Welfare Caseloads Fall By 20% States Have A Head Start As They Prepare To Implement Sweeping Federal Reform Laws

States preparing to put in place sweeping new federal welfare laws are beginning a step ahead because the number of people on welfare already is shrinking across the country.

Statistics released last week show reductions in caseloads of 20 percent nationally and an incredible 40-plus percent in some states. That means states will be able to apportion welfare money among fewer people and face less pressure in getting remaining recipients into jobs.

The numbers give reformers reason to cheer. But it’s not clear why the rolls are shrinking, where former recipients have gone - or what will happen once changes in welfare programs reach people still deeply entrenched in the system.

Much of the credit goes to the nation’s strong economy, which has boasted unemployment below 6 percent for 2-1/2 years. But the country has seen good economic times before without dramatic drops in welfare.

This time, a good economy was combined with a push to change incentives in the welfare system. Before President Clinton signed into law last year’s welfare overhaul, 43 states already had permission to change their programs, some dramatically. Politicians began talking tough about moving people off the rolls.

“We were going to expect people to get up in the morning and work - a radical notion,” said Republican Gov. Tommy Thompson of Wisconsin, where the caseload has been dropping since 1987. In last week’s report, Wisconsin led the nation with a drop of 49 percent since 1993.

In Wisconsin, welfare recipients are required to work or train for work. Checks are reduced proportionately for every hour missed. Wisconsin’s rules give county welfare offices powerful incentive to drive down caseloads: Otherwise, they will be privatized.

Three other states - Oregon, Indiana and Oklahoma - saw their caseloads drop by 40 percent or more since 1993. In 17 states, caseloads dropped more than 30 percent.

Just three states and the District of Columbia reported increased caseloads. Alaska, California and the district had small increases, but Hawaii had 20 percent more welfare cases.

The dramatic decreases followed dramatically higher caseloads in the early 1990s. That may explain some of the drop.

Still, this is the first time since national welfare programs began six decades ago that the nation has seen such marked declines, and they have been gaining steam. Caseloads shrank by 2.5 percent in 1994, 7.5 percent in 1995 and 11.8 percent last year.

“This is truly historic,” said Rep. Clay Shaw, R-Fla., who chairs the House Ways and Means subcommittee dealing with welfare.

While much of the decline was under way well before the welfare law passed Congress last year, Shaw credits the debate for pushing people to get off the dole.

No matter what the reason, the drops make it easier for states to implement the law, which replaced the nation’s Depression-era guarantee of cash for poor Americans.

The old system increased funding for states as their number of caseloads grew.

The new system gives states a chunk of money no matter how many people are receiving help. The amounts are based on spending when caseloads were at their peak, meaning states will see a windfall at least at first.

A Ways and Means analysis says if numbers continue downward the next two years, states will receive $5,662 per beneficiary, compared with $3,624 in 1994.

The new law punishes states that don’t have at least 25 percent of recipients in work programs this year - with that percentage increasing until it hits 50 percent, a requirement reduced for states with shrunken caseloads.

Still, it remains unclear where former recipients are now. Are they living productive lives in solid jobs? Or have they slipped deeper into poverty?

Wisconsin officials admit they don’t know. “Not everybody’s going to succeed in the system,” allowed Jason Turner, who helped design the Wisconsin reforms.

Sporadic reports are surfacing of people harmed by the changes, said Sharon Parrott of the liberal Center for Budget and Policy Priorities.

She said nobody will know the real effect until recipients hit time limits and are kicked off, particularly if the economy turns south.

“If you’re thinking long run, that’s when the crucial tests are going to happen,” she said. Even Shaw acknowledges the downward trend can’t continue forever.

“It will level off as you get down deeper to people who are more firmly entrenched in the welfare system,” he said.

“A lot of people getting off of welfare should never have been there in the first place.”