A Washington, D.C.-based libertarian think tank gives North Carolina a mixed review in a 50-state analysis on the implementation of welfare reform.

In a policy report published last fall that rated all the states on the results of their policies, the Cato Institute gave the Tar Heel state a “C” grade, along with 19 other states. Idaho, one of four states to earn an “A,” received the highest marks, while Vermont ranked the lowest among the nine states that received an “F.”

Cato reviewed the states’ policies and practices since the federal overhaul of the welfare system in 1996, through the Personal Responsibility and Work Opportunity Reconciliation Act. The law was pushed by the Republican Congress and signed into law by Democratic President Bill Clinton.

The policy report, “Implementing Welfare Reform: A State Report Card,” evaluated state programs based on two overarching criteria: structural reforms and quantitative results. Cato graded states on how effectively their reform measures:

• limit benefits for families that have additional children while on welfare
• require unmarried mothers under age 18 to remain in school and live with an adult
• require work as a condition for benefits
• implement “diversion” programs such as requiring mandatory job searches or seeking alternative resources before receiving benefits
• implement time limits for receiving benefits
• enforce their own welfare policies.

Cato also measured states’ results in five categories:

• caseload reductions
• child poverty rate
• teen birthrate
• work participation

The 1996 law allowed states flexibility for the implementation of their welfare reform programs. States were given federal dollars to distribute through the Temporary Assistance to Needy Families program, with work requirements and time limits attached as a condition for receiving the funds.

The results have been largely impressive. In data culled from the U.S. Department of Health and Human Services and from the National Center for Policy Analysis, Cato reported a 58 percent reduction in welfare caseloads between 1996 and 2002.

“The employment rate for never-married single mothers rose from 46 to 68 percent during roughly the same time period,” wrote Cato’s welfare policy analyst, Jenifer Zeigler, citing NCPA findings.

But from state to state, reform strategies and quantitative results vary greatly, Zeigler wrote. Differences exist not only because of types of programs, but also because of the states’ population makeup due to factors such as sizes of urban areas, number of immigrants, and economic changes. Degrees of success in welfare programs, measured quantitatively, must take those factors into account.

“Some programs also take time to produce results,” Zeigler said, “especially programs designed to discourage self-defeating behavior such as teenage pregnancy.”

She said that welfare programs should not be judged solely on their results.

“It is difficult to place a numeric value on structural reforms that encourage self-sufficiency and personal responsibility,” Zeigler wrote.
“The quantitative results used in the report are certainly indicators of successful welfare reform, but they cannot reflect important accomplishments such as encouraging community organizations to take over social services or changing the perception of welfare as a safety net rather than a lifestyle subsidy.”

Therefore, the Cato study sought to capture whether the states’ are moving in the right overall direction in their individual welfare reform policies.

“The states with the highest grades ranked in the top third of the states in both structural reforms and quantitative measures,” Zeigler wrote.

North Carolina received a perfect score for its “family cap” policy, which means families that bear children while on welfare do not receive higher payments because of the new child.

However, the state rated a “zero” for the way it handles the requirement for unwed teen mothers to remain in their parents’ home. While other states have stringent policies, Cato said North Carolina offered too many exemptions, which makes it less effective.
But Cato offered praise for the state’s employment requirements as a condition for benefits. Recipients, who can receive benefits for up to 24 months after moving from welfare to work, are ineligible afterwards for three years.

“That approach may anger critics who call such strict limits unfair to families facing major setbacks, but it certainly works,” Zeigler said. “The state has cut its caseload by nearly 69 percent since welfare reform was instituted.”

She said that the program is designed to keep families off welfare. In addition, North Carolina uses other tools as an incentive to show families “that they are better off working than on welfare.”

“Struggling families are often reluctant to accrue assets for fear of exceeding eligibility requirements if they need to turn to welfare,” Zeigler wrote. “By raising the limits on allowable savings and automobile value and providing services to support the working poor, such as subsidized childcare and transportation, the state encourages work and saving while keeping people off welfare.”

Perhaps the greatest incentive that drives the caseload reduction in the state is its time limit. The federal law only allows for lifetime payments of up to five years, so the state must pay if it wishes to grant benefits beyond that time period, with some exemptions. North Carolina received extra credit from Cato for its added limit of ineligibility for three years after providing benefits for two years.

North Carolina also ranked in the middle among the states for its sanctions policies. The most stringent of such policies bear serious consequences for welfare recipients who do not meet requirements or are still on the program when their time limit is up. Such consequences usually bring a reduced welfare check. Cato categorized North Carolina’s sanctions policy as moderate.

Among all the states, North Carolina ranked eighth in percent of reductions in its welfare caseloads.

But in other measured outcomes, the state did not fare as well. It ranked near the bottom (48th) in overall poverty rate reduction, although it finished a more respectable 12th when only child poverty rate reduction was measured.

North Carolina’s teen birth rate reduction placed it 20th among the states. But Cato docked it several points “because of its numerous exemptions to the requirements for living arrangements for minor parents.”

However, the report did praise the state for its emphasis on local control of the Work First programs.

“Local input provides more efficient social services to those who are truly in need,” Zeigler wrote. “North Carolina is on the right track overall, but there is certainly room for improvement.”

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].