The extended TANF application period and applicant outcomes: evidence from Wisconsin.

Author:Cancian, Maria
Position:Temporary Assistance for Needy Families - Report
 
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This article examines the characteristics and income patterns associated with welfare entry and nonentry in the context of an extended application period for a sample of 1,664 women who applied for Temporary Assistance for Needy Families services in Wisconsin in the fall of 2006. The study uses data derived from the systematic review of caseworker notes as well as administrative data on welfare participation, earnings, child support, the Supplemental Nutrition Assistance Program, Earned Income Tax Credit estimates, and Supplemental Security Income receipt. It finds that about one-half of those who applied for services did not enter the welfare program within a 60-day time frame. Results indicate that those with consistent employment prior to applying for services, those with very young children, and pregnant applicants are less likely to drop out. In examining differences in economic well-being in the year following an application, the study finds that those who applied for and entered welfare (participants) and those who applied for but did not enter (dropouts) generally had similarly high levels of poverty. However, dropouts had higher rates of deep poverty, with some subgroups--such as those who had declined services--fating better than others.

KEY WORDS: poverty; TANF; welfare; welfare application

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The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-110) ushered in a new era of work-based welfare. Benefits are time limited and are no longer an entitlement; work activities are generally mandatory in exchange for cash assistance. These components of postreform Temporary Assistance for Needy Families (TANF) programs were designed to move low-income families off the welfare rolls and into the labor market, reducing caseloads and reliance on welfare. An expansive literature on welfare leavers has documented the dramatic decline in TANF caseloads and increased employment among single mothers, although findings point to poverty-level earnings and future spells of welfare receipt for many (for a review of welfare leaver outcomes, see Acs & Loprest, 2004; Cancian, Haveman, Meyer, & Wolfe, 2002; Cancian & Meyer, 2004; Danziger, Heflin, Corcoran, Oltmans, & Wang, 2002; Grogger & Karoly, 2005; Wu, Cancian, & Meyer, 2008). Although scholars continue to debate the impact of welfare reform policies relative to the economy on postreform caseload decline (see Danielson & Klerman, 2008), the strong work-first approach of modern welfare programs, which generally offer lower cash benefits than those earned through unsubsidized employment, shares some credit for the sharp reduction in caseloads and the increase in low-income women's employment (Blank & Schmidt, 2001; Grogger & Karoly, 2005; Moffit, 2002).

There is another contributor to reduced welfare caseloads: TANF policies that redirect applicants before they enroll, often referred to as "diversion" (Besharov & Germanis, 2007; Danielson & Klerman, 2008; Meyers & Lurie, 2005; Ridzi & London, 2006). Two popular diversion tools are (1) one-time cash payments offered in lieu of TANF participation and (2) extended application periods during which applicants participate in mandatory job-search activities over a prescribed number of days prior to eligibility determination. Diversion procedures are intended to attach unemployed applicants to the labor market or maintain employment for the working poor prior to TANF enrollment, thereby promoting self-sufficiency among target groups.

There are, however, concerns regarding the effectiveness of diversion tools in moving applicants into employment and targeting the appropriate groups. For example, scholarship on lump-sum cash payments suggests that those who are both the best and least equipped for the labor market are targeted, and a substantial number of recipients cycle onto TANF soon after receipt of the payment (Hetling, Ovwigho, & Born, 2007; Helting, Tracy, & Born, 2006; London, 2003). These results suggest that lump-sum payments are often inadequate as a work support, and related diversion is frequently short term.

