Increase Education, Training and Employment Opportunities for AFDC Recipients


The state should increase education, training and employment opportunities for recipients under the Aid to Families with Dependent Children program.


Background
Texas can increase education, training and employment opportunities for its recipients of Aid to Families with Dependent Children (AFDC). Doing so would save general revenue and raise the incomes of families receiving AFDC.

The federal Family Support Act of 1988 established the Job Opportunities and Basic Skills Training (JOBS) program to link education, employment and training programs and human service agencies at the state and local levels to improve the economic self-sufficiency of AFDC families. Although federal law allows JOBS funds to be used for job training, Texas JOBS program provides support services such as transportation and child care to participants while relying on existing education and training systems to help them find work. The program served 36,123 participants in fiscal 1992.

Texas could use existing state spending to draw down additional federal matching funds for the JOBS program. In fiscal 1992, Texas let $17 million in potential federal funds slip away; another $12 million could be lost in fiscal 1993.

To be effective, Texas JOBS program must acquire full federal funding at the higher rate available to states whose programs meet federal participation levels. To gain this additional funding, participants in Texas JOBS program need broader access to Job Training Partnership Act (JTPA) and Adult Basic Education (ABE) programs.

JTPA prepares disadvantaged youths and adults with job training and other services. In fiscal 1992, JTPA Title II-A adult and youth programs served 56,727 participants, including 13,137 AFDC recipients, of which 2,045 were also JOBS participants. The ABE p rogram, administered by the Texas Education Agency (TEA), provided basic education services for about 220,000 adults in 1992, including 16,400 public-assistance recipients and 8,400 JOBS participants. Increasing participation by AFDC recipients in JTPA and ABE programs would also increase their participation in JOBS.

Moreover, to increase the program s efficiency and effectiveness, Texas could develop alternatives to spending general revenue to earn matched federal funding in the JOBS program.

Federal Funding for JOBS
Texas maximum share of federal JOBS program funding was capped at $96 million for Texas 1992-93 biennium. For those two years, the Legislature appropriated $49 million in general revenue funds for the program to draw down an estima ted $67 million in federal dollars. Consequently, Texas will lose $29 million in federal funds this biennium because of a lack of state and local matching funds.

In 1993 and 1994, the federal government will provide 64 percent of all funding for JOBS if a state has a participation rate of at least 11 percent of all AFDC recipients. If Texas falls below this threshold, the state will earn matching funds at a less fa vorable 50-percent rate. In 1991, the Legislature decided to provide resources for the program only at the previous biennium s participation rate of 7 percent.

An increasing AFDC/JOBS caseload, higher federal participation rate requirements and a lack of state matching funds mean that the Department of Human Services (DHS) may fail to meet the 11-percent requirement this year. In fact, the agency has requested fu nding for fiscal 1994 and fiscal 1995 at a less favorable 50-percent match rate in anticipation of this failure.


Assuming Texas could earn federal funds at the 64-percent rate, an additional $6.8 million in state and local funds would be needed to earn the additional $12 million in federal funds available in fiscal 1993.

Adult Education
Deficiencies in basic skills prevent some AFDC recipients from succeeding in job training. TEA provides adult basic education through cooperatives across the state. JTPA also offers adult basic education, financed by JTPA education coordination funds and r egular Title II-A funds.

TEA s 1992-93 appropriation requires that not less than $2 million of the $2 5.8 million appropriated annually for ABE be used to expand education and training services to AFDC recipients. These funds have been matched with federal JOBS funds at the federal Medicaid rate of about 64 percent to generate an additional $3.5 million in federal funds. Altogether, these funds support about 8,400 JOBS participants. However, other than the programs funded with the $2 million, ABE does not currently serve this population on a priority basis.


Recommendations
A. The Legislature should require Department of Human Services (DHS) to develop an emergency plan to guarantee the state s Job Opportunities and Basic Skills (JOBS) participation rate at 11 percent in fiscal 1993 to gain the more favorable federal match rate for fiscal 1994.

B. The Legislature should require DHS to use unmatched, unexpended program funds from Adult Basic Education (ABE), the Texas State Technical College, community colleges and the Communities in Schools program to draw down additional JOBS federal funds which are available to the state this fiscal year and in future fiscal years, but which are projected to be unspent.

C. The Legislature should assume a 64-percent federal match rate when considering DHS s appropriation for the JOBS program instead of the 50-percent rate identified in the agency s Legislative Appropriation Request.

D. The Legislature should phase out 25 percent of the general revenue appropriation for JOBS in fiscal 1994 and 50 percent in fiscal 1995 and instead should use existing, unmatched state funding of Texas Education Agency s ABE program, Texas State Technical College, the community colleges and the Communities in Schools program. To achieve the savings indicated, the DHS appropriation would need to be reduced by the amount indicated in the table. An alternative to using existing state revenue would be for DHS to enter into agreements with employers to provide the match for federal JOBS funding as a voluntary donation. The funds should be matched and transferred to a contracted third party to train Aid to Families with Dependent Children (AFDC) recipients who would work for the employer.

A contract with a third party is necessary since federal law prohibits returning funds to a private donor. The state has elected to use JOBS funding primarily for support services and to use existing systems, such as Job Training Partnership Act (JTPA) an d ABE programs, to educate and train AFDC recipients. However, an exception should be made for this approach, since it offers the potential for more jobs for those trained than existing programs.

E. The Legislature should mandate that DHS be notified of any identified AFDC recipient entering JTPA or ABE programs.

This would enable DHS to encourage these recipients to enroll in the JOBS program so that the state can receive credit for their participation.
F. The Legislature should mandate that AFDC recipients be given priority for entering ABE programs.

Except for the places set aside in ABE programs for JOBS participants, AFDC recipients sometimes must wait for access to ABE programs.


Implications
These recommendations would significantly increase access to education, training and employment for AFDC recipients and allow more recipients to be served. They would improve incomes for AFDC families and provide children in those families with working rol e models.

The recommendations would free general revenue for other purposes while increasing the level of services in the JOBS program. They would generate new federal dollars without increasing state expenditures. T hey also would reduce general revenue expenditures for AFDC recipients who obtain employment, save funds for the federal government and provide better customer service for JOBS participants.


Fiscal Impact
The recommendation to ensure the fiscal 1993 participation at an 11-percent rate required to draw a higher federal match rate for JOBS would generate about $13 million in savings to general revenue in fiscal 1994 over the 50-percent match rate requested by the agency. However, since Texas received the more favorable match rate in fiscal 1993, the savings will not be included in the table below.

Phasing in existing state spending as match for up to 50 percent of the remainder of the general revenue used in the JOBS program would generate an additional $6.5 million in fiscal 1994 at a 25-percent reduction and $13 million for fiscal 1995 at a 50-per cent reduction. These estimates assume fiscal 1993 data based on available revenue.

Moreover, using existing state spending for match to draw down the unused por tion of federal funds still available to Texas would mean an additional $12 million in federal funds in fiscal 1993. The availability of additional federal funds in future years depends upon the federal cap.

Increasing the number of AFDC recipients in job training and adult basic education programs would lead to savings in general revenue and federal funds as recipients complete training, find employment and leave the AFDC program; however, insufficient data e xist to estimate these savings.

Saving to the
Fiscal General Revenue Change in
Year Fund 001 FTEs

1994 $ 6,500,000 0
1995 13,000,000 0
1996 13,000,000 0
1997 13,000,000 0
1998 13,000,000 0