The new law contains three provisions requiring work or work preparation by adults in welfare families:
1. Adults receiving assistance through the block grant are required to "engage in work'' (as defined by the State) after 2 years (or less at State option); otherwise, their assistance under the block grant is ended. Unless States opt out, adult recipients not working must participate in community service employment with hours and tasks set by the State after receiving benefits for 2 months. This requirement does not apply to single parents of a child under 6 who are unable to obtain needed child care. Further, States may exempt parents of a child under age 1 from this or any other work requirement.
2. States are required to have a specific and gradually increasing percentage of their caseload in work activities. Work activities are tightly defined to include actual work in the private or public sector plus, to a limited degree, education, vocational education training, and job search. (See below.) The participation requirement begins at 25 percent in 1997 and increases by 5 percentage points a year to 50 percent in 2002. In calculating required participation rates, States are given credit for reducing their welfare rolls, provided the decrease is not due to changed eligibility criteria (the required participation rate is adjusted down one percentage point for each percentage point that the State's welfare caseload is below fiscal year 1995 levels). As noted above, States may exempt single parents of a child under age 1 from the work requirement. If they do so, these families are omitted from the calculation of work participation rates (for no more than a total of 12 months for any single family). At least one adult in 75 percent of two-parent families must be working in 1997 and 1998, as under previous law, but the rate rises so that adults in at least 90 percent of two-parent families on welfare must be working in 1999 and thereafter. States not meeting these work participation rates for single-parent or two-parent families face a reduction in TANF block grant funds: 5 percent the first year and then 7 percent, 9 percent, 11 percent and so forth in subsequent consecutive years of failure; the maximum penalty for failing to meet State work requirements is the loss of 21 percent of the State's block grant.
3. Cash payments and other benefits from the block grant are forbidden for a family with a member who has received aid as an adult for 5 years. States may set a shorter time limit. The maximum time limit of 5 years requires families to become independent of TANF block grant assistance at that point (eligibility for other programs such as food stamps and Medicaid would continue, subject to program income limits). States may make exceptions to the 5-year limit for up to 20 percent of their caseload if the State judges that special circumstances (for example, family violence or borderline disabilities) justify an extension of benefits. In addition, States may use their own funds to assist families made ineligible by the 5-year time limit; States also may use title XX social services block grant funds (including amounts transferred out of the cash welfare block grant into the title XX block grant) to provide assistance to these families.
