Temporary Assistance for Needy Families: Action Is Needed to Better Promote Employment-Focused Approaches

The TANF block grant requires states to engage a certain percentage of work-eligible cash assistance recipients in specified work-related activities, such as job search assistance and training. Yet, data suggest that more TANF recipients could receive assistance that would help them gain employment and reduce their dependence. GAO was asked to provide examples of what some states are doing to achieve these goals and how to expand these efforts.

This report (1) reviews some approaches that have been identified as holding promise for engaging TANF recipients in employment and increasing their earnings and examines ways in which selected states and localities have used them, and (2) identifies factors that influence their use. To first identify promising approaches, GAO reviewed summaries and syntheses of rigorous research on approaches that increase employment and earnings, and profiled 10 state and local programs that were nominated by experts familiar with welfare research and state and local efforts, and that were selected to represent a range of approaches. GAO also reviewed relevant federal laws, regulations, and agency guidance, and interviewed agency officials and experts with a range of views.

The 10 state and local programs GAO examined used various promising approaches to help Temporary Assistance for Needy Families (TANF) cash assistance recipients gain employment by meeting a range of participant needs. These approaches included the use of subsidized employment, employment alongside treatment for a health condition, and training for high-demand jobs. For example, for individuals in need of additional work experience, San Francisco's TANF program has provided subsidies to employers to place participants in temporary, wage-paying jobs. To help individuals with mental and physical disabilities and substance abuse problems, nonprofit contractors for New York City's TANF program have provided individualized assessment and treatment, often combined with employment. To prepare individuals with various skill levels for high-demand jobs, Minnesota and Washington have used a career pathways approach of combining occupation-specific training with basic skills education and support services. However, experts told us that some states have a misperception that this approach is not allowable under TANF rules, even though the Departments of Labor, Education, and Health and Human Services (HHS) support its use. HHS told us that states could still meet program requirements while using this approach, but the agency has not issued formal guidance clarifying this. Internal control standards for the federal government state that information should be communicated to managers in a form that enables them to carry out their responsibilities. As a result of these misperceptions, the career pathways approach may be underused by TANF agencies and TANF recipients could miss out on the potential benefits of this approach.

Expertise and dedicated funds facilitated use of these promising approaches, but the federal TANF program, itself, lacks incentives for their wider adoption. Of the 10 programs GAO examined, 9 drew on the expertise of partner organizations—including community college systems, workforce agencies, and nonprofits. The programs also benefitted from decisions by state and local policymakers to dedicate funds—including TANF funds—for the selected programs, according to officials. However, incentives for large numbers of state and local TANF agencies to adopt and test promising approaches are lacking under the structure of the TANF program for several reasons. First, many program design and funding choices are left to the states, and GAO's prior work has shown that state use of TANF funds for more costly welfare-to-work approaches can compete with other allowable uses of TANF funds. Second, TANF's main performance measure does not necessarily encourage agencies to use certain approaches that incorporate longer-term education and training or treatment services, although states are not prohibited from doing so. Third, little incentive exists for TANF agencies to evaluate their programs. HHS's authority over many aspects of TANF is limited and it has not proposed legislative changes to address these areas. Yet, because HHS oversees TANF, it is positioned to identify, suggest, and work in consultation with Congress on potential changes that would better address the lack of incentives for the use of promising approaches by states and to better meet the TANF goal of increasing employment. Without federal action, adoption and evaluation of promising approaches may continue to be limited to select states and localities, leaving TANF recipients in other locations without access to these promising approaches.

GAO recommends that HHS should issue guidance to clarify how the career pathways approach can be used by TANF agencies and identify potential changes to address the lack of incentives in the TANF program. HHS agreed with GAO's recommendations.

The Temporary Assistance for Needy Families (TANF) block grant,  administered by the U.S. Department of Health and Human Services  (HHS), provides $16.5 billion annually in federal funding to states for cash  assistance as well as a variety of other benefits and services to meet the  needs of low-income families with children. In March 2014, states used  federal and state TANF funds to provide cash assistance to 1.6 million  low-income families nationwide. In keeping with a TANF goal of reducing  families’ dependence on government by promoting work, TANF requires  states to engage a certain percentage of families with a work-eligible  individual receiving cash assistance in specified work-related activities or  face potential financial penalties. These work activities include, for  example, unsubsidized employment, job search and job readiness  assistance, certain training and education, and work experience. In recent  years, some state TANF agencies have narrowed the scope of services  they provide, reportedly in response to resource constraints and staff  reductions. Related to this trend, data suggest that more TANF  recipients—especially those considered hard to employ—could receive  assistance that will help them to gain employment and reduce their  dependence on cash assistance.

GAO has been asked to provide examples of what some states are doing  now to help TANF recipients reach these goals and how these efforts can  be expanded. Our report (1) reviews some approaches that have been  identified as holding promise to engage TANF recipients in employment  and increase their earnings and examines ways in which selected states  and localities have used them, and (2) identifies factors that influence the  use of these and other promising approaches.

To first identify promising approaches, we reviewed research summaries  and syntheses of rigorous research on promising approaches for  engaging TANF recipients in employment and increasing their earnings.  To identify state and local programs that are currently using these  approaches to serve TANF cash assistance recipients, we interviewed  cognizant researchers; officials from HHS, the Department of Labor, and  the Department of Education; and others with TANF expertise. We  selected 12 experts based on their knowledge of the research and efforts  under way at the state and local level, as well as to reflect a range of  perspectives on welfare-to-work issues. We identified them through our  literature review and through referrals from other experts. We selected 10  programs to profile (located in 6 states—California, Kentucky, Minnesota,  New York, Utah, and Washington—and the District of Columbia) from  those nominated by experts to reflect diversity in approaches used,  economic conditions, demographics, and geographic regions, among  other factors. We conducted in-depth interviews, by phone and through  four site visits, with program administrators and state and local TANF  officials to learn about key program features that might increase  employment and incomes. We obtained views from experts; federal,  state, and local officials; and program administrators on factors that  facilitate the use of promising approaches and that could broaden their  use. We assessed information and communication HHS provides to  states related to promising approaches against federal internal control  standards.for the programs we selected, and reviewed HHS administrative data on  states’ engagement of TANF recipients in prescribed work activities. We  assessed the reliability of these data by reviewing related documentation  and interviewing knowledgeable officials and determined they were  sufficiently reliable for providing contextual information on these programs  and describing work participation trends, respectively. We also reviewed  relevant GAO, HHS Office of Inspector General, and HHS reports, as well  as relevant federal laws, regulations, and guidance. Appendix I describes  our objectives, scope, and methodology in greater detail.

We obtained budget, performance, and other program data  We conducted this performance audit from January 2014 to November  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

The Personal Responsibility and Work Opportunity Reconciliation Act of  1996 (PRWORA) established four purposes for the TANF block grant:  1.  provide assistance to needy families so that children may be  cared for in their own homes or homes of relatives;  2.  end dependence of needy parents on government benefits by  promoting job preparation, work, and marriage;  3.  prevent and reduce out-of-wedlock pregnancies; and  4.  encourage two-parent families.

Within these goals, states have responsibility for designing, implementing,  and administering their welfare programs to comply with federal  guidelines, as defined by federal law and HHS, including imposing a 5- year lifetime limit on many families receiving cash assistance. In  addition, the block grant includes a maintenance-of-effort (MOE)  requirement, which requires states to maintain a significant portion of their  historic financial commitment to welfare-related programs. In fiscal year  2013, states spent a total of $31.6 billion in federal TANF funds and state  MOE funds, with federal funds accounting for 53 percent of the total. The  federal law that established TANF also created a TANF Contingency  Fund that states could access in times of economic distress. In creating  the TANF block grant, Congress emphasized the importance of state  flexibility, and restricted HHS’s regulatory authority over the states except  to the extent expressly provided in the law.

In line with the second purpose, a key TANF goal is helping parents  prepare for and find jobs. The primary means for measuring state efforts  in this area has been TANF’s work participation rate. Generally, states  are held accountable for ensuring that at least 50 percent of all families  receiving TANF cash assistance and considered work-eligible participate  in one or more of the federally-defined allowable activities for the required   The law also contains a provision known  number of hours each month. as the caseload reduction credit, which allows states to reduce the work  participation rate they are required to meet based on reductions in the  size of their TANF caseload. In addition, TANF regulations provide that  states that spend more than their MOE requirements generally receive an  increase in their caseload reduction credit.

