Thought Leadership

The New Welfare System

The 1996 welfare reform legislation addressed the three major criticisms of the previous system. It gave more power to the states, focused on the goal of reducing dependence on welfare, and placed limits on government spending for welfare programs.

Personal Responsibility and Work Opportunity Reconciliation Act

These and related criticisms of the welfare system helped to fuel reform efforts, which eventually led to passage of’ the Personal Responsibility and Work Opportunity Reconciliation Act; President Clinton signed it into law on August 22, 1996. The Republican majority in the 104th Congress wished to reform the welfare system before the elections November 1996. Therefore these political developments created the incentive for policymakers to make the most significant changes in American welfare policies.

Empowering the States

A reform called Temporary Assistance for Needy Families (TANF) was created. It was funded by funds previously allocated to Aid to Families with Dependent Children (AFDC), emergency assistance, and work assistance programs. TANF provides each state with resources to accomplish the legislation’s following four basic goals.

·        Assisting needy families so that children may be cared for in their own homes or in the homes of relatives

·        Ending the dependence of needy parents on government benefits by promoting job preparation, work, and marriage;

·        Reducing the incidence of out-of-wedlock pregnancies and establishing annual numerical goals for such preventing pregnancies and thus reducing their number

·        Encouraging the formation and maintenance of two-parent families.

States were given considerable power to shape their own welfare policies and programs. However, the Congress did set some limits. To receive federal funding under TANF states had to submit an acceptable welfare assistance plan to the national government by July 1, 1997. Each state was to demonstrate that its efforts would be equal to at least 80 percent of what it spent on federally funded programs in fiscal year 1994. It also included provisions that would require most recipients to seek at least part-time employment, after two years, as well as provisions that would end eligibility for TANF-funded programs for most recipients after five years. In addition, each state had to promise that it would hold the administrative costs of any programs funded under TANF to 15 percent or less of budget.