Wisconsin's Welfare Experiment Fails To The Tune Of $3.3 Billions

Many people ask me how I can be conservative and still be a social worker. My usual answer is that I'm for the most cost effective solution whether it be from a liberal camp or a conservative. I believe if you invest in preventative measures you will inevitably save money in the long run. Spending money on the right kind of social programs is more conservative than attempting to demolish the middle class and build barriers between the rich and poor, which in the end cost our society in both material capital and well human capital. I'm a conservative social worker because I believe that all businesses need a proper business model to be framed within, especially since you are dealing with peoples tax dollars. Outcome measures can work with social services and again it will save the average tax payer in the long run. I believe part of the contempt leveled at social workers has come from the valid criticism that as an industry we have spent tax dollars like drunken sailors on programs with no system of accountability. So long as Democrats were in power the well would never run dry. However, the answer is not to swing the pendulum so far back that we completely dismatle the New Deal and revert to the days of Upton Sinclair. As with all good things, the truth is in the middle of compassion with responsible economic sense.

Social service reforms are still in an experimental phase. Much of the focus is on getting people out to work and time limiting any service the average impoverished American might qualify for. The following press release refers to just one experimental reform that has been an unmitigated disaster:

WI Legislative Audit of W2 Welfare Reform Finds:

o 81% Of Moms "Graduating" From W2 Earn Well Below-Poverty Wages

o 42% of Employment Secured by Moms under W2 are Temporary Jobs

o W2 Agencies Took $30 Million in Sanctions from Families with Nothing

o Wisconsin Spent $3.3 Billion For Only 13,300 Families Per Year

o Privatized W2 Agencies Received $149.9 Million in PROFITS

A 272 page audit of Wisconsin¹s $3.3 billion welfare experiment, W2, found that 81% of families formerly on W2 are still struggling to survive, with earnings 25%-50% below poverty. The audit, conducted by the non-partisan Wisconsin Legislative Audit Bureau in April, reports that 90% of W2 graduates work in the low-wage service industry: 41.9% in Temp jobs, 19% in Home Health Care and Nursing Homes; 18% in retail services; 11% in food service; and 10% in "other.

Only 19% of moms who secured employment under W2 are able to provide for their families on their income alone, despite W2¹s mandate to help family heads reach self-sufficiency. 53% of participants in 2004 were former clients who returned after loss of employment. Only 43% of W2 clients were screened for potential barriers to employment despite state law requiring this.

An average of 13,300 families were "served" each year to the tune of $3.3 billion dollars. But only 9,362 families received any cash benefits. Each family received an average of $6,561 in yearly cash W2 benefits. This was considerably lower than the $7800 fixed grant level because W2 families lost $30 million in benefits as a result of sanctions imposed for infractions of rules. (W2 agencies sanctioned 20% of their cases by 30% of their grants.)

W2 agencies imposed $30.2 million in sanctions against families in poverty. Seven agencies sanctioned more than 20% of their clients; Women of color were sanctioned at a higher rate than white women.

The Audit states that W2 agencies "erroneously" paid $1.3 million to 2,500 parents of newborn infants after 90 days ($520 per family). The audit refers to this as "excess payments." However, all families are eligible to continue receiving payments after their infant is 90 days old. The W2 agency is required to assign work activities to the mother when the baby is only 3 months old. Agency failure to assign work is not an excess payment to the parent; it is an agency error (perhaps based on simple human compassion.)

The audit states that W2 "is funded primarily by the Temporary Assistance for Needy Families (TANF) program." Yet the 272 page report, which includes charts detailing dollar amounts and percents spent on W2, fails to include $1.9 billion in federal TANF dollars spent on W2. The non-partisan audit makes no mention of this absent $1.9 billion in its report, in the Highlights, or in the cover letter to the Joint Legislative Audit Committee who requested the audit. The Welfare Warriors, a Milwaukee activist group of mothers in poverty, discovered the $1.9 billion discrepancy after requesting a federal and state TANF breakdown from state auditors.

