Gaining Ground

Welfare Reform


Leaving aside the mean-spirited diatribes of ex-tremists on one side and the hand-wringing guilt activ-ists on the other, most Texans have legitimate concerns about the rising costs of public assistance. The issue is so urgent that the Lieutenant Governor has asked the Comptroller to prepare a special report with recommendations for streamlining the bureaucracy, improving services and saving taxpayer dollars. That report will be released later this month.

Gaining Ground, however, contains a number of additional recommendations regarding public assistance. We hope they will help begin reshaping the general debate about how the state can adequately care for those who need temporary assistance, while eliminating waste and fraud in a system Texans can no longer afford.

Taking food stamps off the black market. If you're searching for an example of public assistance gone awry, look no further than the federal food stamp program. A Washington initiative set up 20 years ago with the usual best intentions -- to feed poor people -- it soon bogged down in bureaucratic inefficiency, special interest skimming and outright theft. Perhaps no government program has ever so thoroughly missed its target. Estimates of the total taxpayer dollars lost each year nationwide range up to $2.2 billion, although an exact figure is impossible to determine because fraud, by its very nature, operates in the shadows.

In Texas, we've begun to revolutionize food stamps delivery. As noted in the introduction to this report, the Lone Star card is already being tested in southeast Harris and Chambers counties. First proposed in 1991's Breaking the Mold, the electronic benefits transfer (EBT) system uses modern technology to deliver food stamps and Aid to Families with Dependent Children (AFDC) to qualified recipients. By the time it goes statewide in early 1996, it will have virtually eliminated the kind of fraud and abuse we have sadly come to expect in the federal program.

TPR recommends that the Legislature now extend the Lone Star card to other government benefit programs, including child support collections, Medicaid and unemployment insurance. This would improve services, reduce fraud and cut administrative costs. The Health and Human Services Commission should be directed to establish target dates for the addition of these programs, according to such criteria as potential savings to taxpayers, number of clients served and the ease of supplementing the existing infrastructure.

In cooperation with Transactive Corporation, the operator of Texas' Lone Star card technology, the Department of Human Services (DHS) should begin moving toward placing a photograph of the primary recipient on each EBT card to further deter fraud and abuse. This would make it far more difficult to illegally transfer the card to an unauthorized person, as well as providing greater protection to the authorized cardholder in the event of theft.

Finally, the Legislature should establish a public assistance fraud oversight task force to guard against new avenues of potential fraud. With resources from the Comptroller's office, DHS, DPS and the Attorney General, we believe the ongoing efficiency and effectiveness of EBT can be assured. And Texas retailers who use the EBT system should be trained and regularly updated on this evolving technology.

Giving working families a well-deserved pay raise. The Earned Income Tax Credit (EITC) used to be one of the best-kept secrets of the federal tax code. Since 1992, however, the Comptroller has mounted a public awareness campaign to let working Texas families know how they can qualify for the credit, which arrives in the form of a cash refund.

As a result, some three million households have received a total of $4 billion in the past three years -- a quick infusion of funds for the state economy. In 1993 alone, more than 1.5 million Texas families who learned about the program filed for $1.6 billion in cash refunds.

To claim the EITC during the current tax year, families are required to meet certain standards. Texans with one child living at home and an annual family income of less than $25,760 could be entitled to refunds of up to $2,038. Those with two or more children at home and earning less than $25,300 could get back up to $2,527. Even Texans with no qualifying children and annual incomes of less than $9,000 could receive more than $300.

Moreover, low-income taxpayers with two or more children are eligible for advance payments. To claim the earned income tax credit, known as AEITC, an employee completes a one-page form and give it to his or her employer, who calculates the total refund due during the following year. Up to 60 percent of that total amount is then added, in monthly installments, to the employees payroll check.

TPR urges the Legislature to designate the Comptroller as the official Texas spokesman for the EITC, and to direct other state agencies to cooperate in this effort. Many already are, of course. The cost has already been absorbed by the Comptroller's office. But an institutionalized, statewide coordinated campaign would ensure the continued effort to provide low- and moderate-income working Texas families these federal dollars they deserve.

Funding family violence shelters. Four out of every 10 women murdered in Texas last year were killed by their husbands or partners. Even when it stops short of murder, family violence is on the rise. In 1993, more than 750,000 Texas women reported that they'd been physically or sexually abused. Family violence shelters operated at full capacity during the same period, housing 27,500 women and children, while other groups offered services to another 16,000 women and 158,000 calls for help came into the various crisis hotlines across the state.

Although figures aren't yet available for 1994, all indications are that the danger has increased. Nearly 10,000 victims have been turned away because shelters lacked space.

DHS works with the Texas Council on Family Violence to administer some 60 shelters in Texas, where women can find temporary protection as well as emergency medical care, technical help with criminal justice, counseling, education and job-search workers.

TPR recommends that the Legislature pursue available federal Emergency Assistance funds that aren't currently being used to expand the reach of family violence shelters and related programs. Over the next five years, TPR's recommendations could bring in nearly $30 million in additional federal funds, allowing Texas to improve efforts to meet the needs of victims and potential victims.

Expediting child care payments. The lack of affordable child care is a major obstacle to self-sufficiency for many welfare recipients. Even the working poor, who at least have paying jobs, teeter on the brink of unemployment when they must pay for someone to care for their children while they're at work.

A combination of federal, state, local and private funds, most administered by DHS, currently subsidizes child care for low-income families. Since 1991, DHS has administered most of the state's child care for low-income families through the Child Care Management System, or CCMS. This system is designed to automatically shift families from one funding source to another according to their eligibility, so that they can receive uninterrupted child care as their employment circumstances change. But the system is slow and cumbersome, and child care vendors often experience payment delays. This in turn jeopardizes the availability of child care for many families of limited means who are struggling to become self-sufficient.

New technology makes the problem relatively easy to solve. DHS could expedite vendor payments by using scannable forms to process the necessary information. These forms are already standard in school tests and voting, and even other state agencies use them to collect data on tax or unemployment insurance. In addition, DHS should urge vendors to opt for electronic funds transfer directly from the state, rather than waiting for paper checks to clear.

Increasing federal child welfare funds. The Department of Protective and Regulatory Services (DPRS) manages the state's foster care and adoption assistance programs, many elements of which are partially paid for by the federal government.

In Against the Grain, TPR recommended that DPRS study ways to maximize its federal funds. As a result, the agency estimates that it will have brought in an additional $84 million by the end of the current biennium.

But even more could be done. Children placed in relatives' homes don't qualify for Medicaid, Emergency Assistance or other federal benefits because DPRS doesn't classify them as "children in foster care," even though they are. Moreover, many of the costs now incurred by adoptive parents -- from court costs to attorney fees -- could be eligible for federal reimbursement, but aren't claimed.

TPR proposes that DPRS increase federal funding for its case management of children in protective services or foster care in the homes of relatives by classifying them as "children in foster care." In addition, DPRS should recover the legitimate expenses involved in child adoption. This would allow the state to extend Medicaid eligibility to these children and take full advantage of available federal funds. Between now and the turn of the century, Texas would gain nearly $42 million.