The Welfare Solution

Part 2: Fixing Maine’s Welfare System

“The solution was not simply to hand them a check and walk away. The solution was to develop meaningful programs that could support them in their struggle for independence.”

-Former Wisconsin Governor Tommy Thompson on his state’s welfare reform success.

How do we fix welfare to free Maine families from dependency?  When he first took on the task of reforming Wisconsin’s out-of-control welfare system in the 1990’s, then-Governor Tommy Thompson met with countless welfare recipients to hear their stories. What he heard was that “they wanted to work, but were concerned about being unable to afford health care for their children, to obtain quality child care and to find transportation to and from their jobs.”  Thompson’s administration began to immediately “shift resources” into programs to promote work and self-sufficiency, and insisted that in exchange for these new and expanded benefits, the state would “expect the people it helped to get up in the morning and go to work.”[i]

What Wisconsin achieved under Thompson’s leadership was remarkable.  From 1996 to 2003,the state’s TANF caseload dropped by 68 percent. The poverty rate in Wisconsin fell from 11.9 percent in 1996 to 9 percent in 2002, one of the steepest drops in the nation in that period. In Maine, by contrast, the TANF caseload dropped only 30.3 percent from 1996 to 2003 (the third lowest rate of decrease in the nation), and the poverty rate actually increased, from 11.2 percent below the poverty line in 1996 to 13.4 percent below poverty in 2002. Only two other states had increases in poverty of this magnitude between 1996 and 2002.[ii]

Fixing Maine’s welfare system requires embracing a Wisconsin-style approach and keeping the system focused on promoting work and self-sufficiency. Maine’s current welfare system does just the opposite, trapping people and families in poverty and promoting dependence and an overreliance on government.

What is Maine doing wrong? Six things:

  1. Maine has some of the most liberal eligibility limits in the country, allowing people to enroll in the state’s welfare system who would be disqualified from enrolling in other states.
  2. Maine does not have aggressive work or job search requirements for those enrolling in its welfare system, and does not fully embrace alternative approaches that would help low-income Mainers avoid enrollment in the state’s welfare system in the first place.
  3. Maine not only fails to adequately enforce work requirements, it takes no active steps to ensure that work is always the first option for those seeking assistance.
  4. Once people are in the system, Maine does not impose time limits in an effective way, with the result that Mainers remain in the system for longer periods of time than they would if they lived in other states.
  5. The sanctions Maine imposes for breaking the rules are among the weakest in the nation, with the predictable result that many of those enrolled in the system fail to comply with program requirements.
  6. Maine’s welfare system is poorly managed, with the state’s Department of Health and Human Services repeatedly being cited by state and federal authorities for errors and poor performance.

The only way to fix Maine’s welfare system is to confront each of these six issues head-on.

Step 1: Tighten eligibility requirements.

The first thing Maine must do is bring its eligibility requirements in line with national averages. Maine falls in about the middle of all states in terms of the percent of its population in poverty, yet has eligibility limits so high that programs designed to meet the needs of the truly needy have become middle class entitlements. Tightening eligibility standards preserves resources for those in need while discouraging welfare dependence among those with higher incomes. For guidance on establishing more reasonable eligibility standards, Maine should look to similarly rural states. As indicated in the following table, Maine’s eligibility limits are higher than the rural peer state average for all four welfare system programs for which an average could be calculated. For the fifth program, health coverage for non-disabled childless adults, only two peer states even provide this benefit. The states used in the comparisons below are those that were used by the Brookings Institution in its 2006 Charting Maine’s Future report.[iii]

Maximum eligibility for welfare programs

Maine should also investigate its eligibility policies with regard to legal non-citizens and those convicted of drug felonies, as few states allow these groups the kind of broad access to the welfare system that Maine does.

The Solution: 

Maine should undertake a comprehensive effort to bring welfare eligibility levels more in line with rural state averages. Even adopting the eligibility standards of neighboring New Hampshire would represent a significant step toward ensuring that Maine’s welfare programs are available exclusively to the truly needy.

Step 2: Discourage enrollment through more effective use of diversion programs.

For those eligible to enroll in the state’s welfare system, the first step should not be the near-automatic enrollment that is the case today. Maine should use what are known as “diversion programs.” These programs are intended, as the name suggests, to deter welfare applicants from entering the system in the first place.

