The Deficit Reduction Act

The Deficit Reduction Act (DRA) of 2005 was signed into law February 8, 2006. The DRA reduces direct federal spending by $39 billion for the five-year period of 2006-2010. The act saves nearly $40 billion over five years. This includes savings related to program changes that are required, as well as optional programs and initiatives that states may pursue.

Within the provisions of the Deficit Reduction Act of 2005 (DRA), Congress has provided several opportunities for states to help enhance the financial support available to low income families that receive child support. While considered a way of recovering money for the state when initially implemented, the child support program is now seen as an important and effective “family-friendly” financial support program. With so many families struggling to meet basic needs on a daily basis, Ohio needs to make the commitment now and enact these optional measures.

The DRA provides several important changes to how child support will be treated when a family is receiving cash public assistance benefits. The DRA requires that pre-assistance child support arrears will no longer be required to be assigned to the state upon application for assistance. Optional provisions contained within the DRA include changes in child support disregard and pass through rules, the ability for the state to release its claim in favor of the family to several types of arrears, and, perhaps most importantly, the ability for payments collected through the federal income tax offset program to be paid to the family first instead of the state.

Currently, as part of the application process for public assistance, the family must assign its right to receive child support payments to the state, as a way of reimbursing the state for the cost of the assistance. This assignment of rights includes assigning away the right to child support arrears that accumulated prior to the family applying for assistance. Under the DRA that assignment of pre-assistance arrears must stop. The option that the DRA provides with regard to pre-assistance arrears is the effective date for implementing the ban. The ban on the assignment of pre-assistance arrears must be enacted in Ohio no later than October 1, 2009, but can be enacted as early as October 1, 2008.

The DRA allows Ohio to disregard child support payments ($100 per month if one child and $200 per month if more than one child) when determining eligibility for cash assistance, as long as that child support is then passed through to the family. This disregard and pass through would allow a family to retain full eligibility for cash assistance and would enhance their monthly income by the child support collected. Currently, child support collected for a family receiving cash assistance goes to the government.

Other family-friendly options include modifying the distribution rules, so that more of the child support collected is paid to the family first, instead of the state. The most important of these options relates to the distribution rules surrounding money collected through the federal income tax refund offset program. Currently, payments received through tax refund offset are paid first toward any arrears owed to the state. Adopting the family-friendly option of paying those collections to the family first will be a tremendous improvement in Ohio’s support for families as the federal tax refund offset program is a significant source of collections on child support arrears.

The options provided by the DRA are significant and the benefits to the affected families are undeniable. The obstacles to enacting the various modifications to current policy have nothing to do with the obvious wisdom of enacting the changes. The obstacles relate to budget considerations surrounding the cost of foregoing the reimbursement provided by the child support collections and the cost of modifying computer systems.

Despite any costs, all of the available options should be enacted and implemented as soon as possible. Families with incomes low enough to qualify for cash assistance are struggling to survive on a daily basis (on less than half of the resources that we know they need to meet their most basic needs). These families need the extra support offered by the DRA now. It must be the highest priority to enact these options as soon as possible. Money must be found in the current budget. The survival of these families depends on Ohio becoming “friendly” now.

Sources/More Information
Dept. of Health and Human Services

Clasp.org

Thomas

[where: Athens, Ohio 45701]

Worse than it seems

The recent Census report regarding income, poverty and health insurance coverage in the United States for 2006 got quite a bit of media attention. Yet, perhaps the least reported but most significant statistic is the increase in individuals who are living at less than 50 percent of the poverty level. Clearly, people living at this income level have a very difficult life, struggling to meet their most basic human necessities. When compared to the 2000 Census, there has been an increase in the total number of people, roughly 5.3 million, living below the poverty level. During the same time frame (2000-2006), there has been an increase of 3.2 million people living at less than 50 percent of poverty. This basically means that of the people that have fallen into poverty during these last six years, the fastest and largest growing segment, roughly 60 percent, has been those living at less than half the poverty level. The difference between a family living at less than 50 percent of poverty (less than $10,000 per year) versus a family under 100 percent ($20,000 a year) is huge. Obviously, all poor families are desperately struggling and are living in difficult circumstances. However, we are somewhat cavalier about the growing number of people that are living on less than $10,000 a year.

