International Perspectives on Welfare to Work Policy

Richard Hoefer, James Midgley

• Publisher: Routledge
• Year: 2006
• eBook ISBN: 9781136777561
• Topic: Medicine
• Subtopic: Health Care Delivery

Learn what you can do to promote social policy initiatives that really work

International Perspectives on Welfare to Work Policy presents the latest available research on the various interpretations of welfare-to-work in the United States, the United Kingdom, Australia, and Hong Kong, and on the role social work plays in cr

A Rose by Any Other Name?
Lump-Sum Diversion
or Traditional Welfare Grant?

Andrea Hetling
Kirk Tracy
Catherine E. Born

SUMMARY. Critics of diversion grants, lump-sum payments designed to alleviate short-term emergencies and prevent the need for ongoing Temporary Assistance to Needy Families (TANF) receipt, claim that recipients use monetary amounts similar to traditional welfare recipients. This paper examines the total cash grants for two cohorts of TANF applicants: those whose applications resulted in a TANF grant and those who received a diversion grant. Multivariate regression models show that diversion leads to a reduction of $1,841.44 in cash benefit receipt during the three-year tracking period (p < 0.001). Findings suggest that diversion payments are not TANF under another name. [Article copies available for a fee from The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail address: <[email protected]> Website: <http://www.HaworthPress.com> © 2006 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Welfare, diversion, Temporary Assistance to Needy Families (TANF)

INTRODUCTION

Diversion strategies, established by the 1996 federal welfare reform legislation, the Personal Responsibility and Work Opportunities Reconciliation Act (PRWORA), are alleged to be innovative techniques to help families avoid welfare dependency. The premise of diversion is that monthly cash grants may not be the best way of helping poor families in all cases and other, more appropriate, services may enable them to become self-sufficient without ever entering the “rolls.” In many states, including Maryland, diversion allows potential Temporary Assistance to Needy Families (TANF) recipients to collect one large lumpsum payment, so that rather than receiving smaller monthly TANF checks, individuals receive the equivalent of several months of benefits at once in order to alleviate an immediate crisis, such as an urgent automobile repair or avoiding an eviction. The only restriction is that they are then ineligible to receive TANF for the equivalent number of months.

Diversion grants are especially appealing in these times of budget shortfalls as it is assumed that one-time lump-sum grants are less costly than traditional, longer-term, cash assistance. This assumption, however, has not been unequivocally determined. Some scholars believe that diversion strategies are as costly as monthly grants and, moreover, do not offer the same incentives such as time limits and work requirements as TANF does (Besharov & Germanis, 2004). Also, if work participation rates increase with TANF reauthorization, diversion could be used as a way for states to reduce the number of people required to work and thus increase their rates through legerdemain.

This study examines a critical assumption about the nature of diversion programs. That is, are diversion programs, specifically lump-sum cash grants, a cost effective alternative to traditional monthly cash grant programs? Are diverted clients actually “diverted” from welfare or are they just using equivalent funds in a different way?

Using Maryland State administrative data, this study compares the total receipt of cash grants over a three-year period of two welfare applicant cohorts, those whose application resulted in a Welfare Avoidance Grant (WAG) and those who became new TANF clients. The cohort of individuals who received a WAG between October 1,1999 and December 31, 1999 (n = 315) was matched on two criteria, region and number of adults, to a sample of new TANF recipients of the same time period. Data on the two groups’ use of cash grants, both WAGs and TANF, over 36 months were tracked and calculated. Additionally, an Ordinary Least Squares regression model was designed with other demographic and life experience controls to determine whether or not WAG receipt resulted in a lesser amount of cash assistance during the 36-month outcome period. The findings are important not only for Maryland, but also for other states implementing and developing policies related to diversion grants. Many states have lump-sum programs similar to Maryland's; others may also be able to design similar studies specifically for their own state's program.

