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Creative Outlets for Welfare Windfall

Smaller welfare rolls leave states with extra cash. Texas buys used cars for its poorest.

In the past 12 months, Wisconsin's welfare rolls have dropped by 37 percent. Despite the decline, Gov. Tommy Thompson is boosting welfare spending for child care, training, and other programs this year by 45 percent - some $200 million.

What's happening in Wisconsin is taking place around the US: States are dramatically increasing the amount of money they are spending on services for those still on welfare rolls.

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Behind the trend is an unexpected windfall of welfare funds. It is being caused by a 26 percent decline in the number of caseloads over the last three years while federal funding has remained at levels when caseloads were at record highs.

In Ohio, the surplus is running at $30 million per month. Oklahoma has $60 million to work with this year. New York State's surplus is expected to be $800 million to $900 million. No one knows the national total, but it's running into the billions.

As they start their budget process this month, most states are scrambling to come up with new services because the bulk of the federal money must be spent on the poor. A few states plan to increase the amount of direct cash given to recipients, but most are trying to use the money to get welfare recipients into jobs.

Already there are some unusual ways states are spending their surpluses - everything from helping recipients buy cars to teaching them how to start businesses:

* In Maryland, Anne Arundel County is helping the poor - but entrepreneurial - begin van services that will bid for contracts to take welfare workers to jobs and the elderly to the mall. The van owners will get paid with vouchers that taxi companies don't want to accept.

"This is not just a training program but also provides transportation services because the private sector has not responded to our need," says Vesta Kimble, deputy director of the county Department of Social Services.

* In Wisconsin, the state is providing specialized training by a local college, plus transportation, for welfare recipients to labor-short areas. One company, Tecumseh Products Corp., recently hired eight welfare recipients after they completed courses in math, communications, and how to operate gauges.

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The firm, which makes engines and transmissions for lawn mowers, pays the workers more than $9 an hour. In January, it will hire 15 more. "I have to admit I was somewhat skeptical about it because you hear that people on welfare have no desire to work," says Dave Eberhardt, operations manager. "But this group of people has proved me to be wrong."

* Virginia and Texas are helping welfare recipients buy cars. Virginia purchases surplus government vehicles and then sells them on reasonable terms to welfare clients who have no public transportation to get to jobs. Texas sells donated vehicles - some from local car dealers looking for a tax write-off.

"Transportation may be our largest issue," says Raymond Haddock, director of family-support services for Oklahoma, which has earmarked money for tires, minor car repairs, and bus passes.

The state surpluses are only expected to widen in the future since Congress has funded the welfare block grants, now called Temporary Assistance to Needy Families, until 2002.

Bring on the funds

But the extra money will likely be needed: Solving the problems of those left on the rolls could be more expensive.

"The hard core will be left, and they will be harder to serve since you have to tackle more issues, such as drug abuse, to be successful with them," says Mr. Haddock of Oklahoma.

Still, other states think the extra money needs to be saved for a time when the US economy is not so vibrant and the welfare rolls expand again. Ohio, for example, plans to put $75 million of its surplus into a rainy-day fund.

But most states are using the surplus, plus new rules allowing them greater flexibility, to restructure their programs. For example, many states are now funneling money directly to cities and counties, where administrators can adapt to local conditions.

"What the person often needs is a minor car repair, a uniform, steel-toed boots, or new tires," says Haddock. "If we can tie it to a work activity, we can pay for it."

Not all of the surplus funds need to be used for welfare purposes. Some can be transferred to child care and a smaller amount can be transferred to the social-services block grant.

Most states are doing this. Wisconsin, for example, is tripling its spending on child care from $60 million to $180 million over the next two years. With the additional funding, it's expanding the program to include a family of three with a gross income of $26,650.

Maryland's Anne Arundel County views child care as essential to getting people back to work. Since many welfare recipients end up getting late-night jobs because they have low seniority, the county has increased the number of child-care slots for shift workers and evening hours. It's also training 15 welfare recipients how to run a home-based child-care center.

From welfare to business owner

In fact, some states are trying to solve the welfare problem by making the recipients into entrepreneurs. In Ohio, for example, the Ohio Microenterprise Program has seven programs earmarked for people on welfare. In Lucasville, the state made a loan to a man who had been pulling metal out of garbage cans.

"With a halfway decent truck, he's got a good business; he's off welfare and doing rather well," says John Damschroder, special projects director for the program.

This is the goal for Derick Young of Piney Orchard, Md. Mr. Young was laid off from his job last April. By August, he was getting ready to apply for welfare. At the county offices, he saw a poster that said "Start Your Own Business."

"I said, 'yeah, right,' " recalls Young. He pursued it anyway and applied for help to start a van service that will provide rides for welfare recipients on their way to jobs and the elderly who need rides to the mall. His proposal for VANtage Transport Service was accepted.

Now the gray Plymouth seven-seat van is ready to roll next week. "I have contracts and everything," says Young. "It feels great."

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