Using the $3.3 billion figure, the state spent an average of $35,467 per family each year, yet only 19% of those families escaped poverty. (Four years after leaving W2 the average income was still only $11,400 for a family of 3.) W2 families received a total of $430 million in cash benefits, but W2 agencies received $150 million in profits.

While the total 7 year cost of Wisconsin's W2 welfare program was $3.3 billion for 13,300 families, its frugal predecessor, AFDC, cost $2.7 billion to serve 78,380 families each year for 7 years. (Wis Briefs 98-4 April '98)

W2: Punitive, Not Empowering


W2 has unsuccessfully used the stick--sanctions, time limits, denials, infant warehousing--rather than positive incentives to assist single-mothers to maintain families without government support. This strategy has failed in four ways:
1) W2 has cost taxpayers far more than AFDC for ten times fewer clients;
2) W2 has increased infant death and family homelessness in Wisconsin;
3) W2 has graduated 81% of their clients into sub-poverty and temporary jobs;
4) W2 has reduced wages for low-wage workers.

W2 was created to improve on AFDC, but has failed to attain its goal. The average stay on AFDC, W2¹s frugal predecessor, was two years. Yet more single mothers leaving AFDC after two years were able to support their families than those leaving W2. And far fewer family-heads leaving AFDC relied solely on temp jobs.

Welfare Warriors¹ Recommendations:

1. Extend W2 Time Limits to 5 years as federal law allows (and eliminate two-tier grant sizes). Current 2 year time limits are unrealistic, unnecessary, and severely harm families with the most obstacles. Thousands of such families reached two-year CSJ time limits and have been living with no income and no homes. No study has determined the actual number. The $628 W2-T grant also discriminates against families with disabilities and special hardships. W2 must provide ALL families the $673 grant.

2. Allow post-secondary education to fulfill work requirements. To escape poverty while supporting a family with only one breadwinner, any single mother who can do so must be allowed to pursue upper education, with no additional work requirements. As a SINGLE parent she is already overburdened with tasks normally handled by the second parent. All studies comparing education / income prove that education defeats poverty wages.

3. Allow infants to be cared for by their parent until the age of one year. This will reduce the shameful, unnecessary deaths (37% increase) among Milwaukee African American infants and Wisconsin infants (11% increase). This will reduce the cost of W2. (Infant care costs far more than the W2 grant.) This will allow infants, already deprived of a second parent, to receive essential one-on-one care, and benefit from the security/ bonding necessary for healthy growth and a positive future.

4. Eliminate Full-Family Sanctions. Children should not be sanctioned for any parental failure. And sanctions have FAILED to accomplish their goals while gravely endangering family stability ($30 million taken from moms with nothing). We recommend the elimination of ALL sanctions, but if policy-makers insist on keeping W2 a punitive system rather than an empowering program, the sanctions should be limited to the parent¹s portion of the grant, not to exceed 20% of family income.

5. Put an End to Privatized Administration of W2 Cash (Milwaukee).
Privatization of W2 cash administration has been a failure economically and practically. Corruption has been rampant. Goodwill, Maximus, and OIC all admitted "misspending" over half a million W2 dollars each. YWCA sanctioned half of their cases by half of their grants. UMOS "errored" in 86 out of 110 cases studied‹yet every "error" benefited the agency financially. And 80% of the clients who successfully graduated from the five private W2 businesses were thrust into the workforce to earn sub-poverty wages and work temp jobs. Besides the human suffering, the cost to taxpayers is exorbitant, with multiple layers of directors, administrators, buildings. Separating foodstamp and medical cases from cash cases has been an enormous burden on taxpayer money, client time and community stability.

6. Reinstate the Right to a Fair Hearing. No complex system can effectively police itself. No underprivileged people can access justice in the absence of basic legal rights.