Post Office Box 7829, Portland, Maine 04112 | 207.321.2550 | info@mainepolicy.orgT H E M A I N E H E R I T A G E P O L I C Y C E N T E R

Freeing Maine familiesfrom welfare dependency

Freeing Maine familiesfrom welfare dependancy

thethe

www.mainepolicy.org

Maines welfare system undermines hard work

and traps parents and children in poverty.

We must fix the system to free families from

dependency through accountability and hard work.

Fix the System Freeing Maine Families from Welfare

Dependency

By Stephen Bowen, Tarren Bragdon, and Kyle Pomerleau

welfare (wel ), n.

Financial or other aid provided, especially by

the government, to people in need.

Merriam Websters Dictionary

Table of Contents

Preface _____________________________________________________________________________ 1

Overview ___________________________________________________________________________ 2

Maines Dependency Crisis _____________________________________________________________ 3

Part 1: Maines Welfare System: Designed for Dependence ___________________________________ 7

1. Eligibility limits are among the most liberal in the nation. _______________________________________ 7

2. Work Requirements are largely unenforced. _________________________________________________ 10

3. Time limits are virtually nonexistent. _______________________________________________________ 12

4. Sanctions for violating program rules are the nations weakest __________________________________ 13

5. The states rich benefits package encourages dependence. _____________________________________ 14

Part 2: Fixing Maines Welfare System ___________________________________________________ 15

Step 1: Tighten eligibility requirements. _______________________________________________________ 17

Step 2: Discourage enrollment through more effective use of diversion programs. ____________________ 18

Step 3: Institute far more robust job search and work requirements. _______________________________ 19

Step 4: Impose strict time limits. _____________________________________________________________ 21

Step 5: Enact tougher sanctions for violation of program requirements. _____________________________ 23

Step 6: Increase agency accountability and improve program management. _________________________ 24

Step 7: Additional Reforms that Expand Choice and Opportunity. __________________________________ 26

Conclusion _________________________________________________________________________ 27

Sources ____________________________________________________________________________ 29

Fix the System

1

Preface

From 1996 through 2000, I served in the Maine House of Representatives, representing part of Bangor. My

district included Capehart, an area with hundreds of publicly subsidized housing units. As I campaigned door-to-

door I saw firsthand the hopelessness that the welfare system can create. Too many families were stuck in a

system that punishes hard work and traps parents and kids in poverty.

During my time in the Maine House of Representatives, I served on the Legislatures Joint Standing Committee on

Health and Human Services. During this time, Maine passed a bipartisan welfare reform bill, following the lead of

so many other states. For a while, Maine moved people from welfare to work and reduced the number of families

dependent on government. Welfare reform proved that families can move from welfare to work and become

entirely self-supporting.

But under Governor Baldacci, Maine government reversed course. Governor Baldaccis Department of Health and

Human Services has presided over a massive expansion of the number of individuals receiving welfare assistance

and, thereby, the number of Mainers dependent on government. Sadly, this is Governor Baldaccis biggest legacy.

In fact, if the state does not reverse course, in just three years Maine could have more people in its welfare

system than the number of people working in the private sector.

Thats financially unsustainable. But more importantly, it is morally unacceptable.

Maine has a proud tradition and a national reputation for self-reliance and a strong work ethic. Yet, our current

welfare system robs families of the hope of a better life by trapping them in a system that promotes dependency

and discourages hard work and independence.

This report is the story of Maines welfare challenge and a clear path of how we can Fix the System and free

families from welfare dependency through accountability and opportunity.

It is my hope that you will read this report, understand the problem and the necessary solutions, and then

become engaged as we all work with the next Governor and next Legislature to Fix the System. The future of

hundreds of thousands of parents and children depends on all of us becoming advocates for real and

compassionate welfare reform.

Tarren Bragdon

CEO, The Maine Heritage Policy Center

September 9, 2010

Fix the System

2

Overview

TTHHEE WWEELLFFAARREE SSYYSSTTEEMM IISS BBRROOKKEENN

Because of the Baldacci administrations policies, the number of people trapped in Maines welfare

system is skyrocketing.

Between 2003 and 2010, welfare system enrollment grew 70% (from 226,000 to 381,000)

If this trend continues, Maine is on pace to have more people on welfare by 2013 than are working in private sector jobs.

Almost 1 in 3 Mainers are trapped in the welfare system.

29% of Maines total population is on some form of welfare.

Maine ranks second in the nation in the percent of its population on Food Stamps, second for TANF cash assistance, and second for Medicaid.

Maines poverty rate is growing despite the welfare systems huge cost and size.

Between 2001 and 2007, the portion of Mainers living in poverty grew from 10.3% to 10.9%

Maine spent $2.506 billion on its welfare system in 2008 alone - more than it spent on:

Attracting new jobs ($47.6 million)

K-12 public education ($2.278 billion)

FFIIXX TTHHEE SSYYSSTTEEMM

Focus aid on the truly needy.

Tighten income eligibility requirements

Eliminate handouts for drug felons and non-citizens

Define success as a new paycheck, not more welfare checks

Help people toward work and self-sufficiency first, with welfare as a last resort.

Create real and enforceable work and job search requirements.

Establish clear and firm time limits.

Overhaul Maines welfare bureaucracy

Rename Maines welfare bureaucracy from Office of Integrated Access and Support to Maine EMPOWER (Employing and Moving People Off Welfare and Encouraging Responsibility).

Simplify and streamline the system in order to provide a clear path to self-sufficiency.

Set work and self-sufficiency goals for recipients, and report total results to taxpayers each month.

Fix the System

3

Maines Dependency Crisis On August 22, 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation

Act. At the bills signing, the president explained that the federal welfare reform initiative he was to sign was an

attempt to overcome the flaws of the welfare system for the people who are trapped on it. We all know,

Clinton said, a significant number of people are trapped on welfare for a very long time, exiling them from the

entire community of work that gives structure to our lives. From now on, he continued, the Nations answer

to this great social challenge will no longer be a never-ending cycle of welfare; it will be the dignity, the power,

and the ethic of work. Today we are taking an historic chance to make welfare what it was meant to be: a second

chance, not a way of life.1

Maines vast welfare system, however, has indeed become a way of life for many, despite changes to federal law

more than a decade ago. Last fall, the Census Bureau reported that Maine ranks second in the nation in the

percent of its residents receiving Food Stamps.2 In this, the state trailed only hurricane-ravaged Louisiana.3

The Census also reported that 4.8 percent of Maine households received cash public assistance through the

Temporary Assistance for Needy Families (TANF) program, the second highest rate in the nation and more than

twice the national average of 2.3 percent.4

Maines Medicaid program is also the second largest in the county, with an astounding 27 percent of the states

residents receiving publicly funded health care. Only California has a higher percentage of its total population

enrolled in Medicaid. Neighboring New Hampshire, by contrast, has only 11 percent of its population in the

program.5

13.8%

8.6%

1%

3%

5%

7%

9%

11%

13%

15%

17%

Percent of Households receiving Food Stamps, 2008Source: U.S. Census

4.8%

2.3%

0%

1%

2%

3%

4%

5%

6%

7%

Percent of Households with Cash Public Assistance Income, 2008Source: U.S. Census

Fix the System

4

Indeed, Maine is so far outside the mainstream in the extraordinarily high number of people trapped in its welfare

system that not a single other state ranks in the top twelve for enrollment in all three major welfare programs.

The state closest to matching Maines level of welfare system dependence is New York, which ranks 13th in Food

Stamps, 10th in TANF and 4th in Medicaid. Maine ranks second in the nation in all three.

