How to fix the mistakes of welfare reform

Baker is off to a good start, but more is needed

ON A COLD FEBRUARY DAY  in 1995, former governor Bill Weld signed his much-anticipated welfare reform into law. The new law included additional work requirements, time limits, benefit reductions, and a family cap for the state’s Temporary Aid to Families with Dependent Children (TAFDC) program. Such reforms were necessary, according to Weld, because the existing system had become dysfunctional. As he told reporters, “We are obliterating, today, the mistakes of welfare as it has existed for decades.”

Today, Gov. Charlie Baker and the Legislature are revisiting those reforms. Armed with mounds of social science studies evaluating the effectiveness of the 1995 changes, one might say they are seeking to obliterate the mistakes of welfare reform as they have existed for over two decades.

The endeavor began last year with incremental reforms meant to simplify benefits and further encourage work among beneficiaries. The changes removed the unnecessary disparity in benefit levels between those subject or not subject to work requirements (boosting the maximum benefit for a family of three by a modest $15 per month), and doubled the absurdly low asset limit to reduce administrative costs. An innovative new “income disregard” was also added, designed to ease the transition from welfare to work by allowing beneficiaries to continue receiving benefits for the first six months after they begin working again.

Other potential reforms are in the pipeline. There is a surge of support to lift the family cap based on a consensus that it has no effect on birthrates, while worsening health outcomes for children subject to the cap. The Legislature has moved to lift the cap as a standalone measure; however, the Baker administration insists on making the change part of a more ambitious package of welfare reforms. The administration’s 2020 budget would also totally exclude the value of one vehicle from the asset limit, ensuring that parents do not have to sell the family car to become eligible for assistance, only to have to buy another one at a higher price when they find work again.

Unfortunately, the reform package has stalled over Baker’s attempt to eliminate another inequity in eligibility standards. Under current rules, veteran, retirement, and disability insurance benefits all count as income for determining eligibility. Supplemental Security Income  (SSI) benefits are the lone exception to this rule — an oversight with no rationale that Baker has proposed be corrected.

Despite the sound reasoning behind these proposed revisions, the Legislature is resisting pushing them forward. Anti-poverty advocates worry that the correction would reduce already meager benefits for those receiving both SSI and TAFDC. While a valid concern, the solution should not be to block a good fix to a longstanding loophole. Instead, reformers should support Baker’s reform package while focusing additional advocacy on another long-standing problem in the system: the absence of inflation indexing and the erosion of benefits.

The Legislature has not adjusted TAFDC benefits since 2000, when it last raised the maximum monthly benefit for a family of three to $633. If adjusted for inflation, that $633 benefit in 2000 would be $922 today. The Legislature’s decision to not index TAFDC is therefore equivalent to slashing benefits by over 30 percent. This is unacceptable, and has resulted in substantially more hardship than what’s possible from closing the SSI loophole.

Luckily, there is a simple reform that would allow the Baker administration to close the SSI loophole, reduce hardship among all TAFDC beneficiaries, and correct the Legislature’s benefit level neglect. Look no further than New Hampshire. In his last budget, Gov. Chris Sununu proposed – and the Republican-controlled legislature approved – a measure to index the state’s welfare benefits to 60 percent of the federal poverty line. This amounts to $1,066 per month for a family of three, and is part of the reason New Hampshire leads the country with the lowest child poverty rate, 9.8 percent, among the 50 states.

Indexing TAFDC to 60 percent of the federal poverty line would have a dramatic effect on child poverty in Massachusetts, as well. Despite the fact that we are wealthier and receive more in federal block grants for social assistance per capita than New Hampshire, Massachusetts ranks only 12th in the country on child poverty, at a rate of 13.2 percent. We can, and should, do better.

Meet the Author

Joshua McCabe

Assistant dean of social sciences/Senior fellow, Endicott College/Niskanen Center
Effective welfare reform requires taking a comprehensive view of the state’s TAFDC program. The Baker administration is on the right track with proposed changes to the family cap, asset limits, and inclusion of SSI benefits in determining eligibility. But to really combat the scourge of child poverty, we must go further in righting the wrongs of the past. Reversing the erosion of TAFDC benefits, and using indexing to prevent erosion in the future, ought to be a top priority of the Baker administration, the Legislature, and anti-poverty advocates.

Joshua McCabe is assistant dean of social sciences at Endicott College and a senior fellow with the Niskanen Center.