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Tuesday was the deadline for states to file outlines for new ways to run welfare programs. It was ordered by Congress and legislation that replaces federal aid with block grants. How are states and welfare receipients coping?

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February 11, 1997: California Governor Pete Wilson's workfare program. February 6, 1997: A report on finding affordable daycare as state and local subsidies are cut. February 4, 1997: The impact of last summer's welfare reforms on state governments and a panel of regional commentators with their accessments of the reforms. December 2, 1996: Elizabeth Brackett reports on the growing business of welfare. October 22, 1996: Sen. Rick Santorum (R-PA) answers viewer questions about the new welfare reforms in an Online NewsHour Forum. October 1, 1996: A team of NewsHour correspondents report across the nation on Day One of the new welfare reforms. June 7, 1996: Wisconsin officials answer your questions about that state's welfare innovations. Read a special Online NewsHour backgrounder explaning the challenges states face when reforming welfare. External Links The Department of Health and Human Services' welfare reform page.

JIM LEHRER: Welfare reform is first tonight. Our look begins with reports from Betty Ann Bowser and Spencer Michels on how two states are progressing.

SPENCER MICHELS: 20 percent of the nation's welfare recipients live in California, about 2 ½ million people on the Aid to Families with Dependent Children Program. To support them, federal, state, and county governments are spending more than $6 billion this year. But the federal welfare reform law requires the states to devise a new system aimed at moving people off welfare and on to work. California filed an interim plan just to meet the deadline last October. Then the fight over the real plan began. In March, Republican Governor Pete Wilson threw down the gauntlet by asking the Democratic legislature stringent rules, including a 12-month limit on aid in any 24-month period, and a requirement that single parents work 32 hours a week.

GOV. PETE WILSON, (R) California: If a parent simply says this job is beneath my dignity, if they are very dismissive and say, I refuse to take this job, then they're going to be off right away.

SPENCER MICHELS: It was a proposal that antagonized Democrat Dion Aroner, co-chair of a legislative committee on welfare.

DION ARONER, Democratic Assemblywoman: I see the governor's proposals as punitive. In other words, instead of interesting people moving from welfare to work, putting carrots out, I think that the governor uses a stick. Okay? I think that's a philosophical difference in how we see the world.

SPENCER MICHELS: Democrats in the California legislature have their own welfare proposal, with less stringent work requirements and more generous benefits than the governor's plan. Republicans consider it no reform at all.

BERNIE RICHTER, Republican Assemblyman: I support a welfare reform program. I am not going to support a Democrat welfare expansion program, and that's what this is all about.

SPENCER MICHELS: Democrats and Republicans part company on several major issues. Exactly how long can recipients get AFDC payments before being cut off? What happens to them and their children if they are dropped? How much should they get? And how strict should the work requirements be? The debate among lawmakers has been tense.

TOM McCLINTOCK, Republican Assemblyman: Republicans expect that able-bodied adults work for their checks, and the Democrats are working to find every possible excuse to exempt them from that requirement.

RODERICK WRIGHT, Democratic Assemblyman: I would submit that most of my colleagues on the other side have never spent five minutes with a welfare mom to figure out how do you pay $500 a month for an apartment; how do you buy clothes for your children; how do you buy food--

SPENCER MICHELS: Despite the arguments, Aroner feels the differences can eventually be compromised.

DION ARONER: It is very clear that we all believe that we want to develop a system that moves families from welfare to work. I don't think we're as far apart as everyone thinks we are. I do think that there's a compromise in sight, and I don't think it's very far away.

SPENCER MICHELS: The governor, however, says the sides are very far apart and accuses the Democrats of wanting to preserve the status quo.

GOV. PETE WILSON: It is apparent that they want to continue for assistance, making it essentially permanent with a state-only program, even after the five-year federal limit. That makes no sense. That not only runs counter to the federal proposal; it runs counter to the whole idea of moving people from welfare to work.

SPENCER MICHELS: The delay is causing confusion in California's 58 counties and among recipients, according to Frank Mecca of the county Welfare Directors Association.

FRANK MECCA, Welfare Directors Association: Neither the recipient nor the administrators can know for sure exactly how this is going to impact them until the state finishes its business of legislating and adopting a welfare reform proposal.