Percent of Households receiving Food Stamps, 2008 Source: U.S. Census

Percent of Households with Cash Public Assistance Income, 2008

Source: U.S. Census

Medicaid Enrollment as a Percent of Total Population, 2007

Source: Kaiser Family Foundation

Rank State Percen

t Rank State Percent Rank State Percent

1 Louisiana 16.2% 1 Alaska 6.1% 1 California 29.0%

2 Maine 13.8% 2 Maine 4.8% 2 Maine 26.6%

3 Kentucky 13.7% 3 Michigan 3.4% 3 Mississippi 25.7%

4 Mississippi 13.1% 3 Washington 3.4% 4 New York 25.5%

5 Tennessee 12.8% 5 Oklahoma 3.3% 4 New Mexico 25.5%

5 West Virginia 12.8% 6 California 3.2% 6 Vermont 25.4%

7 Arkansas 12.6% 6 Pennsylvania 3.2% 7 Louisiana 25.1%

8 Michigan 12.2% 8 Hawaii 3.1% 8 Arkansas 24.4%

9 Oregon 11.7% 8 Minnesota 3.1% 9 Tennessee 23.4%

10 Missouri 11.1% 10 New York 3.0% 10 Arizona 22.9%

11 Oklahoma 11.0% 11 Vermont 2.9% 11 West Virginia 21.7%

12 South Carolina 10.8% 12 Connecticut 2.8% 12 Massachusetts 21.6%

Confirming Maines high rate of welfare dependence, the U.S. Census recently released data which revealed that

Maine devotes 30.5 percent of its total state expenditures to funding its welfare system, the second highest rate

in the nation. The average for all states was 23.7 percent.6

26.6%

19.0%

0%

5%

10%

15%

20%

25%

30%

35%

Medicaid Enrollment as a Percent of Total Population, 2007Source: Kaiser Family Foundation

30.5%

23.7%

0%

5%

10%

15%

20%

25%

30%

35%

Public Welfare Expenditures as a Percent of Total State Expenditures, 2008Source: U.S. Census

Fix the System

5

How many Mainers are receiving welfare benefits? According to the Maine Department of Health and Human

Services, 388,000 Mainers are currently enrolled in Medicaid, Food Stamps or TANF---nearly 30 percent of the

population.7 According to a recent USA Today report, one in six Americans is now enrolled in a welfare program

such as Food Stamps or Medicaid, which is a record high. In Maine, that ratio is closer to one in three.8

Not only is Maine, as CNBC reported in 2009, one of the nations biggest welfare states, dependence on the

states welfare system continues to grow dramatically. 9 In June 2000, there were 170,000 Mainers in the states

Medicaid program. Today, the number enrolled is approaching a staggering 300,000.10 As recently as the summer

of 2000, there were fewer than 100,000 Food Stamp recipients in Maine. Today, more than 237,000 Mainers

receive Food Stamps.11

In this new era of government dependency, enrollment in the welfare system grows even during the good times.

In the past, welfare enrollment only grew during economic downturns. Under the Baldacci Administration,

though, the number of Food Stamp recipients rose even during periods of economic growth.12

Where are these trends taking Maine? As the following chart illustrates, if welfare dependency continues to grow

at its current rate, in less than three years there will be more Mainers enrolled in the welfare system than are

working in the states private sector.

Data from the Maine Department of Health and Human Services suggests that in 28 Maine towns more than half

the population is already dependent on TANF, Food Stamps or Medicaid.13

147,939

86,296

141,337

97,714

237,443

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

210,000

230,000

250,000

Food Stamp Enrollment and Recessions, 1979-2009Sources: Maine Department of Health and Human Services, Bureau of Economic Analysis

Recession

Food Stamp Enrollment

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Individuals in the Welfare System versus Private Sector Job Growth, 2002-2014(Projected)Sources: Maine Department of Health and Human Services, Maine Heritage Policy Center

Welfare Cases

Private Sector Employment

Projected Welfare Cases

Projected Private Sector Employment

Fix the System

6

This level of dependence comes at an astonishing cost. According to the U.S. Census, Maine spent nearly $2.5

billion a year on its welfare system as recently as 2008, up from only $1.4 billion a decade earlier. Even in

constant, inflation-adjusted dollars, welfare spending in Maine rose almost 40 percent from 1999 to 2008.14

Maine does not spend billions on welfare because our population is more needy than most. Maine is not even

close to being the poorest state. According to the Census, just 12.3 percent of Maine people lived below the

poverty level in 2008, a rate below the national average and lower than 25 other states.15 With regard to child

poverty, Maine is ranked 28th in the nation, again below the national average.16 Only 9.2 percent of Mainers over

65 live in poverty, putting Maine at 24th place, which is also below the national average.17

In fact, it doesnt seem as though spending by the states welfare system has had any impact whatsoever on

poverty rates. As indicated in the chart below, real, inflation-adjusted spending by Maines welfare system has

increased, but Maines poverty rate has remained more or less constant for the last 15 years.18

$1,107,131,000

$2,492,721,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

$2,200,000,000

$2,400,000,000

$2,600,000,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total and Inflation-adjusted growth of Public Welfare spending in Maine, 1993-2008Source: U.S. Census

Total Spending

Inflation-adjusted spending,

1993 dollars

13.2%12.3%

0%

5%

10%

15%

20%

25%

Percent of People Below the Poverty Level, 2008Source: U.S. Census

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Po

ve

rty

Ra

te

Infl

atio

n A

dju

ste

d S

pe

nd

ing

on

Pu

blic

We

lfar

e,

1993

Do

llars

Inflation-adjusted Public Welfare Spending and Maine's Poverty Rate, 1993-2008Source: U.S. Census

Inflation-adjusted spending on Public Welfare

Poverty Rate

Linear (Inflation-

adjusted spending on Public Welfare)

Linear (Poverty Rate)

Fix the System

7

Clearly, poverty is not the driving force behind the exploding growth of Maines welfare system. As this paper will

demonstrate, Maine people are among the nations most dependent not because of economic misfortunes

unique to the state, but because state policymakers have consciously enacted policies that make it too easy to

become trapped by the welfare system, and too difficult to escape it.

Part 1: Maines Welfare System: Designed for Dependence

In a September 2009 Portland Press Herald article on Maines Food Stamp enrollment rates, John Martins, a

Department of Health and Human Services spokesman, explained why 13.8 percent of Mainers receive Food

Stamps, well above the national average of 8.6 percent. The states screening system, he said, is so well

integrated that when someone goes to one of the regional offices, the staff will check eligibility for 22 support

programs.19 Maines welfare system is designed, in other words, to maximize dependence.

The design of Maines welfare system encourages reliance on government in a number of ways, beginning with

how easy it is to get trapped in these programs in the first place.

1. Eligibility limits are among the most liberal in the nation.

The most effective way for the state to maximize welfare dependency is to relax eligibility requirements so more

people can enroll in the welfare system. According to the Urban Institutes Welfare Rules database, for instance, a

family in Maine can earn as much as $1,023 a month and still qualify for cash assistance.20 Only 12 other states

allow incomes that high to qualify. Many of those states, such as Massachusetts, Connecticut, New York and New

Jersey, have far higher costs of living than Maine.

High eligibility levels apply to Maines child care assistance as well. According to the National Womens Law

Center, a family of three in Maine can earn more than $40,000 and still receive taxpayer-funded child care. Only

six other states allow families with such high incomes to receive costly benefits of this kind.21

Eligibility levels for Maines Low-Income Home Energy Assistance Program (LIHEAP) are the very highest in the

nation, allowing those considered at risk for hypothermia, such as the elderly and families with young children, to

earn as much as 230 percent of the Federal Poverty Limit and still receive benefits. No other state has as high an

$40,006

$33,217

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Income Eligibility Limit for Subsidized Child Care for a Family of Three, 2009Source: National Women's Law Center

Fix the System

8

eligibility limit, regardless of the population being served. Those not at risk for hypothermia can earn up to 200

percent of the Federal Poverty Level and still qualify for LIHEAP, an eligibility criterion higher than that found in 39

other states.22

Maines Medicaid program also has some of the most liberal eligibility requirements in the country. As The Maine

Heritage Policy Center concluded in a 2008 report, Medicaid has largely become a middle class entitlement. Forty-

six other states, the report found, have lower Medicaid income eligibility limits for working and non-working

parents. Maine Medicaid income limits for working parents, the report continues, are more than three times

the US average, while income limits for non-working parents are almost five times the US average.23 Maines

Medicaid even covers non-disabled adults without children, a population 30 states do not provide any Medicaid

coverage to at all.24

Medicaid Eligibility Levels, Maine versus the National Average Source: Kaiser Family Foundation, Maine Heritage Policy Center, 2008

National Average Maine

Single person, no children $ - $ 10,400

Married couple, no children $ - $ 14,000

Single parent, 1 child $ 8,820 $ 28,840

Single parent, 2 children $ 11,088 $ 36,256

Single parent, 3 children $ 13,356 $ 43,672

Married couple, 1 child $ 11,088 $ 36,256

Married couple, 2 children $ 13,356 $ 43,672

Married couple, 3 children $ 15,624 $ 51,088

Elderly person $ 8,528 $ 10,400

Elderly couple $ 11,480 $ 14,000

Since the publication of that report in 2008, Maines near-highest-in-the-nation eligibility limits for working

parents enrolled in Medicaid have actually become the nations highest. According to the Kaiser Family

Foundations most recent survey, Maine provides Medicaid coverage to working parents earning 206 percent of

the Federal Poverty Level, the highest income limit in the country.25

Not only does Maines welfare system provide benefits to those with higher incomes, it has also been expanded

to include entire populations of people that other states do not serve.

