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    PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Government Reform. Additional material pertinent to this transcript may be found on the web site of the committee at [http://www.house.gov/reform]. Complete hearing records are available for review at the committee offices and also may be purchased at the U.S. Government Printing Office.

57–684 CC



before the



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APRIL 22, 1999

Serial No. 106–18

Printed for the use of the Committee on Government Reform

Available via the World Wide Web: http://www.house.gov/reform

DAN BURTON, Indiana, Chairman
STEPHEN HORN, California
JOHN L. MICA, Florida
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BOB BARR, Georgia
LEE TERRY, Nebraska
DOUG OSE, California
PAUL RYAN, Wisconsin
HENRY A. WAXMAN, California
TOM LANTOS, California
ROBERT E. WISE, Jr., West Virginia
PAUL E. KANJORSKI, Pennsylvania
CHAKA FATTAH, Pennsylvania
DANNY K. DAVIS, Illinois
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JOHN F. TIERNEY, Massachusetts
HAROLD E. FORD, Jr., Tennessee
BERNARD SANDERS, Vermont (Independent)

KEVIN BINGER, Staff Director
DANIEL R. MOLL, Deputy Staff Director
DAVID A. KASS, Deputy Counsel and Parliamentarian
CARLA J. MARTIN, Chief Clerk
PHIL SCHILIRO, Minority Staff Director

    Hearing held on April 22, 1999
Statement of:
Allen, Claude A., secretary, Virginia Department of Health and Human Resources; Michael Poole, chairman, Board of Directors, Florida Work and Gain Economic Self Sufficiency Program; Jason A. Turner, commissioner, New York City Human Resources Administration; Julia Taylor, CEO, YW Works; Cassandra Tucker, former welfare recipient; Genevieve Kukla, president, Central Overhead Doors; Wendell Primus, director of income security of the Center on Budget and Policy Priorities
Thompson, Tommy G., Governor of Wisconsin
Letters, statements, etc., submitted for the record by:
Allen, Claude A., secretary, Virginia Department of Health and Human Resources, prepared statement of
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Burton, Hon. Dan, a Representative in Congress from the State of Indiana, prepared statement of
Hutchinson, Asa, a Representative in Congress from the State of Arizona, letter dated April 2, 1999
Kucinich, Hon. Dennis J., a Representative in Congress from the State of Ohio, prepared statement of
Kukla, Genevieve, president, Central Overhead Doors, prepared statement of
Poole, Michael, chairman, Board of Directors, Florida Work and Gain Economic Self Sufficiency Program, prepared statement of
Primus, Wendell, director of income security of the Center on Budget and Policy Priorities, prepared statement of
Sanders, Hon. Bernard, a Representative in Congress from the State of Vermont, prepared statement of
Taylor, Julia, CEO, YW Works, prepared statement of
Thompson, Tommy G., Governor of Wisconsin, prepared statement of
Tucker, Cassandra, former welfare recipient, prepared statement of
Turner, Jason A., commissioner, New York City Human Resources Administration, prepared statement of


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House of Representatives,
Committee on Government Reform,
Washington, DC.
    The committee met, pursuant to notice, at 10:33 a.m., in room 2154, Rayburn House Office Building, Hon. Dan Burton (chairman of the committee) presiding.
    Present: Representatives Burton, Morella, Shays, McHugh, Mica, LaTourette, Miller, Hutchinson, Terry, Biggert, Ose, Ryan, Waxman, Maloney, Norton, Kucinich, Davis of Illinois, and Schakowsky.
    Staff present: Kevin Binger, staff director; Barbara Comstock, chief counsel; David A. Kass, deputy counsel and parliamentarian; Kristi Remington, senior counsel; Mark Corallo, director of communications; John Williams, deputy communications director; Carla J. Martin, chief clerk; Lisa Smith-Arafune, deputy chief clerk; Corinne Zaccagnini, systems administrator; Nicole Petrosino and Jacqueline Moran, legislative aides; Laurel Grover, staff assistant; Phil Barnett, minority chief counsel; Cherri Branson and Sarah Despres, minority counsels; Ellen Rayner, minority chief clerk; and Early Green, minority staff assistant.
    Mr. BURTON. A quorum being present, the Committee on Government Reform will come to order. I ask unanimous consent that all Members' and witnesses' written opening statements be included in the record. Without objection, so ordered.
    I want to welcome Governor Thompson of Wisconsin, who is with us today. Governor, we have four markups that are going on right now, and as a result we are going to have Members coming in and out; and I appreciate your patience with the problems we are having here in Washington.
    Today, we will continue our series of hearings on the relationship between State and local governments and the Federal Government, and we will look at the progress of reforms of our Nation's welfare system.
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    We are very honored to have Governor Thompson with us today, whose innovative reforms in Wisconsin set the tone for later Federal reforms. The remarkable turnaround in welfare policy at both the State and Federal levels has allowed millions to free themselves from the vicious cycle of welfare dependency and poverty, and I am glad to be able to say that the success of the 1996 reforms and the State initiatives they were based on has proved many of the reform critics wrong. Since 1993, welfare caseloads have fallen by 6.5 million people.
    Welfare reform started the same way many of our most innovative and successful policy reforms have started: in the States. One reason for this is that every State is different, and the government that is closest to the people is best able to respond to the people. We already have seen that in the past two hearings on crime and taxes. What may work in a large State like California may not be right for Delaware. The same holds true for welfare reform, and today we will hear from several different States and localities on how things are getting done.
    Welfare reform is one of the best examples of policy success at the State level. Before Federal welfare reform legislation was enacted in 1996, 43 States were already operating under waivers from the Federal laws, a practice begun under President Reagan. The waivers enabled States to initiate experimental reforms in welfare that were ultimately successful, and these reforms led to the Federal legislation enacted in 1996.
    In 1965, there were over 1 million people on welfare rolls nationwide. By 1994 that figure was over $5 million. Even after spending $6 trillion in the war on poverty, the poverty rates increased from 14 percent to 15.2 percent between 1965 and 1992 and out-of-wedlock births rose from 5 percent in 1965 to approximately 32 percent today. If you look at the inner-cities, the figures are even higher. It became apparent that the welfare system was not working and was actually hurting the very people it was designed to help.
    The 104th Congress made it a priority to change this system and replace it with a program that placed an emphasis on work, responsibility, and family. The old welfare system undermined these basic values. The premise of reforms was rather simple. If an individual on public assistance is able to work, there is no reason he or she should not work. One of our most respected Presidents once said you cannot help men permanently by doing for them what they should and could do for themselves.
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    Yet welfare reform is very controversial. The President vetoed two of these bills before he signed the third welfare reform bill in August 1996, and many liberals said that the bill would cause chaos and throw millions of people into the streets. Well, that has not happened. In fact, the welfare reform bill provided a $14 billion block grant for child care.
    Other critics claimed that the States could not be trusted. Both President Clinton and his Secretary of Health and Human Services warned of the serious danger of providing welfare funds to the States in block grants. When President Clinton spoke of the pending danger of the States' race to the bottom, he said ''It is always cheaper to cut people off of welfare than to move them to work. It will always be cheaper to lower benefits than to figure out how to reduce the caseload by moving them to work.'' Well, the States did not do that. They actually put more funds and more effort into providing their citizens new jobs, new hope, and new opportunity.
    Take, for example, Governor Thompson. Who did he talk to when he was planning welfare reform for Wisconsin? He went directly to the people who are most affected by the reforms in welfare, the recipients. He found out directly from the source why they were on welfare and how he could help them become independent. Even with the success of the waiver reforms in Wisconsin, it was an uphill climb to convince the administration that the reforms would work and that we could trust the States to provide adequate benefits to their citizens.
    Fortunately, we in Congress trusted the States and believed that they were best equipped to assist their own citizens. One of the truly great aspects of State control over policy is the speed with which they can address issues or problems that arise. If a program is not working for a State like Virginia, Virginia can change it. Virginia does not need to come to Congress and convince Senators and Representatives from 49 other States that a particular welfare policy should be changed because it does not suit one State.
    Representatives from several States will be here today to tell us about their welfare reform programs and the progress they have made. Today, we want to look forward to the future of welfare and determine what roles the Federal, State, and local governments should play.
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    Our witnesses today also will share with us their views of the impact of present Federal laws and regulations on State programs and whether they are helping or hindering State efforts.
    We are very happy Governor Thompson is on our first panel. He was first elected in 1986, and has won reelection ever since then. My gosh you have been Governor for——
    Governor THOMPSON. Thirteen years.
    Mr. BURTON. And you look so young.
    Governor THOMPSON. I am the dean.
    Mr. BURTON. Only 1 year after he took office, he received his first Federal welfare waivers from President Reagan and later received waivers from Presidents Bush and Clinton. Since that first waiver, he has worked with true diligence to overhaul Wisconsin's welfare system, and under his leadership Wisconsin's welfare rolls have dropped 81 percent since 1994.
    As part of his efforts, Wisconsin became the first State to require work in return for welfare benefits. Wisconsin Works or W–2—you know that is the same thing as the W–2 form for the IRS. Maybe you should have thought about that.
    Governor THOMPSON. That is why we did it. We went on to make W–2 synonymous with work.
    Mr. BURTON. I understand. Wisconsin Works or W–2, the State's welfare program is a model for the rest of the country. In fact, W–2 has become an international model for many European nations looking to reform their welfare systems.
    The successful reforms in many States and local governments have been widely reported. What Congress needs to know is when to help, how to help, and when to get out of the way. And we hope today to learn from you, Governor Thompson, and others what it is you think we need to do to assist you further in what you are doing in the States.
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    We will have other panelists who we will introduce at that time and each participant on that panel will provide us a different view on welfare reform. And with that I recognize Mr. Waxman for his opening comments.
    [The prepared statement of Hon. Dan Burton follows:]
    [The official committee record contains additional material here.]

    Mr. WAXMAN. Thank you very much, Mr. Chairman. I welcome Governor Thompson to our hearing. This is an important hearing because as an oversight committee we want to watch to see how in the real world changes are taking place and whether the original assumptions of our legislation are being lived up to.
    I am glad to be able to be here and report some good news about welfare reform. Many former welfare recipients have jobs and have been able to move from being recipients to taxpayers. In part, these changes are made possible through innovative programs like that which Governor Thompson has initiated in his State. And in large part these positive changes are the result of a strong national economy which created 1.9 million jobs in 1998 alone. The Council of Economic Advisors attributes about half of the decline in welfare rolls to favorable economic conditions.
    Unfortunately, the story on welfare reform is not all good news. Since the enactment of welfare reform, welfare rolls have declined by 46 percent. This sounds like a dramatic improvement. But in some States, many people have left welfare because they have been forced off by the State, not because they have risen out of poverty.
    In December, for example, a Federal court in New York City found that applicants had been illegally discouraged from applying for food stamps and Medicaid and cash assistance. The court found that people were not only improperly denied assistance, but new applicants were diverted to private sources. And New York City may not be alone. Nationally enrollments in the food stamp program have declined further and faster than the decline in the poverty rate. The Department of Agriculture has initiated investigations into whether States have illegally diverted applicants from the food stamp program.
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    On the other hand, voluntary agencies have also felt the pinch created by welfare reform. A study by Catholic Charities U.S.A. found that the demand for food from pantries and other church-run programs has increased over 70 percent since welfare reform. So we see people going off food stamps. We hope they are working and self-sufficient, but at the same time we see them turning to Catholic charities and other charitable organizations.
    None of these trends would exist if case closures meant that all people who left welfare were making a successful transition to the work force. But by and large what we have had is pretty good news. We hope it will continue. The real test is going to be when the economy is not as strong as it is now. And then we will have to evaluate whether welfare reform is living up to our expectations.
    I applaud the success of individuals who have made the transition from welfare to work. I believe that just closing a case is not necessarily the true test of whether we have a welfare success. As an oversight committee, it is our duty to look beyond the case closing as statistics to determine what is really happening in welfare programs.
    And so, therefore, Mr. Chairman, I see you have a long list of witnesses who are going to give us different perspectives on this problem. I think that is very worthwhile. And I know many of the Members are not going to be able to be here for the testimony, but the record that you will make today will be very helpful for all of us on this committee and in the Congress to continue our oversight over this important area of interest. I yield back the balance of my time.
    Mr. BURTON. Thank you, Mr. Waxman. Mrs. Morella.
    Mrs. MORELLA. Either one, we work together well. I just want to welcome you, Governor Thompson. I am one who has had some concerns about how well welfare reform systems would work, and I am just so pleased to hear such good success stories. I guess I also want to—in your remarks if at some point you might also look at some of the legislation that we are going to have before us. I mean, for instance, legislation that would allow people to continue with Medicaid as they work so they don't lose health benefits. I guess that is what I am thinking of. Have you confronted a challenge with people who need to have health care benefits while they are working?
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    And second, the concept of training. One of the things we did in the Higher Education Act is we allowed some colleges to be able to subsidize child care for people returning to school to hone their skills or to learn new skills which actually would get them off of welfare. So I am also curious about child care and about training programs. And I really applaud your coming here to help us learn from your experiences. Welcome.
    Mr. BURTON. Mr. Shays.
    Mr. SHAYS. Governor Thompson, I consider you a real role model for so many people. You have been out front on these issues when they were not popular. But I would add that I also consider you a role model because, when you moved forward with welfare reform, you didn't just say ''OK now that we have passed it, we can go on to the next issue.'' You truly tried to make it work, which in some cases has meant you put more money into programs.
    I think you have made it very clear that welfare reform is not going to work if we don't have the kind of designed education and job training that will help people get jobs. You are the one who said that welfare recipients are not going to move over to jobs if they do not have some continuation of health care. You are the one who has made it very clear that you need transportation and day care. All of those cost money. And I just appreciate that you have done that.
    This may sound partisan, but I find it particularly satisfying to see a Republican who has been so out front on both sides, in the sense that you want welfare reform, but you want to make it work. And you have shown a tremendous amount of compassion, so to me you are a real hero.
    I would also conclude that you have an outstanding Congressman sitting next to you. I don't know how Wisconsin does it, but you have a lot of great members on both sides of the aisle. This fellow is tremendous. It is great to have you here.
    Governor THOMPSON. Thank you very much.
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    Mr. BURTON. Any comments, Mr. McHugh? Mr. McHugh passes?
    Mr. MCHUGH. Well, Mr. Chairman, let me just very briefly welcome the Governor. I would certainly associate myself with the remarks of the gentleman from Connecticut. I too look to you, Governor, as a source of inspiration, as someone who has really, like so many other Governors across this great country, forged a new path that we can hopefully continue to follow. I want to thank you for your efforts and tell you how much we appreciate your being here today. And thank you, Mr. Chairman, for allowing us to hear from such a distinguished panelist.
    [The prepared statements of Hon. Bernard Sanders and Hon. Dennis J. Kucinich follow:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Thank you. Congressman Ryan, the fine Representative from the great State of Wisconsin and one of our new members, we appreciate you being here to introduce the Governor.
    Mr. RYAN. Thank you, Mr. Chairman. Thank you, members of the committee and my colleagues. I am pleased to be here today to introduce Governor Tommy G. Thompson from the great State of Wisconsin, my home State. Governor Thompson is the first Governor in the history of Wisconsin to be elected to four consecutive terms. This is a true testament to his abilities and how he has served the people of Wisconsin. Time and again Tommy Thompson has been willing to throw out the traditional approaches to government and experiment with innovative ideas in governing, and this is what is going to be shared today. He has been and continues to be on the cutting edge of social change in health care, long-term care, welfare reform, education reform, and several other social issue reform areas.
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    It is his innovative W–2, or Wisconsin Works program that has brought him before this committee today. This program, which has served as a model for the rest of this country, has reduced welfare rolls in Wisconsin, and get these numbers: under Governor Thompson's leadership, the W–2 program has reduced welfare rolls in Wisconsin from when he took office in 1987 of 100,000 families receiving AFDC to February 1999, 8,865 families on cash assistance. Let me repeat that just for 1 second because I think it bears repeating. When he came into office 100,000 families on AFDC. Now we are down to 8,865.
    In a State with unemployment below the national averages, it is important to have every available person contributing to the work force. Governor Thompson's W–2 program continues to move new people into the work force by providing training and education. As the Governor describes this amazing reform proposal here today and as participants and program operators from the W–2 program will testify on further panels, I urge my colleagues to listen carefully to three elements of the Wisconsin welfare program that have been essential to its success.
    The first element I urge you to pay particular attention to is the program design. The program is designed as a four-rung ladder that assesses employment readiness of an individual and places those individuals accordingly. As workers receive more experience and training, they move up the ladder toward independence.
    Second, please take a look at the social services available through the W–2 program and the integrative administration of these services. If you ever have time in your busy schedules I encourage to you come to Janesville, WI and take a look at our job center. We retrofitted a K–Mart department store under Tommy Thompson's leadership. We have a job center now where we have all welfare recipients, other people coming to get one-stop shopping in social services. This is a very, very important point and phase of welfare reform.
    Not only does W–2 assist individuals in finding employment, at these job centers it helps link them to services such as child care, health care, and transportation. We just had a plant shut down in Janesville, WI, Parker Pen. Probably half the pens you are using now were once made in Janesville, WI. But we had to get training assistance for these displaced workers. Where did they go? They went to the job centers that Tommy Thompson created in Janesville, WI and other places around every single county in Wisconsin.
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    Last, please note the public-private partnerships that are a vital part of the administration of this program. It is much to the Governor's credit that he recognized that the government could not operate this type of a sweeping reform in a vacuum without the assistance of private sector agencies and businesses.
    I believe the Governor can offer a great deal of insight not only on the welfare reform but also on Federal barriers to that reform. I am pleased that my colleagues will learn about the success of the welfare reform in Wisconsin, but also how Federal Government agencies and regulations have hindered that success. I will also be listening very carefully to the Governor's comments on what these barriers are, as well as his recommendations on how to address them; and that is something that is very serious work that this committee, I hope, will undertake in the next couple of years.
    I am sure you are going to agree with me that the Governor's accomplishments have become a model for both the State and national level. Mr. Chairman, I want to thank you for holding this very important hearing. I want to congratulate you for the work on this committee. And my hope is that you will join me in welcoming Governor Tommy G. Thompson, who is a trailblazer in social reform, not only in welfare reform but health care and education as well. I thank the Members for holding this hearing. Thank you.
    Mr. BURTON. Governor Thompson, welcome. And we appreciate very much—I know how busy you are in Wisconsin—we appreciate your being here, and we really are looking forward to any advice you can give us on how we can do additional things to help Governors across this country.

