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Economic tumult hasn't stretched welfare rolls

| Sunday, July 18, 2010

WASHINGTON — Food stamps, Medicaid and unemployment benefits have been a lifeline to many Americans during this recession.

But there's one safety-net program that hasn't been tapped as heavily: welfare cash assistance.

In fact, in some states, welfare caseloads have declined — even as the unemployment rate rose into double digits.

Across the country, the number of families receiving cash assistance has increased in most states since December 2007, the start of the recession.

But the Government Accountability Office, which examined the impact of the recession on welfare rolls, found "no clear association" between a state's unemployment rate and its cash assistance caseload. Some states with high unemployment rates had smaller welfare increases than states with lower unemployment rates.

"This does not mean that there is no relationship between unemployment and cash assistance caseloads, but rather that unemployment is one of many factors, including the state's eligibility and asset limits, the state's application process, and other state specific program characteristics that may affect a state's caseload," the GAO wrote in February.

Liz Schott, a welfare analyst with the Center on Budget and Policy Priorities, agrees that each state has to be looked at individually. But the larger picture, she said, is that cash assistance has been a much weaker safety net than other programs.

"What we see is that it's uneven as a safety net because the performance from state to state is varied," Schott said. "We see that it was a late and lesser safety net than something like the (food stamp) program."

A family of three can earn $1,984 a month (which is 130 percent of the federal poverty level) and still qualify for food stamps, an eligibility level set by the federal government.

By contrast, states set their own eligibility rules for cash assistance and the income limit is much less in most states. In Indiana, for example, a family of three can't earn more than $378 a month to qualify. That's one reason that the number of Hoosiers getting cash assistance has dropped 26 percent since 1995, while Medicaid rolls have increased 27 percent and food stamp participation is up 45 percent.

"You have to be poorer than poor" to qualify for cash assistance in Indiana, said Jim Dunn, policy manager for Indiana's Temporary Assistance for Needy Families program. "Even though Indiana has been hit hard with the employment loss, anyone who continues to get unemployment benefits has too much income to qualify for cash assistance in Indiana."

When Congress overhauled in 1996 to keep people from becoming dependent on cash assistance, states were given a set amount of money to work with along with increased flexibility on how to run their programs, including setting benefit levels and eligibility requirements. States generally have to have at least half the families meeting the work requirements. Recipients cannot get more than a combined five years worth of cash assistance during their lifetime.

In the decade after the overhaul, welfare rolls declined nationally, both because fewer people were eligible and because a smaller share of those who were eligible applied.

Fewer were eligible because of the strong economy, and because increases in the minimum wage and in the earned-income tax credit boosted family incomes, according to the GAO. The reasons applications were down among those who still qualified included the new work requirements and time limits, declining cash benefits, and efforts by states to divert applicants into other aid programs.

A federal extension of unemployment benefits have kept others off the rolls, although many states, including Indiana, expect to see an increase as those benefits run out.

The federal stimulus package passed last year included extra funding for states to help pay for higher welfare costs. States could get extra funding if they had an increase in cash recipients or an increase in spending on short-term benefits or on subsidized employment programs. Twenty states have spent more than half of their allocated amount, and seven have spent all.

Three states — Indiana, Nebraska and Wyoming — haven't qualified for any additional funds.

The application for the last round of quarterly funding is due in September, and Dunn said he expects Indiana will qualify in at least one of the three areas.

"We know we're going to qualify for something," Dunn said. "We're still trying to figure out how to maximize the amount we can get."

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