According to the 1996 welfare law, Gail Aska was a model recipient. Two years ago, the New York City resident got a job–without health insurance–and promptly informed her caseworker. Because the system took a while to register her change in status, she received two welfare checks, which she returned. Meanwhile, her son, who had spinal surgery a year before, needed a follow-up visit with a doctor. To her dismay, Aska discovered that the transitional Medicaid benefits she was supposed to be getting had been cut off. “The case-worker I talked to said my case had been closed because I hadn’t picked up my checks,” Aska recalls. “But I didn’t want to be sanctioned for getting checks when I had a job.”

Somehow Aska’s case had been miscoded. When she kept insisting that she had a right to transitional Medicaid, she was told she would get a date for a Fair Hearing, where the issue would be arbitrated. She waited for months and months. Finally, she gave up and applied for insurance for her son through a separate government-funded program she had heard about, CHIP, the Children’s Health Insurance Program. “My son had some symptoms from the surgery that we needed to get checked out,” she said. “You don’t play around with that–you don’t wait for a Fair Hearing.”

Despite all the talk three years ago about “easing the transition from welfare to work,” the welfare law has if anything made that transition more difficult. Even for welfare recipients like Aska who are aware of their rights and savvy enough to insist on them, the always lumbering and inefficient system has transformed itself from a bureaucratic behemoth into a whirling dervish, cutting people’s benefits in a tangle of confusion that’s nearly impossible to correct. In interviews with legal aid attorneys, advocates for the poor, former welfare recipients, local community leaders, nonprofit researchers and charities, The Nation discovered that a new lawlessness reigns. Whether out of willful disregard or real misunderstanding, states are failing to fulfill their legal obligations to the poor.

After sixty years of the federal government controlling welfare as an entitlement program–everyone who applied and qualified got aid–the new block grants give states vast discretionary power in distributing cash assistance. But it’s not only cash benefits that have been arbitrarily denied. Safeguards written into the law–like making sure a family has health insurance, food stamps and daycare when Mom lands a minimum-wage, no-benefits job at Burger King–have gone largely unenforced. What has evolved instead is a system that pretends to offer such things but in practice withholds them with alarming frequency, vastly expanding the ranks of the working poor.

In 1997 an estimated 675,000 low-income people became uninsured as a result of welfare reform; the majority (62 percent) of those were children who in all likelihood never should have lost their insurance, according to a report by Families U.S.A. A South Carolina study found that 60 percent of former welfare recipients did not know a parent could get transitional Medicaid; nine states had no outreach efforts to inform parents that they could get childcare assistance after welfare. The states of Florida and New York have committed abuses so severe and blatant that former welfare recipients and applicants have filed lawsuits against them for refusing to give Medicaid and food stamp applications to eligible families.

“There used to be some standardization in how welfare recipients were treated and processed at welfare offices,” explains Deepak Bhargava, director of public policy for the Center for Community Change. “By eliminating the whole architecture of the old entitlement program, the federal government eliminated a lot of the existing protections for people.” Now, with no uniform processes in place, thousands of families never find out that they still qualify for health insurance, childcare or food stamps. Instead, they do without.

Gail Aska, who now works as a program coordinator for the welfare rights organization Community Voices Heard, puts it succinctly. “The real information that people need isn’t coming from the system. And why should it? The object of the game is to get as many people off welfare as possible. So why should they share the rules of the game with you?”

Medicaid Emergency

On paper, the rules are pretty straightforward: In August 1996, Congress replaced the New Deal-era Aid to Families with Dependent Children with Temporary Assistance for Needy Families. TANF is not an entitlement program. This means states are under no obligation to provide cash assistance to eligible families. Instead, the federal government gives large block grants to assist poor families, with an emphasis on moving them from welfare to work or deterring them from applying for welfare in the first place. The federal law requires states to impose a five-year limit on welfare but states are free to impose shorter time limits (twenty-two states do) and to set up more rigid work requirements than the federal government’s minimum. States are not allowed, however, to divert families from applying for Medicaid or food stamps. If an adult fails to follow any rules a state imposes–for instance, at 10 am Monday a client must present proof to a welfare worker that she’s gone to six job interviews–a state can punish her for these infractions (for being late to the interview or failing to present adequate documentation) by taking away her Medicaid. That is perfectly legal. States may not, on the other hand, take away a child’s Medicaid to punish a parent.