It would be difficult to deny that many of these families are in this desperate circumstance because of state and federal government policies which have drastically limited the assistance available to them. Families that receive Ohio Works First cash assistance, funded through the federal TANF Block grant, must have a gross income of less than 50 percent of poverty level in order to meet the initial means test for eligibility. Even worse, the cash benefits that we provide these families is only 28 percent of the poverty level. The Ohio Works First program serves over 120,000 children.

Furthermore, there is an increasing number of families who are not eligible for cash assistance due to time limits, sanctions and other program limitations. We are forcing more families to combine households just to survive. This increase in household size without an increase of income is driving more families to live further and further below the federal poverty level.

Other detrimental program policies include the failure of the federal government to resolve the eligibility problem for Social Security Disability and SSI. Currently, 70 percent of initial applications are denied and a majority of people must file for a hearing with an administrative hearing officer in order to have benefits established. The waiting time to get these hearings is frequently as much as two years. During that wait, many of these disabled individuals have no income whatsoever. This, coupled with the virtual elimination of programs in Ohio to provide any financial assistance for those individuals 18 to 65 without children, leaves a large number of people who are either forced to double or triple up in housing simply because they have no income.

The country was horrified to see families in the aftermath of Hurricane Katrina who had no place to live, no food, no medical care and were struggling to survive. We are far less sensitive to the fact that we are driving more and more families and individuals into these similar desperate circumstances by design and choice rather then as a result of a natural disaster.

--Jack Frech
Director

[where: Athens, Ohio 45701]

Help is NOT on the way

On July 29, 2007, USA Today ran stories: Disabled worker cases at record and Disability delays can lead to personal havoc, about the lengthy delays individuals have to wait for Social Security disability claims. The articles included a list of the Social Security Administration offices with the shortest and longest average waits for hearings on whether an applicant is too disabled to work, which included on the longest waits: Columbus with 841 days and Dayton with 735 days.

In Ohio, this means an average wait of 2 to 2 ½ years for determination; one of the slowest states in the nation. Not only is this havoc for the applicants, but for their families, many of which have dependent children. Families waiting for Social Security determinations are forced to rely on cash assistance (Ohio Works First) benefits from the state in the meantime. But living on cash assistance in Ohio, means living well below the poverty level; and in Ohio, there is a lifetime limit of 36 months for cash assistance benefits – which is likely to run out before disability determination is made. A typical family of three receiving OWF benefits would receive a maximum of $410 a month (Federal Poverty Level for family of three is $1431 per month).

For these families life is a constant struggle to meet basic needs. In Athens County, nearly one-third of the adults receiving OWF assistance have some serious disability. And, their family struggles are further compounded by the fact that the one or more caretakers in these families are disabled and trying to care for children while trying to deal with their own disabilities.
From the article, Social Security Commissioner Michael Astrue says the backlog of cases doubled in six years and could reach 1 million by 2010. Clearly, no help is on the way.

Budget Blues: Shortcomings of Ohio's proposed budget

The new state budget includes some program expansions and improvements that will be very beneficial to struggling Ohio families. An increase in the income eligibility for Medicaid to 300 percent of the Federal Poverty Level will help thousands of uninsured children. An increase in child care provider payments will help many deserving child care providers. Expanding child care subsidies and early learning programs for families up to 200 percent of the poverty level will be a great benefit for children and their parents. Subsidies for food banks, home energy assistance and a variety of special earmarked programs will provide valuable resources for low-income Ohioans. With the support of the governor and the General Assembly, life will be a little better for many Ohioans.

But there is another side. Who lost so these programs could grow? Unfortunately, lawmakers have chosen to help the needy at the expense of the even more needy. While expanding eligibility for Medicaid for children up to 300 percent of poverty, the General Assembly rejected the governor's proposal to restore eligibility for the parents of children between 90 percent and 100 percent of the Federal Poverty Level. While they'll offer assistance to children in families making more than $50,000 a year, they deny help to parents making less than $15,000. I'm not sure why lawmakers imagined that the children in families below the poverty level don't suffer when parents can't get health care or are forced to pay out of pocket and face destitution.