In a 2008 report for the federal Administration for Children and Families, Mathematica Policy Research identified three different diversion approaches used by states today. In some programs, lump sum payments are made to the needy as a way of assisting them with short-term financial problems—such as costly car repairs—that do not require full enrollment in the welfare system. Other diversion approaches utilize work or job search requirements to deter potential enrollees from entering the welfare system in the first place. Lastly, a number of states blend these two approaches in some way, requiring job searches or job training, but providing three or four months of cash assistance to help during this temporary transitional period. [iv]

Maine’s Alternative Aid program, discussed previously, could be described as a diversion program but, if anything, that program’s design encourages dependence. Those who qualify can get the equivalent of three months of TANF cash assistance each and every year without any work requirements and without jeopardizing any other benefit such as Food Stamps. By providing an annual benefit with virtually no accountability and no strings attached, the Alternative Aid program’s very design discourages families from learning to live independently.

Maine’s Alternative Aid program stands in stark contrast to Georgia’s diversion strategy, which Mathematica highlights in the report cited above. In DeKalb County, Georgia, for instance, “applicants are required to attend an orientation, develop a TANF Family Service Plan based on a comprehensive assessment and, for those deemed ready for work, complete an up-front job search period as a condition of program eligibility.” The program’s intake meeting is “an hour long,” and utilizes a “standardized assessment tool developed by the state to explore the applicant’s job skills, work interests, educational attainment, and personal and family challenges.” Applicants considered work-ready “participate in a four-week structured job search program for 40 hours per week,” which includes “a series of workshops and group job search sessions to prepare for employment,” as well as time spent “contacting employers, completing resumes,  and participating in job interviews.”[v]

Georgia’s diversion program is remarkably successful. Out of every 100 TANF applicants, “25 to 50 percent complete the program and receive TANF,” with the remainder either finding employment or dropping out of the application process.[vi] According to the U.S. Census, only 1.3 percent of Georgians received cash public assistance in 2008, the second lowest rate in the nation. Maine, by contrast, had the nation’s second highest rate of cash public assistance in 2008, at 4.8 percent.[vii]

The Solution:

Maine should implement a much more robust and carefully structured diversion program based on Georgia’s model. Those seeking enrollment in the welfare system should undertake an extensive application and enrollment process which involves a series of steps designed to encourage employment and self-sufficiency in place of welfare dependency. Enrollment in TANF and other programs should be seen as a last, not first, resort. The state’s Alternative Aid program should be abolished and those facing a temporary financial challenge should be directed to the state’s General Assistance program, which is run by Maine’s municipalities.

Step 3: Institute far more robust job search and work requirements.

For those who do enroll in the state’s welfare system, the primary goal of state policy should be for them to secure employment and escape the system as soon as possible. One of the requirements for enrollees should be immediate participation in job search and employment activities. As noted earlier, Maine does not require a job search prior to enrollment. As a consequence, Maine has one of the lowest work participation rates in the nation.

The concept of tying work requirements to the receipt of taxpayer assistance was a centerpiece of the 1996 welfare reform law passed by Congress and signed by President Clinton. That effort was itself inspired, at least in part, by the work of Governor Tommy Thompson, of Wisconsin, a welfare reform pioneer. Thompson inherited a state welfare system that was out of control. In 1986, more than 100,000 Wisconsin residents were enrolled in the welfare system, and the state was struggling to keep welfare budgets under control. Thompson himself noted in a 1997 speech that his state “had continually raised taxes to pay for its ever-increasing welfare rolls,” with the result that “businesses were leaving, taxes were going up, and people across the state were really depressed.”[viii]

To get the welfare rolls under control, Thompson’s administration “rebuilt its welfare system around work,” with the centerpiece of the effort being its “Wisconsin Works” program, which made work a condition for taxpayer assistance.Prior to the implementation of Wisconsin Works, say researchers, the state’s welfare work programs had “little effect on caseload,” as Wisconsin “accepted growing dependency and showed limited commitment to work programs.” [ix]

Driven by the “simple premise” that “every person is capable of doing something,” the Wisconsin Works program required that everyone in the system had to work for the benefits he or she received.[x]In order to provide enrollees with the broad selection of work opportunities, the state developed a four-step employment support system:[x]

