Federal Rule Seen Snarling Welfare-Education Efforts

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As states scramble to set in motion education and job-training services required by Oct. 1 under the federal welfare-reform law, they are encountering what many describe as an unforeseen obstacle: a stipulation that the funds be channeled through state welfare agencies.

"The magnitude of the problem is just beginning to be realized by states," said Judith Thorman, deputy director of the Washington office of the state of Illinois.

The Job Opportunities and Basic Skills Training program, created under the Family Support Act enacted by the Congress in 1988, is designed to help welfare recipients become self-sufficient by offering education, training, and other support services.

The education services--which must include high-school and General Educational Development certificate programs, remedial education, and instruction for those lacking English proficiency--are considered essential to boosting clients' employability and earnings potential.

The law requires that states establish jobs programs by Oct. 1 and offer them statewide by 1992.

Many states are already operating jobs-like programs or have appropriated funds to state education or training departments to launch or expand their efforts.

But officials in several states say they fear that their plans could be undercut by a stipulation by the U.S. Health and Human Services Department that, to qualify for federal matching funds, states must ensure that state jobs dollars are controlled by the welfare-administering agency.

In many cases, at least part of the jobs dollars have already been appropriated to education, labor, or other agencies charged with training activities. In such cases, HHS officials have suggested, these funds must be physically transferred to the state welfare agency and then redisbursed in order to draw federal matching funds.

Such transfers, state welfare and education officials contend, can be cumbersome and complicated, and, in some instances, conflict with state law or require additional legislative action.

Just as troubling, these officials maintain, is the fact that the HHS rule runs counter to the welfare-reform law's goal of promoting interagency collaboration in serving disadvantaged families.

"One of the really progressive things about the legislation was that it called for bringing together the resources of several different branches of government in a concerted effort" to stem welfare dependency, said Jerry W. Friedman, deputy secretary of the Pennsylvania Department of Public Welfare.

Added Janet Levy, director of the Joining Forces project of the Council of Chief State School Officers, "Not only is this a costly and burdensome administrative barrier, but it counters the message of full partnerships between state education and welfare agencies."

While the welfare-reform law has elicited "a strong call" for such coordination from national organizations and state officials, she maintained, "now we have the federal government standing in the way of the collaboration we are all willing to advance."

Howard Rolston, an associate administrator for program evaluation in HHS's Family Support Administration, said last week that the department was "alert to some of the concerns" raised by states and that its policy on the issue was "not entirely settled."

"I understand that it's being talked about," noted Ms. Levy, whose Joining Forces project promotes cooperation between schools and social-service providers in serving at-risk children and families. "But every day that we wait is costing states money and having a serious impact on our ability to implement the program."

Only 'Hard Cash' Matches?

The Family Support Act states that a single state agency--the welfare agency--is to be responsible for the jobs program, a point that does not appear to be under dispute.

"I don't think there's disagreement on who has responsibility for the program; it's clearly the [welfare] agency," said Rick Ferreira, a policy associate with the American Public Welfare Association.

Instead, the controversy centers on a regulation published by HHS in October 1989.

The rule states that, in order to qualify for federal matching funds, a state's jobs expenditures must be "appropriated directly to the state or local [welfare] agency, or transferred from another public agency ... to the state or local agency and [be] under its administrative control."

While the rule does not preclude joint planning among agencies implementing jobs services, Mr. Fer observed, it could impede interagency collaboration in "leveraging the necessary state and local public and private resources to match the federal financial participation."

Several state welfare and education officials said last week that they have in place or are willing to craft interagency agreements allowing welfare agencies to authorize that other departments devote designated funds to jobs programs.

Such arrangements, these officials contend, would satisfy the intent of the law by allowing welfare agencies to retain administrative control.

Mr. Rolston of the Family Support Administration said last week that there was "still some flexibility in the exact nature of the arrangements" that would satisfy its regulation.

But HHS has indicated in some of its correspondence with states that the funds must be under the physical control of the welfare agency.

"What has been a concern is that the federal government is unwilling to use a set-aside amount of our state funds that we would dedicate to serving this particular population," said Wilkes A. Wilcox, director of adult education and Job Training Partnership Act programs for the West Virginia Department of Education.

In response to a letter from Senator Robert C. Byrd, Democrat of West Virginia, seeking clarification of HHS's position, "we got back a letter saying that the present interpretation is that it would have to be a hard cash match," Mr. Wilcox noted.

Claudia Langguth, deputy commissioner of the Texas Department of Human Services, also noted that, when the federal regulation was first proposed, an inquiry from several agencies in her state that have a stake in welfare reform drew a similar response from HHS

Consistent With Intent?

Several states and national associations, including the American Public Welfare Association and the Council of Chief State School Officers, say they hope to persuade HHS to reconsider its interpretation of the jobs law.

While it has not taken a formal stand, the National Governors' Association is also considering getting involved, "since it is becoming a major state issue," said Linda McCart, a senior policy analyst.

HHS officials maintain, however, that their regulatory interpretation is consistent with Congressional intent.

"After considerable debate" over proposals to give states more flexibility in the administration of jobs programs during Congressional deliberations, Mr. Rolston said, "the consensus was that, if jobs was to be an important part of welfare reform, the welfare system needed to be in charge."