TANF Programs Currently Engage Recipients in a Limited Range of Work- related Activities

Our work has shown that over the years, states have engaged about one  third of families receiving TANF cash assistance in federally-defined work  activities nationwide while still meeting their required work participation  rates. Generally, this is because many states have relied on the caseload  reduction credit and other allowable options to meet the requirement  rather than engaging more families in specified work activities to reach a  50 percent rate. This has raised concerns among some policymakers that  states are meeting the letter but not the spirit of the law. PRWORA  established higher work participation rate requirements and eliminated  many exemptions from these requirements for recipients compared to  what was in place prior to TANF. This reflected research that found that  mandatory work requirements could reduce welfare receipt and increase  employment among single mothers and help address concerns about  long-term welfare receipt. In our prior work, we concluded that states’ use  of the modifications currently allowed in federal law and regulations, as  well as states’ policy choices, have diminished the usefulness of the work  participation rate as a national TANF performance measure.

The Claims Resolution Act of 2010 required states to report additional  information on TANF recipients’ engagement in activities. An HHS  report to Congress, based on 2011 state data, found that that 24 percent  of work-eligible individuals met federal work participation rate standards,  but more than 50 percent of work-eligible individuals had zero hours of  participation (see fig. 1). While some of these individuals were  exempted from participation or excluded for some other reason such as  caring for a child under age one, at least some of these individuals had  not been engaged in work activities by the state or local TANF agency.HHS data show that federal and state spending on work-related activities,  such as subsidized employment, has declined in the last 3 years for  which data are available (fiscal years 2011-2013) and has been under 8  percent of total TANF spending in each of these years.

Almost half of individuals meeting the work participation rate standards  did so through unsubsidized employment—working in a regular job while  receiving cash assistance. This suggests that states’ ability to meet the  work participation rate relies heavily on the activities of individuals who  are already able to work rather than providing special assistance to those  who have the most difficulty finding and keeping jobs. In fiscal year 2011,  unsubsidized employment was the most common work activity among  individuals participating in at least one hour of a countable work activity  per month. Job search and job readiness assistance, followed by  vocational education training, were the next most common activities (see  fig. 2).

History of Welfare Program Experimentation, Research and State Waivers

Between 1987 and 1996, there was considerable experimentation with  welfare-to-work programs under TANF’s predecessor program, Aid to  Families with Dependent Children (AFDC), as HHS granted waivers to  states to test and evaluate new approaches. A body of HHS-sponsored  research resulted, showing that welfare-to-work programs can increase  employment and reduce welfare receipt. This research helped inform the  creation of TANF. Between 1987 and 1996, 46 states received waivers  from existing AFDC requirements to test and evaluate new approaches to  improve employment outcomes for people on welfare. These initiatives  were referred to as section 1115 waivers because they were granted  under section 1115 of the Social Security Act. According to HHS  officials, HHS required states that applied for and received waivers from  federal program requirements to have an independent organization  evaluate its program change, supported by HHS and state funding.  These waiver initiatives included placing time limits on the receipt of  benefits and strengthening work requirements, among others. According  to HHS, many of the policies and concepts included in state waiver  requests were later incorporated into TANF. States that received section  1115 waivers under AFDC were allowed, under PRWORA, to continue to  operate under these waivers until their expiration. However, the last of  these waivers expired in 2007, and no provision in law allowed these  AFDC waivers to be extended. Questions have been raised as to whether  HHS continues to have the authority under section 1115 to waive certain  TANF program rules; this report does not address this issue. Under law,  HHS is required to conduct TANF and related research and the agency  supports a broad array of research and evaluations. See appendix III for a  list of relevant recent and ongoing HHS-funded evaluations.

Since the 1996 welfare law replaced AFDC with the TANF block grant  and gave states flexibility to set spending priorities, they have used a  smaller share of the grant to provide cash assistance. Within the first 5  years of TANF, the number of families receiving cash assistance declined  by over half and states shifted their TANF priorities to other forms of aid,  or non-cash services. These can include any other services meeting  TANF purposes, such as job preparation activities, child care and  transportation assistance for parents, out-of-wedlock pregnancy  prevention activities, and child welfare services. In fiscal year 1997,  nationwide, states spent about 23 percent of federal TANF and state  MOE funds on non-cash services. In contrast, states spent more than 66  percent of federal TANF and state MOE funds for these purposes in fiscal  year 2013. While the TANF block grant still serves as the nation’s major  cash assistance program for low-income families with children, states  have also increasingly used it as a flexible funding stream for supporting  a broad range of allowable services. However, we previously reported  that the accountability framework currently in place in federal law and  regulations has not kept pace with this evolution. Our prior work found  that TANF’s accountability framework provides incomplete information on  how states’ non-cash services are contributing to TANF purposes. We  noted that Congress may wish to consider ways to improve reporting and  performance information so that it encompasses the full breadth of states’  uses of TANF funds. The composition of the overall TANF caseload has  also changed, with the percentage of “child-only” cases increasing from  about 23 percent in fiscal year 1998 to about 46 percent in fiscal year  2011. These cases consist of families receiving cash assistance on behalf  of children only, in contrast to other cases in which adults in the families  also receive benefits on their own behalf. According to HHS, the  increase in the percentage of child-only cases was primarily due to a  sharp decline in the number of TANF cases with an eligible adult, rather  than an increase in the number of child-only cases.

Some TANF cash assistance recipients are work-ready while others face  challenges that make them harder to employ. According to the preamble  to a TANF final rule from 1999, several provisions of the law, including  time limits, higher participation rate requirements, and fewer individual  exemptions from participation requirements, taken together, suggest that  states should serve more clients beyond just those who are job-ready.  However, some state TANF officials we interviewed for a 2012 report said  the pressure to meet TANF work participation rate requirements causes  them to focus on the “ready-to-work” cash assistance population, which  can leave the “hard-to-employ” population without services. Health  issues, disability, substance abuse, criminal records, domestic violence,  limited education, and responsibilities for disabled children or parents can  all constitute employment challenges for TANF recipients, who may need  enhanced assistance to prepare for, find, and keep jobs. States may  generally only count a family’s participation in job readiness assistance,  which can include mental health and substance abuse treatment, towards  the work participation rate for up to 12 weeks in a year.

Selected State and Local Programs Reflect Elements of Four Promising Approaches

Research Indicates Several Promising Approaches for Increasing Employment and Earnings

A body of rigorous research points to four approaches that can be used to  increase the employment and earnings of TANF cash assistance  recipients: subsidized employment, treatment and employment services,  career pathways, and modified work-first.this research is based on programs that operated, at least in part, during  TANF’s predecessor program, AFDC, and have since ended; and some  of these older studies focused on programs that predominantly targeted  women. Some prior studies have also focused on individuals with  education levels that are higher, on average, than the TANF population.

Evaluation of Florida’s Back to Work  program  Florida’s Back to Work program used  American Recovery and Reinvestment Act of  2009 funding to create subsidized jobs.  Administered by regional workforce boards, it  operated in 2010 and placed about 5,600  individuals in subsidized jobs. For-profit, non- profit, and public sector employers received  subsidies that covered 80 to 95 percent of  program participants’ wages for 6 months.  For-profit organizations were asked to  commit to hiring the participants after the  subsidy ended and non-profits were  encouraged to do the same. Program  participants experienced significantly greater  increases in unsubsidized employment  compared to individuals who were eligible  but did not take part in subsidized  employment. Participants experienced a  nearly $4,000 average increase in earnings  over their prior earnings compared to about a  $1,500 average increase for the comparison  group. the use of public funds to create or support temporary work  opportunities for people who might otherwise be unemployed. One  model of subsidized employment—transitional jobs—focuses on the  hard-to-employ by providing temporary, wage-paying jobs, support  services, and job placement help to individuals who have difficulty  getting and holding jobs in the regular labor market. Subsidized  employment programs have been used for decades to provide income  support for people who are unable to find jobs in the regular labor  market and improve employability for people with limited work  experience. These programs can vary, for example, in terms of the  amount of wages that are subsidized; prospects for permanent,  unsubsidized employment; the degree of worksite supervision  provided; and whether the worker is employed directly or through an  intermediary (see fig. 3).

Research has shown that subsidized employment can increase  employment and earnings, although some studies suggest that these  gains may not last beyond the subsidized position. Nevertheless,  these programs can provide individuals who are hard to employ with  work experience and can have indirect effects, such as reduced  recidivism among former prisoners. Subsidized employment programs  in the 1970s and 1980s, during the time of TANF’s predecessor  program, yielded positive results on employment and earnings. One  such demonstration project tested a model in which 10,000 welfare  recipients in seven locations received 4 to 8 weeks of training and  spent up to one year in subsidized positions as home health aides.  Most of the subsidized employment programs that produced long-term  employment gains targeted women; disadvantaged men experienced  fewer positive results following the period of subsidized employment.

Following welfare reform, transitional jobs gained traction as a  strategy to increase the employability of TANF recipients. The theory  behind this approach is that people best learn to work through  working. Program staff can observe and coach participants on skills  such as developing good work habits and dealing with coworkers to  improve their future success in an unsubsidized job. Participants may  be able to subsequently acquire jobs they would not otherwise have  access to. Recent studies of transitional jobs programs have not  shown sustained increases in employment, although these programs  had indirect effects of reducing recidivism and reliance on welfare  receipt.

