Impact of the South Carolina Family Independence Act: 1996 to 1998
June 1998

SUMMARY (PDF)

The Family Independence Act (FIA) requires the Legislative Audit Council to report to the General Assembly every two years on the success and effectiveness of the policies and programs created under the act. We are required to address specific questions, including: the number of families and individuals no longer receiving welfare; the number of individuals who have completed educational, employment, or training programs under the act; and the number of individuals employed and the duration of their employment.

This will be our second report and is statutorily mandated to be published on or about August 31, 1998. The first report was published in 1996 and focused on how well the Department of Social Services (DSS) was implementing the mandates of the FIA. Because the Family Independence program had just begun in 1996, the effects of the act could not be fully addressed in the first report. Our second review looks at the impact of the FIA from its inception through December 31, 1997, and also includes several areas of concern identified through research and discussions with key legislators and legislative staff. These include:

• What has been the impact of the program so far on the welfare caseload, and what is happening to people who are no longer on welfare?
• Is there a surplus of welfare funds (Temporary Assistance for Needy Families [TANF] block grant funds), and what can these funds be used for?
• What is the availability of program services, such as job training, child care, and transportation, needed by welfare recipients?

We also have reviewed DSS' compliance with recommendations made in the first report.

Key Findings

There has been a large decrease in the number of people receiving welfare.

From January 1996, when the Family Independence program began, through December 31, 1997, the decline in the number of both individuals and families receiving welfare was about 42%, which represents 38,529 fewer children and 12,832 fewer adults receiving welfare. In 15 counties, 50% or more of welfare clients have left the rolls. Of the adult clients still receiving welfare, 42.9% were actively participating in either education, training, or work activities. DSS reported that as of December 1997, FI clients had found 29,729 jobs lasting at least 30 days for at least 30 hours a week at minimum wage or above.

However, the decrease in welfare rolls is also attributed to a healthy economy and a drop in the number of new applications for welfare.

Some clients leave welfare through employment; others lose benefits by failing to comply with program requirements.

We reviewed all FI cases closed from July 1996 through December 1997 to determine why individuals left welfare. Only 25% of cases were closed because recipients found jobs and were earning enough money to leave welfare; more cases were closed for failure to comply with procedural or work/training requirements of the FI program, or because recipients voluntarily left welfare.

DSS also is conducting surveys of former FI clients in an attempt to determine the status of these clients. This follow-up found that approximately 60% of former clients surveyed were employed full-time a year after leaving welfare. However, many respondents to the closed case survey stated they did not know about transitional benefits, such as child care and medicaid, that are available to them under the FIA.

DSS projects a reserve of $54 million in state and federal welfare funds by the end of FY 97-98.

Of this amount, $14.7 million in state funds has been committed to match other federal grants. Expenditures of the federal portion of the surplus must be in accordance with TANF requirements. DSS spent less than the federal block grant allotment and state appropriation because welfare caseloads are declining more rapidly than expected. With this surplus the state has the opportunity to invest more funds in services that will increase the long-term prospects for those trying to become more self-sufficient. DSS needs to work closely with the Governor's office and the General Assembly to formulate a plan for using surplus federal funds.

Transportation is a major problem for welfare clients.

A lack of transportation currently is one of the biggest barriers to self-sufficiency facing both FI clients and low-income working families in general. Some areas of the state are completely unserved by public transit, and others have only limited public transportation services. DSS is planning to purchase 20 vans to transport FI clients; however, other public and private sector involvement is needed to find solutions to the transportation problem in this state.

FI clients also need more vocational training opportunities that would enable them to find jobs at higher wages. According to DSS data on client status, approximately one-third of able-bodied adult recipients are working but still receiving a stipend because they do not make enough to leave welfare. While DSS has collaborated with technical colleges and other agencies to provide training for FI clients, some barriers exist to making this training more widely available.

The use of subsidized child care by FI recipients is less than was projected.

A major concern was that, as increasing numbers of welfare recipients found employment and thus needed child care, children of non-welfare, low-income families would be squeezed out of the subsidized child care system. Priority in the ABC child care voucher system was given to welfare families, and as the number of welfare children receiving child care increased, the number of working poor families receiving child care decreased. However, child care use has not met projections, and many clients are using relatives or friends to care for their children. By early 1998 additional funding was provided for 10,000 new slots in subsidized child care for low-income families.

DSS has taken appropriate action on most of the previous LAC recommendations.

In our 1996 review of the Family Independence Act, we made recommendations concerning DSS' implementation of the FIA. These recommendations were reviewed to determine the progress DSS has made. DSS has taken appropriate action on most of the recommendations and is conducting its own evaluations of the FI program.

Particular concerns were also noted regarding the management information systems. In the 1996 FIA review, we recommended that DSS "move as quickly as possible to improve its management information systems for the FIA." While modifications have been made, there are still some problems with the ability of these systems to provide all the necessary support for the FI program.