Kentucky's Welfare Reform Bill is a Transformative Positive Step
House Bill 3 (“HB 3”) is a common-sense measure which seeks to target the administration of Kentucky’s welfare system to those services that Kentuckians need most, such as child care, work supports, and job training. States across the nation are effectively using federal funds to more effectively improve the lives and upward mobility of their constituents, and the passage of HB 3 will usher Kentuckians toward a bright and hopeful future.
In 1935, President Franklin D. Roosevelt stated that, “The lessons of history show conclusively that continued dependency upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber.” Indeed, as Economics Professor Jeffrey Dorfman has outlined in Forbes Magazine, our current welfare system (comprised of approximately 100 different federal programs, only three of which are addressed by HB 3) suffers three fatal shortcomings, all of which prevent welfare from achieving their oft-stated goal of providing recipients with the opportunity for a better future. Those shortcomings, simply stated, are that government welfare programs in their current form (1) prefer current consumption to future self-sufficiency (or giving a man fish rather than teaching him to fish himself), (2) cause financial fragility by forcing recipients to run through the vast majority of their assets prior to receiving benefits, and (3) penalizing recipients through high effective marginal tax rates as they attempt to escape poverty and earn higher incomes.
Kentucky, through HB 3, encounters an opportunity to overcome the traditional welfare failings outlined above and improve the administration of such programs here on the ground. Specifically, HB 3 seeks to:
1. Focus TANF Funds to Support, Rather Than Stifle, Recipients
Notably, Kentucky is one of only two states in the nation that devoted the majority of its TANF funds to basic assistance (i.e. cash benefits) in 2017. Pegasus conducted a thorough review of each state’s use of TANF dollars and found that the majority of states distribute TANF funds among such uses as child care, child welfare, work training, and support services, with only a small minority of most states’ funds going to basic cash assistance. HB 3 would similarly split this distribution by providing 25% of program funds to work, education, and training programs; 25% to work and supportive services; 25% to child care needed to help many low-income parents establish and maintain employment; 15% to basic assistance; 10% to short-term assistance; and 5% to program maintenance. The more tailored use of TANF funds would not remove such funds from low-income recipients; they would more effectively serve such recipients and lift them from the low-income status that traditional basic assistance merely maintains. Importantly, 25% of TANF funds would continue to be used for short-term or long-term cash benefits for those who need them most.
TANF was created through the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 [emphasis added] as part of federal effort to “end welfare as we know it”. So far in its implementation, Kentucky has largely failed to fulfill the central mission of the federal program. As American Enterprise Institute (“AEI”) Resident Fellow Matt Weidlinger has added, HB 3 is…
consistent with the comprehensive five-year TANF reauthorization bill approved by the U.S. House Ways and Means Committee in May 2018. That bill called for more universal engagement of adults on welfare in work and training and other productive activities while receiving benefits, and also proposed holding states accountable for their success in assisting able-bodied adults in leaving welfare as a result of entering, remaining, and advancing in work. Those principles remain a key part of the reauthorization discussion still ongoing in Washington, DC. Work and the income that it provides families are the only long-run solution to poverty, and you are to be commended for taking steps to improve the work-supporting effects of the TANF program in Kentucky. Low-income adults and their families will directly benefit. And taxpayer confidence that the TANF program promotes work and self-sufficiency, instead of prolonged welfare receipt, will be strengthened as well.
2. Transitions Able-Bodied, Working-Age Adult SNAP and Medicaid Recipients to Workforce
HB 3 codifies community engagement and cost-sharing requirements for working-age, able-bodied Medicaid participants to offer each participant the ability to customize their healthcare path, leading to better health, civic engagement, increased employability, and improved self-sustainability over time. Rather than restrict access to healthcare coverage, these requirements would grant Medicaid beneficiaries the opportunity to utilize the Commonwealth’s resources, such as its Kentucky Career Centers, to participate in job training and educational activities and gain access to the private insurance market when they are ready. Civic engagement such as volunteer work and caregiving may also satisfy a beneficiary’s community engagement requirements, improving a participant’s social determinants of health.
The proposed legislation would also require working-age, able-bodied parents of children from ages six to 17 who partake in the SNAP program to participate in community engagement activities such as work, job training, education, or volunteering each month. Such community engagement by parents models healthy work behavior for their children, promotes employment and higher family incomes, and works to end the cycle of generational dependency. While child care may ordinarily be an issue for such parents to participate in community engagement requirements, only parents of children over six years of age are subject to the requirements, and pursuant to HB 3, a quarter of federal TANF funds distributed to Kentucky would be allocated to child care for low-income families.
3. Prevents Program Fraud and Ensures that SNAP Benefits are Used for Intended Purpose
In FY16, Kentucky’s state share of administrative costs to support the Supplemental Nutrition Assistance Program (“SNAP”) exceeded $60 million. In the same fiscal year, Kentucky completed 408 positive post-certification investigations, totaling over $2.3 million in identified ‘fraud dollars’. Matt Weidlinger, who serves as an American Enterprise Institute (“AEI”) Resident Fellow, has additionally stated that SNAP error rates exceeded six percent in 2017 alone. When SNAP dollars are spent fraudulently, they (1) are taken from their intended purpose: to buy food for low-income individuals to prevent hunger; and (2) are used for other unauthorized purposes which may work to the detriment of the very population that SNAP is intended to serve, such as secondary market sales.
4. Identifies Need for and Encourages Substance Abuse Treatment Among Recipients
Given Kentucky’s rank among the top ten states in the nation for opioid-related overdose deaths (nearly double the average rate), our Commonwealth cannot waste any opportunity to identify and encourage individuals needing substance abuse treatment. HB 3 seeks to require substance abuse testing only for those individuals with a felony or misdemeanor history of substance abuse, and upon a positive test, provides a grace period schedule during which a SNAP participant will continue to receive benefits and be provided with a list of licensed substance abuse treatment providers available in his or her area. While the SNAP participant is required to pay for the upfront cost of the drug screen, a negative drug screen will be fully reimbursed pursuant to HB 3 through an increased initial SNAP benefit.
Notably, HB 3 mandates that no dependent children will be affected by a parent or guardian’s positive drug screen under this SNAP requirement; a parent or guardian may mitigate a positive drug screen by designating another appropriate individual to receive benefits on behalf of a minor child or children.
SNAP participants identified as fighting substance use have the basic right and human dignity to be referred to treatment by our Commonwealth when they need it, and such data is currently left uncollected and unaddressed by our state welfare system. The administration of such a program is a small price to save the life of even one Kentuckian.
Anne-Tyler is a Member at McBrayer Law Firm and Senior Fellow of Health Care Policy at Pegasus Institute. She has previously served as Senior Policy Advisor, Deputy General Counsel, and healthcare lead for the Kentucky House of Representatives; Deputy Commissioner for the Kentucky Department for Medicaid Services; and finally as Senior Advisor to the Secretary of the Kentucky Cabinet for Health and Family Services.