As part of the American Recovery and Reinvestment Act of 2009,  Congress provided funding through the TANF Emergency  Contingency Fund that in part helped states cover the costs of  increased expenditures for subsidized employment programs. Thirty-nine states and the District of Columbia reportedly used $1.3  billion from the Emergency Contingency Fund to create 260,000  subsidized jobs, according to research. Although these efforts were  not focused solely on TANF cash assistance recipients, experts we  spoke with said the availability of additional funds renewed interest  among states in subsidized employment. According to one study,  these efforts involved the private sector in creating subsidized  positions to a greater extent than in the past.

The American Recovery and Reinvestment Act of 2009 created a $5 billion Emergency  Contingency Fund for state TANF programs, available in fiscal years 2009 and 2010. Pub.  L. No. 111-5, § 2101(a)(1), 123 Stat. 115, 446.

Evaluation of New York City’s Personal  Roads to Individual Development and  Employment (PRIDE)  New York City’s PRIDE was a large-scale  welfare-to-work program for recipients with  work-limiting medical or mental health  conditions. This program operated from 1999  to 2004, and served more than 30,000  people. Staff performed in-depth  assessments of participants’ work and  education histories and medical conditions,  then assigned them to activities—including  unpaid work experience, education, and job  placement assistance— that took account of  their medical conditions. An evaluation of  3,000 randomly-assigned participants found  that PRIDE significantly reduced the amount  of welfare that participants received, in part  because it generated increases in  employment. Thirty-four percent of  participants worked in jobs covered by  unemployment insurance within 2 years after  entering the study, compared to 27 percent  of the control group. However, about two- thirds of participants never worked during the  2-year study period.

Demonstration is evaluating seven subsidized employment programs  that target current, former, or potential TANF recipients, low-income  noncustodial parents, and others. The Department of Labor-funded  Enhanced Transitional Jobs Demonstration is evaluating seven sites  for which it has provided grants for transitional jobs programs that  target either non-custodial parents or former prisoners. HHS and the  Department of Labor entered into a memorandum of agreement to  coordinate these studies through shared data collection instruments  and evaluation sites and coordinated reporting efforts. Both projects  incorporate lessons from earlier research on transitional jobs and test  whether providing subsidies to private employers can be effective for  less job-ready participants. Reports on the results of these studies are  scheduled for 2015 through 2018.

Treatment and employment services – This approach provides  treatment for mental health needs, substance abuse, or a physical  disability as well as employment services in different combinations  and sequences (see fig. 4). The theory behind this approach is that  treatment can help to stabilize a health condition to make steady work  possible, while work experience can help participants learn how to  manage problems that could otherwise prevent them from retaining a  regular job.

Rigorous research has shown some limited impacts for this approach.  Evaluation of one program that offered a mix of unpaid work  experience, educational activities, and job search assistance to TANF  recipients with work-limiting health conditions and disabilities showed,  to some extent, increased employment that lasted for two years.  Another evaluation for a program in which staff visited participants’  homes to teach them life skills showed substantial increases in  employment and earnings for those considered very hard to employ,  but the larger population of participants receiving services  experienced only small increases in employment and earnings. In  terms of future research possibilities, HHS is considering whether  emerging research from the fields of psychology and neuroscience on  executive functioning—which is related to behaviors such as goal- setting, self-regulation, planning, and problem-solving—could help   If so, it may have applications for  adults succeed in employment.TANF.

Career pathways – This approach has been defined in different  ways, but can involve providing contextual learning to prepare  individuals of various skill levels to advance in a high-demand  occupation or industry. Reading, writing, and math skills are taught  using real-life materials and situations from the industry in which they  will be used. Employers in the targeted sectors help to determine what  skills are required for participants to become employed and advance  their careers in growing industries. Workers of varying skill levels can  use multiple entry or exit points to advance within a specific sector or  occupational field and gain industry-recognized credentials through a  clear sequence of education, training, or a combination of education  and training. Participants are provided career counseling and other  support services (see fig. 5).

This approach builds on results from a random-assignment evaluation  of sector-based employment, indicating that programs offering sector- specific training can increase the employment and earnings of low- income individuals. The approach is also informed by lessons from  prior research showing that adult basic education alone has not been   successful in connecting low-skilled individuals to jobs. Research on  education-oriented welfare-to-work programs that operated in the  1980s and 1990s showed that the most successful programs offered  short-term assignments that did not allow participants to “languish” in  activities without making progress. This is in contrast to remedial  education and GED preparation programs that either had difficulty  retaining participants or kept them for years without clear progress.  These prior findings informed a call for training that promotes career  advancement, integrates basic education and skills training, and  engages local employers, while providing support services to TANF  recipients to improve program retention.

Public/Private Ventures’ Sectoral  Employment Impact Study  Results from Public/Private Ventures’  Sectoral Employment Impact Study based  on follow-up interviews 24 to 30 months  after random assignment suggest that  sectoral programs can increase the  employment and earnings of traditionally  disadvantaged workers. The study,  launched in 2003, evaluated three sectoral  programs that train workers for skilled  positions in a range of industries, including  healthcare, manufacturing, information  technology, and construction. The study  assessed impacts on employment,  earnings, hourly wages and access to  work-related benefits. Programs included in  the study offered training that was focused  on a specific sector or sectors and that  took no more than a year to complete.  Over the follow-up period, treatment group  participants were employed an average of  1.3 months more than individuals in the  control group. Individuals enrolled in  training also earned about $4,500 more  than individuals in the control group over a  2-year period and were also more likely to  work in jobs with higher wages and  benefits.

As confirmed by HHS officials, there are no completed rigorous  experimental impact studies of a comprehensive career pathways  program, but HHS is funding relevant ongoing evaluations, as part of  an inter-agency effort with the Departments of Education and Labor to  promote the use of career pathways. One of the studies, known as  the Innovative Strategies for Increasing Self-Sufficiency project, is a  nine-site, random assignment evaluation of career pathway programs.  Initiated in 2007, the study will last 10 years, and early results are  expected in the next 2 to 3 years. HHS also has a research portfolio  for evaluating health care-related education and training programs  operated with Health Profession Opportunity Grants (HPOG). These  grants are targeted to TANF recipients and other low-income  individuals and aim to prepare them for occupations in the health care  field that pay well and are expected to either experience labor  shortages or be in high demand. Three of the HPOG grantees are to  have site-specific impact evaluations as part of the Innovative  Strategies for Increasing Self-Sufficiency project with reports expected  in 2016. An interim analysis of the impacts of HPOG is expected in  June 2016. HHS expects that further follow-up analysis of both  Innovative Strategies for Increasing Self-Sufficiency and HPOG  impacts will be released in 2018.

Research Snapshot: Modified Work-First  Approach  The National Evaluation of Welfare-to- Work Strategies (NEWWS)  NEWWS examined the long-term effects of  11 mandatory welfare-to-work programs, in  seven sites, on welfare recipients and their  children. These programs took different  approaches to helping welfare recipients find  jobs, advance in the labor market, and leave  public assistance. During the 1990s, more  than 40,000 single-parent families were  tracked over 5-year follow-up periods. A  Portland, Oregon program outperformed the  other programs that were examined. It  offered education or training to some  participants, depending on the caseworkers’  assessment of the individuals’ skills and  needs, and encouraged all participants to  hold out for jobs that paid better than the  minimum wage and offered stable  employment. In the program’s fifth year, it  produced a 6.4 percent increase in  employment and 14.6 percent increase in  average earnings, compared to the control  group. responses to the Request for Information. According to HHS officials,  this information will yield insights on (1) the benefits of and challenges   to aligning diverse funding streams, programs, and stakeholders  around career pathways systems; and (2) the current and potential  future use of career pathways systems to help at-risk populations,  including TANF cash assistance recipients, gain skills and access the  middle class.

Modified work-first – This approach entails a strong work focus and  some upfront education or training, as needed (see fig 6). Research  on welfare-to-work programs during the 1990s sought to test the  effectiveness of programs that emphasized rapid employment (“work  first”) through mandatory job search compared to those that focused  first on mandatory education and training. One program combined  aspects of both of these approaches: it included a strong employment  focus, the use of both job search and short-term education or training,  and an emphasis on holding out for a good job, as opposed to  participants taking the first job they were offered.

Research shows that programs using this approach increased  employment and earnings and reduced welfare receipt. This approach  appears more effective than programs that focus solely on education  and training or solely on job search.

