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The Effect of Welfare Reform
by Michael Khoo
January 28, 2000
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A report from Minnesota's legislative auditor shows Minnesota's welfare rolls are shrinking, but the remaining cases tend to be the hardest to solve. With a federal five-year limit on welfare benefits approaching, the study recommends intensified efforts to reach all needy families and tougher sanctions for those that don't comply.

THE LEGISLATIVE AUDITOR'S REPORT shows Minnesota's welfare caseload has dropped by nearly 40 percent since 1994. That's slightly less than the national average reduction of 50 percent. Nonetheless, fewer cases mean more dollars to go around, and in this case, the report found $164 million in unused federal funds due to the drop in welfare recipients. The auditor's report recommends tapping into the surplus to reach chronic cases left behind on the rolls - and soon. Joel Alter prepared the report for the auditor's office. He says if the money isn't spent, the federal government could reclaim it.
Alter: This is a unique opportunity. I think we need to be careful about spending that money. But at the same time, if we don't spend this money or a large portion of it, again, we could lose it. And so we think that we should be looking at prudent, short-term alternatives for spending that might reduce dependency.

Welfare Caseloads in the Region
State 1994 1999 Change


78,507 23,251 -70%
Michigan 225,671 90.541 -60%
Kansas 30,247 12,799 -58%
S. Dakota  7,027  3,062 -56%
Illinois 238,967 114,686 -52%
Indiana 74,169 37,156 -50%
N. Dakota 6,002 3,085 -49%
Missouri 91,598 48,351 -47%
Iowa 39,623 21,270 -46%
Minnesota 65,621 40,013 -39%
Nebraska 16,145 10,799 -33%
U.S. Total 5,053,000 2,536,000 -50%
A report from the state Department of Human Resources issued earlier this week makes a similar recommendation. But not everyone is anxious to spend money just because it's in hand. Republican Representative Fran Bradley of Rochester chairs the Health and Human Services Policy Committee. He says he'd support limited, specific interventions but is wary of any broad expansion of services, which he says could attract the hard-to-employ from other states to Minnesota.
Bradley: When, overall, 25 percent of the welfare recipients are recent comings to Minnesota, the facts say that upwards of 40 percent in Hennepin County and 25 percent statewide are new to the state. I still believe that we have a very strong magnetism in Minnesota.
Lourey: Every single state believes that people are coming into their state because of their welfare benefits.
DFL Senator Becky Lourey of Kerrick chairs a Senate subcommittee overseeing welfare reform. She says it's unproductive to worry about attracting out-of-state welfare recipients.
Lourey: Each state has benefits in a certain area that are richer than another state's benefit. So it's really hard to tell. I don't think that we should look at that. I think we should look at what it is we want to do with Minnesota citizens and continue that work.
Lourey welcomes the opportunity to expand support services to welfare recipients, and even beyond: to the so-called working poor who don't quite qualify for cash assistance. However, Lourey is slightly cautious about another recommendation from the legislative auditor. The report agrees with a DHS proposal to stiffen penalties for welfare recipients who don't comply with the program's work and job search requirements. Currently, case workers can impose a 30 percent benefits reduction in cases of people who aren't doing enough to find work. But Alter says the penalty doesn't motivate everyone.
Alter: When we began talking with providers and county officials, they expressed a considerable amount of frustration with non-compliant clients. They didn't think that the current sanction created a very strong incentive for compliance; they were frustrated by the amount of time the spent on those clients. And when we surveyed providers and counties statewide, we did find a fair amount of sentiment for increased sanctions.
Both reports recommend stiffer penalties for welfare recipients who consistently fall short of the job requirements. Representative Bradley endorses the suggestion. He says lawmakers are already drafting legislation authorizing, in some cases, a complete end to cash assistance.