All of the child care and other program expansions were funded out of the Temporary Assistance to Needy Families block grant. While they are all beneficial, these expansions do not resolve the most severe problems that the lowest income families face. Families who must rely on TANF cash assistance are forced to live on an income of only 50 percent of the FPL. Ohio has consistently chosen to provide a grossly inadequate benefit level despite a wealth of available TANF funds. The first priority for the use of TANF funds must be to meet the basic needs for our poorest children--and they are not doing that. Ohio's poorest families will pay so those with more resources can benefit.

My concern is not whether the program expansions are needed or worthy. They are. However, it seems that the less fortunate have been forced to continue to suffer in order to pay for these expansions. Unfortunately, this decision was politically easier than asking those who are already comfortable to sacrifice more.

Testimony Before the State Senate

On May 31, director Jack Frech testified before the Ohio State Senate on behalf of OWF recipients. Below is his testimony:

There are 130,000 children who must depend on the Ohio Works First (OWF) program. There is no state policy that is more intentionally harmful to children than the decision to force these children to live on an income that we know will not meet their basic needs.

An average family of two on OWF receives $336 in cash and $284 per month in food stamps. This combined income rises to only about half of the federal poverty level. Life for these families is a constant struggle to find enough food and to keep a roof over their heads. Over half of the OWF caseload is made up of 'child only' cases in which the grandparents or other relatives are the caretakers.

Why do I say intentional?

We know these families have no other resources. They must follow all of our eligibility rules and work requirements. We have more than ample funds to offer a decent level of benefits and yet we simply choose not to.

We spend a great deal of time and money to prove that these families are poor. With over $300 million dollars budgeted for entitlement administration and over $100 million a year spent specifically on eligibility determination, we are sure that these folks are poor. There is probably no other financial eligibility system that is as detailed or closely monitored than Ohio’s welfare programs.

Welfare was "reformed" ten years ago. It is complete with time limits and work requirements. It was supposed to satisfy our concerns that welfare be limited to only those who are "deserving." Those currently receiving OWF assistance must comply with all of the program rules.

The most obvious example of our intentional mistreatment of these children has been the way Ohio has dealt with the Temporary Assistance for Needy Families (TANF) block grant. As the name implies, the first goal of the program is to support children in their own homes. Ohio has under spent its $1.14 billion TANF budget in almost every year for the past eight years. We accumulated the largest unspent balance of TANF funds in the nation with balances usually exceeding the $728 million federal annual TANF allocation. During this time, we have routinely spent only a third or less of the TANF budget on OWF cash assistance. Even with the Governor’s proposed $10 a month increase in benefits two years from now, the portion of TANF funds spent on cash assistance will drop to 22%.

Every year we devise a TANF spending plan that is supposed to spend down the balance. Most years, we simply don’t spend the money. Other years we have used the funds to replace state General Revenue Fund (GRF) dollars. This has relieved some of the budgeting stress on the administration and legislature at the expense of these poor children. It should be noted that supplanting of state and local funds is not permitted by federal rules and those same rules also limit the use of carry over TANF funds to cash assistance.

Governor Strickland, with the support of the Ohio House of Representatives, has chosen to spend the carry over TANF funds on an increase in childcare provider payments rather than addressing the critical problem of inadequate OWF benefits. All of the Governor’s plans for improved early childhood education and child care will have little effect on children living in families without sufficient food and with constant stress to pay for basic shelter costs and other necessities.

I could say that most people can’t imagine what life is like for these kids and their families. But the truth is, we spend a lot of effort to know exactly what life is like for them.

So I repeat: There is no other state policy that is more intentionally harmful to children than the low level of OWF cash benefits. It is time to take our foot off the necks of these poor families and their children.

We must provide a significant increase in OWF benefits.

--Jack Frech, Director