All Selected Programs Focus on Employment while Using Various Elements of the Approaches to Meet the Needs of Their Target Populations

We examined 10 ongoing programs that all help TANF cash assistance  recipients to gain employment, using various different elements of the  above cited promising approaches to meet a range of participant needs  (see table 1). These populations included those whose limited prior  work experience prevented them from gaining employment on their own,  those with one or more work-limiting characteristic such as a mental or  physical disability or substance abuse problem, and those in need of  additional skills to enter a new field or to increase their employability. All  of the selected programs serve TANF recipients: 5 of the 10 serve TANF  recipients exclusively, while the other programs serve a broader  population.

Some of the programs we examined offered subsidized employment to  those whose limited prior work experience prevents them from gaining  employment on their own. For example:

San Francisco’s Jobs Now! program uses a community jobs model  similar to a transitional employment program to place participants in  employment positions. The program includes 6 months of subsidized  employment and is targeted to those with limited experience or  exposure to work. Some participants are placed in public service  training programs where they are employed with the local human  services agency or other city departments like the Office of Parks and  Recreation. Other participants who are more job ready are placed in a  wage-subsidy program with private businesses. Under this program  tier, Jobs Now! subsidizes 100 percent of the wage for the first month,  75 percent for the second month, and $1,000 for the next 3 months.  Employers also agree to make a good faith effort to retain the  employee after the subsidy ends. Administrators reported that the  retention rate with private employers—once the subsidy ends—is  between 75 and 80 percent.

Similarly, Erie County, New York’s PIVOT wage subsidy program  requires a commitment from employers to hire participants after the  wage subsidy ends. PIVOT is designed to serve those TANF  recipients who are among the more work-ready, but who did not find  jobs on their own during previous job search activities. When  participants are referred to the program through the local TANF  agency, they receive a skills assessment and enter a job-readiness  training program for 45 days while their eligibility is being determined.  Participants are screened to match their skill levels with employer  needs. PIVOT places participants in local employment—in industries  such as banking, hospitality, legal services, manufacturing, health,  and childcare—for 6 months during job training. Participants’ days are  typically split between a work experience program and other work  activities such as GED classes or barrier remediation, such as English  lessons for refugees with language barriers.

Los Angeles County’s large subsidized employment program includes  a component in which participants can gain work experience with for- profits, nonprofits or government agencies, and an on-the-job training  component that places participants with private sector employers. For  the latter, a subsidy for the participants’ wages is sent to a private job  provider during the first two months of employment. After those 60  days, the wage is paid directly by the employer, who receives $350 for  each part-time employee and $500 for each full-time employee.

Three of the ten programs we examined used the treatment and  employment services approach to serve participants with one or more  physical or mental disabilities, substance abuse, or other work-limiting  characteristics.

Utah’s Licensed Clinical Therapist program provides services for  clients with substance abuse, domestic violence, and mental health  problems. An administrator said participants often enter the program  under emotional turmoil that—if untreated—would prevent them from  gaining stable employment. To address this need, clients receive a  clinical assessment to diagnose mental health problems and they can  participate in clinical therapy sessions offered by the program in  combination with job search and resume building activities.

New York City WeCARE was designed to provide comprehensive  services to hard-to-employ clients with mental or physical health  needs or substance abuse problems. The program uses an in-house  comprehensive assessment of physical, psychological, and social  needs by a board-certified doctor and social worker to determine  whether a client is fully employable, can participate in work-related  activities with limitations, needs treatment to stabilize a condition  before engaging in work-related activities, or if the client could be  eligible for federal disability benefits. One important program element  is flexibility. For example, participants have a window of several days  to make a scheduled appointment. A contractor told us that by offering  flexibility, the program is better able to engage participants whom  other programs might automatically sanction for non-participation.

Ramsey County, Minnesota’s FAST program is a partnership between  agencies that co-locate services like mental health treatment,  vocational rehabilitation, community health care, and TANF  employment supports. Administrators said with the right supports and  an individualized service plan, clients with mental or physical health or  substance abuse problems –who are not eligible for federal disability  benefits—can gain employment. FAST contracts services with  Goodwill/Easter Seals, which provides day-to-day supervision of  participants and facilitates the individual placement and supports  created for them. Home visits are used as needed to assess families’  needs, and family supports, including employment retention services,  can last up to 9 months or longer.

Three of the ten programs we examined used multiple elements of the  sector-based career pathways approach to increase the skills of  participants looking to enter a new field or increase their employability.

Washington State’s I-BEST program was developed to help  participants increase their literacy and basic skills while earning  certificates or degrees in order to qualify for in-demand jobs. The  program is offered in 34 community and technical colleges in the  state. The program curriculum is based on regional job market  demands and resources. A college must demonstrate local demand  for a career program and show that those who complete the program  will be able to exit it and receive an average wage of $13/hour or  more. Program administrators said they believe their program is  successful because of its team-taught, integrated service delivery  model. Within I-BEST classrooms, two instructors work together to  bolster basic skills while integrating career-related content into  students’ curriculum. Since the program’s founding about 10 years  ago, more than 200 career programs in fields such as health care,  early childhood education, and advanced manufacturing have been  approved by the Washington State Board for Community and  Technical Colleges.

The Minnesota FastTRAC program aims to move low-wage, low- skilled adults into credit-bearing training. Participants typically enter  the program after being referred by various sources including local  TANF and workforce programs. Participants are screened to  determine their education level and needs. Similar to the I-BEST  program, clients then go to classroom-based programs, in which  instruction in math and reading is provided within the context of a  profession like healthcare. Clients may also participate in some job  shadowing during this period.

Similarly, Kentucky officials perceived a need to increase educational  attainment among the TANF population to improve their employability  and launched the Ready to Work program about 16 years ago. The  program is run statewide through the Kentucky Community and  Technical College System. Unlike the I-BEST program, which focuses  specifically on high-demand occupations, Ready to Work allows  participants to select classes from the full catalogue of local courses.

However, the program does offer counseling on job prospects in  various career tracks. Participants also engage in on- or off-campus  work study positions with public and private employers that are  subsidized using TANF funds and connected to each participant’s  program of study and career goal.

All of the programs we examined used some form of assessment to  identify participants’ service needs. Across the programs, factors  assessed included skill levels, work history, interests, and physical and  mental health. Additionally six of the 10 programs structured services or  program offerings in two or more tiers or employment tracks for the  purpose of better targeting the needs of participants.

For example, the D.C. TANF program, which uses elements of a  modified work-first approach, was redesigned in 2008-2009 in  response to complaints that under the program’s “one size fits all”  service delivery model, job-ready clients and those with significant  barriers to employment were receiving the same services. Under the  redesign, a continuum of services is available based on the client’s  needs at assessment. Clients are categorized into a service delivery   tier based on their education, experience, and skills, as well as  barriers they may face (see fig 7).

Selected Programs Emphasize Work Participation Rate to Varying Degrees

Although the programs we examined were all focused on work, they  varied in the extent to which they were structured to help their states meet  TANF’s work participation rate requirements, according to state and  program officials. Contributing to the work participation rate, such as by  requiring participants to meet specific federally-defined hours and  activities requirements, was a goal of 5 of the 10 programs, for at least  some portion of the participants served. For example, a Kentucky Ready  to Work program administrator said its work study component is its  biggest asset for meeting the work participation rate requirements.  Students are placed in private-employment positions when possible and  when positions are not available, administrators said students can work  on campus or in volunteer positions to meet their hours requirements. In  the D.C. TANF program, participants have different requirements  depending on their service delivery tier. For example, job-ready  participants are expected to meet both hours and activity requirements  that are consistent with the federal work participation rate standards.  Those who are less job ready must meet the hour requirements but may  participate in any mix of activities even if it they do not count toward the  District’s work participation rate. An administrator told us the D.C. TANF  program was designed based on what they thought would work best to  get participants employed and with the expectation that this will also  result in meeting the work participation rate requirements.

The work participation rate requirement was given less emphasis by the  other five programs we examined, according to state and program  officials. These administrators said their programs did not emphasize the  work participation rate because of a conscious choice to prioritize other  program goals, or because their programs served too few work-eligible  TANF recipients to affect the state’s rate. Nearly all (9 of the 10 programs  we examined) were components of larger TANF programs, meaning that  states and localities may have a variety of other mechanisms for meeting  the work participation rate requirements beyond these programs. Even  without a strong emphasis on the work participation rate, these  programs—like those that did emphasize the work participation rate—still  maintained an employment focus and some offered activities that at least  partially counted toward the work participation rate.

Administrators in Los Angeles County’s subsidized employment program  said they do not over-emphasize contributing toward the work  participation rate requirements, but instead focus on placing participants  in work. Similar to the D.C. TANF program—where addressing  participants’ barriers and progressively increasing their engagement over  time is thought to contribute to the work participation rate and increase  long-term stable employment—Los Angeles County officials said if  participants can be placed in employment, meeting the requirement is  typically not an issue. Additionally, administrators said that because  California allows clients to participate in some activities for longer  durations than can be counted toward the federal requirement, they focus  on keeping people engaged in work-related activities under the state  rules.

