State audit finds DHS failing at welfare-to-work program

by Sen. Doug Whitsett

“The growth in Oregon’s welfare program has led the nation by a wide margin for the past six years”

“About one third of all Oregonians receive some form of public assistance”

Temporary Assistance to Needy Families is the federal and state welfare program that is designed to help our poorest families. Ninety six percent of the U.S families that receive welfare payments from TANF earn no income at all.

The cost of the program is divided, about two thirds coming from the federal taxpayers and one third from state taxpayers. The federal government provides an annual $167 million block-grant to fund their part of the Oregon program. Oregon’s required annual matching contribution is $92 million from the general Fund. Total annual funding for Oregon TANF is more than a quarter of a billion dollars.

President Clinton worked with a Republican Congress to create the TANF program in 1996. The welfare to work program was designed to provide temporary assistance during the time required to teach families to become accountable for their own welfare and financial security.

The program has two interrelated objectives.

It sends monthly cash payments to families who live in poverty to help pay their subsistence costs. In Oregon, these are monthly payments of up to $500, or about $6,000 per year for each family in need.

The federal program also compels the state to require TANF recipients to actively attempt to find work. In the alternative, they must participate in other work related activities that help them to become more self-sufficient.

States that do not comply with the self-sufficiency requirement are subject to losing their federal funding. Moreover, they also may be required to refund past amounts paid by the federal government.

The growth in Oregon’s welfare program has led the nation by a wide margin for the past six years. The Department of Human Services now provides welfare benefits to a higher percentage of Oregon’s poor families than 41 other states.

In fact, Oregon is rapidly becoming a population dependent on government payments. One in forty Oregonians now receive TANF cash payments. Twenty three percent of Oregonians depend on food stamps to feed their families. In fact, about one third of all Oregonians receive some form of public assistance, such as TANF, food stamps, Medicaid, housing assistance, utility subsidies, free cell phone service and Women, Infant, and Children food assistance.

Until recently, extended federal unemployment benefits substantially increased that unsustainable figure. Even more Oregonians receive additional support from community groups, food pantries, homeless shelters and a plethora of poverty aid programs offered by our faith based community.

Unfortunately, the Department of Human Services failed to even come close to meeting their federal requirement to compel TANF beneficiaries to look for work, or to participate in other activities to advance their self-sufficiencies. The Department’s failure to meet federal work participation requirements, and the potential for non-compliance penalties, resulted in an extensive audit by the Oregon Secretary of State.

The report by the audit division was comprehensive, precise and bluntly critical of the Department’s performance.

The audit found little to no progress in moving many TANF clients toward self-sufficiency. That Oregon trend for no progress has become significantly worse since the end of the Great Recession in June of 2009. In fact, the audit found that two thirds of the client records examined by auditors recorded no activity at all in June of 2013.

The primary purpose of the 1996 welfare reform is to help welfare recipients to transition from dependence to self-sufficiency by getting a job to support themselves. For that reason, TANF limits its cash benefits to 60 months, with certain exceptions.

The audit found that Oregon ranked dead last in the nation for TANF clients participating in work, or work related activities. The state ranked 39th in job entry and 36th in job retention the last year that comparative data is available.

Federal law requires that at least 50 percent of welfare recipients must meet their work requirements in order to avoid penalties. The Department has employed some creative accounting to avoid those potential federal penalties.

According to the audit, the state is now using TANF funds to pay a $10 “Job Participation Incentive” to about 16,000 working adults who receive food stamps. The “Incentive” recipients are not required to have ever been on TANF. The Department believes that the $10 monthly payment using TANF money “technically” meets the federal work requirement. However, the federal work participation rate, for TANF clients who receive the standard monthly allowance, remains at only about 8 percent!

The federal rules also require even higher work participation rates for two-parent families. Rather than expecting these folks to actually look for a job, as required by federal rule, the Department has shifted the benefits for these families entirely to be funded by the state. This was also done to avoid potential federal penalties.

Oregon taxpayers should know that the funding shift is costing them $36 million per year from the state general fund. They should also know that the federal government may not accept the Department’s creative accounting. Federal rejection of that DHS accounting could cost Oregon taxpayers tens or even hundreds of millions of dollars in federal penalties and reimbursement.

Oregon is not making headway in moving welfare recipients to sustainable work. The Department of Human Resources now estimates that about 50 percent more families will receive TANF payments in 2017 than before the Great Recession started in 2007. They predict this will happen unless the State can do more to move TANF families toward self-sufficiency.

So what is the agency doing to reduce the number of Oregonians who are dependent upon TANF cash payments?

The audit found that the Department had failed to create active work plans for two thirds of work-eligible adults receiving TANF payments. For most of the other third, the work plans consisted of goals described by only single words such as “job”, “work” or “employment”. The reality is that most case workers are not even making the effort to encourage welfare people to become self-sufficient.

According to the auditors, very few consequences occur when Oregon TANF recipients refuse to participate in work activities. DHS evaluates the TANF client for barriers that might hinder their participation such as drug or alcohol addiction, anxiety, lack of job skills or medical issues. They determine if reducing cash payments might adversely affect children in the family. They are then subjected to a multistage disqualification process that can last several months before benefits are reduced or curtailed.

The TANF client can avoid losing their benefits by cooperating in work activities for a minimum of two weeks. Those clients who do lose their benefits are automatically deemed eligible to reapply after only two months. The auditors found that they are not required to demonstrate any level of work activity cooperation before reapplying for TANF cash payments.

Oregon is one of only three states that allow families to continue to receive TANF payments designated for children after the benefit time-limit is reached. A single parent with two children would see their monthly cash payment only reduced from about $500 to $350.

The audit also determined that the Department has made little effort to coordinate with other state agencies to help develop work participation. Coordinated Care Organizations reported there is no formal coordination with the TANF program even though virtually all TANF clients are eligible for Medicaid and should be receiving care through CCO’s. The Agency does not formally work with Community Colleges to pursue GED’s or vocational skills for their clients. They do not have a formal arrangement with the Bureau of Labor and Industries apprenticeship programs. They even have no formal referral or coordination with their own division of Oregon Vocational Rehabilitation Services.

In its letter responding to the audit, the Department of Human Services blamed just about everyone and everything but their own performance. DHS represents just one more state agency that is in dire need of appropriate executive management.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls