Testimony of Idara Nickelson, Policy Analyst, DC Fiscal Policy Institute At the Public Hearing on Fiscal Year 2003 and Fiscal Year 2004 Spending and Performance by the Department of Human Services

Chairman Allen and other members of the Committee, thank you for the opportunity to speak today.  My name is Idara Nickelson, and I am a policy analyst at the DC Fiscal Policy Institute.  DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with an emphasis on policies that affect low? and moderate?income residents.

I am here today to testify about the budget shortfall in DC’s TANF program.  As you know, the federal government instituted significant changes to the nation’s welfare laws in 1996 by establishing the Temporary Assistance for Needy Families (TANF) block grant.  The new federal law included several new requirements, but also gave DC and the states increased flexibility over the design of their respective welfare programs.  The District’s basic block grant was fixed at $93 million, with another $75 million in local MOE requirements

With this new flexibility, the District adopted numerous program enhancements, including new job preparation services, expanded funding for child care, and a change in the benefit formula to allow welfare recipients to keep a larger share of their benefits as they transition from welfare to work.  New programs, such as home visiting, were created to further assist TANF recipients overcome barriers to work.

These new programs and enhancements were funded in large part by a reserve of unspent TANF funds that the city accumulated in the late 1990s, plus annual performance bonuses awarded by the federal government.  Between 1999 and 2003, the District was awarded nine bonuses totaling $115 million ‘ the most awarded to any single jurisdiction.

Unfortunately, after several years of innovative program development and expansion, the District is facing a significant decline in TANF funding.  This is occurring because in fiscal years 2002 and 2003, DC spent down its TANF reserves to cover program costs.  Only $441,000 remained in the reserve by the end of 2003.  This year, the number of children receiving child care already has been reduced from 22,000 in 2002 to 12,000.  The home visiting program, all TANF-funded education programs (UDC/PATHS, TAPIT), domestic violence services, teen pregnancy prevention, and the New Heights Program operated by DC Public Schools all have been cut in 2004.  Further cuts in vital programs and services will undoubtedly hinder the city in meeting more stringent TANF requirements and negatively impact TANF recipients.

The depletion of the city’s TANF reserve is troubling given that Congress is expected to eliminate bonuses for reducing out-of-wedlock births with the reauthorization of TANF.  The District has received five such bonuses, with $19.8 million received in 2003 alone.  Without the reserve or bonuses, DC will have to fund its TANF program with only its basic block grant and small work performance bonuses.  This amounts to about $100 million per year, or $55 million less than spending in 2002.

The legislation currently pending before Congress also is likely to require that DC and other states place more TANF recipients in work-related activities and increase the number of working hours.  Yet no additional federal funding will be given for these mandates, thereby forcing the District and other states to spend local funds or cut existing programs.

Without additional resources, further cuts will be made in vital programs that help parents care for their children and move to employment.  The District cannot simply stand by and watch this happen.  City officials must work to find additional resources ‘ such as local funds or the tobacco settlement fund ‘ to maintain effective welfare-to-work programs and services.

Thank you for providing this opportunity to share our views on TANF.  I would be happy to answer any questions you might have.