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1  (Washington, D.C.: November 1999). regarding how activities related to the career pathways approach may be  allowable under TANF rules could address misperceptions and  encourage more widespread use of this approach by state and local  TANF agencies.

Expertise and Dedicated Funds Facilitated the Use of Promising Approaches, but the TANF Program Lacks Incentives for Wider Adoption or Testing

The Selected Programs Benefitted from Partner Expertise and Dedicated Funding

Nearly all of the 10 programs we examined that currently use elements of  promising approaches drew on expertise beyond the state or local TANF  agency (see table 2). Nine of these programs involved partnerships with  organizations and agencies such as community college systems,  workforce agencies, and nonprofit organizations or contracted vendors.  These partnerships provided the selected programs with access to the  experience and expertise of a range of partners. For example:

Officials with the Los Angeles County TANF agency noted that  partnership with a local workforce agency is a key facilitating factor in  its subsidized employment program. The workforce agency has acted  as the employer of record for payroll and insurance purposes, and  had existing employer relationships, so the TANF agency did not need  to develop these capacities.

While Kentucky’s Ready to Work program is entirely funded by TANF,  the program is administered by the state’s community college system,  and its case managers are located on campus and familiar with the  college environment. According to program officials, clients generally  pay their tuition through federal Pell Grants, so Ready to Work case  managers help clients complete financial aid applications and ensure  they remain eligible for the grants.

Officials with Ramsey County, Minnesota’s FAST program that seeks  to engage individuals with disabilities in work reported that the  experience and credibility of the initiative’s lead nonprofit partner was  a key facilitating factor. They particularly valued the nonprofit’s  previous experience working with both rehabilitation and employment  services, as opposed to other contractors that have only operated in  the TANF employment context.

Six of the programs also received technical assistance from a federal  agency or nonprofit, such as a policy research organization or foundation.  For example, Minnesota officials cited participation in the federal Career  Pathways Institute as an important step in the development of the state’s  career pathways program.assistance activities connected them with many other programs that  influenced elements of their work. Officials in Los Angeles and Ramsey  County, Minnesota, said that taking part in an evaluation conducted by a  research organization helped inform their program models, and Ramsey  County officials said their participation had enabled them to access  additional resources, such as training from national experts.

Officials said participation in technical  Decisions by state and local policymakers to dedicate funds for the  selected programs also facilitated the use of promising approaches,  according to program officials. We have previously reported that when  federal TANF funds are allocated to states, states do not necessarily  direct the funding to state welfare agencies, but may allocate funds to  support various programs depending on legislative priorities (see fig. 8).  Officials with 7 of the 10 programs we interviewed noted that state or local  funding decisions had facilitated their use of promising approaches. example, officials with the District of Columbia TANF program noted that  the allocation of additional funding has been the key factor that has  allowed the agency to continue to support its modified work-first  approach. Officials reported that the approach requires more staff  resources to assess clients’ work readiness and determine appropriate  activities than does the agency’s prior model of “one size fits all.” The  allocation of additional resources has allowed the agency to support  these staff. The allocation of additional funds by state and local  governments also facilitated San Francisco’s use of a subsidized  employment approach for TANF cash assistance recipients, according to  program officials. They reported that these funds have supported the  agency’s ability to increase its wage subsidy in an effort to attract higher- wage employers.

In addition to federal TANF funds, selected programs reported receiving funds from  state and local sources. However, some of these funds may have included federal TANF  funds that were being allocated by state and local entities. In addition, some of these state  or local funds may have been used by states to meet their TANF maintenance of effort  requirement.

TANF Lacks Incentives for the Broader Adoption and Testing of Promising Approaches

As structured, the TANF program lacks incentives to encourage broader  adoption of promising approaches by large numbers of state and local  TANF agencies. The federal law that created TANF established a goal of  increasing job preparation and employment, and included a provision  addressing the development and evaluation of innovative approaches for  reducing welfare dependency. However, several TANF program  characteristics may not encourage states to adopt and test new  approaches for increasing the employment and earnings of cash  assistance recipients. HHS’s authority over many aspects of TANF is  limited and it has not proposed legislative changes to address these  areas. Without federal action, adoption and evaluation of promising  approaches may continue to be limited to select states and localities,  leaving TANF recipients in other locations without access to these  promising approaches.

42 U.S.C. §§ 601(a), 617. Accordingly, HHS has limited authority to influence state  program choices and cannot compel states to adopt particular approaches for their  welfare-to-work programs. funds on a wide range of programs and services that are not necessarily  related to welfare-to-work activities, as long as these services support  one of TANF’s four statutory purposes. In a 2012 report, we found that  states spent significant amounts of TANF funds on services such as child  welfare or child care, and that state use of federal TANF funds for these  and other services can create tensions and trade-offs in state funding  decisions. As a result, any additional resources needed for  implementing more costly promising approaches for TANF cash  assistance clients may compete with other allowable uses of TANF funds.  Officials with three programs we interviewed that exclusively use TANF  funds to implement elements of promising approaches noted that their  programs had been continuously funded for many years and suggested  that it would be difficult to find funding for the programs were they  beginning today.

Additionally, the federal work participation rate requirements do not  necessarily work as an incentive for states to implement certain promising  approaches, according to our interviews and prior work. Some experts  and HHS officials we interviewed suggested that limits on the amount of  time that certain job readiness and training activities may be counted   may discourage states from  toward a state’s work participation rate pursuing approaches that involve longer-term treatment or education. We  have previously reported the concerns of state and local TANF officials  that these limits do not allow sufficient time to address barriers to work for  clients who have been out of the workforce for an extended period of time  or to train clients for higher-wage employment that will prevent them from  needing assistance in the future.

Officials with 5 of the 10 programs we interviewed that were using  promising approaches also expressed concerns about the limits. For  example, officials with Ramsey County Minnesota’s treatment and  employment services program said the TANF work activities rules do not  provide enough flexibility for families coping with mental illness in that the  time limit on job search and job readiness assistance and the 20-hour  minimum for core work activities are not realistic for all. As a result,  officials said most clients in the program receive cash assistance through  a state program rather than through TANF. Yet, serving such clients  through a state program instead of TANF likely limits the program’s  replicabilty in other state or local TANF agencies, as not all states may be  willing to devote state funds for this purpose. Officials with Kentucky’s  Ready to Work program reported that the 12-month limit on counting  vocational educational training toward the work participation rate has  caused the program to rely more heavily on its work-study subsidized  employment component, which has increased the program’s cost.  Further, one official said that while the subsidized work-study component  is a critical program feature, the expectation that clients will work at least  20 hours a week once they have exhausted their allowable full-time  education may affect academic outcomes.

The work activity limits only apply to what states may count toward the  work participation rate and do not prevent states from allowing clients to  engage in these activities for longer periods of time. However, several  experts we interviewed explained that many state policies on activities  that are available to clients are shaped by the work participation rate  requirements. That is, some states may design their programs to provide  and support only those activities that count toward the work participation  rate, while other states also provide and support activities that do not  count toward the rate. In addition, we have previously found that states  have relied on a combination of factors allowed in law to reduce the  percentage of families they needed to engage in work to meet their work  participation rate requirements. According to the most recent data  available from fiscal year 2011, 23 states used these factors to reduce  their required work participation rate for all TANF families from 50 percent  to 0 percent. As a result, states may have less incentive to use promising  approaches to engage hard-to-employ individuals in work activities, as  they can meet their work participation rate requirements without engaging  these individuals. In 2013, we noted that the work participation rate is  complex and that any potential changes to the measure would likely have  a profound impact on state TANF programs.

Finally, interviews conducted for this report and our previous work  indicate that state and local TANF agencies have little incentive to test the  effectiveness of new approaches. While several program administrators  cited short-term or anecdotal evidence that their programs may contribute  to increases in employment and earnings, only 4 of the 10 programs had  undergone or were currently involved in a rigorous impact evaluation.

States are not required to conduct impact evaluations of their TANF  programs under federal TANF law, although these evaluations can  provide useful information on program effectiveness. A rigorous  evaluation impact study with a random assignment design allows for  comparison with a control group in order to distinguish the program’s  influence from other factors.

Officials with some of the programs that had not undergone rigorous  evaluations said they had not participated in these studies because of  concerns about administrative burden, the newness of the program, or  that a portion of their caseload would not receive services or count toward  the work participation rate. Local Minnesota FastTRAC contractors said  long-term follow ups with clients who had left the program would be  burdensome to staff, who need to focus on newer or existing participants’  needs. An official with the D.C. TANF program said it had not yet been  evaluated formally because the program had only recently been  redesigned. A Kentucky Ready to Work administrator said the program  has not been rigorously evaluated through a random assignment study.  The administrator said this was because the state TANF agency does not  want to deny services to anyone who is eligible as a result of being  assigned to a control group or miss an opportunity to contribute toward  the work participation rate. An administrator at one site that was  undergoing a rigorous impact evaluation said that because only half of  study participants would be selected for the program, recruitment for the  study was challenging.