206%

88%

0%

50%

100%

150%

200%

250%

Medicaid Income Eligibility limits for Working Parents, as a percent of the Federal Poverty Level, April, 2009Source: Kaiser Family Foundation

Fix the System

9

For instance, the 1996 federal welfare reform bill limits welfare benefits for most non-citizens. Immigrants in the

nation legally, such as lawful permanent residents who are issued a green card, are not eligible for federally-

funded welfare in their first five years of legal residency. Federal law does allow states to offer their own

programs to these non-citizens, but such programs are exclusively state-funded.26

According to the National Center for Children in Poverty, Maine is one of only 7 states in the nation that allows

non-citizens to receive Food Stamps, one of only 10 states that offers them taxpayer-funded health care, and one

of only 18 states that provides them with cash assistance through the TANF program. Only Maine and five other

states provide all three welfare benefits, at state expense, to non-citizens during their first five years in America.27

The 1996 welfare reform law also contains a provision whereby persons convicted of certain drug felony offenses

are banned for life from receiving TANF and food stamp benefits.28 As with immigration policy, however, the

federal law gives the states flexibility. States could opt-out of the federal ban altogether, and were also allowed

to restrict access to those programs by requiring convicts to submit to drug testing or participate in drug

treatment programs.

According to the federal Government Accountability Office, Maine is one of only 9 states in the nation that not

only allows convicted drug felons to receive taxpayer-funded Food Stamps and TANF cash assistance, but makes

no further demands on them whatsoever, such as requiring drug treatment or testing.29

Benefit Eligibility for Legal Non-Citizens Who Are Prohibited from Receiving Federally-Funded Benefits Source: National Center for Children in Poverty

Provides access to a state-funded Food Stamp benefit

Provides access to a state-funded Medical benefit

Provides access to a state-funded TANF benefit

California Connecticut

Maine Minnesota Nebraska

Washington Wisconsin

California Connecticut

Delaware Maine

Massachusetts Minnesota Nebraska

New Jersey New York

Pennsylvania

California Connecticut

Hawaii Maine

Maryland Minnesota Nebraska

New Mexico New York Oregon

Pennsylvania Rhode Island

Tennessee Utah

Vermont Washington Wisconsin Wyoming

Fix the System

10

State Policy With Regard to TANF and Food Stamp Benefits for Those Convicted of Drug Felonies, 2004 Source: General Accounting Office

Provides access to TANF and Food Stamps without restrictions

Provides limited access to TANF and Food Stamps and may require drug

testing or treatment

Provides drug felons with no access to TANF and Food Stamps

Colorado (Food Stamps) Illinois (Food Stamps)

Maine Massachusetts (Food Stamps)

New Hampshire New Mexico

New York Ohio

Oklahoma Oregon

Rhode Island Utah (Food Stamps)

Vermont Washington (Food Stamps)

Arkansas California (Food Stamps)

Colorado (TANF) Connecticut

Delaware (Food Stamps) Florida Hawaii Idaho Illinois Indiana

Iowa Kentucky Louisiana Maryland

Massachusetts (TANF) Michigan

Minnesota Nebraska (Food Stamps)

Nevada New Jersey

North Carolina Pennsylvania

Tennessee Utah (TANF)

Washington (TANF) Wisconsin

Alabama Alaska

Arizona California (TANF)

Colorado Delaware (TANF)

Georgia Kansas

Mississippi Missouri Montana

Nebraska (TANF) North Dakota

South Carolina South Dakota

Texas Virginia

West Virginia Wyoming

One of the primary reasons Maine has such a high level of welfare dependence is that it has some of the mostif

not the mostliberal eligibility standards in the country. Freeing Maine from dependence on welfare means

dealing, first and foremost, with eligibility.

2. Work Requirements are largely unenforced.

Not only is it easy to enroll in Maines welfare system, the state apparently imposes few, if any, additional

obligations such as a job search or work requirements. According to the Urban Institute, for instance, Maine does

not require a mandatory job search as part of the TANF application process. 30 In a dozen states, TANF applications

are denied outright if job-ready applicants have not participated in work-related activities such as job searches.31

There are work requirements for those who ultimately enroll in TANF, but Maine has evidently chosen not to

strictly enforce these requirements. According to FY 2008 data from the Administration for Children and Families

(ACF) at the U.S. Department of Health and Human Services, only 11.4 percent of Maines TANF-receiving families

Fix the System

11

with work requirements actually completed work activities during FY 2008, far less than the national average of

29.4 percent. In neighboring New Hampshire, by contrast, 47.4 percent of TANF families with work requirements

worked.32

Maine has been trending toward low work rates for some time. While the rate of work participation among Maine

TANF recipients was once about equal to the national average, it has plunged in recent years.33

Maines TANF families are not even working a little. In Maine, 77.5 percent of TANF families with work

requirements had zero hours of work participation in FY 2008. In only one other state that yearMissouriwere

fewer TANF enrollees with work requirements actually working.34

These low levels of job holding are not the result of welfare enrollees dealing with disabilities. According to the

ACF, only 0.7 percent of Maine TANF recipients also collect disability benefits. 99.3 percent do not.35

Work rates are low in Maine even though the states TANF program has a very broad definition of work.

According to the welfare advocacy organization Maine Equal Justice Partners, among the activities that count

toward TANF work requirements are paid employment, volunteer work at a public or non-profit agency, up to

six weeks a year of job searching, or participation in various education and job training programs.36 For the year

ending September 2007, only 25 percent of TANF-enrolled adults in Maine had paid employment. Another 16.5

percent participated in various work activities such as those described above, while the remaining 58.5 percent

had no employment or work activities of any kind.37

29.4%

11.4%

0%

10%

20%

30%

40%

50%

60%

70%

Work Participation Rates, Average of All TANF Families, FY 2008Source: Administration for Children and Families

32.1%

28.3%26.6%

21.9%

11.4%

32.2% 33.0% 32.5%29.7% 29.4%

5%

10%

15%

20%

25%

30%

35%

FY 2004 FY 2005 FY 2006 FY 2007 FY 2008

TANF Work Participation Rates, FY 2004- FY 2008Source: Administration for Children and Families

Maine

National Average

Fix the System

12

The high degree of unemployment and underemployment among Maine TANF recipients may be related to the

programs long list of approved excuses for failing to meet work requirements. According to Maine Equal Justice

Partners, these good cause reasons for not doing what the program requires include justifiable excuses such

as serious medical problems or domestic violence issues, but they also include bad weather as an excuse, and

that the activity required that you travel more than two hours round trip.38

As a consequence, the vast majority of Maines TANF recipients are not only jobless, they are not even seeking

employment. Remarkably, just 23.1 percent of Maines adult TANF enrollees were considered employed during

FY 2008, and 11.6 percent considered unemployed. The remaining recipients, a staggering 65.3 percent of the

total, were classified as not in the labor force, meaning they were not even looking for a job. In only four other

states were such a high percentage of adults on TANF considered to be not in the labor force. Nationally, only

27.3 percent of TANF adults were classified as not seeking work in FY 2008.39

Despite the work requirements imposed by the 1996 federal welfare reform law, those enrolling in Maines

welfare system seemingly do not need to seek work in order to receive cash assistance.