BACKGROUND

While a few studies have examined the prevalence and characteristics of diverted clients (for a review, see Lacey, Hetling, & Born, 2002; London, 2003), little research has been done to determine whether diversion strategies actually divert or merely delay cash assistance or whether diversion programs are a cost-effective alternative to monthly cash assistance receipt. Research on diversion is lacking partly because such strategies were not a part of pre-reform state waiver experiments. Moreover, as per the design of TANF, states have great leeway in their use of diversion programs, if they choose to implement diversion programs at all. The three forms of formal diversion programs, lump-sum payments, job search, and alternative resources, can be offered independently or in any combination (for more information, see Lacey, Hetling, & Born, 2002). This flexibility, while programmatically beneficial, poses great barriers for evaluation and research on diversion programs. Additionally, some research has highlighted the use of informal diversion tactics, or techniques or methods that hinder or deter an individual's successful completion of the application process.

This study focuses on formal diversion strategies and, in particular, lump-sum payments, the most widely used of the three formal types of diversion. As of this writing, 30 states currently offer some sort of cash diversion program (Administration for Children & Families, 2002). Among the states that offer lump-sum payment programs, there are also variations in the amount of money an individual is allowed to receive at one given time and five states allow counties to determine how they want to implement their programs (Administration for Children & Families, 2002).

The lack of program data on diverted clients and their families poses another research obstacle. Because certain types of diverted clients are never formally enrolled in TANF, they are not usually tracked in administrative data systems (London, 2003). Even when the diversion event has been documented in the state's system, the data required for programmatic purposes are often not detailed enough for research purposes and do not provide a clear picture of the circumstances surrounding the diversion event or the characteristics of the family.

As a result of these barriers to research on diversion, most research efforts are state-specific, resulting in a handful of state-level reports and only one national study to date. The national study utilized the 1999 National Survey of America's Families (NSAF), and focused on recipients of lump-sum payments (London, 2003). The study analyzed the characteristics of diverted clients and found that diversion programs may be targeting two distinct groups: job-ready applicants with high levels of education and unprepared applicants with low education levels who perhaps opt for the larger sum of money and attempt to save future months of TANF. The study also analyzed the outcomes of diverted clients in comparison to TANF leavers in terms of employment outcomes and Food Stamps and Medicaid receipt.

The interpretation of the findings of this national study is more cautious in attributing success to diversion programs than are most of the state-level studies that have been conducted up to this point. To date, there have been a number of state studies conducted on diversion programs (Assistant Secretary for Planning and Evaluation, 2002). State-level outcome studies have focused on recidivism rates of diverted clients and have found that diverted clients returned to cash assistance at slightly less or comparable rates as TANF leavers (Goldsmith & Valvano, 2002; Lacey et al., 2002; Schexnayder, Schroeder, Lein, Dominguez, Douglas, & Richards, 2002).

Of the studies that have looked at the potential savings of diversion, the initial results seem positive. A study on South Dakota's diversion program concluded that one $300 payment, the average monthly benefit for the typical South Dakota AFDC recipient, can save taxpayers nearly $7,000 (U.S. Department of Labor, ...

Table of contents

• Front cover
• Half Title
• Monographic Separates from Journal of Policy Practice ™
• Title Page
• Copyright
• Contents
• ABOUT THE EDITORS
• Introduction: Social Workers and Welfare to Work Programs: International Perspectives
• Welfare and Welfare to Work in the United States: The Role of Social Work
• Working Together for Children and Families: Where TANF and Child Welfare Meet
• A Rose by Any Other Name? Lump-Sum Diversion or Traditional Welfare Grant?
• Welfare to Work in the United Kingdom
• Social Inclusion as an Agenda or Mental Health Social Work: Getting a Whole Life?
• Helping People with Learning Difficulties into Paid Employment: Will UK Social Workers Use the Available Welfare to Work System?
• Workfare Oz-Style: Welfare Reform and Social Work in Australia
• Recent Developments in Welfare to Work in Hong Kong: Opportunities for Social Work
• The Role of Social Workers in Welfare to Work Programs: International Perspectives on Policy and Practice
• Index