely,

Nancy L. Johnson Chairman

NLJ/rhm