    Governor THOMPSON. Well, thank you very much, Mr. Chairman. I appreciate very much the invitation. I also appreciate your leadership in Congress and the fact that you are from a big–10 State. It is outstanding to have you in Congress. And I thank you and all the Members and, of course, my very good friend, Representative Paul Ryan, who just celebrated his 29th birthday. I tell you. And I am delighted that he is a Congressman. And I campaigned with him, and he is a delight to see in action. And I thank you so very much for introducing me.
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    There are a lot of questions that have already been raised by Members in Congress, and I will try and address them as I go through my testimony. On behalf of the State of Wisconsin, I certainly would like to thank you all for this opportunity to address this committee regarding a very important subject to me and that is welfare reform. I commend you, the committee, in your role in strengthening the connection between Washington and the American people by showing them that government is listening and that government wants to change for the better.
    And I think that even yesterday with the Congress conference committee on educational flexibility, another giant step forward—and I want to compliment you on that particular piece of legislation as well. I was supportive of that, as well as most Governors across the country.
    At this time, Mr. Chairman, I would like to request that my entire testimony be included in the record.
    Mr. BURTON. Without objection.
    Governor THOMPSON. I would like to focus my comments today on three issues: first, Wisconsin's successful welfare reform; second, the role the Federal Government has played in that success; and, finally, what we can do to ensure success into the 21st century.
    Wisconsin's welfare-replacement program, Wisconsin Works, W–2, which we put out and we picked the name synonymous with the W–2 slip that you get when you go to work, it has had tremendous opportunities as well as expectations and successes. W–2 was the first welfare to work program in the Nation and it still remains as a model. The program's success can be measured in a number of ways: first by the precedent-setting caseload reduction, and as Congressman Ryan has pointed out in February 1999, we just had over 8,800 individual families still receiving cash assistance. That is down from 34,000 families in August 1997, a 44 percent reduction, and 100,000 families when I started in 1987, or a 91 percent reduction in welfare cases.
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    Between January 1987 and February 1999, we have been successfully reducing our caseload, and it is now down by more than 91 percent. Again, this is higher than any other State in the country. It probably is one of the reasons I started earlier than any other State. And we have had good cooperation from Congress. We have received waivers from Presidents Reagan, Bush, and Clinton.
    Though it is a good indicator, welfare reform's success, as Congressman Waxman pointed out, cannot and should not be measured by caseload reduction alone. A second measure of success must be the direct impact the program has on our participants, their families, and most importantly the children.
    That is why Wisconsin's Department of Workforce Development has undertaken an evaluation project to determine how our former W–2 participants, or ''leavers,'' are doing. To that end we have conducted the first in a series of four leaver surveys to find out about the well-being of our former participants. The results are extremely favorable.
    Some critics of AFDC and W–2 predicted before the end of AFDC and the start of W–2 that most people having to leave these programs would not make it at all. Instead, what we are finding is that many people previously on welfare are making it for, perhaps, the first time in their lives.
    The survey shows that 85 percent have worked since leaving welfare, that most of those are still working. Additionally, at least 80 percent of those with jobs said they were working 35 or more hours a week. And finally, 70 percent of the leavers said that life was better for them now than when they were receiving welfare. And we know those leaving are succeeding. The average wage for those leaving W–2 is $7.42 an hour, more than $2 above the minimum wage. And I also want to point out on top of that you get the earned income tax credit from the Federal Government, and the State of Wisconsin is one of the few States that have a State supplement to that. So if you are working, you are able to get an additional $5,200. So just at a minimum wage, you are already up to $16,000 if you apply for the programs.
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    The compassion—the compassion of W–2 shines through in the economic as well as the social successes that these families and entire communities are seeing. The entire State is benefiting from W–2 successes. Here are some impressive and very telling statistics: a family of three on W–2 is 30 percent above the poverty line of the current average wage of $7.42 an hour. On AFDC, this same family was 30 percent below the line of poverty. And even at a minimum wage job, which there are very few any more in this country, the family is still 15 percent above poverty; and in Wisconsin you can still apply for the Federal income tax—earned income tax credit and the State earned income tax which will add an additional $5,000 if you qualify for the maximums.
    The child poverty—and this is something that I want to address to Congressman Waxman because I know he is so interested in it—child poverty in Wisconsin has dropped 14 percent since 1987. Overall, we have the fifth in Wisconsin, the fifth smallest poverty rate in the country and we have the fourth smallest gap between the rich and the poor.
    Now wages for the lowest income residents—and I think this can be directly correlated to welfare reform—are rising faster than any other group. In 1989, Wisconsin ranked 29th in wages for the poorest residents. Today, it ranks 12th, and it is continuing to grow. The Milwaukee Journal Sentinel just had a report done not too long ago that said that the bus drivers going into the central city of Milwaukee were surprised that their buses in the early hours were filling up with people going to work when before they didn't have that kind of transportation. And second, the New York Times just had—the New York Times has a reporter that is going to be in Milwaukee full-time for 12 months covering welfare reform; and he said one of the interesting things in the central city of Milwaukee is that there are a lot of new tax preparation businesses setting up in the central city of Milwaukee, indicating that those individuals are working and paying taxes.
    Teen pregnancies are dropping. Wisconsin now is the seventh lowest in the country, and before welfare reform it was increasing. Crime in Wisconsin has hit its lowest level since 1973.
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    Third, our success can be measured through the personal experience of our W–2 participants. I recently, as Congressman Burton pointed out, called in welfare mothers to come to the residence and have lunch with me. And I asked them what works, what doesn't work. I had the opportunity to have one of those meetings with a number of our W–2 participants in Milwaukee. Our success can be found in the words they shared with me that day and that I would like to share with you today.
    Michelle Crawford, who had a lot of problems and she was written up in the New York Times this week, a nice display, and she said, I was blessed to have found W–2, and I ask others to take a chance on W–2 workers and we won't let you down.
    I had the opportunity to invite her to come to my State of the State. As the President gives the State of the Union, all Governors give the State of the State. And they guard it very jealously because it gives them a chance to brag how well they are doing. And I decided this year, since I have been doing it so long, to do something different. So I brought in Michelle Crawford, an individual who I had only known for a couple of weeks and asked her to share the podium with me.
    And she got in front of the legislature and told her story and told about the fact that she hadn't worked; she had several children and had been in an abusive situation and she said now she is working. And this was in January and she said I was able to buy Christmas presents for my children. And then she brought her three children, and they introduced them in the gallery; and she pointed to her children and said to her children, she said, I tell my children, this is what you can do when you do your homework. And there was not a dry eye in the whole assembly chambers, and then she put her fist in the air and said give us a chance. We can be very productive, loyal workers. Give us an opportunity like W–2 gave me.
    We were all, you know, very emotional and it was a wonderful, wonderful presentation by somebody that has had the opportunity now to be able to get off of welfare into work.
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    Roberta Giles, another W–2 success story, had this to say about the program: if I had $1 for every time I tell someone how great W–2 is, I wouldn't have to work. And finally Connie Alston said, thank God for W–2. It works for me; I have seen it work for others as well.
    Finally, our success can be found in the innovations developed by our W–2 agency. I set it up so the program could have very complete flexibility. To be able to adapt programs like you have allowed us to do at the State level, Congressman, I have allowed the W–2 agencies at the county and the local levels, the city levels, to develop flexible programs for themselves so they are not hamstrung by rules, so that if they see an individual case they can adapt their program and the money to help that particular family.
    You are going to hear from a person after this, Julia Taylor, who I am so impressed by, is one of those innovative thinkers. She wanted to do something so she went out and bought a bankrupt factory, a plastics factory. W–2 allowed her to do this and under the YWCA, which she runs, she bought a plastics factory to teach welfare mothers how to run injection molding. And it is an absolute success story. She called it G2P, and it is a company created by a nonprofit organization, as I indicated, YWCA of greater Milwaukee. Trainees are recruited through YW Works, one of Milwaukee's five W–2 providers. We split up Milwaukee County and contracted out. The County Social Services Department didn't want to do it, so we contracted out with private vendors and they bid for the opportunity to set up this program.
    Its mission, the YWCA, is to increase the self-sufficiency of central city residents by providing living-wage jobs and training in skilled labor for low income participants. In its first year G2P, this plastics factory, trained 98 W–2 customers in office, light industrial, and injection molding positions. And upon completion, the participants are prepared for hiring by plastics injection molding firms at wages up to $11 per hour and some with complete benefits.
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    This program not only provides the job skills necessary for our participants, but it has also formed partnerships with other Wisconsin employers who are in desperate need of skilled workers. This is innovation and partnership, I believe, at its very best. I won't say any more about G2P because you are going to have the opportunity to hear and to speak and to question Mrs. Julia Taylor, executive director, who is going to be with you later today.
    Undeniably, Wisconsin's success in welfare reform is a reflection, however, of the Federal Government because you have listened; you have reacted to the needs of each and every State in this Nation. And I personally want to come back and just say thank you to all of you for supporting us.
    It can also be said that the Federal Government's direction on welfare reform is a reflection of what we were able to do in Wisconsin, although from a national level it appears that changes to the State's' welfare policy took place within the larger context of Federal welfare reform. Our success provided a blueprint for the Temporary Assistance for Needy Families program. In fact, TANF reflects a number of the initiatives we started in Wisconsin under the waiver program. Wisconsin successfully implemented through the waivers the past 12 years time limited benefits, emphasis on work participation, emphasizing that teen parents should live at home and providing supportive services such as child care, transportation, and health care.
    And Congressman Shays is absolutely correct. I have testified in front of several congressional committees and have always said you can't have welfare reform unless you provide for health care first for the mother and the children. You have to then provide for adequate and reasonable and safe and good child care. Three, transportation. You cannot expect mothers to go to work if they don't have a car or good bus services; and, fourth, you have to have the training. You can't do it on the cheap. In fact, we spend more per case in Wisconsin now moving people off of welfare than we did under the old system of AFDC.
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    On a broader scale, what has TANF provided States? TANF has provided the flexibility States need to be able to change their welfare policy. This has been able to allow States to try innovative approaches from Connecticut to Indiana to California across the whole spectrum to be able to solve problems at the State level in order to meet the needs of its disadvantaged residents.
    Generation 2 Plastics is a final example of this creativity and innovation. In its first year G2P not only gave those participants the necessary skills but it also importantly increased their self-esteem, gave them the opportunity to think for themselves that they could do it; and that is so important when you deal with welfare mothers.
    We have been able to tailor W–2 to the needs and the problems of its participants thanks to you giving us the flexibility to do that. TANF allowed the States to move from a dependency model to a model that expects people to assume control and yes, the responsibilities over their lives and to provide for their families. By removing the entitlement, TANF has strengthened the critical length between something of value and the expectation that people will take control of their own lives if you give them the appropriate incentives.
    And finally, TANF guaranteed the States a fixed funding level in order to develop these innovative programs. We couldn't have done it without the block grants. We could not have done it, and I want to applaud you for it—in order to provide the services, and to be able to assist people in taking responsibility for their lives. The results have been a dramatic number as families have moved off the public assistance to work, proving that State TANF innovations are working. This country has seen its lowest level of welfare recipients in 30 years. And together the Federal Government and State governments have achieved this success as partners, and now more than ever we must work together to continue this success as we move into the 21st century.
    So given the success under TANF, one might ask, as several of you have indicated, where is there room for improvement or, more critically, where has TANF fallen short? Despite the successes, there are a number of areas where removing regulatory barriers will also help future successes. However, before I address those areas that still require improvement, I do want to commend the Department of Health and Human Services on the changes—and I haven't done that often, and this may be the first time I have done it publicly in a long time—that were made to the TANF proposed rules. More specifically, as a State we were pleased somewhat to see the following items contained in the final rules released early last week: the tone has changed dramatically from the Department. It acknowledges that States are doing well. The change in definition of assistance. This has allowed us to be able to expand the kinds of things we can count toward assistance and now we are down in Wisconsin to the hardest-to-place people, so we need more flexibility in order to move the next 8,800 people off of welfare. So I was happy about the fact that they have liberalized the definition of assistance and allowed us more cooperation in child support and data reporting requirements.
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    Separate State programs for MOE, the maintenance of effort purposes, the final rules recognized that States are not using separate State programs to avoid the TANF requirement, something that I argued in Congress we would not do. And it recognizes the validity and the use of child-only cases. So I want to thank you for listening.
    On that note, where is there room for continued improvement? Most importantly, Congress must reject the efforts—and I understand that it is something that you are always looking at as extra money. Every legislator or Congressman in the world always wants to spend more money, it is natural. And so Congress must reject the efforts to reduce, to rescind, or defer the funding of the TANF block grant. Any change in the funding mechanism would represent a breaking of that historic agreement between the States and the Federal Government which was established in 1996.
    There are a number of factors that Congress must consider before thought is given to reducing, rescinding, or deferring the funding of the TANF block grant. Once we have a renewed commitment of those dollars, Wisconsin and other States will need additional flexibility to spend those dollars as we provide important supportive services such as transportation, child care to our low-income families, improvements in the TANF legislation, include giving States more flexibility in spending those dollars.
    In order to provide the services to support low-income families in the most practical way, States need to be relieved of the requirement that expenditures be attached to a specific TANF participant. Congress should recognize and applaud the States' efforts in welfare reform. States didn't use the flexibility of the block grants as some Congressmen said or thought would happen, a race to the bottom. Rather we have been able to spark a race to the top, coming up with innovative programs, moving people off of welfare. Instead States are using these dollars for the public good, such as spending the block grant dollars to provide work and family stabilization services to low-income families.
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    Public support for such programs is evidenced by the recently released Kellogg Foundation survey which showed widespread support for programs to help the working poor. Additionally, Congress should modify the data reporting requirements. I don't know who reads all that data that you ask us to compile. And it just takes away the opportunity. We send in reams of paper, and I am sure, Congressman Burton, you don't want to read all of that data that you require us to collect. Remove that burden. Remove the burden of maintenance-of-effort requirements that are placed on States and allow States more flexibility in meeting the maintenance-of-efforts requirements.
    Although the final TANF regulations appear to have provided some extra flexibility in this area, it appears that not in all cases. Let me quickly explain an example. We have reduced our caseload down to 8,800 families. Now, in order to maintain our maintenance of effort of $173 million, just on those 8,800 family, we would like to be able to make sure that some of those families have moved off of welfare are still able to get services. We have a difficulty counting that. We also have a homestead tax credit that we give people, low-income families that they can apply for. We cannot count that for our maintenance of efforts. So we would like to have some more flexibility.
    Child care is the most important one. Child care is undoubtedly one of Wisconsin's greatest factors to the success of W–2. And what more can be done to strengthen this critical piece of welfare reform? Again, increased flexibility in spending. We would like to be able to have the flexibility, Congressman, to be able to move TANF dollars into the child care development fund because it allows us to be more flexible, more innovative, and the TANF dollars we are very restricted in how we can do child care. I am setting up state-of-the-art new child care, exceptional child care, centers. In this budget that is going to allow for at-risk children in the central city, two of these exceptional child care centers—and we found that the earliest you can get at children and the brain development of that child, the better off you are going to be. So we want exceptional child care centers set up to help at-risk children. We want to be able to put them into a center that they are going to hear classical music. They are going to hear foreign languages piped in, and all of these things from our studies indicate that it is absolutely on the cutting edge to helping at-risk children develop properly.
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    The results would be better if we had the opportunity to have this flexibility, more accessible child care services for working families leaving welfare, so as the caseload has dropped, due to Wisconsin's efforts, to move those who can work into the work force. The portion of Wisconsin's caseload with significant barriers—right now 80 percent of our welfare caseload of the 8,800 are in Milwaukee County and 60-some percent have an alcohol or drug dependency; 50 percent do not have a high school education, and 40 percent have never worked a day in their life of the remaining 8,800. So you can see it is going to cost us more. It is going to have to have more individualized counseling and better counseling and more programs to develop to move those off of it. Not only is there increased focus on these harder-to-serve cases, there is equal focus at helping low-income families maintain and to be able to advance their position in the workplace. Improvements in the TANF legislation should include expanding the use of the TANF dollars to help the hard-to-serve TANF eligibles and low-income families to prevent recidivism. This current narrow definition of work activities is no longer appropriate for the remaining case loads that we have to deal with.
    I want to again thank you, Mr. Chairman, and the committee for proactively seeking out ways to strengthen the Federal-State partnership, for serving our Nation's most disadvantaged citizens. One way the Federal Government can help to ensure this success is to first uphold the commitment to providing the block grant dollars and second provide the additional flexibility necessary to spend our TANF dollars in a way that meets the needs of each State's most needy populations.
    The changes in the final TANF regulations were a good first step. However, while these rules are considered final, even final rules can be changed. By doing so, the Federal Government and State governments can work together to ensure that the 21st century is set for success. In Wisconsin, and throughout America, welfare reform has demonstrated that States can best solve problems when they are given the flexibility and the support to do so. Congress gave the States that freedom. They gave them the freedom to design their own welfare replacement programmings and the block grants to support them. As a result, hundreds of thousands of families are now climbing out of poverty and pursuing their piece of the American dream.
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    We certainly hope that Wisconsin's successes encourages Congress to be able to give States even greater flexibility on welfare reform and greater freedom on other issues, from health care to education to welfare reform. Thank you very much, Congressman.
    [The prepared statement of Governor Thompson follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Thank you, Governor Thompson. Before we start the questioning, Mr. Waxman has to leave, so he has a comment.
    Mr. WAXMAN. I thank you, Mr. Chairman. I do have to leave. I have a conflict in my schedule. But I did want to stay for your testimony, Governor Thompson. You have given us some impressive results in your State. I think you are absolutely right. This is a Federal-State partnership to deal with this problem. It certainly helps when the Federal Government produces an economy of astounding proportions with low unemployment and growth everywhere. It also hurts when the Federal Government allows immigrants to come in illegally, as it has in my State. But we have got to work together and make sure that we are living up to all of those promises, and I think you put your finger in your remarks on all the things that are going to be necessary to be sure that we are doing right by people, getting them to work and not just simply taking them off of welfare. But thank you so much for your testimony. Thank you, Mr. Chairman.
    Mr. BURTON. Governor, let me start the questioning by saying that you had a number of people who were critics when you first started out, and they said that people would be moving to the bottom rather than to the top. And you have been remarkably successful, because you did talk to these people evidently and because you have provided safety nets in areas where they didn't anticipate you would do that.
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    There are things that would concern some of my more conservative friends—but then I am a pretty conservative Congressman myself—but when I listen to you, I see the reasoning behind it. That is why I think it is important for you to be here: we can pass on to our colleagues why it is important even as conservatives that these things be done. But I think it needs to be elaborated on a little bit more why you think additional funding or continued funding needs to be given to people who are now working in the private sector and are above the minimum wage and are fairly self-sufficient; why there needs to be continued expenditures for transportation, child care education and these other things that you talked about. And if you could elaborate just a little bit, it would be helpful.
    Governor THOMPSON. For several reasons. But first let me point out that you are dealing with some very fragile human beings. A lot of people on welfare are there for reasons that they really didn't have any control over. They may have been in an abusive situation. They may have been a mother at a very young age. A lot of teenage pregnancy, a lot of even younger than teenagers are having children. And they have a self-esteem that is extremely low. So moving them into welfare reform, and especially now where we are down to the hardest-to-place individuals, these are the ones with the most problems and multiple problems; and so you are not always going to be successful the first move from welfare into work.
    Michelle Crawford was one of those examples. She had fallen back into AFDC several different times. And the first time we had her in W–2, we had her in a job that didn't pan out for her. She was a janitor; she was cleaning up in a factory, and she didn't like it. She wanted to be a machinist, and so we took what she wanted to do and he taught her how to be a machinist, and now she is operating a machine and she just blossomed.
    So you are not always going to be successful on the first case. So you may have to have some extra efforts, especially now when you are moving the easiest people off of welfare, the ones that have been on just for a couple of months and have had one or two problems and are now off. Now we are down to where you really have to put in the extra efforts, individualized counseling, individualized case studies in order to move them. And so that is why you have to continue funding it.
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    The second thing is that we are trying a lot more innovative things with welfare reform. It is not just moving the people off of welfare. We want to be able to get at the working poor—the working poor that are right above that level where they could fall back and get back on welfare, or get back on assistance but they want to work and they don't have any benefits; and in those places we set up a program in Wisconsin called Badger Care which is the next step to provide the working poor health care for themselves and their family and that is very expensive; and we are going to allow them to buy into our Medicaid program, and the State is going to spend a lot of our own dollars; and with the waiver from the Federal Government, we will also be able to get a Medicaid match but, we can't do it without the continuation of the block grant.
    The third thing is on transportation and on training. You can't expect welfare mothers to be able to improve if you don't give them the training, and that is very expensive; and that is why the necessary dollars and the flexibility is so important, Congressman.
    Mr. BURTON. Your comments brought up a couple more questions. I have a whole list of questions I would like to ask, but there are questions popping into my mind as I listen to you because it is very interesting and informative. One of the things you said in your opening statement was that the cost is actually not any less than AFDC; it is probably the same or a bit more to keep these people in productive positions.
    Now a lot of people would say if it is costing more, why should we do it. But I want to ask you about tax revenues. By making these people workers instead of dependent on welfare, does it help the State's economy?
    Governor THOMPSON. Sure. Absolutely it helps the State's economy; but let me tell you—it is from a conservative point of view—it is a good investment of dollars because when we were on AFDC, we were spending approximately $9,400 per case. But now we are spending close to $16,500 per case because we are putting more in child care. For instance, we have gone from $12 million when I started in 1987 to $175 million in child care. That is a huge increase. But even though we are spending more on a case and even though we spent a lot more on child care, the amount of dollars overall that we are spending on welfare are less because the caseload has declined. So even though we spent more individualized cases—on individualized cases, the overall amount of dollars being spent is actually less because the declining numbers.
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    And so it is a tremendous investment. As far as the economy, just by the numbers our unemployment is at 3 percent in the State of Wisconsin, similar to Indiana. And we are having good cash-flow and the amount of wages that are going down, I mean, the wages are going up; but the decrease from the rich to the poor is declining in Wisconsin, and we think it is definitely correlated to more people working at the lower ends getting better wages by the training, so it is helping our economy overall.
    Mr. BURTON. Very good. Mr. Davis.
    Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman. Governor, let me also welcome you and indicate that I appreciate your testimony as well as the work that you have done in the State of Wisconsin with this issue. Not only do I appreciate your work but I appreciate the passion with which you have done it. You display a passion for this issue in terms of trying to really make it work. Information that I have looked at, some of it, indicate that the welfare rolls in Wisconsin have declined by 85 percent since March 1994. How do you equate that with the decline of poverty? I am saying, do you equate a decline in the welfare rolls also with a decline in poverty? And if so, would the rate of poverty be close to the rate of welfare decline?
    Governor THOMPSON. I don't know if it is a direct correlation, but I think it is close. We have seen in Wisconsin our child abuse has gone down 13 percent. We were ranked 29th in the country in 1989—27th in the country in 1989, Congressman Davis, as far as disparity between the rich and the poor. This year we are ranked No. 12th, so it is definitely the lower income is increasing faster.
    Our teenage pregnancy is down. The fact that our difference between rich and poor is fourth in the country, and poverty we are the fifth lowest in the country, so I would say that all of those statistics are getting better as our welfare rolls are going down, Congressman.
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    Mr. DAVIS OF ILLINOIS. And so the factors which contribute, if you add them all up in terms of what we ultimately define as being a poverty profile, certainly would have had some impact.
    In Illinois we have had the experience of there being an increase in the number of persons lacking health care or without health care as they have come off welfare, about an 8 percent increase. What have the experiences been in Wisconsin?
    Governor THOMPSON. Well, in Wisconsin we have 94 percent of our population covered, Congressman Davis. And we have 1-year transitional Medicaid coverage under our W–2 program. And we are starting a new program as of July 1 called Badger Care that will provide health care to families. They will be able to buy into Medicaid. We just got a waiver from the Federal Government in January to do that, Congressman Davis, and we are going to set this new program called Badger Care that we think will become a model for the country that you will be able to buy into Medicaid and be able to cover the working poor up to 185 percent of poverty, so we are at 93 to 94 percent covered right now in the State of Wisconsin, the highest of any State. We are tied with Hawaii. And we expect that to go up to about 97 or 98 percent after we really implement Badger Care in the State of Wisconsin.
    Mr. DAVIS OF ILLINOIS. So then in reality, in Wisconsin there are not many people having serious difficulty acquiring health care or with access to health care?
    Governor THOMPSON. It is obvious that it is not when you have 93 percent covered and you are the highest in the United States.
    Mr. DAVIS OF ILLINOIS. You indicated in your earlier testimony that child care obviously is one of the great cost areas and cost factors as we deal with the whole question, especially given the fact that so many single women with children are the individuals who have a need to move. Do you have an indication of how many new jobs were actually created as a result of the increase in utilization of child care services and whether or not the job creation really becomes sort of a tradeoff for the costs for the increased costs?
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    Governor THOMPSON. It is hard to quantify that, Congressman. Let me tell you a little bit of what we did in child care so that you understand more completely. I said that we could not expect a welfare mother to go to work unless we provided child care, so we went from $12 million to $175 million this past year in child care. We also did something that I don't think many States have done. We have allowed for a provisional license, especially for the central city of Milwaukee because we were told there would be a lot of minority mothers and aunts and uncles and so on and so forth, grandmas, that would like to be able to take children in three or four of their neighbors or their immediate relatives; and so we provided for that. So we have created sort of a cottage industry in the child care field. And we have increased it. And we put in $25 million for building capacity and I am happy to be able to report to you we have no waiting list in the State of Wisconsin for child care, none at all.
    Mr. DAVIS OF ILLINOIS. Finally, I am a proponent of something called the livable wage; and what that means to us is that individuals should not have to work for less than $7.65 an hour as being a base pay that they can manage on. Are there any ceilings beyond the minimum wage in Wisconsin?
    Governor THOMPSON. No, there isn't. But there are several communities in Wisconsin that have passed living wage in the city council and the county. And we have found in our studies of moving welfare mothers to work, the average hourly wage is $7.42. And you were not here when I pointed out that on top of that, in Wisconsin they get the Federal earned income tax credit but we are one of the few States that also has a supplement to that State earned income tax credit. So even at $7.42 an hour or at minimum wage, you are still qualified for a large infusion of dollars from the Federal Government, the State, if you are working. That could amount up to a maximum of about $5,400 on top of your wages. You qualify for the maximums of both the Federal earned income tax credit and the State earned income tax credit.
    Mr. DAVIS OF ILLINOIS. Thank you very much. And I certainly appreciate your efforts in this arena and compliment you again on the passion with which you have tackled this problem.
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    Governor THOMPSON. That I have, Congressman. Thank you very much.
    Mr. RYAN. We have a vote right now. We have 6 minutes left on the vote. We were going to try to keep the hearing going, but we have to recess for 10 minutes. We will be back. Thank you.
    Mr. BURTON. We will reconvene the hearing. We have Members wandering in and out now, Governor, because we have a vote on the floor and 15, 16, or 17 or so committees and we are beginning the markup phase and we have votes. People are running around. That is why we are all so thin. We are running back and forth to the floor all the time.
    Let me just ask my colleagues, do you have any questions at the moment? Well, let's go right down the line. Mrs. Biggert, we will start with you.
    Mrs. BIGGERT. Thank you, Mr. Chairman. It is good to see you, Governor. You may not remember, but I served in the Illinois general assembly. We had an opportunity to discuss a lot of these issues and you were very helpful. My question is, and being on the other side now, you talked a little bit about the block grants. It is still a concern from the State perspective that there will be kind of backsliding from the Federal Government once we see success and to start limiting the funds and everything. I hope that you will remind us as we move along. In Illinois we have a low income tax but we also have a low threshold. So it is very difficult for some of the people coming off of welfare and getting established and suddenly they are faced with being in an area, a bracket, where they are going to have to start paying income tax. Do you have a higher threshold as far as just above poverty for paying income tax?
    Governor THOMPSON. Yes, we do. First, let me congratulate you on your promotion. It is great to have you in Congress. I will be reminding you and anybody else that will listen to me about keeping your hands off of the block grant because we need to do that. Right now we are moving into the next phase, several States are moving into the next phase to really use the money to place the hardest to place individuals. In my case we are now down to 8,800 families from 100,000 families, and 80 some percent of them in Milwaukee and 66 percent or more have got alcohol or drug problems, sometimes a combination of those, and 50 percent have not graduated from high school and about 40 percent have never worked. So you can see that we have a really difficult time. But what we did in the last session of the legislature along with this is we were able to reduce the threshold from anybody. The families making less than $18,000 would not have to pay any income tax in the State. That should solve a lot of the problems. But there is no question that a lot of individuals that have never worked before or haven't worked consistently are now finding out the luxuries of paying income taxes and they are sometimes complaining. Some of them more than likely may become Republicans as a result, so it is not all bad.
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    Mrs. BIGGERT. Along with that, I think that something that was important in Illinois with having people that had never worked before was the training and the actual skills training. If you have reduced your role so much, you may not have to be providing that so much—the actual training on how to get up in the morning and dress.
    Governor THOMPSON. We are actually spending more because the harder to place require more individualized counseling and more individualized training. A lot of the cases we got right now are not going to be successful on the first try. So you may have to train them for something and find out that they are not suitable for that and retrain them for another. We are actually spending more money on training right now. We are also moving to the next step in trying to followup for 6 months anybody that is placed so that if they need some extra training, extra counseling, so on and so forth, we will not just be putting them into a job and walking away. We are continuing to give them counseling and giving them services. Also we provide for individuals that don't receive any cash, that if they want to come in and get some counseling on different things, maybe food stamps, some transportation assistance, we do that as well. There is still a lot of dollars going out there to help the working poor. Our Badger care, which is a new health insurance program for all of those up to 185 percent of poverty, is also very expensive for the State but it is also a partnership with our State and Federal Government through the Medicaid program. We just got a waiver to do that. We are the first State to have a waiver in that regard.
    Mrs. BIGGERT. What about businesses? I know that we were successful in being able to find jobs for people because of the help of businesses and committing to finding so many jobs and ensuring that they were not splitting somebody else's job or taking away hours from other people. It was something that really helped Illinois to be able to get these people back to work or to work for the first time.
    Governor THOMPSON. I know that was a big concern in Congress about splitting jobs and about displacing jobs, but I don't think that has happened. Jerry Greenwald from United Airlines is the national chairman, along with the cochairs and myself and Governor Tom Carper, to encourage employers all across America to hire welfare mothers. I think it has been extremely successful. I think we are up to close to 30,000 some employers who have indicated their desire to hire welfare mothers and taken the pledge that they will hire at least one welfare mother in the next 12 months. I think that is growing and we are trying to move that across America. I think that we have to encourage because mostly a lot of employers have got the typical stereotype of a welfare mother that doesn't want to work and is going to work one day. We found just the opposite. We found that they are very productive. Once they are able to find their niche, they are extremely loyal because somebody has given them hope and somebody has given them a chance and they are very loyal and very productive employees, the vast majority of them.
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    Mrs. BIGGERT. I would congratulate you on your success. Thank you, Mr. Chairman.
    Governor THOMPSON. It is our success. It is the success of Governors, but also the success of this Congress who had the foresight and the vision to give us the flexibility to do what had to be done. So I compliment you as well.
    Mr. BURTON. Mr. Hutchinson.
    Mr. HUTCHINSON. Thank you, Mr. Chairman. Thank you for holding this hearing. I want to express my appreciation to Governor Thompson. We in Arkansas have followed what you have done and we congratulate you and we hope that we can strive to do just as well. I wanted to relate to you something that is happening in our State in the private sector that helps in this regard and then one problem area that I would like for you to respond to.
    In my northernmost county, Benton County, we have the Benton County single parent scholarship program that raises private funds. They do an outstanding job. They give scholarships to single parents and they also provide mentoring to them. But the scholarship is to help them move from welfare to get more education. I have actually heard the experiences of one person who moved from welfare, got a 4-year degree with the assistance of this program and became an accountant. It was quite a transition that they made and they are really doing remarkable work. One thing that related, though—these are not full scholarships that cover everything. It is just an assistance to help them. But the work requirement part of temporary assistance program, I think there is a 12-month limitation on education and they want that extended. They say that 12 months just gets them started and all of a sudden they have to go to work and they can't go to work and raise a kid and go to school full-time as well or even sufficiently. So it is a real burden, that work requirement.
    I want to add to that, before I give you plenty of chance to respond here, I would like permission of the committee. I have asked for the committee's consent to submit a letter from the Arkansas Department of Human Services and some of their comments on this hearing, today.
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    Mr. BURTON. Without objection.
    [The information referred to follows:]
    [The official committee record contains additional material here.]

