Nothing but Safety Net

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The debate in Albany four years ago was intense. Welfare reform had arrived from Washington, and progressive politicians and their activist allies wanted to make sure that federal time limits wouldn’t stop people in need from getting aid once their five years on welfare were up. Gov. George Pataki and Senate Republicans, on the other hand, saw an opening to slash spending. But they couldn’t do away with welfare entirely. Article 17 of the state Constitution requires “the state to provide aid, care and support for the needy.”

And so the two sides ironed out a compromise: Maintain welfare benefits for the poor whose federal help has expired, but take cash away from them. Instead, the state would begin to pay benefits directly to the likes of landlords, Con Ed and grocery stores. At the time it was a win both for politicians who could claim they were tough on welfare and for activists eager to preserve a safety net. New York is one of just a few states that has agreed to continue full benefits for people who’ve used up their federal welfare time.

Don Friedman of the Community Food Resource Center recalled 1997’s events during a recent meeting with fellow advocates for the poor. “Our so-called friends in Albany kept reassuring us,” he remembered. “They said, ‘You’ll see. No one is going to be hurt.'” He paused. “We’ll see.”

Those reassurances will soon be put to the test. Record job growth and a fierce government push have prompted almost half of those on welfare to leave the rolls, but there are still 75,000 families statewide who have received cash benefits continuously since 1996. As of January 2002, they will qualify only for the new welfare alternative: what the state has dubbed “Safety Net Assistance Non-Cash.”

The most obvious change with Safety Net, as everyone calls it, is that recipients will have much less cash to spend. The average welfare family–a single mom with two children–now receives $577 a month in cash, an amount which likely pays for rent (often subsidized), utilities, food costs not covered by food stamps, and other necessities. Under Safety Net, the city will pay a family’s rent and utilities directly. Whatever is left over will be available as cash, through a debit card. There won’t be much of it. That family will end up with just $58.20 for all of its cash expenses, everything from paying for school clothes at a thrift store to washing clothes at the Laundromat to buying fruit from a street vendor.

State statistics suggest that as many as 63,000 families in the five boroughs, or about 200,000 New Yorkers, could transfer to Safety Net early next year. Among the six women who met on a recent evening in a Lower East Side support group called Women as Resources Against Poverty, four are facing down the limits. Several cradled newborns in their arms as they shared what little information they had about the new program.

The women of WRAP reacted with disbelief when they were told it would cut the small amount of cash they have to spend. “This has nothing to do with planning a better life for my family,” says Barbara Caporale. “What’s this about? Not trusting me because I’m poor?”

“I’m really worried,” adds Idalie Vargas. “How am I supposed to find work when I haven’t found any for years? And forget about shopping for bargains.”

The women unanimously believe that Safety Net will make life on welfare much harder. State and city officials who are implementing the plan couldn’t agree more–that’s the way, they say, they intended it. “Temporary Assistance is not meant to be a permanent form of life,” said Jack Madden, spokesperson for the state Office of Temporary and Disability Assistance (OTDA). “Limiting their access to cash is meant to push them towards self-sufficiency. It’s a stick.”

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With little more than six months to go before the federal time limits kick in, state and city officials have been actively encouraging long-timers on the welfare rolls to believe that their benefits will soon vanish. At welfare and job training centers across the city, posters feature a huge clock and the slogan “Do you realize that your time on Temporary Assistance is limited?” Recent letters from the city to recipients begin, “Your time limits for Cash Assistance will be expiring this year.” Safety Net isn’t mentioned.

As a result of such misinformation, many welfare recipients are convinced they will be permanently cut off. BichHa Pham, the public policy coordinator of the Hunger Action Network of New York, regularly holds workshops for recipients. She asks if people have heard of the time limit, and almost all have. She then asks about the Safety Net program: “Hardly anyone knows about it,” she says. “They’re scared.”

Both the state and the city have made it clear that they hope many of those still on welfare will leave public assistance between now and December. The city Human Resources Administration claims that only a little more than 10,000 of the 63,000 cases nearing time limits will make it to December. Most of the rest will find jobs, according to the agency.

As for the state, “Our goal is to have none,” boasts Madden. People who remain on welfare usually face a combination of persistent obstacles, including illiteracy, little formal education, difficulties with English, young children to care for and in many cases mental and physical handicaps. The state knows this–“these people have multiple barriers,” Madden says–but it, too, maintains that in the next six months thousands will find jobs. (Such predictions run contrary to a growing body of research–including the city’s own–suggesting that only about half of those who have left New York City’s rolls are working at all.)

For those clients who do make it to Safety Net, the government will first cut checks for housing, electricity, gas and heat directly to the recipient’s landlord and utility companies. Next, it will provide a small cash allowance of no more than 20 percent of their total benefits. Remaining benefits will be accessible through a debit card, similar to the Electronic Benefits Transfer card that replaced food stamps.

For each of these pieces of the Safety Net puzzle, unanswered questions abound. Will rent checks continue to go to landlords even if they fail to maintain apartments? What happens if the utility payments aren’t enough in an unusually cold winter or hot summer? What about neighborhoods with few stores that accept debit cards?