  1. On the first step of the ladder, a job skills assessment is performed and the enrollee is directed to “the best available immediate job opportunity in the private sector.” Once employed, program enrollees may “receive additional services” such as job training, and may be eligible for additional benefits such as child care, but the immediate goal is to get the individual working in a private sector job.
  2. For those individuals with basic skills but who “lack sufficient work experience to meet employer requirements,” the state offers to subsidize employee wages in exchange for on-the-job training. Through use of a “Trial Job Contract,” the employer “agrees to provide the participant with on-the-job work experience and training in exchange for a wage subsidy.”  The expectation for both employee and employer is that this arrangement will “result in permanent employment.”
  3. Individuals who not only lack job skills but have yet to develop the “basic skills and work habits” necessary to succeed in the workplace are placed in supported community service jobs. Enrollees in this program are carefully supervised and are only paid if they come to work and fulfill job requirements. The objective at this stage of the “ladder” is to introduce basic job habits such as punctuality in a supportive environment, with the ultimate goal that enrollees then move up the employment ladder.
  4. Lastly, the state provides a transitional program for those who, for whatever reason, are “unable to perform independent, self-sustaining work.” Participants in the transitional program are required to perform a limited amount of “work training or other employment-related activities each week,” for which they are paid a stipend. As with the other three levels of the ladder, support services such as child care and Medicaid are provided to those who qualify.  

A critical component of the Wisconsin Works program is that enrollees must fulfill work requirements that mirror those in the real world in order to receive benefits. “Leisure without obligations was no longer an option,” wrote Jason Turner, one of the architects of the Wisconsin Works program.  As the program was designed, cash benefits “were reduced at the rate of minimum wage for each hour of missed work in a community service or transitions job, to replicate the conditions of private employment.” Additionally, after-tax income for program enrollees rose with every step up the employment ladder, giving recipients “every reason to accept the highest employment option they qualify for.” In this way, Wisconsin created a pathway to escape from the dependency trap of the welfare system through hard work and opportunity.[xii]

As previously noted, Wisconsin’s work reforms were a huge success, resulting in plunging welfare enrollment and declining poverty rates. Today, only 1.7 percent of Wisconsin households receive cash public assistance through the TANF program, compared with 4.8 percent in Maine. Wisconsin devotes only 20 percent of its total state expenditures to public welfare, while Maine devotes more than 30 percent.[xiii]

The Solution:

Maine should immediately implement a Wisconsin-style work program in place of the existing ASPIRE program. Specifically, the state should require that every welfare recipient perform some type of work in exchange for benefits, carefully structuring such a system to mirror, as close as is possible, the broader world of work.

Under federal law, Food Stamp recipients also have work requirements. Adults between the ages of 19 and 50 who are capable of work and who do not have children under 18—so-called “Able-Bodied Adults Without Dependents” (ABAWD’s)—are ineligible for more than three months of Food Stamps benefits every three years unless they work an average of at least 20 hours a week or are involved in a work training or job search program of some kind.[xiv]

States, though, are given the power to request federal waivers to suspend this requirement for geographic areas of “chronic unemployment” or areas where there are insufficient jobs to meet demand. Maine has submitted, and won approval of, a waiver suspending the ABAWD work requirement for all of Aroostook, Franklin, Hancock, Knox, Lincoln, Oxford, Penobscot, Piscataquis, Somerset, Washington and Waldo counties, along with a half-dozen towns in the remaining counties. [xv] In short, the state has eliminated the ABAWD work requirement for thousands of Food Stamp recipients across Maine.

The Solution:

Maine should seek a federal waiver to design and implement a work requirement to receive Food Stamps; one that is integrated into the more comprehensive Wisconsin-style work program described above. It should be the policy of the state that recipients of any type of taxpayer assistance are obligated to do some type of work in exchange for the benefits they receive. There are 168 hours in a week. Asking able-bodied benefit recipients to work in some productive capacity for 20 of them, which is the ABAWD requirement for Food Stamps, is a fair tradeoff for the receipt of public assistance.

Step 4: Impose strict time limits.

The 60-month time limits imposed by the 1996 federal welfare reform initiative were intended to slash welfare system dependency by ensuring that welfare did not become a way of life. Maine, though, is consistently among the states with the highest percent of TANF families receiving cash benefits for more than 60 months. According to data from the federal Administration for Children and Families, Maine had the third highest percentage of long-term TANF recipients in the nation in FY 2002, the second-highest percentage in FY 2003, the second highest percentage again in FY 2004 and the third highest percentage once again in FY 2005, which was the last year for which data of this kind is available.[xvi]

As the chart below indicates, Maine’s extraordinarily high rates of long-term welfare dependence are well above both the national average and the average for the rural peer states identified earlier.[xvii]

Maine TANF

Maine’s reluctance to enforce meaningful time limits for the receipt of welfare benefits defies understanding given the overwhelming evidence that time limits lead to higher levels of employment and lower levels of welfare dependence.