    Mr. HUTCHINSON. One comment that they made: While we support TANF's time limit provision and the emphasis on employment outcomes as a matter of broad social policy, the department has found that the legislation went too far in limiting the State's ability to achieve such outcomes for a portion of its caseload through educational activities. Although a small number of cases may involve higher education, a vast majority of cases infected with this limitation are those needing basic remedial education and post secondary vocational educational services that often extend beyond the 12 months.
    Governor, if you could, just comment about that 12-month limitation.
    Governor THOMPSON. I don't think that you should change that, Congressman. I think that this Congress made a decision that work is vitally important. There was a lot of flexibility built into that. The 12-month was part of that flexibility. A lot of people work. A lot of people raise children and go to college and so on. I think the 12 months is the thing. I think once you start retracting from the mandates of work, I think then you are going to set a sort of slideback and not be able to get more people motivated that they have to work and get off of welfare. The work provisions were set up so that States and the Federal Government had requirements that made people get off of assistance and go to work. Education of 12 months is there, but you can continue—there is a lot of programs that we set up in the State to allow them to work half time and continue on with their education after work and so on. We provide with training and encouragement to do that. I am a big believer in education but I think relaxing the 12 months, I think there is more harm that can be done than good.
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    You are going to find individual cases, I am confident, Congressman, that will solidify and corroborate your position. I think that I can find more cases to indicate to you that we should continue the work requirements because that is the driving force to move people from welfare, off of welfare. That is so important, to get that motivation going.
    Mr. HUTCHINSON. Thank you very much. I yield back.
    Mr. BURTON. Will the gentleman yield to me very briefly. I just had one comment and one question, Governor, and that is that you indicated one lady who has been a real success story. She went to work as a janitor. That didn't work out and she went to this injection molding plant and I guess has done very well. Do you give aptitude tests for these people on welfare? Have you thought about that?
    Governor THOMPSON. We give a lot of testing, but not all testing is going to be successful because a lot of individual welfare mothers have a lot of problems and the testing will not show those problems like drugs and alcohol, lack of high school education, and so on.
    Mr. BURTON. I was just curious about that.
    Governor THOMPSON. In this case this woman never told anybody, but her father was a machinist and she always wanted to be a machinist. She was working in this G2 plastics factory cleaning up. She wanted to go out and learn how to run the machine. She finally got the courage to ask if she could be trained to work on the machine. She didn't like the work of cleaning, but she loved the job of running that machine. She has been very extremely successful.
    Mr. BURTON. Very good. The last thing I would like to say, and I thank the gentleman for yielding, is that you indicated that paperwork is causing you and the other Governors a great deal of problems. I wonder if you and the other Governors that have worked on welfare reform could send us a letter or some kind of a statement telling us how we could reduce the paperwork legislatively that would help you do your jobs better.
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    Governor THOMPSON. I don't know about the other Governors, but I will love to do that, Congressman.
    Mr. BURTON. Get something to this committee and we will get legislation drafted, if possible, to deal with that.
    Mr. Terry.
    Mr. TERRY. Thank you, Mr. Chairman. Governor, good to have you here today. I am from the State of Nebraska. After our football season, our claim to fame is that we gave Barry Alvarez his coaching start.
    Governor THOMPSON. We are very happy you did. He has done well in Wisconsin.
    Mr. TERRY. Yes, he has. There are so many areas that we could have a good conversation for the next couple of hours, but I will try to limit it to 5 minutes. There are two ways to look at the success of welfare reform. First of all, I missed your opening but I have read it here since, or at least gleaned it. One is the success of the individual, and you have stressed that. I wonder if you have done any type of a study that economically shows how, on average, the people that have gotten off of the welfare system and into the work force in Wisconsin, how much better they are off economically today versus when they were on welfare. I noticed that one of the statistics is that for the lowest income people in your State, that Wisconsin ranked 29th and now they are 12th. I have a feeling that you are better off, but have you gauged that?
    Governor THOMPSON. There is no question about that. You are absolutely correct. We have gone from 29th in 1989 to 12th as far as increasing the wages of the lowest wage earners in American. We are also the fifth lowest in poverty and the fourth lowest between rich and poor, the disparity between the rich and poor. It is obviously the working poor coming off of welfare and getting an opportunity.
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    But there are some statistics that I think really point out crystal clear what your position is and my position is. You can't get out of poverty by not working. The old FDC, just getting the FDC benefits, you were 15 percent below the lines of poverty. At minimum wage currently in America you are 15 percent above poverty. The people coming off of welfare in Wisconsin were averaging out at wages of $7.42 an hour. That is 30 percent of poverty. You add to that then when you work the opportunity to qualify for the earned income tax credits of the Federal Government, which is around $3,900. Then in Wisconsin it is one of the few States that have added to that an earned income tax credit from the State, which is another $1,500. So you can actually qualify for the maximums for an additional $5,400 by working which is added onto your wages. That really helps you a great deal. The minimum wage, if you qualify for the maximums with all of the credits in Wisconsin, you will get $16,000 for a family, which is $6,000 more than if you qualified for everything under AFDC. So on minimum wage, you are bound to be better off by working. That is the principle that we as Governors have worked from. You are better off as a person and family by working.
    Mr. TERRY. That would make sense to me; $6,000 better off. That is impressive. That certainly answers some of the critics. The other fact is how it helps the State and the economy. Have you been able to gauge the impact?
    Governor THOMPSON. It was interesting. The New York Times, which is not a paper that I religiously read or quote, but they have placed a reporter full-time in Milwaukee to cover welfare reform. They had a report just recently saying it was interesting to note that some of the new businesses in the central city of Milwaukee were small tax preparers setting up offices to prepare taxes from the central city. That is a strong indication. The Milwaukee Journal just had a report done not too long ago that interviewed several bus drivers of Milwaukee that were the bus drivers in the central city of Milwaukee, say before W–2 started they didn't have very many passengers in the early hours when they drove into the central city. But now their buses are full taking people from the central city to other areas of the city or to the suburbs for working.
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    There is every indication, anecdotally as well as the fact, that our unemployment is 3.2 percent in Wisconsin. Our wages for the lowest income people are going up. All of these are strong indications that the overall economy of the State is much better off because we have started W–2.
    Mr. TERRY. One last question. One of my frustrations coming from local government is the job training type programs, especially under the old Federal edicts that simply scored you on how many people you could get into the system and then would never follow through with the people that actually dropped out of the system, couldn't find a job or couldn't hold a job. What are you doing in Wisconsin and what can the Federal Government do by way of empowering you to get to the people that need the most help with job training, make it successful as it can be?
    Governor THOMPSON. The best thing that you could do is compress the 163 programs in the job training field at the Federal level and compress them into a block grant and give us the complete flexibility to do it. I would applaud you and that would be the greatest thing that would ever happen in Congress and it would be as big as welfare reform and accomplish just as much.
    Mr. TERRY. I agree. I think that we now have our project for next year.
    Mr. BURTON. 163 programs. Mr. Davis.
    Mr. DAVIS OF ILLINOIS. Let me just say, Mr. Chairman, I certainly want to agree, Mr. Governor, that work is worthwhile. I always say that it is a virtue and actually the greatest builder of self-esteem that there is. When one works you not only earn a livelihood but contribute significantly to the well being of the environment of which you are indeed a part.
    The one question that I have got is you have gone around to that group of individuals—Mr. Chairman, let me also just agree that when it comes time to reduce this paperwork, sign me up.
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    Governor THOMPSON. I applaud you, Congressman.
    Mr. DAVIS OF ILLINOIS. I think that certainly could go a long way. Some individuals have been taken off the rolls because of infractions in terms of not being in compliance with some rules and regulations. How do you feel about that?
    Governor THOMPSON. Well, I don't want to lose anybody, Congressman. I want to get everybody moving as much as possible. There are going to be some that fall through the security blanket. What we have tried to do is tried to go back. Now we are down to such a small caseload that we are going back now that—we call it—it is a LEAP program. The W–2 agencies in Wisconsin, in Milwaukee, that is where the biggest problem is, that we are going back to those individuals. We have advertised on television and radio. We are actually going door to door in some areas where we know that there is a family that needs some help. What we are trying to do is encourage them to come in to one of our W–2 agents and be able to sit down and we can assess them and see if they have had an infraction, what is the infraction. We do a lot of in-depth counseling to find out what the problem is. Is it domestic abuse, is it problems with the children, and so on.
    I am sure that you would be supportive of this, Congressman, but also we found in some instances that W–2 mothers have had some disabled children. They would like to work and they couldn't because they couldn't find a proper child care center to take care of the disabled child. So in my budget that is being debated right now we have set aside some TANF dollars to set up child care centers in Milwaukee to take care of that population.
    Then we found out another big problem was when a welfare mother wants to go to work and her child is at home sick. Then sometimes she doesn't know that she has to call to say she can't be at work, she doesn't show up, and gets penalized or maybe gets kicked off the program. What we have done to address that, Congressman, in this budget—we haven't set it up right now—we are also trying to set up a child care center for a central collecting place in the city where we could have for sick children to go. Maybe they have the flu or a cold or something like this. And then we are hoping to diagnose them and catch early a contagious disease or something like this. That has not been set up but that is the next step in both of those areas. We feel that that will also reduce a number of infractions and penalties because we found a lot of people have worked, they were doing well, but then they don't show up for 3 or 4 days, the employer gets mad and they don't call in and fires them and then they are off the program. We are trying to address these problems to keep them working.
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    Mr. DAVIS OF ILLINOIS. Is that what you are also doing with the hard to place, the core group that you are down to now, really the untouchables, the unreachables, the most difficult element of our society, that extensive counseling?
    Governor THOMPSON. That is what we are doing. Congressman. We are now—as can you well imagine, 8,800 families are the ones if they could have had some skills, they probably would have been working by now. Most of them are in Milwaukee County; 80 percent of our remaining 8,800 are in Milwaukee County. We found about two-thirds of those have at least an alcohol or drug problem or combination of the two. About 50 percent do not have a high school education and about 40 percent have never worked before. So what we have really now, we have to spend more money and really give the in-depth counseling.
    We have to have the flexibility, Congressman, to be able to adapt a program to almost an individual family. We may even have to go out to that family and get them up in the morning and transport them to work to teach them how all of these programs work. And so it is a big job, but we want to make sure that we do it and we do it right. That is why we are spending more money to accomplish that. That is why I need the flexibility.
    I think that buttresses what I told this Congress about 4 years ago, trust the Governors. We will not have a race to the bottom. Give us the flexibility to develop innovative programs and you will be surprised with what we come up with.
    Mr. DAVIS OF ILLINOIS. Thank you, Mr. Chairman, and again I appreciate it.
    Mr. BURTON. Thank you, Mr. Davis. Mr. Souder.
    Mr. SOUDER. I wanted to followup on one of the comments that you made just a few minutes ago regarding parents with disabled children or some sort of special needs child because, as you have pointed out, you are getting down to those where it is almost like an individual case-by-case basis. I have run into a few cases in my district where the health insurance risk of those kids—I mean it is hard enough with the wage rates to try to figure out how to do the transition on the health care, and the health cares costs are often horrendously large in those cases. Have you run into that much and how are you addressing that?
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    Governor THOMPSON. There are four things that really prevent a welfare program from being successful and from moving a welfare mother from welfare to work. The first one is health care. The second one is child care. The third one is training and the fourth one is transportation. In order to be successful, you have to address each one of those four items. What we have done in Wisconsin, we allow for the State under our W–2 provisions—we got a waiver, I believe that waiver we got from President Bush, was to allow for them to continue on with Medicaid for a year after they started working. Now we just got a waiver from the Federal Government in January of this year for the working poor and all of those coming off of welfare to be able to buy into our successful Medicaid program and up to 185 percent of poverty. That of course is a waiver from the Federal Government. We had to assure the Federal Government that it wouldn't cost more. You have the Federal program and CHIPs for taking care of poor children. We have found that if the parents are not included, they are not as apt to sign up just the children. So we had to get a waiver to use the CHIP program and to be able to use our successful Medicaid program to allow the working poor, and that is those coming off of welfare, up to 185 percent of poverty. Then if they get on the program while they are still under 185 percent of poverty, they can stay on 200 percent of poverty. The State is backfilling that with our own State dollars. It is expensive, but if you are going to be successful you have to do something like that.
    Mr. SOUDER. That sounds like an excellent way of transition, something logical, and I am glad to see some flexibility with that. In the catastrophic cases, much like we are seeing with IDEA in the schools where all of a sudden you have this level and one State that takes $200,000. Do you see very many of the—you could still have a break of where the insurance costs are running $3,500—that would be a way understatement. It can be $50,000 a year for that parent——
    Governor THOMPSON. You can but most of the time those individuals would qualify for SSI.
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    Mr. SOUDER. So you have a second fallback that you work with. One of the early criticisms that we have some statistics here, that Wisconsin was merely dumping their caseload into Illinois, but I see Illinois is down 40 percent, Indiana went down 46 percent and Michigan down 59 percent. The question is it doesn't seem like a lot of dumping if there they are all going down as well. Did you find that out in your individual case work, that while initially people may have tried to escape Wisconsin because you were first, now you are actually seeing individuals where you are making the progress?
    Governor THOMPSON. There was so much distrust, so much false information about what W–2 was all about that there was a lot of skepticism. Now the more that we are in it, the more people we are helping, the more people we have convinced that it is the right thing to do, the more people are out there applauding what we are doing. Those individuals that come off of welfare and working, they are really happy. They are the biggest supporters. If you have a typical welfare mother that has been in an abusive situation, has been a teenage mother and has got very low self-esteem and you encourage her to get the training and to be able to know that she can do a job and do it successfully and she gets promoted once or twice and starts being able to buy her children some gifts and clothes and so on and so forth, that person just blossoms.
    That is what we have been able to do in welfare reform. That is so exciting to me to see somebody that has been beaten down have the opportunity to step forward and get the chance to prove themselves and prove their self-worth. They are exceptional.
    Mr. SOUDER. You were one of the first if not the first to see the interrelationship of education and welfare issues. I know you tried learnfare, and got bottled up a little bit on that. I would be interested if you have any additional comments on that. Also with the Milwaukee choice program, do you think that some of the reason that parents want to move their kids into these choice programs is that if they don't have the traditional all weekend, always draw the welfare check, and the success in the workplace or also seeing that success in the workplace that that has energized some of Wisconsin choice in education programs and other things that you are doing?
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    Governor THOMPSON. I think it has. We had an interesting election 2 weeks ago in Milwaukee. We had a school board that was dominated by people that were not reform minded and they were most of those individuals on the Milwaukee school board. The five reform minded candidates won the election against three incumbents—two incumbents and two open seats and one reform minded candidate won; but all five reform minded. But in one instance, the citywide candidate for the school board had $500,000. I don't think this has ever happened in America; $500,000 was spent against that one person. Most of the money came from outside the State of Wisconsin to defeat that reform minded candidate because he was pro-choice and pro-change and pro-opportunity, and he won by 60 percent of the vote.
    That has completely energized the educational system. Milwaukee is the only city in America now that you have the complete choice to send your child to a public school, a private school non-sectarian and a private school religious, a charter school run by the school district, a charter school run by the city, a charter school run by the university, a charter school run by the school and a complete science school set up by an individual stand-alone charter school. No other city in America has as many choices as the city of Milwaukee does right now.
    I am confident that, since it is only starting this year, that you are going to see the education quality improve considerably over the next several years. It is going to be almost as big an eye opener as welfare reform has been to this country.
    Mr. BURTON. Thank you, Mr. Souder. Ms. Schakowsky.
    Ms. SCHAKOWSKY. Thank you, Mr. Chairman. I come from Illinois and the Illinois State Legislature——
    Governor THOMPSON. This committee is dominated by people from Illinois.
    Ms. SCHAKOWSKY [continuing]. Where at one time I chaired a task force on welfare reform, so I know how hard it is. I applaud your entrepreneurial spirit in dealing with this issue and showing, I think, that real welfare reform does require on a per person basis that you spend real money, in your case even more money than you were spending before. We have some wonderful programs in Illinois, including More Pays, where TANF recipients can keep more of the money that they earn. Also, a concern that of the 40 percent decrease in the rolls, as Mr. Souder said, about half of the people that are leaving welfare right now are doing that because they have failed to make an appointment. A number of us are raising those kinds of concerns, why are people off the welfare rolls. We are also finding, and maybe it has been brought up before, forgive me it if it has, but there has been a decrease in programs like Medicare and Medicaid and food stamps that even those not receiving cash assistance would be eligible for.
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    At the same time we are seeing increases in food pantries, Catholic Charities, new ports. I want to ask you a question about what is going on in that regard in Wisconsin. I am told that in your current policy manual and your draft request for proposals for the next round of W–2 contracts, that W–2 agencies are specifically directed to not proactively offer these entitlements. Is there any truth to that?
    Governor THOMPSON. I hope not. Unless we are complying with the Federal laws in that regard. In regards to——
    Ms. SCHAKOWSKY. Let me put it this way then. Do your front line people try to make sure that those programs, that people ineligible for cash assistance, are eligible for it. Do you promote those programs?
    Governor THOMPSON. Yes, we do. I want to point out we did see a decrease in food stamps, but now it has leveled off and we are seeing a slight increase back up of people qualifying for food stamps. We make no apologies for that at all. We think it is good. We think it is good that people are using it to supplement their earned income and be able to qualify. We have no problems with that whatsoever. It is a Federal program and we are going to qualify for it.
    Wisconsin is one of the few States—we are the 49th. I keep talking to Congressman Ryan about giving us some more Federal dollars. We are 49th in America about getting any help from Washington.
    Ms. SCHAKOWSKY. We are pretty low, too, in Illinois.
    Governor THOMPSON. But a lot better in Wisconsin. You are still higher.
    Mr. RYAN. You are still higher.
    Governor THOMPSON. The Midwest as a block of States get fewer Federal dollars. As far as food stamps, if we qualify, we are going to certainly accept it.
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    Ms. SCHAKOWSKY. It is understandable how a former beneficiary might think that off is off. They might not understand——
    Governor THOMPSON. I understand that. The question was raised by Congressman Davis. We are down to the hardest to place individuals. We are doing a lot of followup. We are also extending the W–2 counseling for an additional 6 months to 9 months for those people that have gone off of work to keep counseling them to see what we can do to make sure they stay in their jobs and find out if any cross training needs to be done, what other kind of programs we can be of assistance. W–2 is just not cash. W–2 is a whole plethora of programs encompassing the human person to try to get that individual trained, get them into a job that is going to be one that they are going to like and be able to perform at. We are not going to be successful 100 percent of the time. I don't want to leave that. If we can get those individuals placed, we are going to do everything that we possibly can do, and we are going to make their life as easy as possible.
    Ms. SCHAKOWSKY. This may have been asked before. I know that you have private agencies that conduct the W–2 program. Is there the kind of followup so that you know where people are and what has been happening to them, et cetera?
    Governor THOMPSON. Not as good as I would like. I am the first that would admit that. But what happened with the W–2—W–2 has only been in operation for about 16 months. We have been tremendously successful. Since W–2 started we reduced our caseload 74 percent and 90 percent totally from the time I started in 1987 with our first pilot program. We had so many people going off of AFDC the first couple months that we had a terrible time. It was difficult tracking everybody. Now we have set up a new procedure. We have had our first study done and we are going to do four more quarterly studies, where these people are, how well they are doing. Their criticism was constructive. We are doing a much better job now and it is not nearly as good as it is going to be a year from now of tracking people. We will have a lot more empirical data a year from now if you call me back to give you that.
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    Ms. SCHAKOWSKY. Thank you very much.
    Governor THOMPSON. I would like to point out we do have private, we do have profit, and we do have nonprofit agencies running our W–2 but we also have the counties as well. They all bid it and the one that wants to do the best job will do that.
    Mr. BURTON. Mr. Ryan.
    Mr. RYAN. Governor, I think that we have heard some very enlightening questions and testimony here today. Mr. Waxman was asking about some instances where New York State or New York City, they are pushing working poor off the cliff and going to the charities and other places. Ms. Schakowsky had some insightful questions on what happens after W–2. You have shed so much light on welfare reform, on bringing our States throughout this country onto the road of welfare reform. Now that we are beginning to mature through that process, given some of the concerns that we look at welfare reform that people going off of welfare are just going off of a cliff, could you shed some light on how Wisconsin is making sure that W–2 recipients aren't slipping through the cracks? And then I would have a followup question.
    Governor THOMPSON. What we are doing is a lot of counseling, Congressman Ryan, and we are also doing a lot of followup. Ms. Schakowsky pointed out that she wants to make sure that people are not dropping through the cracks, as you are and everybody in Congress. We have not done as good as job as I would have liked. It was just because of the tremendous numbers that we were dealing with at the beginning. So we are following up completely. We are also trying to find out—in this budget we have gotten extended for another 6 to 9 months—for in-depth counseling of everybody that we placed to work to find out how well they are doing and what their problems are and how the State could benefit them and be a partner with them. We don't want to dictate, we want to be their partners. We also are doing a lot of innovative things as far as Badger care. The next step is health care. We have got a waiver on that, as I mentioned to one of the previous Congressmen, and that we are going to provide health care up to 185 percent of poverty, especially to the working poor. Once that kicks in that is going to help them keep their jobs much better because they can't afford health insurance. It is much better to keep them working and have the State help them with their health insurance.
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    In child care we are going the next step. I am really passionate about this and excited about it, setting up in this budget a completely new kind of quality child care centers for children at risk and trying to get to them at an early age so that when their brains are in the formative stages that we can impact on that correctly. It is sort of an exciting thing.
    These are the things that we are doing and I think that it is sort of model setting, but it is the right thing and we are helping to be able to move the remaining people off of welfare over the next several years.
    Mr. RYAN. I just want to compliment you on the way you are implementing this at the county-by-county level. I have toured the job centers in the First Congressional District, and it is just astounding to see how the one-stop shopping principal is being applied within Wisconsin. In Janesville, WI, I don't know if you have been to that job center where you took an old K–Mart department store and retrofitted it and changed it into a job center. If you do have job training problems, health care problems, child care problems, you can go to the job center and meet with a consultant and they can help you get on the road to self sufficiency.
    One of the things that Congressman Davis mentioned was getting a livable wage. I think there is an unjust criticism on welfare reform in general that we are simply putting people in the minimum wage jobs. I know that that is not the case with W–2, but could you just enlighten us a little bit about how W–2 specifically deals with promoting people to getting off of minimum wage jobs into higher paying jobs?
    Governor THOMPSON. I certainly can, Congressman, but I would just like quickly to comment on your one-stop shopping center. This is something that we started in Wisconsin. A lot of States are doing it. It is a combination of the State, city and county. If you were able to give the employment training provisions in the block grant, you would, Congressman Ryan, do so much to unleash the innovation of different States on training people and getting them off of low skilled into higher skilled. It does work. You can go in there and take your children in. They will be taken care of in the child care center while they are there. In the city, if you have a problem with whatever, we are going to take care of you. That to me is the beauty of it. You don't have to waste going from one agency to another. If it is a city problem or a county problem or a State problem, they are all going to be dealt with in that one-stop shopping center. You have been there, you know they are successful. But if we could get that block grant on the employment training, I could tell you we could do so much more for your constituents and for mine and for the people of this country. People have the mistaken belief that you are able to get out of poverty by being on welfare. You are 15 percent below the poverty line on AFDC standards. The only way to get out of poverty in this country is by working. It just makes common sense. If you are 15 percent below poverty staying on welfare, you are never going to get above it. It is impossible. So the only way to get above poverty is by working. Even at the minimum wage, which everybody knows you don't find many minimum wage jobs in many places across this country because people are working. When people are at full employment or close to full employment, wages go up. McDonald's is always used. Why are you training people to go into McDonald's? McDonald's, I am sure, are paying $7 an hour right now just starting. Most of the welfare case workers that we have are people that have moved off of welfare into work, are making on the average of $7.42 an hour, which is $2 above the minimum wage. On top of that, at $7.42 you are 30 percent above the minimum wage, above the lines of poverty. And on top of that in Wisconsin, you qualify for earned income tax credit and from the Federal you get that any place in this country, which you can't get when you are on AFDC. That, if you qualify for the max, is $3,900, over $300 a month on top of that. Even at minimum wage you can qualify for that. Then on top of that in the State of Wisconsin, we are one of the few States that has their own State earned income tax credit, which can give you another $1,500. So actually you can get an additional $5,400, more than $100 a week, just by working, from the Federal and State government, if you qualify for the maximum earned income tax credit. So it makes sense to work.
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    Mr. RYAN. Just to bring you up to date, Governor, as vice chair on one of the subcommittees on this committee, the Natural Resources, Economic Growth, and Regulatory Affairs Subcommittee, we are going to launch a series of hearings looking at Federal barriers toward State and local government reform. That is why it is so informative and helpful to have you come up and testify and tell us precisely what those barriers are. Just for the record, I wanted to get this down, which is you need assistance with the job training block grants. You need the paperwork burden to be lessened or removed. Is there anything else off the top of your head——
    Governor THOMPSON. If you could get those two, you would make my life a lot better and every Governor in this country, and you would do so much to help improve the quality of life.
    Mr. RYAN. We look forward to working with you.
    Governor THOMPSON. Thank you so very much.
    Mr. BURTON. Let me just say, Governor, before I yield to Mr. Mica, that if you will get through to Mr. Ryan or directly to me these requests for changes, I will talk to some of the other committee chairman of the relevant committees and see if we can put some of that on a fast track.
    Mr. Mica.
    Governor THOMPSON. Thank you, Mr. Chairman.
    Mr. MICA. Thank you, Mr. Chairman. First of all, Governor, I would be remiss if I didn't compliment you on the incredible record of accomplishment that you have achieved. I came into the minority in 1992 from the business sector determined to balance the budget, welfare reform, and other reform of some of the Federal programs that had gone askew. We had some incredible battles and we appreciate your assistance. We were defeated several times, but we finally came back and won at the Federal level. During that debate I always liked to use the quote from Thomas Jefferson that said dependency begets servitude.
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    I think that you have freed in your State and across the Nation thousands and thousands of people. I think history will record that as probably the most significant thing that we have done in a generation, really, at the Federal and State level, to help people gain self-respect, self-worth, and dignity and part of what this country is about, economic opportunity and personal freedom, not being dependent on government programs. I just had to say that.
    One of the things that has concerned me is that as we take people from welfare to work is, again, they are going to enter at the lower paying level. I think Mr. Davis asked you a question about health care, which is of great concern to me. You don't want to take people out of a system that they have been dependent on and also gone to for health care and for other benefits that they can't get because we provided more not to work than to work. Then if you work, you have got less and you have got fewer benefits.
    If I am a parent, I am concerned about health care. I was astounded by the figure that you said, 93 or 94 percent of your folks have health care coverage in your State, which I think should be a model for this country. It is a sin that 43 million Americans do not have health care coverage. Could you tell us how you did that and maybe recommend how we could do that? If we could do welfare reform and we could do that, we have accomplished two great things, allowing people to work and then allowing them to have the most important benefit, which is health care coverage in my estimation.
    Governor THOMPSON. I can't take that much credit for it, Congressman. It is sort of the whole State has pulled together. We have a lot of insurance companies in the State of Wisconsin. We were one of the first States to start managed care and HMOs. It was very helpful in getting people covered by health care. We were the first State to start the COT program which allowed people to choose to stay in their own home rather than going into a nursing home. Then under the welfare program, we just made it a policy that we were going to cover welfare mothers for a year after they left welfare so that they would have the security of knowing that they would be covered.
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    There are four things that prevent a welfare mother from going to work. The first one was health care, which was dominant. I looked at that. We got a waiver. I believe it was under President Bush that we got that waiver to provide for health coverage for 12 months after they started working so that there would not be the immediate falloff. The second thing is day care, which we provided. The third one is transportation and the fourth one is training. Now we tried Badger care. That is going to raise our level from 93 to 94 percent. We are tied with Hawaii for having more people covered by health insurance. Hawaii has sort of universal health, but they are only about 93 or 94, so we are tied right there. So we are going to have Badger care for the working poor. We just got a waiver from the Federal Government to do that. We are hopefully going to have it up and running by July.
    The Federal Government says for this waiver, we can't cost the Federal Government any more money. So it is going to be an expensive program for the State, but it is the right thing. It is an investment in the health care. It is the working poor—that person that has never asked for anything, maybe coming off of welfare, but also maybe a poor farmer in the State or somebody just above minimum wage that just can't afford it. We are going to allow that family to be able to buy into our successful Medicaid program up to 185 percent of poverty. Then if they get in below 185 percent of poverty, they can stay in until they reach 200 percent of poverty. It is going to, we think, increase the number of people that are covered by health insurance in Wisconsin from about 93 percent all of the way up to about 98 percent.
    Mr. MICA. Thank you again, Mr. Chairman. Thank you, Governor.
    Mr. BURTON. Let me just say, Governor Thompson, first of all, I am sorry that our Members weren't all here at one time. This has been a very busy day. You can see they have been in and out. The information that you have given us I think will lead to legislation. I can tell you from my own personal standpoint, and I am sure Mr. Ryan and others on the committee, that we will do everything that we can do to help you to reduce the paperwork burden and maybe streamline some of our other programs and get money back to help solve the problems. If you will get that information to us through Congressman Ryan we will really work on that.
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    I would like to say one more thing. You are living proof that good government is good politics. I know that Wisconsin is a switch State. For you to be Governor for 13 years proves you are doing the job right, and we really appreciate what you do. Thank you, sir, very much.
    Governor THOMPSON. You are a wonderful person. Thank you for having me, Congressman.
    Mr. BURTON. Thank you, Governor. Our next panel is Claude A. Allen, secretary of the Virginia Department of Health and Human Resources; Michael Poole, chairman of the Board of Directors of the Florida Work and Gain Economic Self Sufficiency Program; Jason A. Turner, commissioner of New York City Human Resources Administration; Julia Taylor, the CEO of YW Works; Cassandra Tucker, a former welfare recipient and now gainfully employed; Genevieve Kukla, president of Central Overhead Doors; and Wendell Primus, director of income security of the Center on Budget and Policy Priorities. Would you all come forward and sit here at the table. Before we start, we have one of our valued members of the committee from the great State of Florida, Ms. Ileana Ros-Lehtinen, who would like to make a remark or two about some of her constituents.
    Ms. ROS-LEHTINEN. Thank you, Mr. Chairman. It is a pleasure for me to welcome Mr. Michael Poole, the chairman of Florida's Work and Gain Economic Self Sufficiency Wages. This is a program that has performed an outstanding job in reducing Florida's welfare caseload while improving services to the truly needy. With the wages effort under the leadership of Mr. Poole, this program began in 1996 while our State of Florida has led the Nation's eight largest States in the decline of its welfare rolls. The number of families on welfare has dropped by more than 60 percent and more than 140,000 individuals have returned to work. As a result of this amazing success story, more than $250 million in savings has been used to reinvest in clients who face more formidable barriers and as a rainy day fund for a possible future economic recession. Another $70 million in wages savings has been used for the very important needs of child care for the working poor.
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    Recognizing the benefits are limited and taking advantage of increased employment assistance, the average stay on welfare in Florida has dropped significantly from 23 months to 14 months in July 1998. The most comprehensive State study ever taken shows that over 75 percent of Florida families who have left the welfare rolls have found employment and that most believe that they are far better off since leaving the welfare system.
    We congratulate Mr. Poole and the reforms that he has adopted. They have been very effectively implemented in the State of Florida with a strong Federal-State partnership reducing welfare rolls while utilizing our State's private sector with economic incentives to boost payrolls. I welcome him to our panel and I thank you, Mr. Chairman, very much for inviting us in Florida to participate and boasting about what a good job we have been doing.
    Thank you, Mr. Chairman.
    Mr. BURTON. Thank you, Ms. Ros-Lehtinen. And the other Congressman from the State of Florida, Mr. Mica, has a comment.
    Mr. MICA. Thank you, Mr. Chairman. I won't take too much time, but I just want to associate myself with the remarks of my colleague from Florida and also welcome Mr. Poole and compliment him on the outstanding job that he has done, compliment the wages program in Florida and what it has done to allow people self-sufficiency and local control and local responsibility, and we are so pleased to have him with us.
    I really would like to utilize the rest of my time, sir, to hear from him. Thank you, and I will yield back.
    Mr. BURTON. Thank you, Mr. Mica. Mr. Ryan.
    Mr. RYAN. I would just like to welcome Julia Taylor, Cassandra Tucker, and Genevieve for coming today. We just heard from our Governor, Tommy Thompson, about how he structured W–2, how it is working and how the policy works. I am looking forward to hearing from you how it is working on the front lines, how it is working in reality and in practice. I am very excited about having you here. I am glad your plane made it on time. Good to have you.
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    Mr. BURTON. Speaking of planes, I think Mr. Primus is going to have to leave in a little bit, so we will get you on the program here relatively soon. But you will probably get out to the airport, if it is National, and you would probably be waiting anyhow.
    Mr. Allen, would you like to start off? If it is possible, I would like for you to try to confine your remarks to 5 minutes because we have so much we have to cover.

