Welfare Reform: States Seek Funds, Not Strings

THE nation's Republican governors have spoken, and Washington has heard: Give us your money to support and help poor people, but don't tell us how to use it.

Many questions remain in the wake of the lively National Governors Association (NGA) meeting here, which wrestled with the priority issue of welfare reform, but failed to reach a bipartisan consensus on how money should be dispersed - or whether benefits should still go automatically to all who qualify.

Still, there is bottom-line agreement among Republicans and Democrats, in statehouses, Congress, and the White House, that states need greater flexibility in dealing with a system that needs fixing.

A central proposal, which has been supported by Republican governors and House Republicans, would replace the current funding mechanism with so-called block grants - a lumping together of federal welfare funds that are handed over to the states to be used as they see fit.

The merit of the idea, supporters say, is that states know best what their poor people need and should have greater ability to fine-tune their programs at the state level. Currently, states must apply for waivers from the Department of Health and Human Services to experiment with welfare programs, such as ending benefits after two years or denying additional benefits when a welfare mother has a new baby.

But the block-grant idea itself is an untested experiment in welfare reform; never before has an entitlement program been turned into a block grant. And some observers question how it would work in practice - and whether it might end up leaving some of the most vulnerable members of society, children, out in the cold.

``If everything goes to a block grant, it doesn't solve the problems, it just changes the location of who's got responsibility,'' says Harold Watts of the Urban Institute in Washington.

Block grants would fix the amount of money going to each state, and Mr. Watts questions what would happen in the event of a recession, when needs for public assistance would rise. Rep. Clay Shaw Jr. (R) of Florida, chairman of the House Ways and Means Human Resources Subcommittee, suggests establishment of a ``rainy day'' fund for times of need. Congress could also approve supplemental funding in times of need, but in the current mood, lawmakers may be reluctant to waive any balanced-budget requirements.

If welfare is no longer an entitlement, states will have to devise a method for determining who gets benefits and who doesn't. ``It will have to be a great-grandmother of a formula,'' Watts says.

But beyond the question of whether block grants would provide an adequate social safety net as funding needs fluctuate, it remains unclear whether a devolution of power to the states would enhance welfare reform. On one level, all states have shown a desire for reform (or at least cost-cutting) by seeking waivers from Washington. But states face their own fiscal constraints - most have balanced-budget requirements - and an electorate impressed by tax cuts.

If the most ambitious welfare reforms - such as those that provide training, education, and child care to allow parents to work - end up being more expensive than just writing a check, as various studies have shown, then some states may think twice before opting for the costlier options.

Pat Fagan, a social policy analyst at the conservative Heritage Foundation, disagrees. ``A lot of states will keep job training, because it works'' in certain circumstances, he says.

At this point, whether a block-granted welfare system becomes a reality remains an open question. President Clinton told the governors on Jan. 30 that he supports allowing states to experiment with welfare programs, but he has expressed doubt about block grants and about ending welfare's entitlement status. Ensuring the well-being of children is in the national interest, Mr. Clinton asserts, and that duty cannot be left solely to the states.

Even within the pro-block-grant crowd, differences have emerged over how much federal oversight is needed. Some House Republicans say that if the federal government is going to write the checks to the states, the federal government should control the program. Republican governors say, send us the money and let us do what we know is best for our state.

Senate Republicans have yet to pull together on the issue. The most radical suggestion of all comes from Sen. Nancy Kassebaum (R) of Kansas, chairman of the Senate Labor and Human Resources Committee. She wants to end the federal role in welfare - no funding, no oversight - in exchange for greater federal funding of Medicaid, the health-care program for the poor. Her rationale: The only way to keep the federal government from attaching strings to state programs is to take away its leverage, money.