We have previously found that although HHS has a strong tradition of  leading and supporting rigorous welfare research, there are fewer  incentives for states to evaluate their programs under TANF than existed  under the previous welfare program with its evaluation and funding  provisions. Indeed, although HHS maintains an active research agenda, TANF agency participation in some recent and ongoing HHS evaluations  has been limited. For example, none of the four sites in the recently- completed Enhanced Services for the Hard-to-Employ Demonstration and  Evaluation were TANF agencies. In addition, in two ongoing evaluations  of career pathways programs, participating sites consist primarily of  community colleges and workforce agencies. According to HHS, these  sites vary in the extent to which they serve TANF cash assistance  recipients. An HHS official we interviewed reported that engaging TANF  programs in evaluations of promising approaches is difficult because of  the administrative burden on the state or locality. Officials added that  HHS has no authority to require state agency participation in research  and evaluation and no dedicated funding to provide states or localities  incentives to participate. However, HHS officials also noted that often  entities beyond TANF agencies serve TANF cash assistance recipients  and research findings are still relevant for these partners. HHS has also  taken steps to share research findings with local TANF programs, welfare  researchers, and policymakers. For example, the agency has sponsored  an annual Welfare Research and Evaluation Conference to share  evaluations of welfare reform and formulate ways to incorporate these  findings in the design and implementation of programs since 1998. HHS  also makes research results available through presentations at other  conferences related to welfare and low-income issues, their agency  websites, and online announcements sent to subscribers.

While the 10 state and local programs we examined are making use of  some promising approaches for moving TANF recipients into employment  and increasing their earnings, incentives are lacking for large numbers of  state and local TANF agencies to adopt and test such approaches under  the structure of the TANF program. This suggests a loss of opportunity.  Data already suggest that state TANF programs currently engage  recipients in a relatively limited range of activities and that more TANF  recipients could be engaged in activities that are work-related. TANF’s  goals include ending needy families’ dependence on government benefits  by promoting work. However, the program’s block grant structure means  that many policy decisions are decentralized, and HHS has limited  authority in directing state programmatic choices. This tends to leave  innovation to individual localities and states. Yet other allowable uses of  TANF funds compete with the adoption of promising welfare-to-work  approaches. Further, limited participation by TANF agencies in HHS  evaluations may slow the development and adoption of new promising  approaches, leaving TANF without a continuous improvement process. In  announcing its intention to exercise waiver authority, HHS noted that the  purpose of its proposed waivers was to test alternative and innovative  strategies, policies, and procedures designed to improve employment  outcomes for needy families. However, as HHS officials told us, no state  has applied for a waiver since its announcement in 2012. While we are  not taking a position on whether HHS has authority to issue waivers, it is  clear that this strategy has not encouraged states to innovate and test  new approaches. We recognize that PRWORA limits HHS’s authority  over state program and funding choices and evaluations of state  programs. Yet, HHS, as the federal agency that oversees TANF, is  positioned to identify, suggest, and work in consultation with Congress on  potential changes that would address the lack of incentives for states to  adopt promising approaches. Absent federal action, adoption and  evaluation of promising approaches may continue to be limited to select  states and localities, leaving TANF recipients in other locations without  access to these promising approaches. In the meantime, at least one  promising approach—career pathways—appears to suffer from  misperceptions about whether activities under the career pathways  approach can be counted toward the work participation rate, or whether  the career pathways approach is allowable with TANF funds. Without  clarification that it is, indeed, allowable, TANF agencies may be  discouraged from attempting it.

To encourage broader adoption and evaluation of promising approaches  and address impediments to the use of the career pathways approach  among TANF agencies, we recommend that HHS should take the  following two actions:  In consultation with Congress, identify potential changes that would  address the lack of incentives for states and localities to adopt  promising approaches and then develop and submit a legislative  proposal outlining those changes.

Issue formal guidance to clarify how activities under the career  pathways approach can be countable for the purpose of the work  participation rate and that TANF funds may be used to finance the  career pathways approach.

We provided a draft of this report to HHS, the Department of Education,  and the Department of Labor. The Departments of Education and Labor  did not have comments. HHS provided written comments, reproduced in  appendix V, in which the agency generally concurred with our  recommendations. HHS also provided technical comments that we  incorporated, as appropriate.

HHS agreed with our recommendation that the agency consult with  Congress on ways to address the lack of incentives for states and  localities to adopt promising employment-focused approaches. HHS  noted that in the Administration’s Fiscal Year 2015 Budget Request, it  stated, “when Congress takes up reauthorization, the Administration will  be prepared to work with lawmakers to strengthen the program’s  effectiveness in accomplishing its goals. This effort should include using  performance indicators to drive program improvement and ensuring that  states have the flexibility to engage recipients in the most effective  activities to promote success in the workforce, including families with  serious barriers to employment.” The budget request also included a  legislative proposal to increase incentives for states to implement or  strengthen subsidized employment programs by creating a new initiative  funded by diverting existing TANF Contingency Funds to this new use.  We were aware of these points in HHS’s budget request and maintain  that HHS should develop more concrete proposals to address the lack of  incentives within the TANF program itself, and note that the agency need  not wait for Congress to take up reauthorization to do so. HHS also noted  that it has sponsored a large body of research that helps federal policy  makers understand the wide variety of services provided by state TANF  programs and provides credible information to state TANF decision- makers about possible innovative and effective approaches to serving  their clients. At the same time, the agency acknowledged that gaps  remain in the research on effective employment-focused approaches for  low-income families and noted that additional research is needed.

HHS also agreed with our recommendation that the agency issue formal  guidance to clarify how the career pathways approach can be used by  TANF agencies. HHS said that it will issue a formal Information  Memorandum on the implementation of career pathways approaches in  TANF, as part of the agency’s ongoing technical assistance efforts. It also  elaborated on the various ways it has promoted career pathways and  other employment-focused approaches in recent years, as we  acknowledged in the report. In addition to the need for guidance, HHS  said that the 12-month limit on counting vocational education training  toward the work participation rate is a constraint to the implementation of  career pathways models in TANF programs. However, as we note in our  report, states may allow TANF recipients to combine education with other  work activities that count toward the work participation rate. Better  clarification of this fact through formal guidance should help to address  state misperceptions that the time limit on counting vocational education  training prohibits the use of career pathways approaches.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretaries of Health  and Human Services, Education, and Labor, and interested congressional  committees. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please  contact me at (202) 512-7215 or brownke@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix VI.

Appendix I: Objectives, Scope, and Methodology

Our report (1) reviews some approaches that have been identified as  holding promise to engage TANF recipients in employment and increase  their earnings and examines ways in which selected states and localities  have used them, and (2) identifies factors that influence the use of these  and other promising approaches.

To first identify promising approaches, we reviewed research summaries  and syntheses of rigorous research on approaches for engaging TANF  recipients in employment and increasing their earnings. We primarily  focused on studies that used a random assignment (experimental)  research design. This type of design compares the outcomes for groups  that were randomly assigned either to the treatment or to a  nonparticipating control group before the intervention, in an effort to  control for any systematic difference between the groups that could  account for a difference in their outcomes. A difference in these groups’  outcomes is believed to represent the program’s impact. To help compile  the research we reviewed, we conducted a literature search of 12  research databases, including EconLit, ProQuest Research Library, and  Social Services Abstracts, using search terms such as “welfare to work.”  Our intent was not to describe all possible promising approaches, but  rather to identify some key approaches.

We considered approaches to be “promising” if a rigorous evaluation had  determined that a program using this approach contributed to increased  employment, income, or earnings, or reduced welfare receipt. Not all  programs using the approach had to yield positive results in order for the  approach to be considered promising. We realize that there is variation in  how these approaches are implemented. Although a comprehensive  career pathways program has not yet been rigorously evaluated, we  included this approach because it was based on a rigorous evaluation of  sector-based career training and lessons from other prior rigorous  evaluations.

We sought input on our list of approaches from researchers with MDRC,  a nonprofit, nonpartisan education and social policy research  organization. We also validated our list of approaches through the  process of seeking expert nominations for programs currently using these  approaches. For example, based on our review of the literature, we  initially identified earnings supplements—the practice of supplementing  low-wage workers’ earnings with incentives to encourage employment  and employment retention—as a possible promising approach. However,  because we did not find any current examples of this approach being  used to serve TANF cash assistance recipients, we did not include it in  our final list of promising approaches.