    Mr. ALLEN. Certainly. Thank you, Mr. Chairman, members of the committee. It is indeed a pleasure to be here on behalf of Governor Jim Gilmore and the citizens of the Commonwealth of Virginia. In November 1993, the citizens of the Commonwealth elected Republican George Allen to be Governor of the State with a mandate, among other things, to reform Virginia's welfare reform program. At that time, the average welfare recipient received about $291 per month in food stamps, Medicaid, and other ancillary benefits like transportation and child care assistance, which has been talked about here earlier. The former system, however, penalized individuals for working, getting married, and saving money. We realized that the best intentions of the former welfare plan had done more to keep people in poverty than to help them out of it. It created a greater dependence on government than on one's self, one's family, or one's community. Welfare programs rewarded people for dysfunctional behavior that tore families apart rather than bring them together.
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    I am proud to say that 1 1/2 years prior to the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Virginia passed and began to implement our historic Virginia Independence Program.
    In the past 3 1/2 years, Virginia has experienced unprecedented success in moving welfare recipients to work while reinstilling the values of personal responsibility. Virginia's welfare caseload has declined 51 percent from 73,000 families to under 36,000 families on welfare. More than 73 percent of the VIEW participants are working and 90 percent of those are working in full-time, unsubsidized employment. VIEW participants are averaging wages in excess of $834 per month, which is almost triple the average welfare payment of $291.
    Virginia's welfare recipients have earned and contributed more than $130 million back to Virginia's economy through employment, therefore becoming taxpayers and consumers, not tax burdens. Virginia's welfare reform program and success are greatly attributed to the enormous support and efforts of the local communities and businesses. Virginia has created hundreds of partnerships with each facet of the community, nonprofit organizations, businesses, and faith based organizations to provide the necessary support and services needed by welfare clients to achieve lasting employment and self sufficiency.
    Despite these clear successes, there are some critics who want to claim that welfare reform has failed. These are people who argue against mandatory work requirements and the use of sanctions to change behavior. These opponents initially paint vivid and horrifying pictures of women and children being cast adrift in a sea of public indifference. An example of this would be where estimates of a million children would be thrown into poverty and homeless shelters would be exploding with all of the women and children.
    This indeed has not happened in Virginia. I doubt that it has happened throughout the United States. By any standard of empirical, anecdotal, or statistical measure, the conservative pro-family welfare reform initiatives implemented in Congress and by the Republican Governors have been an overwhelming success.
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    There are, however, a few things that Virginia recommends in the continued implementation of welfare reform, and I will touch on those briefly. Federal work participant rates do not measure outcome. These work participation rates that States must meet in order to receive full TANF funding is a process rather than an outcome measure and does not measure the number of individuals who have left welfare for work or have been diverted from welfare rolls. Many States, including Virginia, have seen significant caseload declines and many individuals who have gone to work and are now successfully supporting their families with higher income than when they were on welfare.
    However, under the Federal participation rate requirements, States are actually given more credit for keeping someone in a subsidized job and on welfare than for placing that person in a job with a sufficient income so that he or she no longer is eligible for cash assistance.
    Second, flexibility is needed in the food stamp program. In the era of welfare reform, the food stamp program remains an old style entitlement program with its major emphasis on being payment accuracy rather than on measurement of outcomes, such as increased nutrition or movement of clients beyond dependency. To come in line with the direction taken in the TANF program, several changes are needed.
    First, we would recommend amending Section 17 of the Food Stamp Act to allow the Secretary of the Department of Agriculture to approve a broader array of waivers. Second, we would urge the committee to consider expanding the definition of cost neutrality in the waiver approval process to take into account savings over multiple years and in all Federal programs rather than in measuring cost neutrality over 1 year limited to the food stamp program alone.
    In closing, Virginia's last recommendation to this body would suggest that you continue to provide maximum flexibility to States so that they can identify and solve the problems unique to their individual populations. What is vital to the citizens in the Commonwealth of Virginia is that you do not retreat from the foundational principles of work first and time limited assistance. By any measure, it is clear that all of the people of Virginia have benefited from this program. I thank you again and I would be glad to entertain any questions at the appropriate time.
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    Mr. BURTON. Thank you, Mr. Allen.
    [The prepared statement of Mr. Allen follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Mr. Poole, we would love to hear from you next.
    Mr. POOLE. Thank you, Mr. Chairman. Mr. Chairman and Members of Congress, on behalf of the Florida WAGES Board and the Governor, Jeb Bush, I thank you for giving the opportunity to share my experiences and insights gained in the implementation of welfare reform in our State.
    The State of Florida began implementing welfare reform on October 1, 1996, approximately 2 1/2 years ago. The Florida Legislature passed the WAGES law prior to the Federal Personal Responsibility and Work Opportunity Act. Of chief importance, our welfare program was designed with strong philosophical foundation and substantial program flexibility.
    The philosophy is best described as local control, local responsibility. I have discovered, though, that while control is always embraced, responsibility is often avoided. Individual and community acceptance of responsibility is a learning experience, and although it has been difficult, we have succeeded because of the willingness of community leaders to sacrifice and contribute countless hours to helping neighbors on the road to work and self-sufficiency.
    The organizational structure of our effort is unique. In essence, the State WAGES Board acts as a holding company that oversees 24 subsidiaries we call the local WAGES coalitions. State WAGES Board is comprised of 17 members, 9 of whom are volunteers with diverse business and leadership backgrounds. The remaining members represent various State departments and agencies and State-sponsored economic development partnerships. An organizational chart, I believe, has been provided to you.
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    On the local level, welfare reform in Florida is implemented through 24 local WAGES coalitions comprised of volunteer business and community leaders who are responsible and accountable for overseeing the design, delivery and funding of services. You can say that no two organizations, by the way, are the same; all service deliveries are different across the board.
    A fundamental factor behind our success is the enormous flexibility that these local communities have in addressing barriers in helping people become self-sufficient. We all work together under common guiding principles. We are customer-focused, community-based, outcome-driven. We try to be caring communities, including our business leaders who are engaged in the process, and we are flexible and open to new ways and innovations. The board sets the policy, the local coalitions implement it, and we all work together in focusing on the results.
    Some of the successes that we have accomplished are these: The number of families subject to time limits and work requirements has declined by 71 percent as of today. We do lead the Nation's eighth largest State in welfare caseload declines and people in Florida staying on welfare for shorter periods of time, decreasing from 23 months to 14 months.
    We just finished research on 45,000 families, which we were told is the largest study of families leaving welfare in the country, and we found that 75 percent of those who have left WAGES report that they have found employment. They are stable. In fact, 60 percent of those who found employment are still in the same job that they left welfare for. Approximately 60 percent left the welfare rolls due to employment or earnings.
    And as it relates to sanctions, we found that only 8 percent have left welfare due to noncompliance with the program. And although these highlights point to good success, we do have concerns. Most of our workers earn between $6 and $7 per hour, and this is not a wage that will allow self-sufficiency in our State. The majority of those who have left welfare for work are working in jobs without health benefits.
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    And many people are unaware that they might qualify for other governmental assistance programs, such as food stamps and child care and housing, et cetera, when they do leave welfare because they consider welfare being any benefit that they receive from the government. It is to say that we are in the process of looking at these issues and concerns and are trying to find ways to improve those areas.
    I do want to highlight three issues. Governor Thompson, before us, hit on the new regulations, and there are three issues that we have. I won't go into detail, but do want to highlight them.
    The way we are interpreting the law prevents us from using the reserve funds to serve families who are off of welfare. It seems that we are also having to account for them as two different funding sources, the current funds and the reserve funds, the unspent money. So I would ask you to look at that interpretation. Maybe we are wrong in the interpretation. Whatever you could do to help us with that.
    Another one is the interpretation of the adjustment to the participation rate requirement that the States receive for caseload reduction. And I would ask you to look at that issue and the regulations requiring extensive reporting. They have increased the elements from 60 to, I believe, over 200, and we are just wondering how much paperwork again do we have to have to show results.
    On the areas of innovations in our State, because of the entrepreneurship, it is kind of hard to go into all of them, so I would ask to you look at the paperwork we provided on these, because what I want to do is shift my remaining time to recommendations to have you all look at.
    One is I would like you to look at the redefinition of poverty. It is an old definition. It has been created back in, I believe, the 1940's and the 1950's and underestimates what it costs to be in poverty or the level of poverty. It is archaic. It doesn't have any relevance to today's economics, and you should look at that issue.
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    I think that we should allow remedial education to count as a work activity. It is hard to put someone into a job and have them on the road to self-sufficiency if they can't read, write or do math. And as long as it is within the work element, that should be counted as a work activity.
    We need to start redefining economic development. Currently economic development is viewed as job creation. We need to broaden our definition to embrace the concept of improving the income of the working poor.
    I would like you to look at—welfare reform in reality is really an expanded version of the unemployment compensation program that we have. The common denominator to both programs is requirement to seek work. The only difference is the level of benefits one receives. And I would encourage to you explore how the public and private side of welfare reform and unemployment compensation can work together.
    I believe that to implement the successful policy of welfare reform and other governmental assistance programs, I think some of the work-first ideas that have worked on this cash payment program could work related to housing and food stamps and other what I would call welfare programs that the government provides.
    I would also look at the distribution systems of our welfare system, and that is, why not combine food stamps and housing subsidies and child care subsidies into one income stream? It would make sense. It is more efficient. Companies do this all the time, and I think that we can work up some common philosophies like the earned income tax credit, which is probably the most direct welfare program that we have in our country. We would save a lot of time and money in helping people.
    And last, I would encourage to you look at the issue of the living wage, and I want to hasten to point out that to me this is not raising minimum wage. I don't think that is the right way. But we can do things to encourage businesses to pay a living wage. It costs a lot of our communities every time a job is created that doesn't pay a living wage. Someone has to subsidize that family, and one way that you all might help in doing that is to award extra points to a company bidding on a contract that shows and demonstrates that they are paying their employees a living wage, which might include health benefits.
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    I thank you for your comments and look forward to your questions.
    [The prepared statement of Mr. Poole follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. Before I go to the next witness, let me say that any recommendations that you have, if you can be sure to give them and condense them as much as possible. People send us volumes of things, and we just don't have the time to go into them all, even our staff. So if you can condense, give us the Henny Youngman one-liners, and we will see if we can do something to accommodate you as much as possible.
    Let me go to Mr. Primus. I know you have to catch a plane.
    Mr. PRIMUS. I am fine. I have to leave by 1:20.
    Mr. BURTON. Oh, you are in good shape.
    Mr. Turner.
    Mr. TURNER. Thank you, Mr. Chairman. First I would like to give you two one-liners on food stamps. I agree with Mr. Allen's remarks that food stamps is an archaic program in the sense that its proponents argue that it really isn't welfare, that it is a nutrition program. But studies show that food stamp recipients use the money just the way they use cash. And, in fact, if you look at what the amount of food and the kind of food that people who receive food stamps use it on, you find that both people who have income from food stamps and others in studies where cash has been given instead of food stamps end up both having the same amount of food and getting the same amount of nutrients, calcium, protein, vitamin B.
    We need to look at food stamps like it is. It is a welfare program. And what I would like to suggest to this committee is that food stamp benefits should be merged with cash assistance and made possible to impose the same kinds of work and other requirements that we at the local level have as a condition of receiving cash assistance for food stamps. Right now the Federal food stamp rules don't permit that. And I will send you a very short summary of how those changes could be made.
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    Mayor Giuliani has reduced the number of welfare recipients in New York City by over 450,000 individuals, over a population greater than the size of the second largest New York State city, that is, Buffalo. At this point, 1 in 17 households in the city of New York is a household that was receiving welfare benefits in prior administrations and now is free from welfare. That is quite a number.
    In July, the mayor went further. He said he wanted all individuals who were receiving welfare benefits to be engaged in work activities for 35 hours a week or 35 hours a week as a standard, meaning that typically 3 days out of the 5 would be in work experience programs in various things like working in the parks or working in the courthouses, cleaning and so on, or doing other things that are making New York City more beautiful, and the other 2 days would be in other activities leading to immediate employment.
    Your 1996 welfare reforms, the U.S. Congress, although they make it—although we have a lot of work to do to get to our objective, gave us a clean and clear run for the end zone so we can actually do what we want to do to meet that objective of the mayor's because of the reform that it is Congress gave us, and we appreciate that very much.
    I think what you are going to hear over the next several years in playing out the debate as to whether the reforms were a good idea or not, is many individual anecdotal examples of things where individuals supposedly are falling through the cracks. But let me describe a way to interpret those anecdotes that you are going to hear in a way that I think makes sense for us.
    You heard from Governor Thompson, and as he mentioned, the New York Times is doing an in-depth 1-year study of Wisconsin's reforms. About a month ago, there was a front page article in the New York Times in which a grandmother was confronting her daughter in a jail who had given up her daughter, the mother's daughter, to the grandmother because she was not following through on her work assignments and had no income. And you saw in the news article the grandmother insisting that the mother in jail was not meeting her responsibilities and that she was burdened with this young child. And I think the news article's cast on that was that this was somehow a necessary failure as we move to welfare reform.
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    Actually, I saw that article in a different way. It was a success in this sense—in this important sense: What we have done is shift the anonymous giving through welfare where people were not responsible to each other, even within families, and we have made individual mothers responsible and fathers, for working in exchange for benefits.
    And when they failed to do that, what you are finding is interactions between parents, grandparents, and children and mothers. And it is a constructive reorganization of responsibility within the family unit which is actually making people responsible to one another. So I would encourage this committee not to be overly concerned when they hear stories which actually are part of the solution in the long run to responsibility.
    Finally, I want to just say that I am heartened to hear and agree with many of the others who say the first job that you get, even if it is a minimum wage job, is a way out of poverty. In New York State now, because of welfare reforms and the earned income tax credit, even a mother with two children going from no job on welfare below the poverty line to only 20 hours of work at minimum wage, that is like the lowest threshold in the private sector you could imagine, the mom and two kids brings their family out of poverty when you include the earned income tax credit and the residual amounts she receives still on welfare, plus Medicaid and other things.
    So the real solution is to move people into early employment at first possible opportunity and that is the way to make steps up the ladder, not to withhold people while they go through some extended training program hoping to get a so-called living wage. Let us get them into early employment, and then they will move up. Thank you.
    Mr. BURTON. Thank you, Mr. Turner. And that deductive reasoning you used in looking at that article, I think I agree with. It shows that it is putting family pressure, trying to get people to do the right thing. I think it is great.
    [The prepared statement of Mr. Turner follows:]
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    [The official committee record contains additional material here.]