SPENCER MICHELS: If a bill to Gov. Wilson's liking doesn't cross his desk, his aides are hinting that he might put his tough reform package to a vote of the people. But several counties are not waiting for Sacramento to act. They are experimenting with motivational classes, and they have instituted phone banks, all designed to move welfare recipients off the rolls. While some of them are trying to hunt for work, state politicians of varying stripes are hunting for a formula under deadline pressure. If no final statewide plan has been submitted to the federal government and approved by January 1998, huge penalties will take effect. That could eat into the $3.5 billion in block grants California has been allocated.

SPOKESPERSON: So when we look for our job, when we start to do our job search, these are things that are important to us.

BETTY ANN BOWSER: In Ohio, the move to welfare reform has produced significant progress and new problems. Innovative job training programs and a thriving economy has helped drive the number of new claims down by 1/3 since the early 1990's, to the lowest level in almost two decades. Today, there are only ½ million people receiving welfare.

SPOKESMAN: The question is: Shall the bill pass?

BETTY ANN BOWSER: The state easily met today's federal deadline because it had already started reform back in 1995. Then last week both Houses of the legislature unanimously finalized a final version of welfare reform, which qualifies it for millions of dollars in federal block grants. Under Ohio's reform, people have three to five years to find work, and they're required to do community service or some other kind of work to receive benefits while they look for a permanent job. The director of Ohio's welfare program says the work requirement produced a surprise, a so-called "smoke out" effect, forcing people who were fraudulently working while receiving benefits out into the open.

ARNOLD TOMPKINS, Director of Human Services, Ohio: When you start requiring a lot of people that you didn't require before--did have jobs and things before that weren't reported income and things like that--when you try requiring them to do 20 hours of work or 15 hours of work, they then--I can't do that because I've got another job.

BETTY ANN BOWSER: Tompkins says as much as 1/3 of the drop in welfare claims in Ohio could be a result of previously undetected fraud. And he says the future of welfare reform rests with local governments, who are being allowed to design and control their own programs to meet their community's needs. The city of Dayton is trying a new approach called Integrated Services. By consolidating 37 different agencies all in one building recipients no longer have to go to five or six different locations. Clients can also leave their children in this daycare center for up to four hours as they make the rounds of various agencies. Stephen Rice, who heads the Montgomery County program, says the emphasis is on jobs, not qualifying people for welfare.

STEPHEN RICE, Director of Human Services, Montgomery County: For every person that I pay here to figure out how to get you on, I'm paying someone to figure out how to get you back off. We want to change it to some day that for every one you get on there's ten to get you off.

BETTY ANN BOWSER: Gretha Thigpen found her first real job through the Montgomery County Program. She had been on and off welfare for 11 years. Now she works as a lot attendant for a local car dealership.

GRETHA THIGPEN, Former Welfare Recipient: I have a full-time job now, full benefits, able to purchase a car. And my kids love it; I have their support.

BETTY ANN BOWSER: How hard is it to get off of welfare?

GRETHA THIGPEN: It's real easy. All you have to do is be able to want to get off, and you can get off. I'm a fine example. I got off.

BETTY ANN BOWSER: But most people who have been on welfare for a long time say getting off the system isn't so easy. Linda Goosby has been on for 10 years. She recently started a job readiness program in nearby Cincinnati, and with two young children who require daycare and with no car, she says looking for a job takes time and a lot of effort.

LINDA GOOSBY: It's hard when you're out there looking. A lot of jobs, you need experience and you don't have it, or you got to try to convince the worker to hire you. So it's--it's really hard, so they can't just say, go out there, find a job, or you're going to get cut off. That's impossible.

BETTY ANN BOWSER: Cuyahoga County Commissioner Jane Campbell says Goosby illustrates the major challenges welfare reform faces in Ohio. She commissioned a study for her Northeastern county, which includes the city of Cleveland. The study found there aren't enough new jobs to match the unskilled welfare labor force there. It also concluded many workers will have trouble getting to those new jobs.

JANE CAMPBELL, Cuyahoga County Commissioner: For a corner in the middle of our welfare population, about 25 percent of the jobs are accessible within a 45-minute bus ride. There are 25 percent of the jobs that you can never get to on a bus because the bus doesn't go there, and 50 percent of the entry-level jobs, someone would have to ride on a bus for anywhere between an hour and a half and two hours each way.