3. Time limits are virtually nonexistent.

The Clinton-era welfare reform bill imposed a five year time limit for receiving TANF cash assistance, but here

again Maine has some of the most liberal policies in the nation. According to the Urban Institutes Welfare Rules

Database, Maine is one of only 7 states that does not impose a strict 5-year limit on TANF.40 Even Maine Equal

Justice Partners acknowledges that Maine law allows families to continue to receive assistance after 5 years,

and only imposes the time limit (and only then in a limited way), if a family member has violated program rules 3

or more times since November 1996.41

As a result of this policy, Maine has a higher percentage of TANF recipients that received assistance for more

than 60 countable months than all but two other states. As of FY 2005, the most recent data available, fully 11.5

percent of Maines TANF families had been receiving cash assistance for more than 5 years, nearly four times the

national average of 3.3 percent.42

65.3%

27.3%

0%

20%

40%

60%

80%

Percent of TANF recipients "Not in Labor Force", October 2007-September 2008Source: Administration for Children and Families

Fix the System

13

Long-term welfare dependency has been an ongoing problem for Maine. The 10.2 percent of TANF families that

had been on the program longer than 5 years as of FY 2004 was the second highest rate in the nation that year,

trailing only Rhode Island.43 Maine had the nations second highest long-term enrollment rate in FY 2003 as well.44

TANF is not the only welfare program that does not impose time limits. Subsidized housing programs are among

the worst offenders when it comes to fostering long-term welfare system dependence. A 2007 study by the U.S.

Department of Housing and Urban Development (HUD) found the average length of stay in subsidized housing to

be seven-and-a-half years. About one-third of those in public housing, reports HUD, have had stays of

between 3 years and 10 years. HUD further calculates that about 25 percent of all participants stay more than

10 years.45

Time limits were included in the 1996 welfare reform bill to discourage ongoing dependence on the system. In

Maine, though, there is effectively no time limit on the receipt of welfare, with the predictable result that the

state is among the top states in the nation in terms of long-term welfare dependence.

4. Sanctions for violating program rules are the nations weakest

Maines welfare system is easy to enroll in, and, with the apparent absence of meaningful work requirements or

time limits, easy to remain on. Maine isnt even particularly tough on those who violate the few rules the system

imposes.

According to the Urban Institutes Welfare Rules Database, the maximum sanction Maine imposes on a TANF

family that does not comply with work requirements is the loss of the adult portion of the cash assistance for six

months or until the family is back in compliance with program requirements, whichever is longer. Only one other

state, California, imposes a maximum welfare sanction so weak. In 23 states, the entire TANF amount is withheld

either for a certain number of weeks or until compliance. In 21 states TANF cases are closed in response to

repeated rule violations.46

11.5%

3.3%

0%

4%

8%

12%

16%

20%

Percent of TANF Families That Received Benefits for More than 60 Months, FY 2005Source: Administration for Children and Families

Fix the System

14

Maximum Sanction for Noncompliance with TANF Work Requirements, July, 2008 Source: Urban Institute

Adult portion of benefit is withheld

Entire Benefit is withheld Case is closed

California Maine

Alabama Arizona

Colorado Florida Hawaii Idaho Illinois Iowa

Kansas Kentucky Maryland

Massachusetts Mississippi Nebraska Nevada

Ohio Oklahoma

Oregon Pennsylvania

Tennessee West Virginia

Wisconsin Wyoming

Alaska Arkansas

Connecticut Delaware Georgia Indiana

Louisiana Michigan

Minnesota Montana

New Hampshire New Jersey

New Mexico North Carolina North Dakota Rhode Island

South Carolina South Dakota

Texas Utah

Washington

With the violation of system rules being virtually consequence-free in Maine, is it any wonder that so few TANF

recipients are fulfilling the work requirements the system supposedly imposes?

5. The states rich benefits package encourages dependence.

One of the reasons so many Mainers are enrolled in one or more of the states welfare programs is that the

benefits available from the system are so wide-ranging.

Maines welfare system offers enrollees cash, health care, food supplements, rental assistance, transportation

benefits, child care, job training, and subsidies for electricity and heating oilall funded by Maine taxpayers.

According to Maine Equal Justice Partners, Mainers who are enrolled in the states ASPIRE jobs program are

entitled to the services needed to hold down a job. Those services include, but are not limited to, child care for

children under 13 years old, dental care, eye care, reimbursements for travel costs ( including costs for car repairs

and car insurance), tuition and school supplies, clothing and uniforms for work, and occupational expenses such

as license fees.47 Under the Maine State Housing Authoritys Weatherization and Central Heating Improvement

Program, grants are available to low income homeowners and renters for home energy efficiency

improvements such as insulation, weatherstripping, and caulking, and repair or replacement of central heating

systems.48 Those enrolled in the SafeLink program, which is automatically available to those receiving TANF cash

assistance and Food Stamps, are given a free cell phone and 68 minutes per month in free call time.49

Fix the System

15

Maine also has a taxpayer-funded program called Alternative Aid which provides eligible non-TANF recipients

with vouchers for services such as car repairs, childcare, uniforms, housing-related emergencies, or even dental

work if those things are needed to help them get or keep a job.50 Vouchers of this kind have a maximum value

equal to three months of cash assistance under TANF (about $1,450), but since enrollment in TANF is not required

to receive the voucher, none of TANFs work requirements apply. And because the benefit is in the form of a

voucher, it does not affect cash income and thus has no impact the receipt of other benefits such as Food

Stamps.51

Alternative Aid used to be a one-time benefit. As a result of legislation enacted in Maine in 1996, however, those

who qualify can apply for Alternative Aid once a year every year and receive the equivalent of three months of

cash assistance without having to comply with any of TANFs work requirements or face reductions in any of their

other benefits.52

Even for those Mainers who might be reluctant to enroll in Maines welfare system, this extensive list of benefits

is tempting. When so rich a benefits package is combined with liberal eligibility requirements, limited work

requirements, and lax enforcement of the rules, it is no wonder enrollment in the welfare system is skyrocketing

across Maine.

Maines dependency crisis did not come about because of the extraordinary needs of Maine people. Rather, it

was the result of deliberate state policy that increased reliance on government. Compared to most states, Maine

enrolls more people in its welfare system in the first place, requires less of them once they are in the system, lets

them stay in the system longer, does less to hold them accountable for noncompliance, and offers them a far

more wide-ranging package of benefits. It should therefore come as no surprise that dependence on Maines

welfare system has exploded.

Part 2: Fixing Maines Welfare System

The solution was not simply to hand them a check and walk away. The solution was to develop meaningful programs that could support them in their struggle for independence.

Former Wisconsin Governor Tommy Thompson on his states welfare reform success.

How do we fix welfare to free Maine families from dependency? When he first took on the task of reforming Wisconsins out-of-control welfare system in the 1990s, then-

Governor Tommy Thompson met with countless welfare recipients to hear their stories. What he heard was that

they wanted to work, but were concerned about being unable to afford health care for their children, to obtain

quality child care and to find transportation to and from their jobs. Thompsons administration began to

immediately shift resources into programs to promote work and self-sufficiency, and insisted that in exchange

Fix the System

16

for these new and expanded benefits, the state would expect the people it helped to get up in the morning and

go to work.53

What Wisconsin achieved under Thompsons leadership was remarkable. From 1996 to 2003,the states TANF

caseload dropped by 68 percent. The poverty rate in Wisconsin fell from 11.9 percent in 1996 to 9 percent in

2002, one of the steepest drops in the nation in that period. In Maine, by contrast, the TANF caseload dropped

only 30.3 percent from 1996 to 2003 (the third lowest rate of decrease in the nation), and the poverty rate

actually increased, from 11.2 percent below the poverty line in 1996 to 13.4 percent below poverty in 2002. Only

two other states had increases in poverty of this magnitude between 1996 and 2002.54

Fixing Maines welfare system requires embracing a Wisconsin-style approach and keeping the system focused on

promoting work and self-sufficiency. Maines current welfare system does just the opposite, trapping people and

families in poverty and promoting dependence and an overreliance on government.

What is Maine doing wrong? Six things:

1. Maine has some of the most liberal eligibility limits in the country, allowing people to enroll in the states

welfare system who would be disqualified from enrolling in other states.

2. Maine does not have aggressive work or job search requirements for those enrolling in its welfare system,

and does not fully embrace alternative approaches that would help low-income Mainers avoid enrollment

in the states welfare system in the first place.

3. Maine not only fails to adequately enforce work requirements, it takes no active steps to ensure that

work is always the first option for those seeking assistance.

4. Once people are in the system, Maine does not impose time limits in an effective way, with the result that

Mainers remain in the system for longer periods of time than they would if they lived in other states.

5. The sanctions Maine imposes for breaking the rules are among the weakest in the nation, with the

predictable result that many of those enrolled in the system fail to comply with program requirements.