    Mr. BURTON. Mrs. Taylor.
    Ms. TAYLOR. Good afternoon, Mr. Chairman, and members of the committee. We are pleased to be here today. As a matter of fact, I think we used some of the same innovation and ability in the program to get on the planes and change planes to get here today.
    We are grateful for the opportunity to speak to you about the strides we have made in Wisconsin in building a community of work through partnerships with employers in the greater Milwaukee area. Government alone cannot address the challenges of welfare reform. Rather, a broad range of community partnerships must be involved to refocus the welfare to work system. I am pleased to provide the committee with an overview of our experience in establishing linkages with these partners and suggest ways that the delivery of service could be enhanced.
    Joining me today are Genevieve Kukla, president of Central Overhead Door Co. in Milwaukee, and Cassandra Tucker who you will hear from in a moment. We are here to provide firsthand testimony of the way in which our program, YW Works, has built a bridge between the cycle of dependency in the former welfare system and the world of personal responsibility and work.
    YW Works was formed in 1997 and selected by the State of Wisconsin to be one of the private agencies to manage the Welfare to Work Program in Milwaukee. We did form an entrepreneurial venture with our partner, CNR Health, and Kaiser Group to make W–2 work for participants, employers, and community-based organizations. With over 14 months of experience, I believe that our performance and results deserve to be graded very highly.
    As Governor Tommy Thompson indicated in his testimony today, Wisconsin has achieved much success in its historic Wisconsin Works or W–2 program. This program provides assistance to individuals for job preparation, work and support services to enable them to leave the program and become self-sufficient.
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    Since the inception of W–2, well over 10,000 AFDC recipients began moving into new unsubsidized jobs in Wisconsin. In 1998 alone, YW Works placed 925 people into employment with an average wage of $6.71 an hour. One of the underlying philosophies and goals of W–2 has been to enhance the ways communities and employers support individual efforts to achieve self sufficiency. We are very proud of the part we have done, but we couldn't have done it without the support of private sector employers such as Ms. Kukla and the determination and discipline of people such as Cassandra Tucker.
    Our success lies in the fact that most individuals truly want to become self-reliant members of the work force if they are given the opportunity, the training, and the family support services. And we have seen that borne out.
    A key ingredient of our success has been the involvement of not only employers but other community resources, including advocacy groups and community-based nonprofits. They have helped immeasurably in creating an environment that translates into jobs for lower-skilled workers. And the environment is characterized by a new culture in which innovation and reform is rewarded as is individual achievement and effort.
    Despite our early success, we must be realistic in terms of the prospect for the future. In the wake of a declining caseload, we are now seeing individuals with more severe barriers to employment. Our continuing challenge will be to improve the network of employment and behavioral health services available to job seekers. We are seeing three factors that will shape our future work participation rates.
    The first is that there is a much lower level of job readiness. As our caseloads have declined, so have the skill levels of participants. Measurements such as reading levels and a higher incidence of alcohol and drug abuse and mental illness suggest a need to develop basic skills and to streamline the model for delivery of AODA and other mental health services before a complete transition can occur.
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    Some of the basic problems are lack of knowledge by the participant on how the system works in terms of getting into services. We have a very active EAP program at YW Works staffed with clinicians who provide basic assessment and referral for both mental health and AODA symptoms.
    Consumer education with participants about what they can expect from health care providers is greatly needed. Our staff provides a great deal of one-on-one education and client advocacy within the current system. An initial orientation and well-developed curriculum on what to expect would be an important first step.
    I strongly suggest that States and localities implementing welfare reform programs initiate onsite EAP programs at their site and upfront education and orientation on AODA issues and how the health care system works.
    Another factor is transporation. We have often experienced supportive employers with a supply of jobs but located in areas unreachable by public transportation. Housing and transit strategies need to be developed to address these problems, and we have seen employers go to extraordinary lengths, including one that just established a $100,000 pool for us to get workers out to their site in Waukesha.
    A final factor is potential economic downturn. We are at near record low unemployment in Wisconsin. So we need to watch what is going to happen as unemployment rates rise to continue to increase people staying in jobs.
    One of the other big issues that we have been looking at and working on is trying to get applicable transferable skills in employers's industries and we have been doing a lot of training for specific skills and on-the-job experience. But what we have seen is the wage at placement correlates directly with the amount of training that we can work with a person on before placement.
    Particularly if that training is at the employer's site. We have the highest level of wage placement in the Milwaukee area as an agency, and it is because we spend the most on training. Innovative and flexible approaches such as Generation 2 Plastics which the Governor mentioned, and our house project, which Cassandra
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is going to mention, give you an idea of new approaches that can be used. But innovation and flexibility is very important or entrepreneurial agencies such as ours the not be able to function. Thank you.
    Mr. RYAN [presiding]. Perfect timing, thank you, Ms. Taylor.
    [The prepared statement of Ms. Taylor follows:]
    [The official committee record contains additional material here.]

