Welfare change to hit Louisiana bottom line

In her upcoming special session call, Gov. Kathleen Blanco might wish to add an item addressing something under the policy radar, the welfare portions of the federal 2006 budget reconciliation act (S. 1932). Failing to do so could cost the state millions of extra dollars.

It’s conceivable that Congress could pass the measure and president sign it before the special session is over. It would force states to place at least half (unadjusted, as current law permits) of their eligible Temporary Assistance to Needy Families recipients (mostly single parents) into workfare or job training programs. At present, Louisiana’s rate is about 35 percent so the bill would mandate a rise of at least 15 percent by October. The first year there would be no penalty, but that would kick in by Oct., 2007.

Act 16 of the 2005 Legislature budgeted around $17.7 million to fund programs that are composed mostly those designed to get TANF recipients training. (The federal government’s contribution is estimated to almost double this, and the figure presents almost twice what the state assumes it will pay out in cash assistance.) Pro-rated, this means about another $7.5 million the state will have to find somewhere in the lean post-hurricane-disaster environment to meet this standard.

Failure to achieve the 50-percent standard also could cost the state in another way. Federal law dictates that states must pay at least 80 percent of the 1994 TAF-equivalent level unless they meet the work participation requirement; if so, it’s just 75 percent. By failing to meet the standard, Louisiana could be required to pay around another $2.6 million a year into TANF activities (based on 2003 data) in addition to any penalty cuts in federal funding into the program (which is predicted to pay in about $137 million). The penalty itself could be from one to five percent, meaning a loss of up to nearly $7 million annually for noncompliance.

(Note, however, that training could cut TANF rolls and thus the amount the state must pay out in direct cash assistance. Still, it is budgeted for just over $9 million in this year with the federal government picking up another nearly $114 million, so the state’s savings would not be much.)

One way or the other, Louisiana is going to have to come up with these funds if the Congressional measure, as seems likely, will pass with this provision intact. If not dealt with during the special session, it will have to be tackled during the regular session.