6. Maines welfare system is poorly managed, with the states Department of Health and Human Services

repeatedly being cited by state and federal authorities for errors and poor performance.

The only way to fix Maines welfare system is to confront each of these six issues head-on.

68.0%59.5%

30.3%

0%

20%

40%

60%

80%

100%

Percent Drop in TANF Caseload, January 1996-March 2003Source: The CATO Institute

Fix the System

17

Step 1: Tighten eligibility requirements.

The first thing Maine must do is bring its eligibility requirements in line with national averages. Maine falls in

about the middle of all states in terms of the percent of its population in poverty, yet has eligibility limits so high

that programs designed to meet the needs of the truly needy have become middle class entitlements. Tightening

eligibility standards preserves resources for those in need while discouraging welfare dependence among those

with higher incomes.

For guidance on establishing more reasonable eligibility standards, Maine should look to similarly rural states. As

indicated in the following table, Maines eligibility limits are higher than the rural peer state average for all four

welfare system programs for which an average could be calculated. For the fifth program, health coverage for

non-disabled childless adults, only two peer states even provide this benefit. The states used in the comparisons

below are those that were used by the Brookings Institution in its 2006 Charting Maines Future report.55

Maine should also investigate its eligibility policies with regard to legal non-citizens and those convicted of drug

felonies, as few states allow these groups the kind of broad access to the welfare system that Maine does.

Medicaid, working

parents, percent of

Federal Poverty Limit,

2009

Source: Kaiser Family

Foundation

Medicaid waiver, non-

disabled childless

adults, percent of

Federal Poverty Level,

2009

Source: Kaiser Family

Foundation

LIHEAP, percent of

Federal Poverty Limit,

FY 2010

Source: Administration

for Children and

Families

Subsidized child care

annual income limit,

percent of State

Median Income, 2008

Source: National

Women's Law Center

Monthly income limit

for TANF applicants,

single parent family of

three, July 2008

Source: Urban

Institute

Maine 206% 100% 200% 75% $1,023

Rural Peer States

Arkansas 17% N/A 150% 81% $279

Iowa 86% 250% 150% 45% $1,061

Mississippi 46% N/A 150% 87% $457

Montana 58% N/A 200% 55% $700

New Hampshire 51% N/A 200% 48% $781

North Dakota 62% N/A 195% 59% $1,252

South Dakota 54% N/A 200% 69% $762

Vermont 191% 160% 125% 52% $1,052

West Virginia 34% N/A 130% 59% $565

Wyoming 54% N/A 206% 65% $539

Rural Peer State Average 65% 171% 62% $745

Maximum Eligibility Level for Selected Welfare Programs, Maine vs. Peer States

The Solution:

Maine should undertake a comprehensive effort to bring welfare eligibility levels more in line with rural state

averages. Even adopting the eligibility standards of neighboring New Hampshire would represent a significant

step toward ensuring that Maines welfare programs are available exclusively to the truly needy.

Fix the System

18

Step 2: Discourage enrollment through more effective use of diversion programs.

For those eligible to enroll in the states welfare system, the first step should not be the near-automatic

enrollment that is the case today. Maine should use what are known as diversion programs. These programs are

intended, as the name suggests, to deter welfare applicants from entering the system in the first place.

In a 2008 report for the federal Administration for Children and Families, Mathematica Policy Research identified

three different diversion approaches used by states today. In some programs, lump sum payments are made to

the needy as a way of assisting them with short-term financial problemssuch as costly car repairsthat do not

require full enrollment in the welfare system. Other diversion approaches utilize work or job search requirements

to deter potential enrollees from entering the welfare system in the first place. Lastly, a number of states blend

these two approaches in some way, requiring job searches or job training, but providing three or four months of

cash assistance to help during this temporary transitional period. 56

Maines Alternative Aid program, discussed previously, could be described as a diversion program but, if anything,

that programs design encourages dependence. Those who qualify can get the equivalent of three months of

TANF cash assistance each and every year without any work requirements and without jeopardizing any other

benefit such as Food Stamps. By providing an annual benefit with virtually no accountability and no strings

attached, the Alternative Aid programs very design discourages families from learning to live independently.

Maines Alternative Aid program stands in stark contrast to Georgias diversion strategy, which Mathematica

highlights in the report cited above. In DeKalb County, Georgia, for instance, applicants are required to attend an

orientation, develop a TANF Family Service Plan based on a comprehensive assessment and, for those deemed

ready for work, complete an up-front job search period as a condition of program eligibility. The programs

intake meeting is an hour long, and utilizes a standardized assessment tool developed by the state to explore

the applicants job skills, work interests, educational attainment, and personal and family challenges. Applicants

considered work-ready participate in a four-week structured job search program for 40 hours per week, which

includes a series of workshops and group job search sessions to prepare for employment, as well as time spent

contacting employers, completing resumes, and participating in job interviews.57

Georgias diversion program is remarkably successful. Out of every 100 TANF applicants, 25 to 50 percent

complete the program and receive TANF, with the remainder either finding employment or dropping out of the

application process.58 According to the U.S. Census, only 1.3 percent of Georgians received cash public assistance

in 2008, the second lowest rate in the nation. Maine, by contrast, had the nations second highest rate of cash

public assistance in 2008, at 4.8 percent.59

Fix the System

19

Step 3: Institute far more robust job search and work requirements.

For those who do enroll in the states welfare system, the primary goal of state policy should be for them to

secure employment and escape the system as soon as possible. One of the requirements for enrollees should be

immediate participation in job search and employment activities. As noted earlier, Maine does not require a job

search prior to enrollment. As a consequence, Maine has one of the lowest work participation rates in the nation.

The concept of tying work requirements to the receipt of taxpayer assistance was a centerpiece of the 1996

welfare reform law passed by Congress and signed by President Clinton. That effort was itself inspired, at least in

part, by the work of Governor Tommy Thompson, of Wisconsin, a welfare reform pioneer. Thompson inherited a

state welfare system that was out of control. In 1986, more than 100,000 Wisconsin residents were enrolled in

the welfare system, and the state was struggling to keep welfare budgets under control. Thompson himself noted

in a 1997 speech that his state had continually raised taxes to pay for its ever-increasing welfare rolls, with the

result that businesses were leaving, taxes were going up, and people across the state were really depressed.60

To get the welfare rolls under control, Thompsons administration rebuilt its welfare system around work, with

the centerpiece of the effort being its Wisconsin Works program, which made work a condition for taxpayer

assistance. Prior to the implementation of Wisconsin Works, say researchers, the states welfare work programs

had little effect on caseload, as Wisconsin accepted growing dependency and showed limited commitment to

work programs. 61

Driven by the simple premise that every person is capable of doing something, the Wisconsin Works program

required that everyone in the system had to work for the benefits he or she received.62 In order to provide

enrollees with the broad selection of work opportunities, the state developed a four-step employment support

system:63

1. On the first step of the ladder, a job skills assessment is performed and the enrollee is directed to the

best available immediate job opportunity in the private sector. Once employed, program enrollees may

receive additional services such as job training, and may be eligible for additional benefits such as child

care, but the immediate goal is to get the individual working in a private sector job.

2. For those individuals with basic skills but who lack sufficient work experience to meet employer

requirements, the state offers to subsidize employee wages in exchange for on-the-job training. Through

use of a Trial Job Contract, the employer agrees to provide the participant with on-the-job work

The Solution:

Maine should implement a much more robust and carefully structured diversion program based on Georgias

model. Those seeking enrollment in the welfare system should undertake an extensive application and

enrollment process which involves a series of steps designed to encourage employment and self-sufficiency in

place of welfare dependency. Enrollment in TANF and other programs should be seen as a last, not first, resort.

The states Alternative Aid program should be abolished and those facing a temporary financial challenge should

be directed to the states General Assistance program, which is run by Maines municipalities.

Fix the System

20

experience and training in exchange for a wage subsidy. The expectation for both employee and

employer is that this arrangement will result in permanent employment.

3. Individuals who not only lack job skills but have yet to develop the basic skills and work habits necessary

to succeed in the workplace are placed in supported community service jobs. Enrollees in this program

are carefully supervised and are only paid if they come to work and fulfill job requirements. The objective

at this stage of the ladder is to introduce basic job habits such as punctuality in a supportive

environment, with the ultimate goal that enrollees then move up the employment ladder.