  • A 2008 study that the Lewin Group and MDRC prepared for the U.S. Department of Health and Human Services found “evidence that time limits can encourage welfare recipients to find jobs and leave welfare more quickly, even before reaching the limit.” In some states, the study found, work rates were higher for those who left welfare as a result of reaching time limits than they were for those leaving welfare for other reasons.[xviii]
  • A 2006 report by the Urban Institute found that “stricter time limit policies may lead to lower deep poverty rates among mothers and children,” especially “if they encourage individuals to enter the labor force and thereby increase their earnings.” It also found that time limits “increase employment.”[xix]
  • A 2003 study published in the Review of Economics & Statistics found that “time limits had important effects on welfare use and work, accounting for about one-eighth of the decline in welfare use and about 7% of the rise in employment since 1993.”[xx]

It is undoubtedly in recognition of its success in preventing welfare system dependency that the vast majority of states impose a strict 60-month time limit on TANF families. The 2008 study by the Lewin Group and MDRC found that 37 of the 50 states close TANF cases once time limits are reached.  Of Maine’s rural peer states, only one, Vermont, does not utilize a strict time limit policy which results in removal from the welfare rolls.[xxi]

Welfare Time Limits, Maine vs. Rural Peer States
State Lifetime Limit (Months) Consequences of Reaching Limit if Exemption is Not Granted
     
Maine 60 Continues benefit to compliant families
     
Rural Peer States    
Arkansas 24 Closes TANF Case
Iowa 60 Closes TANF Case
Mississippi 60 Closes TANF Case
Montana 60 Closes TANF Case
New Hampshire 60 Closes TANF Case
North Dakota 60 Closes TANF Case
South Dakota 60 Closes TANF Case
Vermont None No Time Limit
West Virginia 60 Closes TANF Case
Wyoming 60 Closes TANF Case
Source: The Lewin Group, MDRC

The Solution:

Maine should bring its TANF cash assistance time-limit policies more in line with national and rural state standards by imposing a strict 60-month time limit that results in the closure of welfare cases. The state should also undertake a thorough study of time limits for other parts of the welfare system, such as subsidized housing and child care, in order to avoid long-term dependency.

Step 5: Enact tougher sanctions for violation of program requirements.

The sanctions Maine imposes on those who fail to comply with the requirements of the TANF cash assistance program are among the weakest in the nation. The research is clear, however, that for any welfare system to be successful, tough sanctions must be imposed on those who break the rules.

  • A 1999 study by the federal Council of Economic Advisors concluded that “policies that sanction recipients who do not go to work are associated with large declines in welfare participation.”[xxii] That was also the finding of a 2002 CATO Institute report, which found that on average, the states with the toughest sanctions “experienced larger caseload declines” than states with weaker sanctions. States with sanction policies that withheld the full welfare benefit saw their caseloads drop 60 percent, compared with a 40 percent caseload drop among states with the kind of partial sanctions that Maine imposes today.  The CATO study concluded, “the strength of state sanctioning policies had the largest impact on caseload declines between 1996 and 2000.”[xxiii]
  • A 2009 study of California’s welfare system found that “states with stricter sanction policies have substantially higher work participation rates and lower caseloads than states with a California-like sanction policy.” Additionally, the California study found that moving to a “stricter sanction policy” would “substantially increase the state’s work participation rate, and slightly reduce poverty among children living with single mothers.” These findings have implications for Maine because, as noted earlier, the only other state with a TANF sanction policy as ineffective as California’s is Maine.[xxiv]

Maine’s failure to hold accountable those who repeatedly break the rules sends the message that Maine is not serious about ensuring that welfare recipients play fair, which encourages dependency and fraud.

The Solution:

Maine should adopt a sanction policy more in line with that of most states, which is the loss of total cash assistance or the closure of TANF cases for repeated non-compliance with program rules.

Maine also needs to get serious about fraud, which appears to be rampant throughout the welfare system, though hard statistics seem impossible to come by.

  • An April 2010 story in the Lewiston Sun Journal described a half-dozen cases of welfare fraud, ranging from a misreporting of income to the use of multiple names and addresses.  The most common way fraud is found, according to the article, is “a tip from a friend, neighbor or relative,” rather than detection by state officials.[xxv]
  • In a July 2010 article in the Bangor Daily News, Maine lawmakers expressed concern about the fraudulent use cash benefits available under the state’s TANF cash assistance program. Barbara Van Burgel, who directs the office that oversees Maine’s TANF program, told legislators that her office doesn’t investigate “where people use their benefits” and that if someone wanted to “get cash for something improper” there was nothing to stop them from simply getting cash at “any bank or ATM.” She assured them, though, that “most people use this benefit as intended,” and besides which, the $383 in cash that the average TANF household receives each month is not, she told legislators, “a lot of money.”[xxvi]
  • An August 2010 report in the Bangor Daily News described how, on a Tuesday morning, two evidently able-bodied men bought 20 cases of bottled water using their Food Stamps then poured out the water in the parking lot and redeemed the bottles for $24 worth of five-cent deposits. In this way, they turned their Food Stamps into $24 in untraceable cash. The employees of the store where this occurred described the fraudulent practice as both “common” and “a recurring problem.”  Employees who oversee the City of Bangor’s General Assistance program also described the practice as a “recurring problem” and enacted a rule change forbidding the use of General Assistance funds for bottle deposits.[xxvii]

The Solution:

Maine needs to get tough on fraud in the welfare system. At least a portion of the savings generated by the declining enrollment rates resulting from the policy changes suggested in this report should be invested in much more robust fraud prevention practices. Those found guilty of welfare fraud should not only be prosecuted, but should be forbidden from receiving further public assistance.

Step 6: Increase agency accountability and improve program management.

Managing a welfare system of this size and complexity is extraordinarily costly. According to the Maine Legislature’s Office of Fiscal and Program Review, the Maine Department of Health and Human Services (DHHS) will spend more than $2 million this year just to administer the Food Stamp program. The central office budget for the Department’s Office of Integrated Access and Support, which oversees parts of the welfare system like TANF, will exceed $3.5 million this year.[xxviii]

Despite these high levels of spending on administration and oversight, Maine’s welfare system is one of the most poorly managed in the nation. A 2005 study by the General Accounting Office found Maine to have the second highest Food Stamp error rate in the nation. It was one of only nine states whose error rate had increased over the preceding five years.

According to the Portland Press Herald, DHHS was chastised by the federal government in 2007 for having, by that point, the “highest error rate in the country” for two years running.[xxx]

The state’s welfare system is also a regular target of investigation by the state’s own Department of Audit, which routinely finds accounting errors and “inadequate controls” over welfare system spending. In the 2009 Single Audit Report alone, state auditors found that oversight was “inadequate to ensure accurate financial reporting” in the TANF cash assistance program, that “income and eligibility verification system procedures” were “not followed” by managers of the Food Stamp program, and that the state’s Medicaid program “does not have a method to verify whether services reimbursed by Medicaid were actually furnished to recipients.” In all three instances, DHHS agreed with the auditor’s findings.[xxxi]

Part of the problem is that Maine’s welfare system is dizzying in its complexity. The state’s Public Assistance Manual, which describes the rules by which Maine’s TANF and related programs are operated, is 242 pages long. The rulebook for the state’s Food Stamp program is 239 pages. Throw in the state’s 80-page rulebook for the ASPIRE jobs program and the 281-page Medicaid Eligibility Manual and you are left with more than 800 pages of rules and regulations to govern a half-dozen programs.  The Medicaid manual alone has 30 pages of appendices.[xxxii]

Additionally, the recent explosion in welfare dependency has reportedly “overwhelmed” the system itself. State caseworkers report they are dealing with welfare caseloads more than twice the size they feel is reasonable if they are to do their jobs properly.[xxxiii] As a result, something of a “when in doubt, give it out” mentality has taken hold within the Department.[xxxiv]

What is needed is a wholesale restructuring of the management and operation of the state’s social services agencies, beginning with a fundamental change in their mission. DHHS, for instance, which oversees nearly all of the state’s welfare programs, claims its mission is to “provide integrated health and human services to the people of Maine to assist individuals in meeting their needs, while respecting the rights and preferences of the individual and family, within available resources.” The Department sees itself, first and foremost, as a provider of services—not as a supervisor or an administrator or an overseer—but as one big service provider.[xxxv]

Contrast that with the mission statement of the Department of Social Services for Broome County, New York, which is “to be an organization which promotes self-sufficiency and assures the protection of vulnerable individuals.” Broome County, in contrast to DHHS, does not see itself as a service provider, but as an agency whose job it is to advocate for one value above all others, self-sufficiency, while seeing to it that care is provided (by someone, but not necessarily by the Department) to those who are truly needy. A critical step toward freeing Maine families from welfare dependency is to change the mission of the state agency most responsible; the Department of Health and Human Services.

The Solution:

The next governor should work with lawmakers to establish a new mission for the Department of Health and Human Services, one that, while retaining a focus on ensuring care for the most needy, establishes as the primary purpose of the Department the promotion of independence and self-reliance.

Following the establishment of the Department’s new mission, an entire series of initiatives should be launched to help advance that mission:

  • A task force should be convened to research best practices and establish specific performance objectives throughout the welfare system.
  • Steps should be taken to dramatically simplify the rules and regulations that govern the state’s public assistance programs, which will simplify administration and result in budget savings.
  • The Department should implement a transparency initiative, making data on program utilization and the achievement of program goals more readily available.
  • Financial management at the Department needs a complete overhaul, with the goal of producing greater efficiencies and dramatically reducing accounting errors.

Perhaps most importantly, a new culture needs to take root within Maine’s welfare system. Today, the mission of DHHS is one of “providing services” to help people in “meeting their needs.” The Department sees itself as advancing its mission, therefore, when it provides more services to more people. Being second in the nation in the percent of people on taxpayer-funded Medicaid, for instance, means to the Department that they are on the right track.

With a new, “work first” mission, the goals of the Department will be entirely different, and success will be measured in an entirely different way.  That will necessitate a change not just in the way the welfare system operates, but a change in how success is defined. The transition will not be easy, but it is necessary if Maine is to fix the system and get welfare dependency under control.

Step 7: Additional Reforms that Expand Choice and Opportunity.

Moving Maine from welfare to work means changing more than the welfare system itself. One of the reasons enrollment in the state-run Medicaid program has grown so dramatically in Maine, for example, is the lack of affordable health insurance options in Maine’s private insurance market.  Likewise, low-income Mainers who struggle to pay their electric bills would struggle less in the 42 states that have lower residential electricity rates.[xxxvi] Having a reliable vehicle is a must in a rural state like Maine, but Maine charges the 7th highest vehicle excise tax in the nation, a tax 22 states don’t even have.[xxxvii]

Freeing Maine families from dependence on the state’s welfare system will come even quicker with broader policy changes that tackle head-on those state policies that create financial hardships for so many.

  • No other policy change would be as important to the success of welfare reform as the creation of low-cost health insurance alternatives through reform of Maine’s private health insurance marketplace. Today, Maine families looking to buy health insurance in the individual market face the 4th highest health insurance premiums in the nation. Those Mainers fortunate enough to get health insurance through their employer still pay an average of $3,850 a year for the employee share of the coverage, the ninth highest rate in the nation. Maine’s Medicaid rolls will continue to grow unless steps are taken to lower health insurance costs.
  • Maine policymakers need to get serious about Maine’s high energy costs, which disproportionally burden low-income families. Maine has the seventh-highest residential electricity rate in the lower 48 states.
  • Maine not only charges its residents a high vehicle excise tax, it has them paying the 15th highest gas tax in the nation as well. With Mainers traveling an average of 11,000 vehicle-miles per year, well above the national average of 9,700 miles, the cost of travelling for work or school is far too high in Maine.
  • Maine has a well-deserved reputation for high taxes. According to the Census Bureau, the state has the third highest property taxes in the nation when measured as a percent of personal income, and the fourth highest overall tax burden. The legislature’s most recent effort to “reform” Maine’s tax code, a 2009 law which was repealed by voters in June 2010, would have expanded the state’s regressive sales tax, further burdening low-income Mainers.

Of even more concern than the high costs Maine imposes on low-income residents is the lack of economic opportunity. With more jobs available, more Mainers can escape from welfare and move to work and self-reliance in the private sector. Yet according to University of Southern Maine economist Charles Colgan, a net of only 56 new jobs were created in Maine in the ten years between the fall of 1999 and the fall of 2009.[xliv] The simple fact is that Maine is seen as being hostile to business and job creation. Last year, U.S. News and World Report ranked Maine as the nation’s fourth worst state to start a business.[xlv] Forbes came to nearly the same conclusion in 2008, ranking Maine the fifth worst state for business.[xlvi] Earlier this year, the Small Business & Entrepreneurship Council cited Maine for having the sixth worst business tax policies in the nation, a finding which came on the heels of a December 2009 report in which the Council found Maine to have the very worst health care policies in the nation in terms of their impact the cost of health care.[xlvii]

The Solution:

Reducing welfare dependency should mean more than redesigning the welfare system itself. Maine has policies in place in the areas of health care, energy, transportation, taxes, and business climate that create financial burdens for low-income Mainers and hurt job growth. Changing these policies and taking steps to improve economic opportunity for all Mainers is critical to the long term of success of welfare reform in Maine.

Conclusion

Mainers are a people who pride themselves for having strong communities where people look out for one another. Maine people endure some of the highest taxes in America in part because they believe we should have a robust and effective system in place to take of those in need.