But like a game of telephone, as the welfare reform message has trickled down from Congress to governors to state legislators to counties, cities, welfare administrators and caseworkers, it has grown distorted. The mantra to “end welfare as we know it” has mutated into a message that it’s OK to deny all government benefits, regardless of the protective aspects of the law (few and far between as they are). “There is no question that there’s tremendous confusion among welfare administrators,” says Ron Pollack, executive director of Families U.S.A., which documented the tremendous drop in Medicaid enrollment and the corresponding rise in uninsured children. “And there’s no question that beneficiaries are also confused about their rights.” Pollack’s organization discovered that people across the country are being deprived of Medicaid at various points in the process. “When people apply for welfare, the states have the right to have them do certain things–like do a job search or check with your family to see if they can support you–before they will process an application,” explains Pollack. “But when they divert people from filling out a welfare application, they’re often diverting them from applying for Medicaid and food stamps, even though it is illegal to do so.”

Then, if an applicant temporarily gets welfare but later gets a job, she’s often zapped from the computer system in one clean sweep: no more welfare, no more Medicaid, no more food stamps. “In many states, the administrators are unaware of the break in linkage between welfare–no longer an entitlement–and other benefits like Medicaid, which are still entitlements,” Pollack says. “Worse, the computers still automatically assume that if you don’t qualify for welfare, then you’re not eligible for anything else.” He believes such problems are caused by carelessness, inadequate training and a poor understanding of the law. “Still,” he admits, “there hasn’t been overwhelming incentive on the part of the states to correct this because they have to pay part of the Medicaid costs.”

After falling by 2.5 million in 1997, last year total Medicaid enrollment dropped by another 1.1 million. Bureaucratic blunders or malfeasance aside, the insurance problem is about to get a whole lot worse. Since Medicaid coverage for those who move from welfare to work is considered a “transitional” benefit, most recipients are eligible for a half-year to one year. “But the people who are moving from welfare to work typically find themselves in low-wage jobs with no health insurance,” says Pollack. In most states, unless their earnings are extremely low, they will lose Medicaid. “At the end of the transition period, those folks just become uninsured.”

Hungry in New York

When it comes to denying benefits, welfare offices take their cues from the local administration, whose leaders often want impressive numbers–at any cost. In New York City, for example, things got so bad in 1998 that needy residents were forced to take their case to the courts. In April 1998 Mayor Rudolph Giuliani began to make good on his promise to end welfare in New York City by 2000 by converting welfare offices into “job centers” and erecting a series of hurdles designed to discourage applicants from applying for public assistance. The hurdles were effective: During the early weeks of the operation 84 percent of prospective applicants at one job center and 69 percent at another left without filing an application.

But, according to a class action suit filed in December 1998, Giuliani’s job centers paid little heed to applicants’ rights. The suit, Reynolds v. Giuliani, contends that the city is illegally deterring and discouraging thousands of poor people from applying for food stamps, Medicaid and cash assistance, as well as failing to provide written notices of denials and hearing rights. Represented by the Welfare Law Center and the Legal Aid Society, among others, pregnant, disabled and homeless adult and child plaintiffs sought a court order to bar the city from converting more welfare offices into job centers until it stops its illegal practices. Federal District Court Judge William Pauley granted their request, requiring the city to halt its plans until it can prove that the situation has been corrected.

The evidence of illegal activities is credible and considerable. According to court documents, applicants are commonly misinformed. When they first arrive at a job center, receptionists routinely tell them that there is no more welfare, that this office exists solely to see that they get a job, that if they miss any appointments their application will be denied, that emergency food stamps and cash grants don’t exist, that there is a time limit on benefits–without explaining that they can apply for Medicaid or food stamps. Receptionists also tell people who arrive after 9:30 am that they must return another day. If they aren’t already deterred, applicants are given a five-page preliminary form to fill out. They must return the next day to get an application. They are fingerprinted, undergo several interviews and are then directed to meet with a financial planner and an employment planner. The financial planner tries to deter people from applying by directing them to churches, charities and food pantries. At various stages, applicants are orally denied benefits or told they are not eligible to apply, but they receive no written notice of denial or their right to appeal the decision.