4. Lastly, the state provides a transitional program for those who, for whatever reason, are unable to

perform independent, self-sustaining work. Participants in the transitional program are required to

perform a limited amount of work training or other employment-related activities each week, for which

they are paid a stipend. As with the other three levels of the ladder, support services such as child care

and Medicaid are provided to those who qualify.

A critical component of the Wisconsin Works program is that enrollees must fulfill work requirements that mirror

those in the real world in order to receive benefits. Leisure without obligations was no longer an option, wrote

Jason Turner, one of the architects of the Wisconsin Works program. As the program was designed, cash benefits

were reduced at the rate of minimum wage for each hour of missed work in a community service or transitions

job, to replicate the conditions of private employment. Additionally, after-tax income for program enrollees rose

with every step up the employment ladder, giving recipients every reason to accept the highest employment

option they qualify for. In this way, Wisconsin created a pathway to escape from the dependency trap of the

welfare system through hard work and opportunity.64

As previously noted, Wisconsins work reforms were a huge success, resulting in plunging welfare enrollment and

declining poverty rates. Today, only 1.7 percent of Wisconsin households receive cash public assistance through

the TANF program, compared with 4.8 percent in Maine. Wisconsin devotes only 20 percent of its total state

expenditures to public welfare, while Maine devotes more than 30 percent.65

Under federal law, Food Stamp recipients also have work requirements. Adults between the ages of 19 and 50

who are capable of work and who do not have children under 18so-called Able-Bodied Adults Without

Dependents (ABAWDs)are ineligible for more than three months of Food Stamps benefits every three years

unless they work an average of at least 20 hours a week or are involved in a work training or job search program

of some kind.66

States, though, are given the power to request federal waivers to suspend this requirement for geographic areas

of chronic unemployment or areas where there are insufficient jobs to meet demand. Maine has submitted, and

The Solution:

Maine should immediately implement a Wisconsin-style work program in place of the existing ASPIRE program.

Specifically, the state should require that every welfare recipient perform some type of work in exchange for

benefits, carefully structuring such a system to mirror, as close as is possible, the broader world of work.

Fix the System

21

won approval of, a waiver suspending the ABAWD work requirement for all of Aroostook, Franklin, Hancock, Knox,

Lincoln, Oxford, Penobscot, Piscataquis, Somerset, Washington and Waldo counties, along with a half-dozen

towns in the remaining counties. 67 In short, the state has eliminated the ABAWD work requirement for thousands

of Food Stamp recipients across Maine.

Step 4: Impose strict time limits.

The 60-month time limits imposed by the 1996 federal welfare reform initiative were intended to slash welfare

system dependency by ensuring that welfare did not become a way of life. Maine, though, is consistently among

the states with the highest percent of TANF families receiving cash benefits for more than 60 months. According

to data from the federal Administration for Children and Families, Maine had the third highest percentage of long-

term TANF recipients in the nation in FY 2002, the second-highest percentage in FY 2003, the second highest

percentage again in FY 2004 and the third highest percentage once again in FY 2005, which was the last year for

which data of this kind is available.68

As the chart below indicates, Maines extraordinarily high rates of long-term welfare dependence are well above

both the national average and the average for the rural peer states identified earlier.69

Maines reluctance to enforce meaningful time limits for the receipt of welfare benefits defies understanding

given the overwhelming evidence that time limits lead to higher levels of employment and lower levels of welfare

dependence.

A 2008 study that the Lewin Group and MDRC prepared for the U.S. Department of Health and Human Services found evidence that time limits can encourage welfare recipients to find jobs and leave welfare more quickly, even before reaching the limit. In some states, the study found, work rates were higher for

6.0%

8.3%

10.2%

11.5%

0%

2%

4%

6%

8%

10%

12%

2002 2003 2004 2005

Percent of TANF families that received benefits for more than 60 countable months, FY2002-FY2005Source: Administration for Children and Families

Maine

National Average

Rural Peer State Average

The Solution:

Maine should seek a federal waiver to design and implement a work requirement to receive Food Stamps; one

that is integrated into the more comprehensive Wisconsin-style work program described above. It should be

the policy of the state that recipients of any type of taxpayer assistance are obligated to do some type of work

in exchange for the benefits they receive. There are 168 hours in a week. Asking able-bodied benefit recipients

to work in some productive capacity for 20 of them, which is the ABAWD requirement for Food Stamps, is a fair

tradeoff for the receipt of public assistance.

Fix the System

22

those who left welfare as a result of reaching time limits than they were for those leaving welfare for other reasons.70

A 2006 report by the Urban Institute found that stricter time limit policies may lead to lower deep poverty rates among mothers and children, especially if they encourage individuals to enter the labor force and thereby increase their earnings. It also found that time limits increase employment.71

A 2003 study published in the Review of Economics & Statistics found that time limits had important effects on welfare use and work, accounting for about one-eighth of the decline in welfare use and about 7% of the rise in employment since 1993.72

It is undoubtedly in recognition of its success in preventing welfare system dependency that the vast majority of

states impose a strict 60-month time limit on TANF families. The 2008 study by the Lewin Group and MDRC found

that 37 of the 50 states close TANF cases once time limits are reached. Of Maines rural peer states, only one,

Vermont, does not utilize a strict time limit policy which results in removal from the welfare rolls.73

Welfare Time Limits, Maine vs. Rural Peer States

State Lifetime Limit (Months) Consequences of Reaching Limit

if Exemption is Not Granted

Maine 60 Continues benefit to compliant

families

Rural Peer States

Arkansas 24 Closes TANF Case

Iowa 60 Closes TANF Case

Mississippi 60 Closes TANF Case

Montana 60 Closes TANF Case

New Hampshire 60 Closes TANF Case

North Dakota 60 Closes TANF Case

South Dakota 60 Closes TANF Case

Vermont None No Time Limit

West Virginia 60 Closes TANF Case

Wyoming 60 Closes TANF Case

Source: The Lewin Group, MDRC

The Solution:

Maine should bring its TANF cash assistance time-limit policies more in line with national and rural state

standards by imposing a strict 60-month time limit that results in the closure of welfare cases. The state should

also undertake a thorough study of time limits for other parts of the welfare system, such as subsidized housing

and child care, in order to avoid long-term dependency.

Fix the System

23

Step 5: Enact tougher sanctions for violation of program requirements.

The sanctions Maine imposes on those who fail to comply with the requirements of the TANF cash assistance

program are among the weakest in the nation. The research is clear, however, that for any welfare system to be

successful, tough sanctions must be imposed on those who break the rules.

A 1999 study by the federal Council of Economic Advisors concluded that policies that sanction recipients

who do not go to work are associated with large declines in welfare participation.74 That was also the

finding of a 2002 CATO Institute report, which found that on average, the states with the toughest

sanctions experienced larger caseload declines than states with weaker sanctions. States with sanction

policies that withheld the full welfare benefit saw their caseloads drop 60 percent, compared with a 40

percent caseload drop among states with the kind of partial sanctions that Maine imposes today. The

CATO study concluded, the strength of state sanctioning policies had the largest impact on caseload

declines between 1996 and 2000.75

A 2009 study of Californias welfare system found that states with stricter sanction policies have

substantially higher work participation rates and lower caseloads than states with a California-like

sanction policy. Additionally, the California study found that moving to a stricter sanction policy would

substantially increase the states work participation rate, and slightly reduce poverty among children

living with single mothers. These findings have implications for Maine because, as noted earlier, the only

other state with a TANF sanction policy as ineffective as Californias is Maine.76

Maines failure to hold accountable those who repeatedly break the rules sends the message that Maine is not serious about ensuring that welfare recipients play fair, which encourages dependency and fraud.

Maine also needs to get serious about fraud, which appears to be rampant throughout the welfare system,

though hard statistics seem impossible to come by.

An April 2010 story in the Lewiston Sun Journal described a half-dozen cases of welfare fraud, ranging

from a misreporting of income to the use of multiple names and addresses. The most common way fraud

is found, according to the article, is a tip from a friend, neighbor or relative, rather than detection by

state officials.77

In a July 2010 article in the Bangor Daily News, Maine lawmakers expressed concern about the fraudulent

use cash benefits available under the states TANF cash assistance program. Barbara Van Burgel, who

directs the office that oversees Maines TANF program, told legislators that her office doesnt investigate

where people use their benefits and that if someone wanted to get cash for something improper

there was nothing to stop them from simply getting cash at any bank or ATM. She assured them,

The Solution:

Maine should adopt a sanction policy more in line with that of most states, which is the loss of total cash

assistance or the closure of TANF cases for repeated non-compliance with program rules.