What has happened in Maine over the past decade, however, is something very different than what has taken place in the past. Once, enrollment in the welfare system rose when times were tough, and then dropped in periods of economic growth. Under the Baldacci Administration, though, enrollment in welfare has risen year after year, in good times and in bad. Indeed, the budgets submitted by the state agencies that run Maine’s welfare system suggest that had the state not faced budget deficits almost every year, the state’s welfare programs would have expanded ever further and faster than they actually did.

Worse still, the state’s welfare system, once focused only on the truly needy, now reaches well into the middle class. The state offers subsidized child care to families with $40,000 in income. A married couple with three children can earn more than $50,000 a year and still receive taxpayer-funded health care under the state’s Medicaid program, an eligibility limit more than three times the national average. The state’s welfare system is “so well integrated,” as a DHHS spokesperson put it, that once Mainers show up to get assistance from one program, they are automatically enrolled in as many other programs as the state can find for them.

The evidence is overwhelming that Maine’s welfare addiction is unsustainable. In FY 2008, Maine state and local governments spent $2.506 billion on our public welfare system compared to just $2.278 billion on the entire K-12 education system. In contrast, Maine’s Department of Economic and Community Development, the state agency charged with helping to create jobs, spent just $47.6 million. The next governor and the next Legislature will inherit a budget deficit totaling more than $1 billion, in no small measure because the state’s private sector economy, which has seen virtually no job growth over the past ten years, cannot support an ever-expanding welfare system which consumes hundreds of millions of taxpayer dollars each year and which discourages work and self-reliance. No state can have more people on government welfare programs than working in the private sector, yet if present trends continue, Maine will be there in just a few short years.

Though welfare advocates will undoubtedly claim otherwise, the reforms suggested in this report are far from draconian. In most instances, we simply call on Maine to do what most other states do—limit eligibility in order to focus resources on the most needy, encourage work and self-reliance, enforce work requirements and time limits, and get tough with those who break the rules. If the state takes the additional step of adopting innovative welfare reform approaches like those enacted in states such as Wisconsin, it can build a truly effective welfare system for Maine’s future.

What’s in a name? The office that runs Maine’s TANF program was once known as the Bureau of Family Independence. It is now known as the Office of Integrated Access and Support. The mission of the state’s welfare system has changed as well, from one where the system was there to provide a temporary helping hand, to one which seems focused exclusively on expanding dependence on government handouts. Such an approach, no matter how well intentioned, is not only unsustainable, but wrong.

It is time to Fix the System.