    Mr. RYAN. Mrs. Tucker.
    I think we are going to go with Mrs. Tucker next, and then Mrs. Kukla we will go in the order of the witnesses.
    Ms. TUCKER. Good afternoon, Mr. Chairman, my name is Cassandra Tucker. I am currently employed as a project coordinator at Central Overhead Door. I got a job through the YWCA, also through the W–2 project. I know I wrote a lot of things on my paper. Understandably, you know, I have heard a lot of things today that—some I disagree with; some I agree with. But I really, you know, to treat a person with respect and dignity, no matter where they are is, I think, the first principle of anything.
    You want someone to be successful, then you treat them as if they were human beings. And being in the W–2 program, I found positive people on the way, yes, but there are negative people out there that hold power. You know, power-hungry people. You understand what I am saying, you know? And they feel that they have your destiny in their hands and they can control your life, and, therefore, if they are controlling your life, you feel like you have no control and therefore you don't.
    Now, if you want to empower me—that is what I have been hearing today. You want to empower people like myself. If you want to empower me, it starts with giving me self-respect, dignity. I need to know how to read and write. When I came in the W–2 program I had college under my belt; I had worked a full-time job. I have six children. You know, and I had to find a way to support them when I got divorced.
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    So, therefore, YW Works came into my life, you know, and it was a positive thing. They gave me the training I needed. Now I am a foreman. I have an all-male crew that is under me, you know, and I get to hire, and I get to fire people. But first it had to start at the basics. They said, you can do it.
    Halfway through the program, I am giving up. I am saying, I can't do this. And they were like, yes, you can, you know. And they encouraged me, and they supported me. Yes, they even checked up on me after I got the job. And they still call me, and say how you are doing? Is everything going OK? That is giving somebody a basis, a foundation. And I hear that, that is what you guys are talking about today, that you want to give us the foundation, and a basis. That is the starting point, you know?
    I understand they are saying, well we are giving money. There is only 1 cent—I researched this—out of every dollar going to W–2, and it is like where is your other 99 percent going? But you don't look at that. You are saying I am giving you. You are not giving me anything. If I worked for it, then hey, OK, I am on the system for a moment, briefly. You understand?
    Some people don't want to be on the system, that is why they go to shelters. That is why they are overloading food pantries, because they are ashamed and they feel that they have been stigmatized. They are not going to get food stamps, nor do they want the medical assistance. Their child could be dying, and their pride is in the way. But yet still we are statistics.
    We are figures on pieces of paper. But we are human beings first of all. And I need, you know, to hear—I understand you have done research, but have you been to my neighborhood? You know, have you checked up on the people that are supposed to be overseeing the program? I mean the social workers, all of those people. Until you come down to the basics, you are not going to have a successful program.
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    Mr. Thompson said a lot of positive things. And they have been incorporated, you know, into W–2 in Wisconsin. I can only speak for Wisconsin. I don't know about any other State. But they have been incorporated.
    But my point is, the necessities are out there. But, yet, still some people are ignorant to the fact that they are there. I need you to help other people to realize that they are there. And when they go there, not feeling as if you, you know, they are just a piece of dirt, honestly, that you decided to sweep up.
    Instead of, you know, portraying that issue, you should say, look here I know you are down on your hard luck, hard times now, but we are here to get you back on your feet. That is the whole basis; that is all I had to say. Thank you for your time.
    Mr. BURTON. Thank you, Cassandra. That was very interesting.
    [The prepared statement of Ms. Tucker follows:]
    [The official committee record contains additional material here.]