One plaintiff in the lawsuit was in her fourth month of a high-risk pregnancy, carrying twins, when she repeatedly asked job center employees for emergency assistance (including help buying prenatal vitamins and blood pressure medicine) and expedited food stamps, saying she had no money for food. Instead of being given food stamps, she was referred to two food pantries, places that were closed–except during the daily hours she was required to be present at the job search center. Another plaintiff was referred to three pantries but was turned away and then found another pantry on his own; but when he went there during his lunch break from the job center, all the food, except for some old bananas, was gone. A third plaintiff tried to get food from the American Red Cross and the Salvation Army but was told that both had a three-month waiting period. (As the increasing need for emergency food in New York City strains the existing supply, many people are being turned away. According to a 1998 New York City Coalition Against Hunger report, 58,000 people were turned away from local soup kitchens and food pantries in a single winter month.)

For its part, the city is fairly cavalier about falling short in its responsibility to feed the poor. “There are always lots and lots of problems with any new program,” says the city’s corporation counsel, Lorna Bade Goodman. Explaining that the sheer size of the city’s programs means that they are always complicated to launch, she says a few snafus are common. “We are inevitably sued,” she says. “Eventually things get sorted out and begin to run in a more efficient manner.”

But Jason Turner, commissioner of the New York City Human Resources Administration (and architect of Wisconsin’s aggressive experiment with welfare reform), acknowledged to an audience at the Nelson Rockefeller Institute of Government last year that these policies were not the result of “lengthy planning, followed by implementation.” He was direct: “[The city] acted first and worried about the consequences later.”

The latest front in Giuliani’s lawless war on welfare is drugs: The Mayor has proposed using Medicaid records to uncover any evidence that welfare applicants have sought drug or alcohol treatment in the past, to compel them to undergo further treatment in order to receive benefits. (This, while there are only 200 residential treatment slots in the city for women with children–thanks to Giuliani’s slashing of such services.) Although federal law forbids the disclosure of private medical information, Giuliani wants the city’s Health and Welfare Department to take advantage of its access to Medicaid records and welfare lists to skirt the law.

Mississippi Burnout

Blatant lawbreaking isn’t the only problem. Many states, like Mississippi, are as stingy as possible in their interpretation of the law. Indeed, Mississippi is a good case study of what welfare could look like nationwide when the economy takes a plunge–or how a state’s poor can rise or fall at the discretion of local leaders, like notorious antiwelfare Governor Kirk Fordice, whose “internal moral compass” told him to veto 106 of Mississippi’s “liberal” legislature’s bills during his tenure. (“I just might veto them all, Xerox the durn veto message or whatever,” he once threatened, already having gone well beyond the fifty-three bills the two previous governors vetoed during their eight years in office.) With an unemployment rate of more than 13 percent in several counties, jobs are hard to come by. But the welfare rolls are still dropping, in good part because the sanctions for missing appointments or declining work assignments are so harsh: Clients immediately lose their welfare as well as their family’s food stamps and the adult’s Medicaid.

How are Mississippi families faring? In the eleven-county area of the Delta, the poverty rate hovers at 41 percent, and across the state 32 percent of children live in poverty. A study of eight Mississippi counties showed that only 35 percent of welfare recipients had jobs when they left or were kicked off the welfare rolls. Meanwhile, the state has chosen not to spend millions of federal welfare dollars that could be used for programs assisting the working poor. Mississippi has failed, for instance, to invest available funds in childcare. Although childcare is not an entitlement program like Medicaid and food stamps, it is considered such an integral part of welfare reform’s success that Congress included an additional $4.5 billion for childcare–to be spread over five years–in the bill. The welfare law also links cash assistance and childcare by allowing states to move surplus welfare money into childcare programs.