Fix the System

24

though, that most people use this benefit as intended, and besides which, the $383 in cash that the

average TANF household receives each month is not, she told legislators, a lot of money.78

An August 2010 report in the Bangor Daily News described how, on a Tuesday morning, two evidently

able-bodied men bought 20 cases of bottled water using their Food Stamps then poured out the water in

the parking lot and redeemed the bottles for $24 worth of five-cent deposits. In this way, they turned

their Food Stamps into $24 in untraceable cash. The employees of the store where this occurred

described the fraudulent practice as both common and a recurring problem. Employees who oversee

the City of Bangors General Assistance program also described the practice as a recurring problem and

enacted a rule change forbidding the use of General Assistance funds for bottle deposits.79

Step 6: Increase agency accountability and improve program management.

Managing a welfare system of this size and complexity is extraordinarily costly. According to the Maine

Legislatures Office of Fiscal and Program Review, the Maine Department of Health and Human Services (DHHS)

will spend more than $2 million this year just to administer the Food Stamp program. The central office budget for

the Departments Office of Integrated Access and Support, which oversees parts of the welfare system like TANF,

will exceed $3.5 million this year.80

Despite these high levels of spending on administration and oversight, Maines welfare system is one of the most

poorly managed in the nation. As indicated in the chart below, a 2005 study by the General Accounting Office

found Maine to have the second highest Food Stamp error rate in the nation. It was one of only nine states whose

error rate had increased over the preceding five years.81

According to the Portland Press Herald, DHHS was chastised by the federal government in 2007 for having, by that

point, the highest error rate in the country for two years running.82

10.4%

5.8%

0%

2%

4%

6%

8%

10%

12%

14%

State-Reported Food Stamp Error Rate, 2004Source: General Accounting Office

The Solution:

Maine needs to get tough on fraud in the welfare system. At least a portion of the savings generated by the

declining enrollment rates resulting from the policy changes suggested in this report should be invested in much

more robust fraud prevention practices. Those found guilty of welfare fraud should not only be prosecuted, but

should be forbidden from receiving further public assistance.

Fix the System

25

The states welfare system is also a regular target of investigation by the states own Department of Audit, which

routinely finds accounting errors and inadequate controls over welfare system spending. In the 2009 Single

Audit Report alone, state auditors found that oversight was inadequate to ensure accurate financial reporting in

the TANF cash assistance program, that income and eligibility verification system procedures were not

followed by managers of the Food Stamp program, and that the states Medicaid program does not have a

method to verify whether services reimbursed by Medicaid were actually furnished to recipients. In all three

instances, DHHS agreed with the auditors findings.83

Part of the problem is that Maines welfare system is dizzying in its complexity. The states Public Assistance

Manual, which describes the rules by which Maines TANF and related programs are operated, is 242 pages long.

The rulebook for the states Food Stamp program is 239 pages. Throw in the states 80-page rulebook for the

ASPIRE jobs program and the 281-page Medicaid Eligibility Manual and you are left with more than 800 pages of

rules and regulations to govern a half-dozen programs. The Medicaid manual alone has 30 pages of appendices.84

Additionally, the recent explosion in welfare dependency has reportedly overwhelmed the system itself. State

caseworkers report they are dealing with welfare caseloads more than twice the size they feel is reasonable if

they are to do their jobs properly.85 As a result, something of a when in doubt, give it out mentality has taken

hold within the Department.86

What is needed is a wholesale restructuring of the management and operation of the states social services

agencies, beginning with a fundamental change in their mission. DHHS, for instance, which oversees nearly all of

the states welfare programs, claims its mission is to provide integrated health and human services to the people

of Maine to assist individuals in meeting their needs, while respecting the rights and preferences of the individual

and family, within available resources. The Department sees itself, first and foremost, as a provider of services

not as a supervisor or an administrator or an overseerbut as one big service provider.87

Contrast that with the mission statement of the Department of Social Services for Broome County, New York,

which is to be an organization which promotes self-sufficiency and assures the protection of vulnerable

individuals. Broome County, in contrast to DHHS, does not see itself as a service provider, but as an agency

whose job it is to advocate for one value above all others, self-sufficiency, while seeing to it that care is provided

(by someone, but not necessarily by the Department) to those who are truly needy.

A critical step toward freeing Maine families from welfare dependency is to change the mission of the state

agency most responsible; the Department of Health and Human Services.

Following the establishment of the Departments new mission, an entire series of initiatives should be launched to

help advance that mission:

The Solution:

The next governor should work with lawmakers to establish a new mission for the Department of Health and

Human Services, one that, while retaining a focus on ensuring care for the most needy, establishes as the

primary purpose of the Department the promotion of independence and self-reliance.

Fix the System

26

A task force should be convened to research best practices and establish specific performance objectives

throughout the welfare system.

Steps should be taken to dramatically simplify the rules and regulations that govern the states public

assistance programs, which will simplify administration and result in budget savings.

The Department should implement a transparency initiative, making data on program utilization and the

achievement of program goals more readily available.

Financial management at the Department needs a complete overhaul, with the goal of producing greater

efficiencies and dramatically reducing accounting errors.

Perhaps most importantly, a new culture needs to take root within Maines welfare system. Today, the mission of

DHHS is one of providing services to help people in meeting their needs. The Department sees itself as

advancing its mission, therefore, when it provides more services to more people. Being second in the nation in the

percent of people on taxpayer-funded Medicaid, for instance, means to the Department that they are on the right

track.

With a new, work first mission, the goals of the Department will be entirely different, and success will be

measured in an entirely different way. That will necessitate a change not just in the way the welfare system

operates, but a change in how success is defined. The transition will not be easy, but it is necessary if Maine is to

fix the system and get welfare dependency under control.

Step 7: Additional Reforms that Expand Choice and Opportunity.

Moving Maine from welfare to work means changing more than the welfare system itself. One of the reasons

enrollment in the state-run Medicaid program has grown so dramatically in Maine, for example, is the lack of

affordable health insurance options in Maines private insurance market. Likewise, low-income Mainers who

struggle to pay their electric bills would struggle less in the 42 states that have lower residential electricity rates.88

Having a reliable vehicle is a must in a rural state like Maine, but Maine charges the 7th highest vehicle excise tax

in the nation, a tax 22 states dont even have.89

Freeing Maine families from dependence on the states welfare system will come even quicker with broader

policy changes that tackle head-on those state policies that create financial hardships for so many.

No other policy change would be as important to the success of welfare reform as the creation of low-cost health insurance alternatives through reform of Maines private health insurance marketplace. Today, Maine families looking to buy health insurance in the individual market face the 4th highest health insurance premiums in the nation.90 Those Mainers fortunate enough to get health insurance through their employer still pay an average of $3,850 a year for the employee share of the coverage, the ninth highest rate in the nation.91 Maines Medicaid rolls will continue to grow unless steps are taken to lower health insurance costs.

Maine policymakers need to get serious about Maines high energy costs, which disproportionally burden low-income families. Maine has the seventh-highest residential electricity rate in the lower 48 states.92

Maine not only charges its residents a high vehicle excise tax, it has them paying the 15th highest gas tax in the nation as well.93 With Mainers traveling an average of 11,000 vehicle-miles per year, well above the national average of 9,700 miles, the cost of travelling for work or school is far too high in Maine.94

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Maine has a well-deserved reputation for high taxes. According to the Census Bureau, the state has the third highest property taxes in the nation when measured as a percent of personal income, and the fourth highest overall tax burden.95 The legislatures most recent effort to reform Maines tax code, a 2009 law which was repealed by voters in June 2010, would have expanded the states regressive sales tax, further burdening low-income Mainers.

