How Texas curtailed traditional welfare without ending poverty

_{Editor's note: The Texas Tribune and The Guardian, which provides international news for an online, global audience, partnered to examine income inequality and the impact welfare reform in the 1990s has had on state welfare services and benefits today.} 

Vakesa Townson didn’t plan to fall into poverty.

Married and the mother of two kids, she had lived a comfortable life in North Texas. But after her 17-year marriage ended and she became her family’s main provider, she struggled to make ends meet.

“I needed support,” Townson said. “I felt like I was starting over with nothing.”

A support group and the folks at Catholic Charities of Fort Worth encouraged her to apply for government assistance, including food stamps for groceries and Medicaid for her kids. But she didn’t check the box in her application that would’ve allowed her to apply for cash assistance. Working a part-time job that brought home $200 to $230 a month, she might not have qualified anyway.

Townson’s predicament is not unusual for Texans in need. Poor Texans will often find jobs and work to advance out of poverty but are then disqualified from receiving public benefits well before leaving poverty behind, said Heather Reynolds, president and CEO of Catholic Charities of Fort Worth. 

“I don’t think that’s what anybody intends to do,” said Reynolds, whose clients are mostly classified as working poor. “It’s just the reality of what we face sometimes.”

Though Texas’ poverty rates have remained mostly consistent, the state has significantly curtailed the amount of traditional welfare it provides to poor Texans through cash assistance over the last two decades, instead putting more of its federal anti-poverty dollars toward funding core state services, plugging budget holes or funding other programs that provide services to residents with higher incomes than those who qualify for cash welfare.

Federal law allows such disbursements, and state officials say those spending choices are spurred in part by a drop in the number of Texans qualifying for cash assistance. But social workers and service providers who help poor Texas families say those decisions result in a porous safety net that complicates the struggles of residents like Townson, who are too poor to make ends meet but make too much to qualify for temporary cash aid from the government.

“There’s this myth that welfare exists,” said Rachel Cooper, a senior policy analyst for the Center for Public Policy Priorities, a left-leaning think tank. “In Texas, it doesn’t.”

To qualify for $290 a month, you can’t make more than $188

Texas’ reduction of its traditional welfare rolls dates to 1996, when Congress reformed welfare and created the Temporary Assistance for Needy Families (TANF) program, which gives Texas hundreds of millions of dollars a year to combat poverty.

At the program’s inception, hundreds of thousands of poor single-parent families and children — a monthly average of 479,000 individuals in 1998 — received cash aid through TANF. But the number of poor residents who receive this help has plummeted. As of July 2017, the latest available count, fewer than 60,000 Texans — most of them children — remained on the welfare rolls, usually receiving a few hundred dollars a month at most.

Welfare reform was designed to reduce the number of people on welfare by emphasizing temporary assistance and getting people into work. But the drop in the state’s welfare enrollment isn’t necessarily the result of a concerted effort to pull Texans out of poverty. The state’s poverty rate has hovered between 16 and 18 percent for the last decade, and it wasn’t until recent years that Texas saw a larger drop in its poverty rate — currently at 15.6 percent — that was mostly due to rising incomes and not because of more welfare recipients moving out of poverty.

Instead, the number of low-income Texans who can get help has been reduced by caps on how long a family can obtain benefits, which are based on a person’s education or recent work experience, and strict income eligibility rules that make qualifying for cash aid a tall order for even the poorest families, advocates say.

To qualify for a maximum of $290 in monthly cash aid today, a family of three — with one parent and two children — cannot make more than $188 a month, barring a few exceptions. That income eligibility, which is several hundred dollars less than what a family of three can make and still be considered to be living in poverty, has hardly been adjusted since welfare reform.

“It’s been frozen, and 20 years of inflation has meant fewer and fewer people can qualify because it’s so low you really have to be destitute,” Cooper said.

By 2015, only four out every 100 poor families with children in Texas received cash assistance — down from 47 in 1996, according to an analysis by the Center on Budget and Policy Priorities, a left-leaning research institute.

Texas has a long history of regarding welfare as a last resort for needy Texans. Even before federal welfare reform, state lawmakers were working to tighten limits for assistance in Texas. And modest increases to benefits enacted soon after welfare reform were passed because they were approved with little fanfare, appropriations officials said at the time.

Texas’ approach to welfare benefits has pushed it toward the bottom of state rankings for the percentage of households receiving public cash assistance, according to U.S. Census Bureau data dating back a decade. In 2016, Texas ranked last.