But according to a 1998 report put out by two regional nonprofits, the Mississippi Low-Income Child Care Initiative and Congregations for Children, 90 percent of the Mississippi children eligible for childcare vouchers do not receive them. And with the average cost of childcare for a 4-year-old exceeding that of state college tuition, it’s likely that most single parents working full time to bring in $10,712 could use the help. (Otherwise, childcare expenses for two kids consume 61 percent of their total income.) Meanwhile, approximately $25 million in federal childcare money and $17 million in unspent welfare money is sitting in state coffers.

“The state is claiming that the $25 million isn’t being spent because it’s not needed,” says Carol Burnett, director of the Mississippi Low-Income Child Care Initiative and one of the authors of the report. “But they’re not really telling people that the money is available.” While the state’s Department of Human Services contends that it advertises, Burnett is skeptical. “I don’t know where it’s publicized,” she says. “Supposedly there have been ads in newspapers and on TV and the radio, but I’ve never seen them give a list of media announcements, and I haven’t ever seen or heard a single one–and I would notice, because I work in this field.”

Furthermore, Burnett argues, even if the state’s contention that 90 percent of eligible recipients are forgoing childcare assistance because they don’t need it is true, the state could still use the money to improve existing childcare. For example, the state could spend some of the money to reduce the child-teacher ratios; it currently allows one of the highest ratios in the country, with one caregiver allowed to tend fourteen 3-year-olds. It could increase the amount of the childcare voucher that parents turn over to providers (currently $70-$80 a week for a toddler), so that childcare workers–whose average wages are lower than garbage collectors, bus drivers and bartenders–could get a well-deserved raise. It could increase education and training opportunities and requirements in a state where hairdressers have 1,500 hours of mandated training, while childcare teachers have fifteen (in-home providers aren’t required to have any training, even in infant CPR).

But Mississippi’s Department of Human Services insists it has done plenty, dismissing the report as “a monologue on Ain’t It Awful” put out by the “Ain’t It Awful Crowd.” Ronnie McGinnis, director of the state’s Office for Children and Youth, tries to put a positive spin on the report’s revelation that 90 percent of eligible families aren’t being served. “The truth is…the percentage of subsidized parents being served has increased from 5 percent to 10 percent…assuming that 100 percent of the eligible population would seek such care.” She also points out that the department has introduced a credentialing program that will be a requirement for childcare center directors by the year 2000. “As center directors, you are business operators,” she warned a group of daycare center directors. “If you are not carefully managing your center, you may be operating a charity.” Although evidence across the country has indicated that it’s nearly impossible to run a quality daycare center and make a handsome profit–or any profit at all–McGinnis insists that’s what has to happen in Mississippi. “A childcare business is no different from any other,” McGinnis says, explaining why the state has moved away from funding daycare centers in favor of vouchers for parents. While childcare advocates contend there is a paucity of centers in poor and rural areas, McGinnis says, “If there is a valid demand for licensed childcare, there will be someone out there who is prepared to open a business.”

“Childcare is not an entitlement to parents or providers,” McGinnis explains. “Parents seem to understand this.”

While it would be easy to dismiss Mississippi as an aberration–after all, the state ranks last or near last among all states in per capita income, percent of children in poverty, infant mortality rate and child deathrate–its response to the welfare law is far from unique. Due to a combination of factors, including a strong economy and the decline in the welfare rolls brought on by the harsh new policies, many states have found themselves with sizable welfare budget surpluses–but according to recent figures, more than half failed to use the full amounts of their federal welfare grants last year, leaving billions of unspent dollars piling up in state treasuries (a total of $6 billion by one estimate). The worst offenders include West Virginia (one of the poorest states in the nation, which left $72 million, 65 percent of its annual grant, unspent), New Jersey ($170 million), New York ($335 million), Colorado ($61 million) and Louisiana ($90 million, more than half the state’s total of $168 million). The money can roll over into the next year, but future federal allocations are tied to this spending, as well as to overall state spending levels, which are also dropping.