    Mr. BURTON. I want to pursue some questions with you, but in fairness to the other witnesses we will continue with Ms. Kukla.
    Ms. KUKLA. Good afternoon. I run a small business located in central Milwaukee which provides customized garage overhead doors installation for commercial and residential applications. Our experience with W–2 was born out of a need.
    We had received a large contract and required additional personnel to meet the job-site requirements. We took a stab of contacting the YW Works to help us find workers. Our experience has been very positive. We have found that workers' attendance is good. Their performance is good or better than regular employees, and they have more buy-in. They feel they have been given an opportunity they might not normally have gotten, and their attitude reflects that.
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    Employees such as Cassandra come to work and do a job. It is hard to find in today's market people that want to work, and they are eager to better themselves. Women such as Cassandra are also having a positive impact in the workplace. They are entering in nontraditional jobs such as construction and changing attitudes about career paths for women.
    What makes the system work is individual one-to-one relationships whenever possible. I have tried to provide personal and job-related guidance—from helping employees to proper transportation to child care to encouraging them to continue their education.
    Both my late husband and I strongly felt an obligation to seek out young people who have not had all the advantages in their homes or education. It was also being my interest to mentor Cassandra and help her develop additional skills so that she can assume more responsibility within our company. So ours is a story of—success story, not just for women like Cassandra, but for our company and for me personally.
    My message to other employers is that programs such as W–2 work and will make your business stronger. After all, if I can do it at my age, other businesses can and should take advantage of it.
    I want to tell you that for our experience, Cassandra—I start our people—our W–2 people at $8 an hour. We have Cassandra take some under her wing because we have trained her for that and scrutinize the ones that are good. The ones that are not working, she lets them go. And we do prevailing wage jobs. They are eager to go because they get the prevailing wage.
    The prevailing wage in Wisconsin runs anywhere, we are doing carpenter work, they run about $20, $22 an hour for laborers or helpers, or trainees it runs about $18. And we have a lot of that, and they are eager to perform. And we have been told on jobs there were never any minorities working. We have opened the doors for them. And we have gotten such a response that they recommend us for jobs.
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    And I am very happy to be here to talk about this W–2 because I have seen it work. And I would hope that it would be used throughout the country. It is like Cassandra says, they need a responsibility, they need to be known that they are going to grow in their business and that they are going to have positions that will be able to grow. If they don't want to, say, stay with that company they can go some place else and they have got experience and they have a record of good work. Thank you for the opportunity to come before you.
    Mr. RYAN. Thank you for your testimony.
    [The prepared statement of Ms. Kukla follows:]
    [The official committee record contains additional material here.]

    Mr. RYAN. Mr. Primus.
    Mr. PRIMUS. Mr. Chairman, I very much appreciate your invitation to testify on the impact of welfare reform on low-income families.
    Under the welfare legislation enacted in 1966, States currently are receiving considerably more Federal funding than they would have under prior law and are given more flexibility and how to spend those moneys. The conventional wisdom is that welfare reform is working because welfare caseloads have declined sharply. Caseload reduction, however, is a very poor measure of welfare success. Any assessment of the success of welfare reform law should take into account not only caseload declines but also evidence of whether welfare reform has improved the economic circumstances of poor, single-mother families.
    Improvements in the well-being of poor, single-mother families can only take place if increased earnings and increased child support collections are sufficient to replace lost benefits of cash assistance and food stamps.
    Preliminary data to answer this question are just becoming available on a national basis. These data suggest just that while welfare reform has undoubtedly improved the lives of some families, some other families are losing ground and appear to have been made worse off as a result of changes in the welfare system.
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    Our study uses the public census files; and, using standard techniques, we have concentrated on single-mother families and have arrayed them from low- to high-income, adjusted for family size, and then compared economic circumstances of those families in 1993, 1995, and 1997.
    Our study shows two kinds of major findings. First, program caseloads are falling much more rapidly than need. As you can see in the chart, between 1993 and 1995, the number of people receiving AFDC and food stamps began a gradual decline. And the economy largely explains that decline. The number of poor people declined about as much as the decline in the caseload.
    However, between 1995 and 1997, the situation changed dramatically. Caseload declines can no longer be explained primarily by changes in the economy. As you can see here, the number of people receiving food stamps declined about 17 percent while the number of poor individuals declined only 2 percent.
    The next figure shows exactly the same thing with respect to TANF. Between 1995 and 1997, the number of poor individuals in female-headed families declined by 4 percent, but the caseloads declined 22 percent. A fivefold difference between an objective measure of need and what is happening to caseloads.
    The most telling finding from this analysis are centered in the divergent income paths of the bottom two quintiles of persons in single-mother families between 1995 and 1997. Each quintile has about 5.7 million individuals in it, to give you some basis. So if you look at those numbers in the chart, it is also in your testimony on page 4, you can see that the picture was very good between 1993 and 1995. Families in that second quintile actually gained in after-tax real income $2,000. About a 15 percent gain. There were also gains in the bottom decile and in the second decile, and you can look at those bottom numbers in terms of a percentage of poverty.
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    The situation though—and that is because earnings increased and they were only offset by a very small amount of welfare benefits declining. The situation changes dramatically between 1995 and 1997. The earnings gains that we saw in the earlier 2 years came to a halt, basically; and we see huge declines in the level of benefits these families receive.
    So in the second quintile, you will see economic welfare has stayed about the same. In fact, improved a little bit. And even in the second decile, families are doing OK. But in that bottom decile, again about 2.8, 2.9 individuals about equal to 5 congressional districts, they have lost ground. About $1,000 on average. And that is because earnings have remained roughly constant, and welfare benefits have declined significantly. There are many reasons for that.
    And I guess in conclusion, I would argue that a healthy economy, policies that make work pay such as increased EITC and State welfare policies have provided the supports to move welfare recipients into jobs. A large portion of that research has shown is due to the increased EITC. However, other poor mothers have not fared as well. On average, the economic well-being of persons in the poorest single-mother families has decreased substantially. No one predicted such a result would occur during a period of strong economic growth and before any sizable number of welfare recipients reached their time limits.
    This result is disturbing and should give us considerable pause before we simply pronounce welfare reform a success. I think these preliminary results need to be examined in light of more national data that will become available later this year as well as other efforts to evaluate the findings in several States. Hopefully, States can respond to this challenge and use their TANF block grant moneys to improve the well-being of poor children in single-headed family households.
    [The prepared statement of Mr. Primus follows:]
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    [The official committee record contains additional material here.]