We know comparatively less about the impact of extended TANF application periods on diversion. In fact, a recent review of state diversion programs concluded that there is a significant shortage of research on state diversion rates and outcomes for applicants diverted through extended TANF application periods (Rosenberg et al., 2008). Moreover, little is known regarding individuals who are denied TANF services relative to those who exit the TANF application process in other ways (Rosenberg et al., 2008). Scholars suggest that some applicants may be unable to comply with the demands of the application process because of unrecognized barriers, complex life circumstances, or difficulty navigating an increasingly complex system (Gonzales, Hudson, & Acker, 2007; Meyers & Lurie, 2005; Riccio & Hasenfeld, 1996; Ridzi & London, 2006; Ybarra, 2011). This consequently decreases the likelihood of TANF participation among the most disadvantaged (Clampet-Lundquist, Edin, London, Scott, & Hunter, 2004). Overall, however, current information on extended TANF application periods and their contribution to diversion of applicants does little to clarify outcomes among the diverted, particularly for those who are denied services.

In this study, we used computerized administrative data, supplemented with data derived from the systematic review of caseworker notes, to analyze the effects of Wisconsin's 12-day application process on diversion and the later economic well-being of TANF applicants and their families. Our sample included 1,664 women who applied for TANF in Wisconsin in September and October of 2006. We distinguished between those who entered TANF (participants) according to the different participation requirements of the Wisconsin Works (W-2) program and those who exited the extended

application period (dropouts) by the reason the dropout occurred (for example, declined TANF services, denied TANF services, missed an agency appointment). We then considered differences in characteristics and postapplication earnings and income between participants and dropouts overall as well as within subgroups of each category.

POLICY CONTEXT

In 2006, 21 states used extended TANF application periods in which applicants without barriers to work were required to engage in work activities as a condition of program entry. According to federal guidelines, states may exempt individuals from work activities for the following reasons: physical limitation, mental health impairment, alcohol or drug abuse issue, disability of family member or custodial child(ren) that requires care-taking by the TANF participant, being a mother with an infant or infants, or being a high school student 19 years of age or younger. The types of activities assigned during the extended application period are similar across states. For instance, in 2006, all extended-application-period states required applicants to attend a TANF orientation session and participate in worklike activities (Rowe & Murphy, 2006). Moreover, most states require that TANF applicants submit applications for unsubsidized employment as well as participate in job-related workshops (Rowe & Murphy, 2006). The length of the application period varies, ranging from several days in Texas to up to six weeks in Georgia. The penalty for noncompliance with application period activities may be a reduction in cash benefits, or, as is the case in 15 states, TANF services may be denied (Rowe & Murphy, 2006).

This study focused on individuals who applied to Wisconsin's TANF program, W-2, in the fall of 2006. The W-2 program structures its extended application period over the course of 12 days. Agencies may extend the application period up to 30 days. Extensions, however, are typically granted because an applicant was unable to complete assigned activities in a 12-day period rather than as a punitive measure by W-2 agencies (Ybarra & Kaplan, 2007).

As in many other states with extended application periods, in Wisconsin, W-2 applicants are assigned job search activities that require 10 job application submissions to unsubsidized employment per week and several employment workshops. If applicants do not comply with most application period requirements, W-2 services may be denied. The W-2 extended application period is comparable to those of other states and offers important information to scholars, policymakers, and administrators about the outcomes for families who participate in extended TANF application periods.

PREVIOUS LITERATURE

Previous literature regarding the extended TANF application process has focused on three different issues: (1) the extent to which the extended application process diverts applicants from enrolling in TANF programs, (2) the characteristics of those who are diverted from the TANF program as compared with those who enroll, and (3) the long-term economic outcomes of those who are diverted from the TANF program as compared with those who enroll.

There is a limited literature on the impact of extended TANF application periods on applicant diversion, and it is mixed. For example, Ridzi and London (2006) found that about 75% of individuals who applied for TANF services in March and April of 2000 in one New York county did not enter TANF within two months after applying for services, although 61% of the sample had participated within one year. In contrast, Gonzalez et al. (2007) found a much lower rate of diversion, with only 21% of respondents reporting they were diverted during Oregon's extended application period in 1998. Further, a state of Arizona evaluation found that just over one-half of 3,500 applicants were diverted during a 30-day application period following an application for services in June 1999 (Arizona Department of Economic Security [ADES], 2001). The variation in diversion rates across states is likely related to the...

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