[i] The Good News about Welfare Reform: Wisconsin’s Success Story, Heritage Foundation, March 6, 1997.http://www.heritage.org/Research/Lecture/HL593nbsp-The-Good-News-About-Welfare-Reform
[ii] Zeigler, Jenifer, Implementing Welfare Reform: A State Report Card, Cato Institute, October 19, 2004
[iii]  Charting Maine’s Future: An Action Plan for Promoting Sustainable Prosperity and Quality Places, Brookings Institution, October, 2006
[iv] Rosenberg, et.al., A Study of States’ TANF Diversion Programs, Mathematica Policy Research, December 8, 2010.
[v] IBID
[vi] IBID
[vii] U.S. Census, http://factfinder.census.gov/servlet/GRTTable?_bm=y&-_box_head_nbr=R1904&-ds_name=ACS_2008_1YR_G00_&-_lang=en&-format=US-30&-CONTEXT=grt
[viii] The Good News about Welfare Reform: Wisconsin’s Success Story, Heritage Foundation, March 6, 1997.http://www.heritage.org/Research/Lecture/HL593nbsp-The-Good-News-About-Welfare-Reform [ix] Mead, Laurence, Et al., Implementing Work Requirements in Wisconsin, Institute for Research on Poverty, July, 2001.
[x] The Good News about Welfare Reform: Wisconsin’s Success Story, Heritage Foundation, March 6, 1997.http://www.heritage.org/Research/Lecture/HL593nbsp-The-Good-News-About-Welfare-Reform
[xi] Wisconsin Department of Children and Families. http://dcf.wisconsin.gov/w2/wisworks.htm
[xii] Turner, Jason, The Wisconsin Experience, American Institute for Full Employment
[xiii] U.S. Census
[xiv] Maine Food Supplement Program Certification Manual, Maine Department of Health and Human Services, January 12, 2010
[xv] January 2009 ABAWD WAIVER STATUS REPORT, U.S. Department of Agriculture,www.fns.usda.gov/snap/rules/Memo/PRWORA/abawds/abawds.pdf
[xvi] Administration for Children and Families, http://www.acf.hhs.gov/programs/ofa/policy/timelimit/index.htm [xvii]IBID [xviii] Welfare Time Limits: An Update on State Policies, Implementation, and Effects on Families, The Lewin Group and MRDC, April, 2008.
[xix] McKernan, Signe-Mary, and Ratcliffe, Caroline, The Effect of Specific Welfare Policies on Poverty, The Urban Institute, April, 2006.
[xx] Grogger, Jeffery, The Effects of Time Limits, the EITC, and Other Policy Changes on Welfare Use, Work, and Income Among Female-Headed Families, Review of Economics & Statistics, May 2003
[xxi] Welfare Time Limits: An Update on State Policies, Implementation, and Effects on Families, The Lewin Group and MRDC, April, 2008.
[xxii] The Effects of Welfare Policy and the Economic Expansion on Welfare, Council of Economic Advisors, August 3, 1999
[xxiii] New, Michael, Welfare Reform that Works: Explaining the Welfare Caseload Decline, 1996-2000, CATO Institute, May 7, 2002
[xxiv] Danielson, Caroline; Reed, Deborah, Sanctions and Time Limits in California’s Welfare Program, Public Policy Institute of California, April 2009 [xxv] Williams, Christopher, Couple Accused of Welfare Fraud, Lewiston Sun Journal, April 1, 2010 [xxvi] Leary, Mal, Maine lawmakers seek control over welfare cards, Bangor Daily News, July 19, 2010
[xxvii] Stigile, Rob, Bangor food stamp scam dumps water for deposit, August 19, 2010
[xxviii] Office of Fiscal and Program Review
[xxix] U.S. General Accounting Office. Food Stamp Program: States Have Made Progress Reducing Payment Errors, and Further Challenges Remain. May, 2005.
[xxx] Cover, Susan.  DHHS struggles with high error rate; The food stamp program is under scrutiny, as caseloads overwhelm many workers. Portland Press Herald, July 15, 2007.
[xxxi] 2009 Single Audit Report, Maine Department of Audit, 2009,http://www.maine.gov/audit/reports/2009sareport.pdf
[xxxii] Maine Office of Integrated Access and Support, http://www.maine.gov/dhhs/OIAS/rules.shtml
[xxxiii] Cover, Susan.  DHHS struggles with high error rate; The food stamp program is under scrutiny, as caseloads overwhelm many workers. Portland Press Herald, July 15, 2007.
[xxxiv] Confidential source within the Department of Health and Human Services
[xxxv] http://www.maine.gov/dhhs/mission_vision.html
[xxxvi] U.S. Energy Information Administration, U.S. Department of Energy
[xxxvii] The Maine Heritage Policy Center, http://www.mainepolicy.org/resources/media/143_1471941384.pdf
[xxxviii] Individual Health Insurance: A Comprehensive Survey of Premiums, Availability, and Benefits, America’s Health Insurance Plans, October 2009
[xxxix] Kaiser Family Foundation, http://www.statehealthfacts.org/comparetable.jsp?typ=4&ind=271&cat=5&sub=67
[xl] U.S. Energy Information Administration, U.S. Department of Energy
[xli] MSN, http://articles.moneycentral.msn.com/Taxes/best-and-worst-taxes-by-state.aspx
[xlii] Highway Statistics 2008, Federal Highway Administration, U.S. Department of Transportation
[xliii] Maine By the Numbers, The Maine Heritage Policy Center, 2008-2009
[xliv] http://muskie.usm.maine.edu/PDF/colgan-corporate-partners-2010.pdf
[xlv] U.S. News and World Report, http://money.usnews.com/money/business-economy/small-business/articles/2009/02/02/the-7-worst-states-to-start-a-business.html
[xlvi] Forbes.com, http://www.forbes.com/2008/11/24/west-virginia-louisiana-alaska-biz-beltway-cz_kb_1124worststates_slide_8.html
[xlvii] The Small Business & Entrepreneurship Council, http://www.sbecouncil.org/home/index.cfm
[xlviii] Table 1.  State and Local Government Finances by Level of Government and by State: 2007-08. 2008 Annual Surveys of State and Local Government Finances. US Census Bureau.http://www2.census.gov/govs/estimate/08slsstab1a.xls
[xlix] Total Appropriations & Allocations – All Funds – 2008-2009 Biennium.  Maine State Legislature’s Office of Fiscal and Program Review.  January 12, 2010.  Page 3.http://www.maine.gov/legis/ofpr/total_state_budget/approps_alloc/0809_Approps_Alloc.pdf
[l] Metzler, Rebekah, Officials: Budget shortfall to top $1 billion, Portland Press Herald, July 28, 2010http://www.pressherald.com/news/officials-budget-shortfall-to-top-_1-billion_2010-07-28.html