To identify state and local programs that are currently using these  approaches to serve TANF cash assistance recipients, we interviewed  cognizant researchers; officials from the Department of Health and  Human Services (HHS), the Department of Labor, and the Department of  Education; and others with TANF expertise. We selected 12 experts  based on their knowledge of the research and efforts under way at the  state and local level, as well as to reflect a range of perspectives on  welfare-to-work issues. We identified them through our literature review  and through referrals from other experts. We asked the experts and  agency officials to identify state and local programs that are currently  using the promising approaches we identified through our literature  review to serve TANF cash assistance recipients. We asked the experts  to indicate the specific reasons why they recommended these programs  and whether evaluation results or outcome data were available for the  programs; however, these programs have generally not been rigorously  evaluated.

From the programs identified by experts, we selected 10 programs to  profile (located in 6 states—California, Kentucky, Minnesota, New York,  Utah, and Washington—and the District of Columbia) to reflect diversity in  approaches used, economic conditions, demographics, and geographic  regions. We also considered how the program was connected to TANF  and whether the program was in an area where TANF is state- or county-  We did not report on work participation rates for the states  administered.in which these programs are operated because some are state programs  and others are locally administered. Work participation rates are  calculated only on the state level by HHS, based on data reported by the  states, and generally available after the end of the fiscal year. We  conducted in-depth interviews, by phone and through four site visits, with  program administrators and state and local TANF officials to learn about  key program features that help increase employment and earnings. For 3  programs, we also interviewed local contractors. We obtained views from  experts; federal, state, and local officials; and program administrators on  factors that facilitate the use of promising approaches and that could  broaden their use. We assessed information and communication HHS  provides to states related to promising approaches against federal  internal control standards.

We obtained budget, performance, and other program data for the  programs we selected, as well as HHS administrative data on states’  engagement of TANF recipients in prescribed work activities. We  assessed the reliability of these data by reviewing related documentation  and interviewing knowledgeable officials and determined they were  sufficiently reliable for providing contextual information on these programs  and describing work participation trends, respectively. We also reviewed  relevant GAO, HHS Office of Inspector General, and HHS reports, as well  as relevant federal laws, regulations, and guidance.

We conducted this performance audit from January 2014 to November  2014 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Appendix II: Categories of Federal Work Activities and Limitations on Counting Time in Those Activities

In meeting the 30-hour average weekly requirement, individuals must  spend at least 20 of the hours in certain activities (referred to as core  activities). Any additional hours needed to meet the requirement can  come from non-core or core activities.

Appendix III: Selected Recent and Ongoing Department of Health and Human Services- Funded Evaluations

Employment Retention and Advancement Project (ERA): This study  ran from 1998 to 2011. Under the study, Health and Human Services  issued planning grants to 13 states to develop new programs. The goal  was to test strategies for helping employed individuals keep their jobs and  advance in the workforce. Only 3 of the programs were found to increase  employment retention and advancement: the Texas sites (Corpus Christi  and Fort Worth), Chicago, and Riverside PASS ERA programs. An ERA  report was published in April 2010, “The Employment Retention and  Advancement Project: How Effective Are Different Approaches Aiming to  Increase Employment Retention and Advancement? Final Impacts for  Twelve Models,” which can be viewed at:  http://www.acf.hhs.gov/programs/opre/resource/the-employment- retention-and-advancement-project-how-effective-are. Among the  participating sites, 8 were led by TANF agencies at either the state or  local level. The Texas ERA program offered monthly stipends of $200 to  former TANF recipients working at least 30 hours per week. The Chicago  program was a work-focused advancement program, offering targeted job  search assistance and help indentifying and accessing career ladders.  These services were provided to participants by staff in a private, for- profit firm, and TANF recipients were required to have regular contact  with program staff to continue to receive TANF benefits. In contrast, the  Riverside PASS ERA program provided voluntary, individualized retention  and advancement services provided primarily by three community-based  organizations and community colleges. Each of these programs targeted  a specific population’s service needs.

Enhanced Services for Hard-to-Employ Demonstrations and  Evaluations: This demonstration tested several strategies for helping  hard-to-employ parents find and sustain employment. One of the four  sites in the study included TANF participants: the Transitional Work  Corporation in Philadelphia conducted a subsidized employment  demonstration exclusively for TANF clients. Other sites included  programs in Kansas, Missouri, New York, Pennsylvania, and Rhode  Island. This 10-year evaluation was completed in 2012. Findings from this  study were used to influence the design of two new federal subsidized  employment initiatives. Final evaluation reports can be viewed at:  http://www.mdrc.org/publication/what-strategies-work-hard-employ.

Temporary Assistance for Needy Families/ Supplemental Security  Income Disability Transition Project (TSDTP): This study is an effort to  identify the extent of overlap between TANF and SSI programs and  populations and develop pilot programs aimed to improve a variety of  outcomes for individuals with disabilities and work-limiting barriers to  employment. The study is a collaboration between ACF and the Social  Security Administration through a contract with MDRC. This study is  complete. Reports were published throughout 2013 and 2014. TSDTP  included Ramsey County, Minnesota—a program highlighted in this GAO  report—which participated in a pilot-phase experiment to increase  employment among TANF participants with work limitations and  disabilities. Los Angeles County, California and Muskegon County,  Michigan were also involved in the study, implementing pilot tests of  approaches to serving individuals with disabilities either through the  provision of services to TANF participants with work-limiting barriers,  streamlining the Supplemental Security Income application process, or  improving coordination between the two systems.

Behavioral Innovations to Increase Self-Sufficiency (BIAS) study:  Launched in 2010, BIAS is the first major opportunity to apply a  behavioral economics lens to programs that serve poor families in the  United States. The goal of the study is to learn how tools from behavioral  science can improve the well-being of low-income children, adults and  families. The study is being conducted by OPRE and MDRC in  partnership with behavioral experts. One site within the study is the Los  Angeles county TANF agency. Results are planned for rolling release in  2014 and 2015. Two reports on BIAS were issued in April and August of  2014.

Health Professions Opportunities Grant (HPOG): HPOG was  established by the Patient Protection and Affordable Care Act with the  goal of providing training programs in high-demand healthcare  professions to TANF recipients and other low-income individuals. In 2010,  the Administration for Children and Families (ACF) awarded five-year  grants to 32 grantees in 23 states. The program includes post-secondary  educational institutions, workforce investment boards, state and local  government agencies, and community-based organizations. Two of the  27 non-tribal HPOG grantees are Departments of Human or Social  Services agencies and also administer the TANF program. One of the five  tribal sites also administers the Tribal TANF program. However, a number  of HPOG grantees also serve as the employment services providers for  TANF agencies. ACF’s Office of Planning, Research, and Evaluation  (OPRE) is evaluating HPOG demonstration projects. An interim analysis  of the impacts of HPOG is expected in June 2016.

Innovative Strategies for Increasing Self-Sufficient Project: The  Innovative Strategies for Increasing Self-Sufficiency evaluation began in  2007 as a multi-site, random-assignment evaluation of promising  strategies for increasing employment and self-sufficiency among low- income families. It is under the direction of ACF. This study focuses on  the career pathways approach as the main intervention. One of the nine  ISIS sites—Seattle/King County Workforce Development Corporation—is  a contracted employment services provider for a local TANF agency and  serves both TANF and non-TANF clients. Other sites in the study include:  Des Moines Area Community College, I-BEST in Washington State,  Instituto del Progreso Latino, Madison Area Technical College, Pima  Community College, San Diego Workforce Partnership, and Valley  Initiative for Development and Advancement.

Job Search Assistance (JSA) Strategies: This study was launched by  OPRE in fall 2013 and features a multi-site, random-assignment  evaluation to measure the relative impact of specific job search services  offered by TANF programs on short-term labor market outcomes such as  earnings and time to employment. The JSA evaluation aims (1) to provide  information about the relative impacts of various JSA services and the  manner in which agencies provide them, and (2) to provide actionable  and policy-relevant feedback to the TANF field, including federal TANF  policymakers, state and local TANF administrators, and frontline  caseworkers. Site recruitment is ongoing, and initial findings could be  reported as early as the end of 2016.

Subsidized and Transitional Employment Demonstration (STED):  The STED study was launched by ACF in 2010 with the goal of  demonstrating and evaluating the next generation of subsidized  employment models for critical low-income populations. The project is led  by MDRC, under contract with ACF, and examines strategies for  providing counter-cyclical employment and for successfully transitioning  individuals from short-term subsidized employment to unsubsidized  employment. STED is being conducted in coordination with the  Department of Labor’s Enhanced Transitional Jobs Demonstration  Project. Random assignment began at the first sites in early 2012 and  continued through late 2013. Of the seven STED sites, three are TANF  agency-operated including Los Angeles, San Francisco, and Minnesota.  The evaluation is scheduled to run through 2017.