"Part of that relates to having the final authority for how funds are expended," he said.

"We think it's really important that the [state welfare] agency coordinate with services that exist" in education and other agencies, Mr. Rolston added. "But it is still a question of who is responsible for the program and the funds spent under the program."

He emphasized, however, that federal officials "have and will continue to meet with all sides" on the issue.

'A Serious Setback'

Two states--Pennsylvania and Maryland--have already received notification from HHS indicating that they will have to revise their jobs plans to comply with the regulation and to draw matching funds.

As a result, Pennsylvania has put on hold a $2-million program that was to be jointly administered by the departments of education and public welfare. The program would have offered jobs services for custodial parents under age 20.

The program was to be paid for by local school districts, which "cannot logistically transfer money back to the state welfare agency," noted Gary Ledebur, director of the bureau of basic-education support services for the state education department.

For HHS "to advise us at the 13th hour ... that they are strictly interpreting this very vague regulation is a serious setback," said Mr. Friedman of the public-welfare department, who noted that the state's welfare-reform strategy involved extensive interagency collaboration.

The HHS rule, he added, is "a serious setback to the intent of the jobs program and to the notion of welfare reform in general."

"We intend to be as aggressive as we can in having a satisfactory resolution to this issue," Mr. Friedman asserted.

The Maryland Department of Human Resources this month also re notice that its welfare-reform program, Project Independence, would require revision.

State officials said last week that they were seeking a budget amendment to allow funds to be transferred from the Department of Employment and Economic Development, the chief agency overseeing job training, to human resources.

But Maryland officials will keep pressing HHS to change its stand.

"We're not letting the issue" said Human Resources Secretary Carolyn Colvin.

While the immediate issue is one of compliance, "there is a larger issue of how government works," said Marion W. Pines, a senior fellow at the Johns Hopkins University's Institute for Policy Studies, vice chairman of the Governor's Employment and Training Council, and chairman of a Project Independence management team that involved several state agencies.

The HHS ruling sends a signal that, "when you try to build an integrated delivery system, you find yourself stepping all over HHS's administrative turf," she said.

"For states just getting off the ground" with welfare reform, she added, "this will really chill collaboration."

'Labor Intensive' Route

While other states have apparently not faced an immediate threat to their programs, many share similar concerns.

Illinois, for example, stands to lose $9.5 million in funds that the legislature appropriated to the state board of education to provide education, literacy, and vocational training for public-aid clients.

The state board has implemented such services under a contract with the Department of Public Aid for a number of years, noted Dan Miller, public-assistance coordinator for the board.

But an actual transfer of funds, he said, would be barred by state statute, which does not allow the board of education to disburse funds to entities other than local school districts, superintendents, and community colleges.

"Our position is that the federal government is interpreting the law in a manner that is not consistent with or supported by the Family Support Act," said Jeannette Tamayo, an administrator of employment and training services in the state's public-aid department.

West Virginia officials say they were able to come up with an additional $262,000 they needed to draw federal matching aid for jobs only after the state legislature, in a special session unrelated to the welfare controversy, appropriated $500,000 for adult basic education.

"If it hadn't been for that, we wouldn't have had [the funds], and there weren't too many states that had special sessions this summer," noted Mr. Wilcox of the state education department.

Officials in some states say that they have worked out funding transfers they feel will satisfy HHS, but that the process was cumbersome and "labor intensive."

In New York, where the commissioners of education and social services signed an agreement three years ago to spur interagency collaboration, "we would have much preferred to do this with a memoranda of understanding with social services to dedicate a certain amount of our money to their purposes," said Garrett W. Murphy, director of continuing education for the state education department.

Other states, such as California and Ohio, have not arranged funding transfers, in the belief that the strength of existing interagency agreements will satisfy HHS.

Ultimate approval "will turn on the nature of these agreements," acknowledged Jerry Friedman, legislative counsel for the Ohio Department of Human Services.

"If it does become an issue," observed Gerald Kilbert, an assistant superintendent in the California education department, "the positive relationship we've had between agencies" will ease the way to a resolution.

'Scramble for Resources'

Maura Cullen, a special assistant in Michigan's Washington office, noted that, while state law does not prohibit transferring funds from education to welfare, "we don't currently have any mechanism in place to transfer or assure monitoring of the distribution of funds to local school districts."

She added that the HHS rule could serve as "a disincentive to providing appropriate educational services for jobs participants."

"Training means education, and the appropriate place for that money to emanate from is education," she said.

In many cases, state welfare officials also share that view.

"Our position is that, as long as we have an audit trail that allows us to document and verify through our contracts that the money is being spent appropriately, we feel that is specific enough," said Mr. Friedman of the public-welfare department in Pennsylvania.

"It is bureaucratically cumbersome, and we think an unnecessary waste of our resources to establish a new accounting procedure," he added.

Mr. Friedman of Ohio also voiced concern that a federal regulation limiting state agencies' flexibility could "cause a further scramble for limited dollars" at a time when "state budgets are not going to be flush with extra revenue."

"My concern is that the ultimate beneficiaries of these programs seeking job training may end up the losers," he said.

Vol. 10, Issue 4, Page 1, 18

Published in Print: September 26, 1990, as Federal Rule Seen Snarling Welfare-Education Efforts
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