Legal Aid responds to op-ed on welfare reform

Maryland Legal Aid’s Peter Sabonis responds to a recent Sun op-ed on welfare reform:

The state of Maryland may deserve praise for the way it handled welfare reform, but none of it for the reasons cited by Gary MacDougal (“The Welfare Reform Model,” Baltimore Sun, Sept. 8).

MacDougal and his libertarian think tank examined the change in unemployment, poverty, teenage birth rates and Temporary Assistance to Needy Families caseloads from 1996 to 2006 in all states, and put Maryland near the head of the class for “poverty reduction.”

Then, after determining the presence of seven policies “known to encourage self-sufficiency” (including welfare sanctions, family cap provisions, and work requirements) and subjectively evaluating most of these, the think tank ranked Maryland number one in welfare reform success.

Fortunately, welfare reform policy in Maryland is informed by far more than this superficial analysis.

Since 1996, the University of Maryland School of Social Work has, at the behest of the state, engaged in the most comprehensive longitudinal study of those who exit the rolls (“welfare leavers”), examining post-exit employment data, welfare recidivism, and other public assistance participation (including Medical Assistance).

This wealth of information indicates that roughly half of “welfare leavers” are employed in the calendar quarters immediately following welfare exit. Even more encouraging is the fact that work participation levels increased as time passed, as did earnings.

The “sobering reality,” however, as the latest report indicates, “is that, even a decade after leaving welfare … the average earnings of working adults are still less than the poverty level for a family of three” (“Life After Welfare #12,) Univ. of Md. School of Social Work, p. 18 ).

Putting aside the limitations of the antiquated federal poverty level, these workers should be lifted above poverty by the assistance that includes and is targeted for the working poor: food stamps and the Earned Income Tax Credit (EITC).

Maryland’s food stamp participation rate is shameful compared to other states. For the last ten years, the state has ranked near the bottom of all—enrolling a little more than 56 percent of those who are eligible for the program, which extends to 130 percent of poverty.

The “welfare leaver” studies show that food stamp participation by those exiting welfare is more likely compared to other low-income groups—but only in the two quarters immediately following exit.

After that, food stamp participation rates drop steadily—to the extent that less than one in three of those who exited welfare in 1996 now participate.

EITC participation rates are worse, and this is where MacDougal’s report is valuable. Using data from 2004 (the last year the IRS made public state-by-state participation ratios), MacDougal shows that 73 percent of EITC dollars remain unclaimed in Maryland. This is typical for most states.

The reasons why low-income persons do not maintain food stamp eligibility or file tax returns that would net them EITC refunds are many and multi-faceted. MacDougal’s explanation for this, provided relative to EITC in his report, is typical and cynical—poor people don’t know about the benefits and “since the tax credit flows directly to individuals and not through welfare bureaucracies, there is little incentive…to invest in public education programs” (“Welfare Reform after Ten Years: A State-by-State Analysis,” p.75).

This conclusion is undermined by our food stamp experience. There, dollars do flow to the state, as the federal government picks up the program’s administrative costs. The “welfare leaver” reports dispel the myth that the poor are ignorant of the benefit. Despite this, participation declines over time.

Further, MacDougal asks the bureaucracy to do more—while Maryland is giving it less. According to the Maryland Budget and Tax Policy Institute, the Department of Human Resources and the Department of Health and Mental Hygiene have lost 1,333 and 1,042 full-time positions respectively over the last six years.

The institute shows that Maryland is clearly disinvesting in its human services infrastructure, relative to other state agencies.

This comes at a time when the federal government is upping the ante on welfare reform. Legislation in 2006 reauthorizing the program imposed even more onerous work requirements on states, most of which are seeing the current recession wipe away their prior reductions in the unemployment, poverty and teenage birth rates.

The issues of the working poor, however, involve only half of those who leave welfare in Maryland.

The “welfare leaver” studies show that the group that does not find employment is split almost evenly between those who return to the rolls and those who are never heard from again (although there is evidence this latter group remains linked to food stamps and their children, most likely, to Medical Assistance).

Much remains to be done in welfare reform—both on behalf of the working poor and those who are not employed. Maryland can accept MacDougal’s praise. But wise policy-makers should turn their attention from him and his cohorts to the ones that are contained in the “welfare leaver” studies.

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