The states’ failure to spend their welfare money isn’t illegal, but it vividly shows what’s wrong with giving them so much latitude. For years, states argued that they knew best how to spend the money to lift their residents out of poverty. Now that the Feds have given them the autonomy they asked for, they’ve slashed the welfare rolls but hoarded the money that could actually help the working poor. (Wisconsin went even further, using part of its welfare surplus to fund tax cuts for the middle class.) In early August at an assembly of the nation’s governors in St. Louis, Clinton urged states to spend their leftover welfare money on childcare and education for poor children and to invest more in outreach for underused programs like Medicaid, CHIP and food stamps. The President also announced that he would be dispatching federal officials to all fifty states to make sure people aren’t being illegally excluded from health programs. But because of the law he endorsed, the most the Administration can do is nudge states to mend their ways. Meanwhile, before Congressional Republicans had the bright idea of fiddling with the earned-income tax credit to balance the budget, they floated the notion of asking states to return their surplus welfare cash to the federal government.

In the past few months, reports on the welfare “leavers” have begun to emerge, painting a bleak portrait of increasing hardship for the country’s poor–and not just in the regional pockets described by Clinton on his recent poverty tour. A study by the Center on Budget and Policy Priorities found that between 1995 and 1997, the poorest fifth of single-parent families suffered nearly a 7 percent loss in income, or $580 per family. Among the poorest of the poor, the loss was even more pronounced. And most of the decline can be attributed to cuts in government benefits–in 1995, for instance, 88 percent of poor children were getting food stamps, but by 1998 food stamps were reaching only 70 percent of poor kids. Moreover, a National Governors’ Association survey found that 40-50 percent of those who left the welfare rolls did not have a job, and “most of the jobs [held by former recipients] pay between $5.50 and $7 an hour…not enough to raise a family out of poverty.” Extreme poverty is growing among children, especially those in female-headed households, according to a study released by the Children’s Defense Fund and the National Coalition for the Homeless. In a study of the poor in ten states by Network, the National Catholic Social Justice Lobby, 24 percent of those surveyed said they couldn’t provide enough food for their children, 46 percent said they were eating less because they couldn’t afford food and 36 percent said they had to forgo needed medical care.

According to Jack Tweedie, director of the Children and Families Program at the National Conference of State Legislatures, the welfare rolls dropped faster than states anticipated, and states have not taken advantage of the flexibility they now have to address poverty issues. “States are reluctant to set up new programs if two years down the line they’re going to have to shut the programs down–and take the political fallout–or use state money to keep them alive,” Tweedie explains.

Activists are challenging such inertia with organizing campaigns focused on investing surplus welfare funds in programs for the working poor. In New York, unions, research nonprofits and welfare advocacy groups formed the Campaign for the Empire State Jobs Program, which called for using $85 million of the welfare surplus to provide subsidized jobs with living wages and childcare benefits to former welfare recipients–with assurances that no permanent workers would be displaced. The state agreed to start a $12 million pilot project based on the proposal, a significant victory that nonetheless leaves the bulk of the surplus unused. Likewise, activists in Pennsylvania and Wisconsin have succeeded in wresting a small amount of the welfare-to-work funds away from states and putting it toward programs for former recipients. In Massachusetts, Parents United for Child Care lobbied successfully for entitlements to childcare assistance on a sliding scale for working-poor families. State-level earned-income tax credits, which subsidize the working poor, have passed in several states, and campaigns are under way to provide transportation assistance and extended job training (in place of the “work first” approach) to those leaving welfare. Perhaps the most important breakthrough has been the expansion of Medicaid to cover working-poor parents in Rhode Island, Connecticut, Wisconsin, California, Ohio and Washington, DC.

Together, these efforts, says Center for Community Change’s Bhargava, are “seeds of a national progressive agenda around poverty issues,” which may play out in the debate over the reauthorization of the law in 2002. But there is a long way to go. Three years ago the “reformers” declared that welfare was a broken system that needed to be wiped out before it could be improved. Sadly, the same might be said with far greater justice of the replacement they came up with. Unless the federal government unties its own hands, the battle for welfare justice will remain centered in the states, where activists must struggle to bring reason and fairness to a system that has abandoned both.