Welfare Reform Has Many Indirect Effects
(from Maine Townsman, December 1996)
By Geoff Herman

 The way that Maine reacts and adjusts to the federal welfare reform legislation signed into law last August will be a matter of much debate during the first session of the 118th Legislature. Because none of the federal changes directly affect the municipal General Assistance program, MMA is not in a position to step out front with a legislative welfare agenda. Because a great deal of federal welfare reform could affect Maine’s GA program indirectly, by reducing or eliminating the federal or federal-state benefits that are currently provided certain low income households, the legislative welfare agendas put forward by the Department of Human Services and others will need to be very carefully scrutinized.

 The short-term issues municipal welfare directors are most concerned about are:

      1. the threat of discontinuing the $50 AFDC pass through;
      2. the discontinuation of SSI benefits to recipients whose primary disability is substance abuse;
      1. the threat of discontinuing federal/state public assistance to legal immigrants;
      2. the discontinuation of Food Stamp benefits to recipients between the ages of 18 and 50 who have no dependents and are not working or participating in a work program of some kind at least 20 hours a week.

 The AFDC $50 Pass-through. Families in the AFDC program assign their child support payments to the state. Most of the child support collected is used to fund the AFDC program. Before the 1996 federal welfare reform legislation, AFDC law required states to "pass through" to the AFDC family the first $50 of child support collected for that family each month. That $50 "pass through" was not counted against the amount of AFDC benefit the household was entitled to receive. Congress eliminated the $50 pass-through in the 1996 reforms; Maine is no longer required by federal law to pass through to the AFDC family the child support it collects for the AFDC household from the absentee parent. Every state is required, however, to send back to the federal government approximately 2/3 of all the child support money the state collects as the "federal share". The exact proportion of the federal share is based on the Medicaid matching rate. In short, if the state wants to continue the pass-through, then the state will have to pay for it, so to speak, rather than deducting that amount from Washington’s share of all child support collected.

There are many good reasons to continue the $50 pass-through. It is often pointed out that the incentives for absentee parents to make their child support payments drop away when none of the child support payment actually goes to the household it is supposed to support. From the General Assistance perspective, any household receiving $50 less a month will be potentially eligible for $50 more in GA benefits. AFDC families represent approximately 25% of the statewide General Assistance caseload, and it is important to municipalities that the changes Congress and the Maine Legislature decide to make do not arbitrarily reduce federal/state public assistance benefits just so municipalities will be obliged to replace the loss.

SSI and Substance Abuse Disability. Supplemental Security Income, or SSI, is a federal public assistance program for persons with disabilities that are so severe the individual is unable to engage in gainful employment for a period of at least a year. Congress has been tightening certain aspects of the SSI program for a number of years, especially with regard to persons disabled by substance or alcohol abuse. A couple of years ago the rules were changed so that SSI recipients with substance or alcohol abuse problems had to obtain "payees"; that is, the federal cash benefit had to be issued to a (hopefully) responsible third party who could make sure the benefit was used for basic needs.

The 1996 changes to the SSI program go a giant step beyond required payees. SSI recipients or applicants whose primary disability is substance or alcohol abuse will no longer be eligible for the federal benefit.

Based on information from the Social Security Administration, it was initially felt that 1300-1500 people in Maine could be affected by these changes to the rules. As the law has been implemented, however, the projection of disqualified recipients has dropped down to approximately 600 people across the state. One of the reasons for this drop in the projected impact is that the disqualifying situation is substance or alcohol abuse as a primary disability, and many people who have been abusing drugs or alcohol over an extended period of time now have physical disabilities that are more primary, medically speaking, than the abuse problem.

It is certainly the case that anyone discontinued from the SSI program due to this change in federal law will be potentially eligible for General Assistance at the local level. A potentially serious side effect of the SSI disqualification is that these individuals are automatically receiving Medicaid while on SSI and may lose that medical coverage when they are disqualified from SSI. Medical services are a defined basic need in General Assistance law, and when such services are performed outside of a hospital, municipalities can be directly exposed to the costs.