Of even more concern than the high costs Maine imposes on low-income residents is the lack of economic

opportunity. With more jobs available, more Mainers can escape from welfare and move to work and self-reliance

in the private sector. Yet according to University of Southern Maine economist Charles Colgan, a net of only 56

new jobs were created in Maine in the ten years between the fall of 1999 and the fall of 2009.96

The simple fact is that Maine is seen as being hostile to business and job creation. Last year, U.S. News and World

Report ranked Maine as the nations fourth worst state to start a business.97 Forbes came to nearly the same

conclusion in 2008, ranking Maine the fifth worst state for business.98 Earlier this year, the Small Business &

Entrepreneurship Council cited Maine for having the sixth worst business tax policies in the nation, a finding

which came on the heels of a December 2009 report in which the Council found Maine to have the very worst

health care policies in the nation in terms of their impact the cost of health care.99

Conclusion

Mainers are a people who pride themselves for having strong communities where people look out for one

another. Maine people endure some of the highest taxes in America in part because they believe we should have

a robust and effective system in place to take of those in need.

What has happened in Maine over the past decade, however, is something very different than what has taken

place in the past. Once, enrollment in the welfare system rose when times were tough, and then dropped in

periods of economic growth. Under the Baldacci Administration, though, enrollment in welfare has risen year

after year, in good times and in bad. Indeed, the budgets submitted by the state agencies that run Maines

welfare system suggest that had the state not faced budget deficits almost every year, the states welfare

programs would have expanded ever further and faster than they actually did.

Worse still, the states welfare system, once focused only on the truly needy, now reaches well into the middle

class. The state offers subsidized child care to families with $40,000 in income. A married couple with three

children can earn more than $50,000 a year and still receive taxpayer-funded health care under the states

The Solution:

Reducing welfare dependency should mean more than redesigning the welfare system itself. Maine has policies

in place in the areas of health care, energy, transportation, taxes, and business climate that create financial

burdens for low-income Mainers and hurt job growth. Changing these policies and taking steps to improve

economic opportunity for all Mainers is critical to the long term of success of welfare reform in Maine.

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Medicaid program, an eligibility limit more than three times the national average. The states welfare system is

so well integrated, as a DHHS spokesperson put it, that once Mainers show up to get assistance from one

program, they are automatically enrolled in as many other programs as the state can find for them.

The evidence is overwhelming that Maines welfare addiction is unsustainable. In FY 2008, Maine state and local

governments spent $2.506 billion on our public welfare system compared to just $2.278 billion on the entire K-12

education system.100 In contrast, Maines Department of Economic and Community Development, the state

agency charged with helping to create jobs, spent just $47.6 million.101 The next governor and the next Legislature

will inherit a budget deficit totaling more than $1 billion,102 in no small measure because the states private sector

economy, which has seen virtually no job growth over the past ten years, cannot support an ever-expanding

welfare system which consumes hundreds of millions of taxpayer dollars each year and which discourages work

and self-reliance. No state can have more people on government welfare programs than working in the private

sector, yet if present trends continue, Maine will be there in just a few short years.

Though welfare advocates will undoubtedly claim otherwise, the reforms suggested in this report are far from

draconian. In most instances, we simply call on Maine to do what most other states dolimit eligibility in order to

focus resources on the most needy, encourage work and self-reliance, enforce work requirements and time limits,

and get tough with those who break the rules. If the state takes the additional step of adopting innovative welfare

reform approaches like those enacted in states such as Wisconsin, it can build a truly effective welfare system for

Maines future.

Whats in a name? The office that runs Maines TANF program was once known as the Bureau of Family

Independence. It is now known as the Office of Integrated Access and Support. The mission of the states welfare

system has changed as well, from one where the system was there to provide a temporary helping hand, to one

which seems focused exclusively on expanding dependence on government handouts. Such an approach, no

matter how well intentioned, is not only unsustainable, but wrong.

It is time to Fix the System.

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Sources 1 Remarks on Signing the Personal Responsibility and Work Opportunity Reconciliation Act, http://www.milestonedocuments.com/documents/full-text/remarks-on-signing-the-personal-responsibility-and-work-opportunity-reconci/ 2 Kim, Ann S., Mainers' food stamp use second in nation, Portland Press Herald, September 28, 2009

3 U.S. Census, http://www.census.gov/prod/2009pubs/acsbr08-8.pdf

4 U.S. Census, http://factfinder.census.gov/servlet/GRTTable?_bm=y&-_box_head_nbr=R1904&-

ds_name=ACS_2008_1YR_G00_&-_lang=en&-format=US-30&-CONTEXT=grt 5 Kaiser Family Foundation,

http://www.statehealthfacts.org/comparetable.jsp?ind=199&cat=4&sub=52&yr=18&typ=2&sort=a 6 U.S. Census, http://www2.census.gov/govs/state/08_press_release.pdf

7 Maine DHHS, http://www.maine.gov/dhhs/OIAS/reports/2010/geo-may.pdf

8 Wolf, Richard, Record number in government anti-poverty programs, USA Today, August 20, 2010

9 CNBC.com, http://www.cnbc.com/id/31910310/The_Biggest_US_Welfare_States?slide=15

10

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U.S. Census, http://factfinder.census.gov/servlet/GRTTable?_bm=y&-geo_id=01000US&-_box_head_nbr=R1704&-ds_name=ACS_2008_1YR_G00_&-_lang=en&-redoLog=false&-mt_name=ACS_2008_1YR_G00_R1701_US30&-format=US-30&-CONTEXT=grt 17

U.S. Census ,http://factfinder.census.gov/servlet/GRTTable?_bm=y&-geo_id=01000US&-_box_head_nbr=R1703&-ds_name=ACS_2008_1YR_G00_&-_lang=en&-redoLog=false&-format=US-30&-mt_name=ACS_2008_1YR_G00_R1902_US30&-CONTEXT=grt 18

U.S. Census 19

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Urban Institute, http://anfdata.urban.org/databook_tabs/2008/I.E.4.xls

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21

National Womens Law Center, http://www.nwlc.org/pdf/StateChildCareAssistancePoliciesReport08.pdf Eligibility criteria for Texas and Virginia includes regional funding adjustments which result in higher eligibility levels than those in Maine for certain regions of those states. 22

Administration for Children and Families, http://www.liheap.ncat.org/tables/FY2010/POP10.htm 23

Bragdon, Tarren, Maines Choice: Have Medicaid Take Care of the Truly Vulnerable or Give Away Medicaid to the Middle Class, The Maine Heritage Policy Center, February 25, 2008 24

Kaiser Family Foundation, http://www.statehealthfacts.org/comparetable.jsp?ind=749&cat=4 25

Kaiser Family Foundation, http://www.dhcs.ca.gov/provgovpart/Documents/Waiver%20Renewal/Expanding%20Coverage%20for%20Low%20Income.pdf 26

Migration Immigration Source, http://www.migrationinformation.org/feature/display.cfm?ID=40 27

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Drug Offenders: Various Factors May Limits the Impacts of Federal Laws That Provide for Denial of Selected Benefits, United States Government Accountability Office, September 2005. 29

IBID 30

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IBID 32

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Administration for Children and Families 34

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Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/character/FY2008/tab23.htm 36

Maine Equal Justice Partners, http://www.mejp.org/aspire-tanf.htm#anchor152680 37

Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/character/FY2007/tab28.htm 38

Maine Equal Justice Partners, http://www.mejp.org/aspire-tanf.htm#anchor152680 39

Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/character/FY2008/tab30.htm 40

Urban Institute, http://anfdata.urban.org/databook_tabs/2008/IV.C.1.xls 41

Maine Equal Justice Partners, http://www.mejp.org/tanflimits.htm 42

Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/policy/timelimit/2005/tab1.htm 43

Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/policy/timelimit/2004/tab1.htm

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44

Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/policy/timelimit/2003/01.htm 45

Thompson, Dianne. Evaluating Length of Stay in Assisted Housing Programs: A Methodological Note Cityscape: A Journal of Policy Development and Research, Vol. 9, No. 1, 2007. http://www.huduser.org/periodicals/cityscpe/vol9num1/ch10.pdf 46

Urban Institute, http://anfdata.urban.org/databook_tabs/2008/III.B.3.xls 47

Maine Equal Justice Partners, http://www.ptla.org/mej/aspire-tanf.htm 48

Maine State Housing Authority, http://www.mainehousing.org/PROGRAMSWeatherization.aspx?ProgramID=49 49

Maine Equal Justice Partners, http://www.ptla.org/mej/Update/14-1/lifeline.htm 50

Maine Equal Justice Partners, http://www.mejp.org/alternativeaid.htm 51

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Maine Legislature, http://www.mainelegislature.org/LawMakerWeb/summary.asp?paper=HP1294&SessionID=6 53

The Good News about Welfare Reform: Wisconsin's Success Story, Herita