Addressing the Child Welfare Cliff

Member Group : Lincoln Institute

Results of the Public Opinion Focus Group on
Benefits that Work:
Addressing the Child Care Welfare Cliff on November 19, 2014

Compiled by Erik Randolph on Behalf of the Lincoln Institute of Public Opinion Research, Inc.

Initiative Background:

During the 2013-2014 legislative session, the Majority Policy Committee of the Pennsylvania House of Representatives created the Empowering Opportunities: Gateways-Out-of-Poverty initiative. This House Republican Caucus initiative recognizes that current efforts to address poverty are in need of revision and subsequently searches for opportunities to address barriers that entrap individuals in impoverished conditions and to replace them with outcome-based solutions.

The initiative is divided into five broad areas for the development of policy and legislative proposals: Outcomes That Matter, Life Skills 101, Benefits That Work, The Essentials, and Educating for Opportunity. With the assistance of the Pennsylvania Association of Nonprofit Organizations, the Lincoln Institute of Public Opinion Research convened a focus group on proposals in the areas of Educating for Opportunity and Benefits That Work.
The focus group consisted of leaders from the non-profit sector who provide human services to alleviate social problems associated with poverty. Rep. Tim Krieger, 57th Legislative District of the Pennsylvania House of Representative, led the discussion on Benefits That Work.

Make-up of the Focus Group

The leader of the discussion was Rep. Tim Krieger. The session was moderated by Lowman Henry, chairman and CEO of the Lincoln Institute of Public Opinion Research, Inc., and recorded by Erik Randolph, Erik Randolph Consulting. Staff in attendance were Brianda Freistat, Research Analyst, Majority Policy Committee, and Whitney Krosse, General Counsel/Executive Director of the House Health Committee.

The participants of the discussion were as follows:

• Anne Gingerich, Executive Director, Pennsylvania Association of Nonprofit Organizations (PANO);

• Blair Hyatt, Executive Director, Pennsylvania Head Start Association;

• Caryn Long, Executive Director, Feeding PA;

• Steven Martinez, Communications Director, Community Action Association of Pennsylvania;

• Ellen Kramer, Pennsylvania Coalition Against Domestic Violence;

• Ashlinn Masland-Sarani, Policy and Development Director, ARC of Pennsylvania;

• Britton Miller, Director of Public Policy and Civic Engagement, PANO;

• Kristen Rotz, President, United Way of Pennsylvania;

• Michelle Sanchez, Director of Program Evaluation and Reporting, Maternal and Child Health Consortium of Chester County;

• Eric Saunders, Executive Director, New Hope Ministries;

• Tracy Shantz, Executive Director, Phoenixville Healthcare Access Foundation;

• Carol Shoener, Economic Justice Project Director, Women’s Resource Center;

• Megan Shreve, Executive Director, South Central Community Action Programs, Inc.;

• Kay Washington, Executive Director, PathStone Corporation

Discussion Background:

The following summary is a compilation of the points made during discussion of the focus group and does not necessarily reflect the opinions of all participants.

Far too often, the cause of poverty in Pennsylvania begins with a poor life choice or unpredicted circumstantial life change. This creates a situation where an individual can choose from a variety of life paths: living solely off the human services system to gain economic incentives; working hard, playing by the rules, and earning their way out of poverty; or becoming lost in the myriad of the "in-between." If an individual chooses to receive various subsidies in the form of human services benefits, they can be housed, fed, and receive subsidies for child care. Sometimes, this is in exchange for only performing minimal work. Conversely, the same family can enroll in job training programs, acquire new skills, and work hard to increase their wages.

All families are given the option to receive subsidies; however, many families are not economically encouraged for their behavior. Unfortunately, families who attempt to earn their way off the system can, in a sense, become penalized for their efforts due to the nature by which the current benefits structure is tailored. Simply put, there are currently few incentives for families to work their way off welfare as the financial incentives welfare provides are more financially generous than many in the middle class are able to procure. These situations can spin out of control, resulting in families who work hard and play by the rules being ignored or even punished for their economic gains.

Empowering Opportunities: Gateways Out of Poverty represents a new focus on how our state and its public assistance programs support low-income families and, more importantly, help transition them toward self-sufficiency. The goal of the initiative is to identify the barriers that stand in the way of individuals striving to achieve personal, professional, financial and social growth and to guide lawmakers down a path to help tear down those barriers.
Primarily, lawmakers from both the state and federal governments continue to focus their attention and resources on alleviating the symptoms of poverty through a patchwork of band-aid solutions. Alleviating the symptoms of poverty is both helpful and necessary, but no meaningful, life-altering changes can be initiated without lawmakers simultaneously addressing the fundamental conditions that create these situations initially.

These root causes of poverty often have greater impacts on our society than just financial strains. These root causes change family structures, restrict personal responsibility, and rely on government dollars to make ends meet.

Primary Discussion:

The topic of subsidized child care remains central to both goals within the Empowering Opportunities: Gateways Out of Poverty initiative. The focus group conducted with Rep. Krieger pin-pointed the particular subset of issues within Pennsylvania’s child care assistance programs. Also discussed were ways in which the state can encourage increased fiscal responsibility for a family’s subsidized child care expenses. Fundamentally, it was recognized that the family structure has evolved over time. This has also simultaneously shifted the state’s efforts in addressing poverty.

All parties involved in the focus group agreed that children are best served when their parents or immediate family stand as the primary caregivers. While the preferential manner in which to raise a child, it’s evident that many parents are not afforded this structure of support and are, in turn, forced to make difficult decisions. In many cases, they must choose between ensuring a loving and caring environment of care for their child or children, or working to help care for the family. It’s this forced decision that can often perpetuate the cycle of poverty.