    Mr. RYAN. Let me just ask you a question, since you just finished. Is it your opinion, given the totality of the results, given the testimony here by Cassandra and Ms. Taylor and others, that with hindsight being close to 20/20 as possible, do you believe the welfare reform law was a prudent law to be passed that the President signed into law? Given the fact that we don't have the statistics yet available to help us target the resources as well as we would like to, and that we might in the future, do you think it is a good idea that we passed the welfare reform law?
    Mr. PRIMUS. Well, as an economist, I am going to say yes and no. I think the increased funding that is available to the States was a good thing. I think the States did need more flexibility. And there were a lot of work requirements, and I believe in work. In fact, I believe in it so much that I am going around to States and arguing that our child support system has to also be more focused on moving men, the men look very much like the mothers here into the labor force. So there are some good aspects.
    Mr. RYAN. So the premise and the principles—you pretty much revealed the main principles of welfare reform.
    Mr. PRIMUS. But I do think that the downside of this is that there is no emphasis on moving families out of poverty. And there is no incentives to serve low-income families with children. And so when I look at incentives in the block grant, and the pressures that State legislatures and decisionmakers are under, we see welfare declining much more rapidly.
    And I think we should be concerned about that $1,000 loss of income in the very poorest single-mother families. And that is why I think the test of welfare reform is does it make children better off? And this is preliminary data. We need a lot more data before we can reach a final conclusion.
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    Mr. RYAN. Thank you. And I think Governor Thompson highlighted that very point. We have 8,800 people left on W–2 assistance. It is going to take some work. And it is going to take many more dollars to rescue those people, to get them on to self-sufficiency. So I think what you are saying essentially corroborates the point that we are now getting to the people who really need the assistance, who really need the help; and we have to figure out how to handle that.
    Mr. PRIMUS. If I can say one other thing. I mean, I guess it is a little disconcerting to me when he said poverty decreased 14 percent, but caseloads have declined 85 percent. It seems to me that is somewhat out of balance, and we are all for poverty reduction, and indeed the studies that I have looked at coming out of Wisconsin suggest some people are better off. But there are a lot of people that don't have a job and are, indeed—I think the numbers that are in the one study is that 66 percent of people are worse off than the month before they left welfare reform.
    So I think people should work, but some people are going to need support; and our goal should be to help them climb the economic ladder and not take benefits away as they enter that work force.
    Mr. RYAN. Thank you.
    Cassandra, I just wanted to ask you a quick question. I found that was a very interesting point that you made about some of the people who are refusing to go to the job centers, to W–2 to seek assistance because of pride. You say they are going to Catholic Charities or the soup kitchens because they don't like the stigma that is attached to getting help.
    How do we get to those people? What would you say we do to try to get over that obstacle to give them the self-esteem, to show them that this is not welfare, this is not a bad thing, this is a program to help get you up and on your feet moving as you described. What do you think we should do?
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    Ms. TUCKER. From my opinion, if they need a high school diploma, some people need, like the gentleman said down there, basic education. How can you ask them to go into a job you know there is no room for progressing at all because they can't read nor write, but they can do the job function in that particular area. They need the basic education. They also need the job training.
    Some people even need nurturing skills, like she said, counseling. It is deeper than what you see. I am just stating, you see a bunch of numbers; you don't see the people. And today I am just representing all the people, you know. I am on both sides so I understand. That is all I am saying.
    Mr. RYAN. Thank you.
    Mrs. Taylor, I wanted to ask you a question. With your extensive experience and putting together the welfare-to-work program—through your own personal experience, what do you see as the biggest obstacle for moving individuals from welfare to work and what do you think is the most important component of the W–2 program?
    Ms. TAYLOR. I think one of the biggest issues is trying to get people to be upfront about all the issues in their lives especially with case managers. We have built in a lot of pieces in our program where we have people that are staying in touch with people and spend more than a half hour with them. But to establish that level of trust so people will be upfront about the issues going on. And then to wrap around the services.
    When I was talking about the EAP and the behavioral health component, that has been critical for us for success in our program; and that is going to be one of the most critical things going forward. People need supports to get their life together to go to work and be successful.
    Mr. RYAN. Mr. Mica.
    Mr. MICA. I heard Mr. Primus say that we needed more data information on some of these specific cases; is that correct?
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    Mr. PRIMUS. Yes, I think that data will be forthcoming; and I am just cautioning before we judge it a complete success, we need to see what is happening to the economic well-being of these families.
    Mr. MICA. Then I heard Mr. Poole from Florida saying that we are spending too much time and money on regulatory paperwork, data collection, for reporting requirements. Mr. Poole what do you think?
    Mr. POOLE. Well, I think it all depends what we are collecting data on. I think the issues that maybe Mr. Primus is trying to figure out is what is happening at family level, not collecting data about who they are before they come on to welfare. And to our analysis is what is really happening at family level.
    I agree with Mr. Primus, it is too soon to call it a success. We know that about 80 percent of our families in our study say they are better off, but we have 17 percent of our families saying that they are not. And the question is whose responsibility is it? We know it is individual responsibility to participate and to have those people denied themselves of their own responsibility rights or is it our failure to provide quality service?
    And I think that is where we have to dig down—just as a company would have to dig down to figure out why customers are unsatisfied and not buying their product—we have got to figure out why are people who are poor and in poverty not buying the product of our service which is to help them get to self sufficiency.
    Mr. MICA. Since the adoption of Federal welfare reform, what changes have you seen in reporting requirements, and what parts of that would you modify?
    Mr. POOLE. I believe the initial rules there were 60 data elements that the Federal Government asked us to report on and it has now gone up to 232; 140 of them, I understand, represent something about the client. When you multiply that times how many people are on our welfare rolls and how many people come off and on, that is an awful lot of data collection. In our State we started off with 30 performance measurements. We are down to six. I think I will get down to a couple more after analysis of what is really important, and what is really important is the measurement of self sufficiency.
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    Mr. MICA. So you have gone from 30 to 6 and we have gone from——
    Mr. POOLE. From 60 to 232.
    Mr. MICA. So we are headed in the wrong direction.
    Mr. POOLE. Just a tad.
    Mr. MICA. Are there any other recommendations? We passed this thing, and I am sure it is not perfect. I am sure from the Federal level we can improve it. One thing you mentioned is data reporting and information that is required. If you had one, two, three, your top priorities for the Feds to change to help you improve what you are doing, what you would recommend, Mr. Poole?
    Mr. POOLE. Maybe being flip but also straight forward, maybe tear up the regulation book and asking the States to be responsible for the money that you have given them and look at the results. And let the States be responsible. What you have told us in our communities is that when the communities in our State look at it, they recognize that if they don't help someone to self-sufficiency in 2 years they are going to have to take 100 percent of the burden because you are going to stop the funding for that individual. That is pretty strong responsibility. You don't need any regulation other than that.
    Mr. MICA. Basically you would favor some block grant with minimal reports, and the reporting would be from the State to the Federal?
    Mr. POOLE. Correct.
    Mr. MICA. Any other majors?
    Mr. POOLE. That would be major enough.
    Mr. MICA. What do you think about that, Mr. Primus?
    Mr. PRIMUS. I guess in terms of recommendations to this committee I want to agree with Governor Thompson. I think you shouldn't be reducing or rescinding or deferring the size of the block grant. I think that was a commitment you made, you ought to keep. I also want to compliment the Governor, I think one of the innovations he has done is passing through all of the child support. And you might want to consider ways of encouraging States to follow that example in Wisconsin.
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    I don't think you should followup on his recommendation to reduce the maintenance of effort. I think again, it was part of the deal. I think there are plenty of needs among low-income custodial families with children and needs of the father who we should be concentrating on as well. And so before you reduce the maintenance of effort, I think I would really make sure there is no need left. And I think that would be a hard thing to establish.
    I think the reporting requirements were put in there by the majority, and I think they are good. And before you reduce them, I think you run the risk of not understanding what we are about in welfare reform. And so I urge caution. And I think the HHS has issued a good final rule and again, I just urge caution.
    Mr. MICA. Thank you.
    Mr. RYAN. Mrs. Biggert.
    Mrs. BIGGERT. Thank you, Mr. Chairman. In Illinois, when we started to revise the welfare reform, we did an Illinois bill as well as then having the Federal reform, and the biggest problem that we had was the computer. And to start to solve a problem was to figure out what was happening before that, and to go to a one-stop shopping. And we discovered that with all of the different agencies that we had was that we were double-counting. Families were not listed as families, but everyone was given a number. And then if they were out of the process and came back, they were a new entry.
    So this was the biggest thing that we had. And I wondered if some of you have had that problem, because it took an awful long time to find a computer system that was sufficient, really, to be able to put that data. We finally have a warehousing for the reform. But I would like to know what happened as far as computers.
    Mr. ALLEN. I will be glad to try to address that. In Virginia, we still have a challenge with adapting the existing computer systems to try to accommodate not only going from 60 reporting requirements to 232, but all of the various programs trying to bring in the food stamp program, bringing child support enforcement on line, coordinating that with Medicaid, which is, in our State, a different agency. But having to coordinate those is not only a challenge in and of itself, but being pushed up against the Y2K issue as well. So you cannot make the changes that are going to be necessary to try to keep up with the paperwork that is being required from Washington.
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    So we continue to have ongoing challenges and struggles with our technology trying to keep up with the rules and regs that are being imposed upon the States to provide information to the Federal Government.
    Mr. POOLE. I would say that we have had the similar problem of information. We have had a data collection system related to food stamps and referral before, and now we are trying to move to a case management local-network system so different agencies and providers can talk to each other. And we are, at least, probably a good year away from having a decent system. And this is true, I think around the State in our research.
    Mrs. BIGGERT. And then to Ms. Tucker, I think something that is very important is to go out and see what is happening. And in the Illinois general assembly, I spent a lot of time going throughout the State, particularly with the Department of Children and Family Services, to talk to the clients, to talk to food stamp foster parents, to talk to case works, et cetera, and I think that is very important.
    And one of the things that we put in as far as the welfare reform was the training for the one-stop shopping so that the person that a client comes into see is that one person can make such a difference in how—the reaction, and the treatment there is by the training of the case manager. And so that is something that I think you bring up and is a very good point to be sure that they are well treated and that the State is very concerned about that first contact.
    Ms. TAYLOR. If I could respond to the computer question. We have a State system called CARES that we use that basically was built as an eligibility system years ago. And we have developed a system ourselves that is a web-based software system known as GEMS that is actually a case management system that measures behavioral changes, changes in skill-building, we can input different test levels and track where people are at, and it is a much more user-friendly system as well. But it is something that we spent time developing, and we have actually been using it in other States at this time.
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    Mrs. BIGGERT. Thank you, thank you all.
    Thank you, Mr. Chairman.
    Mr. RYAN. Mr. Turner, we haven't heard from you yet, and I understand that you were one of the gentlemen responsible for putting together Wisconsin's W–2 program and that now are attempting to do the same in New York. New York City's caseload was probably greater than many States we have heard from yet today and in recent history here. What do you think of the concerns raised by Mr. Primus, as you have read some of his studies earlier and his testimony now? Given the fact that you have been through the Wisconsin experiment, and you are doing the same thing in New York.
    Mr. TURNER. I am sorry he had to step out.
    Mr. RYAN. He is still here.
    Mr. TURNER. Good, I am happy about that. As it relates to poverty in the lower quintiles in those remarks, I would like to mention that the Congressional Budget Office looking at CPS data in a recent year showed that for nonmarried mothers, aged 18 to 44, with kids under 18, that is your hard-core welfare population, welfare-at-risk population, the percent of the labor force recently is about 59.5 percent. That is up from 49.2 percent only 2 years before. That is a social revolution. That is something that we have just never seen before.
    Mr. RYAN. We have seen employment gains to the tune of 10 percentage points in that decile.
    Mr. TURNER. No, that is a little bit of a different cut of the cat. This is all nonmarried women with children under 18, what portion of that group, rich and poor, are engaged in the labor force; 59.5 percent are. And it was 49.5 percent only 24 months before. You can't imagine any kind of social policy legislated from the Congress that could have had that impact other than what you did, combined with a strong economy.
    So with that, combined with availability of the earned income tax credit which takes virtually anybody that works full-time at any wage out of poverty, I can only say there is not much more that I can think of that could be done by the Congress that could be more constructive than what we have already done. And I think, at this point, it is up to both the local governments running the programs and let us not forget the individuals who are moms with children, to take available positions and move up and out. I think that is the solution.
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    Mr. ALLEN. Mr. Ryan, if I may, because we have touched on this twice, I think it is important that we recognize what the purpose of welfare reform was. It was not to eradicate poverty. The purpose of welfare reform was to put those who were currently in poverty, who were participating in public assistance programs on the road to self sufficiency. And I think Ms. Tucker's testimony bears this out that only 17 percent of those who were in poverty actually participate in public assistance programs. So the vast majority of people that would qualify for being in poverty are not in any program whatsoever. And so we need to be very careful when we try to change the focus or the goal of welfare reform after the fact. It was not to eradicate poverty. Rather it was self-sufficiency. And I think that we shouldn't get away from that to recognize that, therefore, we can declare in many States welfare reform a success. But we do need to be very cautious as we move into the deeper caseloads and the more difficult to employ.
    Mr. RYAN. Thank you. You mentioned in your testimony, Mr. Allen, that earlier estimates prior to welfare reform's implementation—I think Mr. Primus is one of those who estimated that we would see 1 million children thrown into poverty in welfare reform.
    Mr. ALLEN. Absolutely.
    Mr. RYAN. Could you just comment on that? I would think that he would probably redo his estimate now that we have some facts in front of us.
    Mr. ALLEN. I can comment on Virginia, and I think that is nationally we have not seen the type of dramatic downshift or the dramatic outcomes of women and children being thrown into poverty. That just has not happened. Some have moved out much quicker, but many, and most, are actually above the poverty level. And that is what we need to be looking at, that we are on the road to success.
    It will take time, indeed, for them to move from that minimum wage job into higher levels once they get additional training, education. We do need to provide those wraparound services to afford them that of transportation and health care. But at the same time we can't say that it has not been successful and that, I think, is what is very key to recognize. And we also need to coordinate the programs that are currently existing out there. We have children's health insurance program which will also benefit this population greatly.
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    Mr. RYAN. Thank you. This has been a very interesting panel. What we have seen with this panel is a cross-section between the policy formulators, the policymakers, the policy receivers, and the doers who are on the front lines doing this. Mrs. Kukla, with your business on trying to implement welfare to work, seeing and hearing from you exactly what you go through to accomplish that.
    Cassandra, to hear from you what it is that—the psychological change that you have experienced, I think as Governor Thompson said, it is a blossom. That is precisely what we were hoping to achieve with this. It is helpful to hear you share your story with us so that the policymakers here who are seated to your right and those of us who are trying to do a better job of bringing people into the lives of self-sufficiency. That helps us do our jobs better here. Thank you to everybody on this panel. I think it has been a very interesting panel. At this time I like to say this hearing is adjourned. Thank you.
    [Whereupon, at 1:30 p.m., the committee was adjourned.]