Bloom, Dan. Transitional Jobs: Background, Program Models, and  Evaluation Evidence. Prepared by MDRC for the Department of Health  and Human Services. Washington, D.C.: 2010.  ———, Cynthia Miller, and Gilda Azurdia. Results from the Personal  Roads to Individual Development and Employment (PRIDE) Program in  New York City. MDRC. July 2007.  ———, Pamela J. Loprest, and Sheila R. Zedlewski. TANF Recipients  with Barriers to Employment. Washington. D.C.: Urban Institute, August  2011.

Derr, Michelle and LaDonna Pavetti. Assisting TANF Recipients Living  with Disabilities to Obtain and Maintain Employment: Creating Work  Opportunities. Prepared by Mathematica Policy Research, Inc. for the  U.S. Department of Health and Human Services. Washington, D.C.:  February 2008.

Greenberg, David H., Victoria Deitch, and Gayle Hamilton. “A Synthesis  of Random Assignment Benefit-Cost Studies of Welfare-to-Work  Programs.”Journal of Benefit-Cost Analysis, vol. 1, issue 1, article 3  (2010).

Gueron, Judith M. and Gayle Hamilton. The Role of Education and  Training in Welfare Reform. The Brookings Institution, Policy Brief no. 20  (April 2002).

Hamilton, Gayle. Improving Employment and Earnings for TANF  Recipients. Prepared by the Urban Institute for the Department of Health  and Human Services. Washington, D.C.: March 2012.  ———. Moving People from Welfare to Work: Lessons from the National  Evaluation of Welfare-to-Work Strategies. Prepared by MDRC for the  Department of Health and Human Services and Department of Education.  Washington, D.C.: 2002.

Hendra, Richard, Keri-Nicole Dillman, Gayle Hamilton, Erika Lundquist,  Karin Martinson, and Melissa Wavelet. The Employment Advancement  Project: How Effective Are Different Approaches Aiming to Increase  Employment Retention and Advancement? Final Impacts for Twelve  Models. Prepared by MDRC for the Department of Health and Human  Services. Washington, D.C.: April 2010.

Kirby, Gretchen, Heather Hill, LaDonna Pavetti, Jon Jacobson, Michelle  Derr, and Pamela Winston. Transitional Jobs: Stepping Stones to  Unsubsidized Employment. Washington, D.C.: Mathematica Policy  Research, Inc., April 2002.

Maguire, Sheila, Joshua Freely, Carol Clymer, Maureen Conway, and  Deena Schwartz. Tuning In to Local Labor Markets: Findings from the  Sectoral Employment Impact Study. Philadelphia, PA: Public/Private  Ventures, 2010.

Roder, Anne, and Mark Elliott. Stimulating Opportunity: An Evaluation of  ARRA-Funded Subsidized Employment Programs. Economic Mobility  Corporation, New York, NY: September 2013.

Werner, Alan, Catherine Dun Rappaport, Jennifer Bagnell Stuart, and  Jennifer Lewis. Literature Review: Career Pathways Programs, OPRE  Report #2013-24, Office of Planning, Research and Evaluation,  Administration for Children and Families, U.S. Department of Health and  Human Services (Washington, D.C.: June 24, 2013).

Appendix V: Agency Comments from the Department of Health and Human Services

Appendix VI: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Gale Harris (Assistant Director),  Kristen Jones (Analyst-in-Charge), Holly Hobbs, and Michael Pahr made  significant contributions to all aspects of this report. Also contributing to  this report were James Bennett, Sue Bernstein, Ed Bodine, Alexander  Galuten, Ashley McCall, Sheila McCoy, Almeta Spencer, and Walter  Vance.

Question: What approaches did the states GAO examined use to help TANF recipients gain employment?

Answer: The 10 state and local programs GAO examined used various promising approaches to help Temporary Assistance for Needy Families (TANF) cash assistance recipients gain employment by meeting a range of participant needs. These approaches included the use of subsidized employment, employment alongside treatment for a health condition, and training for high-demand jobs.

Question: What approach does San Francisco use?

Answer: For example, for individuals in need of additional work experience, San Francisco's TANF program has provided subsidies to employers to place participants in temporary, wage-paying jobs.

Question: What approach does New York City use?

Answer: To help individuals with mental and physical disabilities and substance abuse problems, nonprofit contractors for New York City's TANF program have provided individualized assessment and treatment, often combined with employment.

Question: What approach do Minnesota and Washington use?

Answer: To prepare individuals with various skill levels for high-demand jobs, Minnesota and Washington have used a career pathways approach of combining occupation-specific training with basic skills education and support services.

Question: What misperception of TANF rules did officials discover?

Answer: However, experts told us that some states have a misperception that this approach is not allowable under TANF rules, even though the Departments of Labor, Education, and Health and Human Services (HHS) support its use.

Question: How did HHS respond to this?

Answer: HHS told us that states could still meet program requirements while using this approach, but the agency has not issued formal guidance clarifying this.

Question: How does this contrast with internal control standards?

Answer: Internal control standards for the federal government state that information should be communicated to managers in a form that enables them to carry out their responsibilities.

Question: What issues might this misperception cause?

Answer: As a result of these misperceptions, the career pathways approach may be underused by TANF agencies and TANF recipients could miss out on the potential benefits of this approach.

Selected State and Local Programs Reflect Elements of Four Promising Approaches

Research Indicates Several Promising Approaches for Increasing Employment and Earnings

All Selected Programs Focus on Employment while Using Various Elements of the Approaches to Meet the Needs of Their Target Populations

Selected Programs Emphasize Work Participation Rate to Varying Degrees

Expertise and Dedicated Funds Facilitated the Use of Promising Approaches, but the TANF Program Lacks Incentives for Wider Adoption or Testing

TANF Lacks Incentives for the Broader Adoption and Testing of Promising Approaches

Question: What does the federal TANF program lack?

Answer: Expertise and dedicated funds facilitated use of these promising approaches, but the federal TANF program, itself, lacks incentives for their wider adoption.

Question: What did the programs GAO examined benefit from?

Answer: Of the 10 programs GAO examined, 9 drew on the expertise of partner organizations—including community college systems, workforce agencies, and nonprofits. The programs also benefitted from decisions by state and local policymakers to dedicate funds—including TANF funds—for the selected programs, according to officials.

Question: Why are incentives for such programs lacking?

Answer: However, incentives for large numbers of state and local TANF agencies to adopt and test promising approaches are lacking under the structure of the TANF program for several reasons. First, many program design and funding choices are left to the states, and GAO's prior work has shown that state use of TANF funds for more costly welfare-to-work approaches can compete with other allowable uses of TANF funds. Second, TANF's main performance measure does not necessarily encourage agencies to use certain approaches that incorporate longer-term education and training or treatment services, although states are not prohibited from doing so. Third, little incentive exists for TANF agencies to evaluate their programs.

Question: What has HHS done to address these issues?

Answer: HHS's authority over many aspects of TANF is limited and it has not proposed legislative changes to address these areas.

Question: What could HHS do to address these issues?

Answer: Yet, because HHS oversees TANF, it is positioned to identify, suggest, and work in consultation with Congress on potential changes that would better address the lack of incentives for the use of promising approaches by states and to better meet the TANF goal of increasing employment.

Question: How might HHS's inactivity limit the TANF's success?

Answer: Without federal action, adoption and evaluation of promising approaches may continue to be limited to select states and localities, leaving TANF recipients in other locations without access to these promising approaches.

The Selected Programs Benefitted from Partner Expertise and Dedicated Funding

Question: What does the TANF block grant require?

Answer: The TANF block grant requires states to engage a certain percentage of work-eligible cash assistance recipients in specified work-related activities, such as job search assistance and training.

Question: How does data on TANF recipients suggest that this is inefficient?

Answer: Yet, data suggest that more TANF recipients could receive assistance that would help them gain employment and reduce their dependence.

Question: What was GAO asked to provide examples of?

Answer: GAO was asked to provide examples of what some states are doing to achieve these goals and how to expand these efforts.

Background
TANF and the Work Participation Rate

Background
Hard-to-Employ TANF Recipients

Question: What does this report review?

Answer: This report (1) reviews some approaches that have been identified as holding promise for engaging TANF recipients in employment and increasing their earnings and examines ways in which selected states and localities have used them, and (2) identifies factors that influence their use.

Question: How did GAO identify promising approaches?

Answer: To first identify promising approaches, GAO reviewed summaries and syntheses of rigorous research on approaches that increase employment and earnings, and profiled 10 state and local programs that were nominated by experts familiar with welfare research and state and local efforts, and that were selected to represent a range of approaches.

Question: What did GAO do to collect data?

Answer: GAO also reviewed relevant federal laws, regulations, and agency guidance, and interviewed agency officials and experts with a range of views.

Appendix I: Objectives, Scope, and Methodology