BETTY ANN BOWSER: Some state officials disagree with the study's overall conclusions, but they do say transportation is a challenge most communities face as they move people from welfare to work.

JIM LEHRER: Now an overview of the situation nationwide. Sheri Steisel tracks welfare programs for the National Conference of State Legislatures. Sid Johnson is the executive director of the American Public Welfare Association representing all 50 states. Ms. Steisel, in general terms, are there more states about where California is in this process right now, or where Ohio is?

SHERI STEISEL, National Conference of State Legislatures: The fact, Jim, that about 35 states are where Ohio is, and another 10 states have finished their job already. We have about eight states that are like California, either not in session, or still struggling with the fundamentals of welfare reform.

JIM LEHRER: Thirty-five, Mr. Johnson, meaning these thirty-five states have a program that has been approved and is actually functioning in some form.

SID JOHNSON, American Public Welfare Association: Yes, that's exactly the case. Many of these states have started early and have had a focus on work that is a complete change from the previous welfare program.

JIM LEHRER: And what about diversity in the program? I mean, the whole idea of this, of course, was, okay, you decide what you want to do in Ohio. It can be different from what they do in Kansas. It can be different from what they do in Texas. How diverse are the approaches?

SHERI STEISEL: Well, they really are very much dependent on the economies of the various states. A state like California the legislature is struggling with a variety of the population, but we have some states that have targeted programs to rural areas, others who have been very concerned about the level of such abuse among recipients, others who've brought in the business community, so states are really trying with very different kinds of strategy, and state legislators, particularly, are very concerned about follow-through and evaluation.

JIM LEHRER: Is there a clearinghouse of information among and between these states? Are they trying to go at it together, or is everybody going off on their own deal?

SID JOHNSON: I think there's a lot of desire to share their experiences. Our association, American Public Welfare Association, is collecting information on what different states are doing, what's innovative, what's working, sharing between them so they can learn from each other.

JIM LEHRER: What is the--of the states that are now operating--the 35 plus these other 10 that have--what are the major problems that are developing? Are there some that can be identified that have more than--apply to more than one state?

SID JOHNSON: I think it's really hard to generalize at this point. If this were a baseball game, you would say we're in the first inning of an important game. And this is not a game for the people involved. The fundamental change of this law--it's changed the goals, the financing, the governance all at once, and states are just beginning to sort it out. You could say that they are building an airplane at the same time they're learning to fly, and they are starting, I think, in a very promising way.

JIM LEHRER: And the man from Ohio pretty well said it, did he not, Ms. Steisel, when he said we now have one person to help people get on welfare, we have another person to help people get off welfare, they used to not have that second person, right?

SHERI STEISEL: That's right. In fact, a lot of states are actually changing how it is when you come into the welfare office. When you come into the welfare office you're not asked only about your eligibility but what are your skills, what is your individual experience, so that for some recipients, a number of states are trying welfare diversion, which means giving welfare payments up front to recipients who may just need child care, who really don't need public assistance or to get on welfare; all they need is a helping hand to stay in the job market.

JIM LEHRER: And they couldn't do that before under the old system?

SHERI STEISEL: Well, under the old system states would have to go to Washington and ask for waivers of federal laws. And some of these federal laws didn't make a lot of sense. For example, having to ask for permission to do diversion or keeping a car at a value--

JIM LEHRER: Doing diversion--

SHERI STEISEL: Doing these payments, welfare payments--

JIM LEHRER: For a specific thing--

SHERI STEISEL: For a specific client.

JIM LEHRER: To get some people over a difficult--

SID JOHNSON: They call it often welfare prevention. If someone comes in with a specific problem--

JIM LEHRER: Like what?

SID JOHNSON: The car doesn't work, and they can't take the job. They are starting a micro enterprise project, but they don't have the $500 they need for credit. Many states--25 of them--are able now to offer a one-time payment--often the equivalent of three months welfare benefits--to help that family solve that problem and not become dependent on welfare.

SHERI STEISEL: As you know, Jim, in the Ohio tape, there was a whole discussion of transportation.

JIM LEHRER: Right.