Municipalities should begin monitoring any impacts from this change very closely so that our Congressional delegation can be made aware of any unfair cost shifting from the federal to the local level. The state’s charities have good reason to be very concerned about these changes as well, because alcoholics and drug abusers sometimes have trouble staying in a local GA program for long because of the fairly rigorous set of work-related, use-of-income related, and rehabilitation requirements that are part of many municipal welfare programs.

Discontinuation of Federal/State Benefits to Certain Legal Aliens. As has been widely reported, Congress took strong action with respect to immigration last session. The welfare-related immigration issues are somewhat complicated, but for General Assistance purposes, the following should be noted.

Illegal aliens. First, the welfare reform law creates a new definition for "qualified aliens". "Qualified aliens" are permanent resident immigrants, refugees, asylees, parolees (after one year), those whose deportation is withheld and conditional entrants before 1980. "Non-immigrants" are residents of other countries who are in the United States for a specific purpose and for a limited period of time, such as tourists or students. As a matter of federal law, any alien who is not a qualified alien or a nonimmigrant is ineligible for any federal, state and local public assistance benefits, with some exception given for emergency medical benefits, disaster relief, and immunization. It is unusual for the federal government to prohibit municipalities from spending money as the municipal government sees fit, which goes to show how strongly Congress felt about illegal immigration. It should be noted, perhaps, that the new welfare reform law does allow the state legislature to expressly authorize the distribution of state or local public assistance to illegal aliens.

Legal aliens. Although "qualified aliens" are at least potentially eligible for federal, state, and local public assistance benefits, the immigration distinctions do not end there. There is one set of qualified aliens that is to be treated just like U.S. citizens with respect to federal/state public assistance programs (AFDC, Medicaid) as a matter of federal law. Another set of qualified aliens will have access to the federal/state benefits only if the state legislature provides that access.

The immigrant households that may be disqualified from receiving federal/state assistance are (1) refugees or asylees who have been in the United States over 5 years and have not yet attained citizenship status; (2) refugees/asylees who enter the United States after the effective date of federal welfare reform (8/22/96) during their first 5 years in the United States; and (3) qualified aliens who are not refugees/asylees who have not worked in the United States for 10 years (40 qualifying quarters of employment). The pure federal programs (SSI, Food Stamps) will not be available for this vulnerable population. Whether the Maine Legislature will take its option to provide state-funded AFDC and Medicaid to this immigrant population will be decided in the upcoming session. The immediate impact on General Assistance of these federal immigration changes is not entirely known, and the impact over time is even harder to predict.

Food Stamps. The Food Stamp changes will likely have the greatest impact on General Assistance, at least over the short term. People without dependent children who are not disabled will have to be working or participating in a work program at least 20 hours a week in order to retain their food stamp eligibility. This participation requirement clearly has positive public policy implications, provided there are jobs available to these people, or work programs (training, rehabilitation, workfare). The Department of Human Services does not appear to have any plans at the moment to create work programs for this population, although programs of this nature would be a natural extension of the work programs developed for AFDC households. If the state does not develop these work options, municipal workfare will become the safety net Food Stamp work program.

Long-term impacts. The most significant shift from federal to local financial responsibility in federal welfare reform is the 5-year time limit. A 5-10 year projection of welfare costs is very difficult, especially with the restructuring that is taking place in the federal-state-local system of public assistance distribution. On the basis of the best information MMA can assimilate, the 5-year time limit in AFDC will double the size of the General Assistance program by the year 2005, all other factors remaining unchanged.

Measuring impacts. The Maine Welfare Directors Association has just established a system to monitor the impacts of federal and state decisions on the General Assistance program. A reporting form for every month’s distribution of General Assistance that accounts for a number of demographic and distribution data will be filled out on computer by volunteering welfare directors across the state and collected via MMA’s information network (MINet). This should provide us with very accurate, detailed, and up-to-date information about what is happening to the General Assistance program as a result of welfare reform.

Conclusion. Maine has been significantly reforming its welfare system since 1991. General Assistance was overhauled that year, and again in 1993. AFDC was substantially reformed in 1995. Now Congress has had its turn, and Maine has to conform its system to the new federal model. The job certainly can be done without further burdening the General Assistance program. To accomplish this, however, will take some understanding on the part of the Legislature that the arbitrary denial of federal/state subsistence benefits to certain categories of people in need will immediately be felt at the local level. "Need" does not simply go away.