That’s despite Texas being home to almost one out of every 10 poor Americans.

“We spend our dollars on anything but poor families”

While the drop in cash assistance has left Texans in need with a less secure safety net, it has freed up hundreds of millions of federal dollars for legislative budget writers.

Welfare reform set Texas up to receive federal anti-poverty funds in the form of block grants, meant to give state governments more flexibility in how they spent those dollars. That spending had to fit within four broad categories: to assist needy families so children can be cared for in their homes or the homes of their relatives; to reduce dependency on government benefits by promoting job preparation, work and marriage; to prevent or reduce out-of-wedlock pregnancies; and to encourage two-parent families.

With declining welfare rolls, lawmakers have used federal TANF dollars to cover a range of expenses, including core state functions like Child Protective Services.

Of the more than $520 million in federal TANF funds that state legislators appropriated for each of the 2018 and 2019 fiscal years, more than $358 million was earmarked for the Department of Family and Protective Services, which includes CPS. TANF dollars will make up approximately 17.5 percent of the agency’s entire budget for the 2018-19 budget years.

The current state budget also uses TANF funding to prop up the budgets for early childhood intervention services and mental health state hospitals. Another $3 million a year will go toward the Alternatives to Abortion program. The Texas Education Agency will also receive almost $4 million a year in TANF dollars for “school improvement and support programs.”

“We spend our TANF dollars on anything but poor families,” said Will Francis, government relations director for the Texas chapter of the National Association of Social Workers.

Those spending decisions will likely perpetuate a negative trend in the share of total TANF dollars Texas spends on basic assistance to poor families, which dropped from 59 percent in 1997 to about 7 percent in 2014, according to spending data collected by the U.S. Department of Health & Human Services.

State budget writers push back against the notion that the Legislature chooses to spend less on cash assistance for poor Texans.

Texas’ spending on cash aid depends completely on the number of people who qualify and sign up for benefits, they argue. And that drop has freed up more money to spend on other state needs, said state Sen. Jane Nelson, a Flower Mound Republican and the Senate’s chief budget writer.

"The good thing about block grants is that we are able to provide benefits to everyone who qualifies and allocate the remaining funds to address important needs such as Child Protective Services,” Nelson said in a statement. “These are appropriate uses of TANF funds, and they are an essential part of our effort to better protect endangered children."

Advocates for low-income Texans don’t argue that these aren’t worthy causes. But they say they’re just not the best use for dollars meant to combat poverty in the state.

“It’s this $500 million-a-year piggy bank,” said Celia Cole, CEO of Feeding Texas, a nonprofit that oversees a statewide network of food banks. “It’s totally taken away from meaningful services… It leaves very little to cash assistance or employment and training that could help people get out of poverty.”

Where should the money go?

Once TANF dollars are used to fund critical services like CPS, it’s tough to advocate for a change that will create a hole in the budget and put the delivery of other human services in a bind, Cole said.

In 2016, TANF ranked as the state’s ninth-biggest federal funding source.

Others have gone farther in their characterizations of the state’s TANF spending priorities. During a 2013 U.S. House Ways and Means subcommittee hearing, Rep. Lloyd Doggett, D-Austin, referred to TANF as a “slush fund” that states use to fund services they were or should have been funding themselves and questioned whether states have been given “too much flexibility” under welfare reform.

Not all those who are helping low-income Texans make ends meet oppose the state’s TANF spending priorities. Some nonprofit providers underlined the importance of flexibility and allowing states to be nimble with federal resources in ways that can best serve local communities. Others pointed out that some of the services funded through TANF dollars back up a “holistic approach” to addressing the needs of poor Texans.

“I do think that there are some great strategies that are funded with TANF dollars that impact vulnerable populations,” said Eric Cooper, president and CEO of the San Antonio Food Bank, which helps low-income Texans sign up for public benefits.

But Cooper added he sees the “temptation” the state’s spending flexibility presents at a time when poor Texans “could use more dollars to gap-fill” their needs. He echoed other providers who expressed reservations about the state’s wide discretion with disbursements. 

“What we need to make sure is that that money actually gets to nonprofit and government providers who will actually use it to improve outcomes for those living in poverty,” said Reynolds of Catholic Charities of Fort Worth. “And I do think there has been the temptation to use it to help with other budget crunches and we need to make sure to stay away from that.”

Jim Malewitz contributed to this report.

Disclosure: The Center for Public Policy Priorities and Feeding Texas have been financial supporters of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.