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Family Independence Contracts and Outcomes: 2000 to 2002
October 2002

REPORT (PDF)     SUMMARY (PDF)

The Family Independence Act requires the Legislative Audit Council to report every two years on the success and effectiveness of the policies and programs created under the act. This is our fourth report about the Family Independence program and its management by the S.C. Department of Social Services (DSS).

We focused on how DSS has used welfare funds to contract with other state agencies and private organizations for services to low-income families. Federal Temporary Assistance to Needy Families (TANF) funds, together with state matching funds, are the primary sources of funding for the Family Independence program. In addition, we reviewed the three outcome measures as required by S.C. Code §43-5-1285 — the number of individuals no longer receiving welfare, the number of clients participating in education and training, and the number finding employment. Our findings include the following:

  • We reviewed 21 DSS contracts, with a total budget of about $35 million in TANF funds, that were sole-source procurements. DSS committed these funds without first testing the market to ensure these contractors were the most qualified and cost-effective.
  • DSS justified the sole-source procurements on the basis that each organization offered a unique program or was the only organization in the state providing the desired service. We found that several of the contracted services were available from several sources.
  • DSS does not adequately monitor TANF-funded contracts for fiscal accountability, contractor compliance, or effectiveness of outcomes.
  • Many contracts we reviewed did not clearly spell out program specifications such as the number and type of clients to be served, desired client outcomes, payment methodologies and schedules, and reporting requirements.
  • DSS committed $712,598 in state and federal funds to a management and consulting contract that was competitively bid. However, the contract, as written, did not ensure effective or cost-efficient services.
  • In September 1999, DSS committed $5 million in TANF funds for the First Steps program under a memorandum of understanding with the Governor’s Office. As of the end of FY 01-02, only $542,758 had been spent. The First Steps program was appropriated $20.9 million in state funds for FY 02-03.
  • The number of welfare recipients has increased for the first time since welfare reform was initiated. Welfare rolls have grown in South Carolina, as well as in other states, primarily because of a weaker economy. The number of welfare recipients in December 2001 was 24% more than the number in January 2000. Average monthly caseloads during this time increased 11%.
  • About 57% of adult welfare recipients in South Carolina were participating in work or education and training that could lead to work. This rate met current federal requirements for TANF funding.
  • It could be extremely difficult for DSS to meet new federal requirements for the number of clients participating in work and training activities. Proposed federal standards may require DSS to deal with more clients and develop more work and training opportunities for them.
  • Family Independence recipients obtained 13,512 full-time jobs and 5,245 part-time jobs; however, about 23% of recipients who were employed returned to the FI program within one year. The average hourly wage of $6.53 was a 7% increase over the previous two years.
  • Having transportation and child care on a sustainable and affordable basis is an on-going issue for both FI clients and working, low-income families. Transportation remains as the chief barrier to FI clients seeking self-reliance; in FFY 00-01 DSS spent $6 million on transportation for current and former FI clients, including $760,388 for transitional services for those employed.
  • The terms of the TANF-funded contracts did not always specify that Family Independence clients were to receive priority for services.
  • County DSS staff are responsible for reporting performance data through a self-assessment process, but the state DSS office has not used these outcome measures to manage the Family Independence program.