It was recognized during that discussion that many parents are now raising children without the presence of a husband or wife. Extended families may no longer live within close proximity to one another. Also, many Pennsylvanians are now part of dual-income households, a situation that requires both parents to be outside the home during a child’s early childhood years. Essentially, this can shift the primary child rearing responsibility from the family (which has aided in child care assistance for many decades) to publicly funded subsidized help.

Rep. Krieger has expressed concerns with this scenario and has focused on potential soltuions to help address these problems. Currently under this program, individuals who attempt to work their way out of poverty through higher earnings are dis-incentivized, and further penalized in their copayment-to-subsidy ratios for their child care needs. In fact, individuals who remain stagnant in their earnings are rewarded with continued subsidy amounts, while individuals who earn more money are stripped of their child care for simply earning an additional penny in income. This forces these families to decide between becoming self-sufficient in providing for their family or remaining stagnant in their wages and continuing to receive subsidies.

This phenomenon known as the "Benefits Cliff" is present in many of Pennsylvania’s welfare programs. While these programs may have been designed to provide protections from potential waste, fraud, and abuse, they can actually cause more harm than good. Additionally, each of Pennsylvania’s human service programs overlap, creating a number of Benefits Cliffs which hinder a family’s progress towards self-sufficiency.

Rep. Krieger and the non-profit advocates spoke at length about various ways to tackle the issue of the Benefits Cliff, noting that a system designed by government officials should not dis-incentivize work, but should allow individuals the flexibility to work their way off of all government assistance. Rep. Krieger discussed a flexible co-payment versus subsidy proposal, which would take aim to reward work and additional earnings by creating a graduated payment scale for child care benefits. This payment scale would increase co-payments for subsidized child care as a family starts to earn additional income, but at a sustainable rate.

Under this approach, eventually, as incomes increase, a family would become more responsible for its financial obligation to child care. This payment responsibility would increase until the entire financial responsibility is paid for by the parents of the child. By creating this structure, families become both empowered by their own work and earnings and learn to take fiscal responsibility for their child’s care. This fosters economic independence through a graduated payment system instead of a flat rate as is in place now. This new system would increase one’s self-esteem and greater encourage additional wage earning behavior.

Additional Topics Covered:

The need for child care assistance is only one facet of dealing with poverty, and the issues surrounding poverty are very complex. Some of these were also discussed. Impoverished persons can be dealing with any set of social problems and circumstances, including the breakdown of the family, domestic violence, drug addiction, poor decision-making skills, and poor lifestyle choices. Impoverished persons often suffer from hopelessness and low self-esteem. They can lack job-seeking skills and require coaching and counseling. They also may come from families with histories of poverty and have different behavioral patterns than those of non-impoverished persons. Over time, these individuals do not know how to escape poverty and lack any long-term plan for the future. They may be transient or seasonal employees, or they may hold multiple part-time jobs jobs.

It may be difficult to understand the behavior of impoverished persons, which may appear to be irrational to non-impoverished individuals. For the most part, impoverished persons work with the assets that they have, and they must make choices on what bills to pay and which to ignore. This partly explains why a person may sell their food stamp EBT card, although it is illegal to do so. The EBT card has a cash value on the black market and if a person needs money to purchase something—like medication for a child—the person is willing to trade the card for cash in order to purchase what they desire regardless of the consequences.

The Supplemental Nutrition Assistance Program (SNAP) provides a good example of a government program that provides necessary assistance but is also in need of continued modification. Most people on SNAP need assistance and the few that abuse or defraud the system give the program a bad name, creating a worse perception of people who truly need the program. Another area of greater importance than child care is housing. Housing is a crucial component that must be safe and secure before other aspects of welfare assistance can take hold.

As stated, several participants stressed that child care is not the only Benefit Cliff that impoverished persons face and recommended that the other cliffs receive equal attention. It was offered that many government programs are designed to stabilize a person but often do not address the issue of helping that person better themselves by climbing out of poverty.

What is important is to provide individuals a pathway out of poverty, or to promote policies that remove bureaucratic barriers that keep individuals trapped in the welfare system. Many impoverished persons live from crisis to crisis and do not have any plans for the future or any ideas on how they can climb out of poverty. While government programs are helpful and necessary, they do not create opportunities for the economic advancement of the person or family. It’s often a question of resources, and government policies need to assist in the effort, or at least not interfere with the effort for economic advancement for low income Pennsylvanians.

About the Author:

Erik Randolph is an independent researcher who specializes in evaluating government policies, programs, budgets, and legislation, quantitative analysis, and fiscal and economic modelling. As a consultant, he has provided assistance to organizations, legislators, and governments in four different states in the areas of welfare policy, budgeting, transportation policy, and criminal justice.

Erik has twenty-seven years of extensive experience in government and for seventeen years taught principles of economics for the Harrisburg Area Community College. He developed the first microeconomic model to test how welfare benefits influence behavior when he was a special assistant to the Secretary of Public Welfare for the Commonwealth of Pennsylvania, and he led a chartered team at the department to evaluate the problem of economic disincentives. Prior to his service to the department, he spent nineteen years as an analyst for the Committee on Appropriations of the Pennsylvania House of Representatives. While working for the Committee, he evaluated and forecasted costs for legislation, worked on and analyzed state budgets, handled analysis of special fund revenue and capital budgeting, researched and wrote legislation, and conducted special research projects for the chairman.

In the early part of his professional career, Erik worked in the field science and technology policy for the U.S. General Accounting Office (since renamed the Governmental Accountability Office), New York State, and the Commonwealth of Pennsylvania.

Mr. Randolph has a Master’s Degree from the College of Humanities at Rensselaer Polytechnic Institute in science and technology studies, where he concentrated on the economics and policy of science and technology. He has two Bachelor degrees from the Pennsylvania State University, one majoring in mathematics and the other in political science.