SHERI STEISEL: The federal government had a rule that said if you had a car that was valued at more than $1500, you could not get welfare benefits. Well, a $1500 car--

JIM LEHRER: You mean any kind of welfare benefits?

SHERI STEISEL: Any kind of welfare benefits. If you had a value of $1500 because of the concern that recipients would drive fancy cars, so we lowered the value of the car. What happened was, of course, a $1500 car is not very reliable in the middle of an Iowa winter, trying to get to your job, and so states--very understandably--state legislators tried to rectify this, but they'd have to do it by getting a waiver. Now, they can make choices that make the most sense in their particular jurisdiction.

JIM LEHRER: So is the system--these states where they're doing this--for instance, that had--established this kind of flexibility--somebody comes in and says, my car's broken down, and the example you used, how--what kind of a system is in place to make sure all of that is right and that there's not a $15,000 car sitting out there and all of that, all the concerns that people had going into this thing?

SID JOHNSON: Caseworkers involved in this investigated the situation. They just don't write a check and say fix your car. What they're trying to do is to analyze whether a small grant up front to fix that car can prevent that family from going on welfare and staying on welfare. It's a matter of discretion. You need training staff and, in fact, one of the emerging problems--to go back to an earlier question of yours--most of the welfare staff were hired to be eligibility workers, to figure out how large a check you should get, to look at your work history, your rents, and all.

JIM LEHRER: --the amount of the value of your car--

SID JOHNSON: The value of your car. Now there have to be job counselors to find--help find jobs, child care, transportation, to think--it's a whole different process. To capture one example, in the state of Oregon when you--an applicant came in, the questions were: tell us your receipts and your work history and the rest and let us help you. Now, the first question is: how can I help you get a job?

JIM LEHRER: What are your skills?

SID JOHNSON: Right.

JIM LEHRER: What can you do?

SID JOHNSON: Exactly.

JIM LEHRER: Now, we're doing this tonight because there was a deadline, a deadline of midnight last night that states had to file a plan. Is this deadline a meaningful deadline? Did it mean something? I mean, did it help the situation?

SHERI STEISEL: Jim, I believe it's a symbolic but very important deadline in the sense that we've abandoned the uniform national system for a system that fosters state creativity; that looks more at the local parts of these problems. So July 1st really means the beginning of, for example, a federal national time limit on assistance, an end to the old AFDC program. On the other hand, it also is the beginning of states being judged by the federal government too. Will states meet the work participation rates? I certainly think they will.

JIM LEHRER: Yes. But, Mr. Johnson, as you said a moment ago, it's too early to proclaim anything, is it not? Hey, this is really working like a charm.

SID JOHNSON: Exactly.

JIM LEHRER: This is really a failure or whatever.

SID JOHNSON: I think the beginnings are very promising. Sec. Shalala said just a few days ago--

JIM LEHRER: HHS Secretary.

SID JOHNSON: --Health & Human Services Secretary--that there were many observers when the bill was signed who predicted disaster, but if you look at it now, you see governors and state legislators investing in these programs. There's more financing for them--about $2 billion more than there would have been under the old system, which translates into about $685 per family of child care services and transportation. I think, overall, it's a very promising start.

JIM LEHRER: Overall, but there have been some individual cases, have there not?

SHERI STEISEL: There certainly have been. In fact, I know that in some of the studies that actually state legislators and governors have put together to follow up on welfare recipients we've found some problems. Now, the good news is we're fixing those problems.

JIM LEHRER: What kind of problems?

SHERI STEISEL: Let me talk a little bit about that. In Iowa, for example, we found that when people leave the caseload because they're penalized for not participating in a work activity, they've done a follow-up study, and they found that about half of the caseload actually does not--experiences a decline in their income, a decline in their status in terms of their living status. On the other hand, they have also found that about--they can't find--about 60 percent of the caseloads have left welfare because they have refused to participate in these new work requirements.

JIM LEHRER: They don't know where they are.

SHERI STEISEL: They don't know where they are and that's really a challenge. Another case would be in Wisconsin, where there had been some trouble with having uniform applications of penalties on recipients.

JIM LEHRER: As you said, first inning. Thank you both very much.

SHERI STEISEL: Thank you.

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