So far, officials are offering only the vaguest answers. The state denies it’s unprepared, but does admit it won’t be ready by the end of December, when the first wave of recipients lose their federal funding. The Office of Temporary and Disability Assistance says it hopes to launch Safety Net by spring 2002, and will keep paying cash benefits until then. But no one is willing to put a firm date on the transition, suggesting that many important decisions remain. “This Safety Net system will create enormous headaches for the state,” predicts Shelly Nortz, deputy director for policy for the Coalition for the Homeless in Albany.

The most difficult challenge may be staying on the rolls once Safety Net begins. No one outside the halls of bureaucracy yet knows whether the state or the city will automatically switch welfare clients to the new program, or force them to file paperwork and report to their caseworker to apply anew. Such requirements, recipients say, are one of welfare’s biggest headaches. “More paperwork than you can imagine,” said Caporale. “Caseworkers are never available. You miss one appointment and then you end up being sanctioned. Being on welfare can be a full-time job.”

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One reason the state and city are so determined to keep shrinking the rolls is that they’ll soon have to pick up the whole tab. Federal welfare reform mandates that any benefits after the five-year time limit be paid completely by state and local governments. For people who haven’t hit five years, half their cash benefits are paid by the feds, with the remainder split between Albany and City Hall. In the short term, the bigger bill for the city and state won’t be any problem, because the 1996 federal welfare law included healthy cushions of money for the poor. But once Congress revisits its welfare legislation next year, Safety Net could become a very expensive undertaking.

Safety Net won’t stretch state and city budgets right away because they’re actually swimming in hundreds of millions of dollars in unspent cash from federal Temporary Assistance to Needy Families block grants. States are allowed to spend this money freely on programs that help people leaving welfare, and many of them are diving into everything from affordable-housing development to high-quality child care. But New York isn’t one of them. Between 1999 and 2000, New York’s unspent TANF funds grew by $428 million, and now amount to more than $1.3 billion.

Like all states, New York also currently operates under a federal mandate to dedicate to anti-poverty programs 75 percent of what it had been spending for welfare prior to 1996, whether for cash benefits or anything else. Since then, New York’s welfare rolls have shrunk by more than half. Because the state is obligated to spend nearly $1.7 billion a year anyway, devoting it to Safety Net won’t be a problem.

But the reauthorization of the welfare law in 2002 could quickly deflate New York’s welfare windfall. No one knows what Congress will do, but most welfare policy experts predict major cuts. The fact that New York has spent so little of its cash could come back to haunt policymakers, particularly if Congress uses the state’s excess billions as an excuse to slash the grant.

New York will likely have to choose between two politically unpalatable alternatives: increasing welfare spending to meet the expected shortfall, or slashing programs to save money.

Add to all that the likelihood that the current cooling of the economy will increase unemployment, and welfare spending starts to look like trouble for New York in 2003.

And in the long run, New York’s refusal to spend more of its TANF surplus could cost the state far more. “Don’t we want to spend this money on programs that could cause people to leave welfare for good? asks Trudie Renwick of the Fiscal Policy Institute–in English as a Second Language programs, GED prep, drug treatment, child care, transportation. With a recession in sight, the hundreds of thousands who’ve left welfare are vulnerable to going back on the rolls. Except this time, the state and city will foot the whole bill.

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Public officials continue to be vague about the details of how Safety Net will work day-to-day. In response to questions from City Limits, a city spokesperson wrote: “HRA is working on our plan…. Details are not available at this time.” The state was more forthcoming, but admitted it hasn’t made certain key decisions. For example, the OTDA doesn’t know if it will restrict what recipients will be able to buy with their new debit card. Will the card be coded to buy just food? Toiletries too? Books? Cigarettes? Beer?

Most worrisome is that the notoriously inefficient HRA will now be directly paying landlords and utility companies for tens of thousands of clients. For many welfare cases, HRA already directly pays for essentials like housing or child care. HRA’s slow pace and slip-ups in making these payments have been a consistent problem. Valerie Spencer has been waiting for more than two months for HRA to cut a check to her cousin who watches her four- and eight-year-old girls while Spencer goes to her workfare assignment. She considers herself lucky that her child care is in the family. “It’s hard enough to find anyone to watch your child for $96 a week,” Spencer said at the WRAP meeting. “Who’s going to do it if they have to wait months to get paid?”

Likewise, a caseworker told Idalie Vargas that the city would pay her overdue Con Ed electricity bill to help the single mother get back on her feet. Then her caseworker left her job. “Next thing I know,” says Vargas, “Con Ed is billing me $900. It took me two or three years to pay that back out of my welfare check.”

Paying landlords directly raises all kinds of other problems. For one thing, tenants lose what little leverage they have. “If your landlord is not making repairs, or if you have no water or if the roof leaks,” observes Pham, “withholding your rent is one of the few ways you can access your housing rights.” The program also assumes that a recipient has a traditional housing situation, ignoring the extensive underground housing market for poor people. Many rent rooms from friends and family, sublet space and move frequently–all of which will make direct payments to a single landlord difficult.

Perhaps the least explained part of the new program is the introduction of the new Electronic Debit Transfer (EDT) card, which will be very similar to the Electronic Benefits Transfer (EBT) card that low-income New Yorkers already use for food stamps and to access their cash welfare benefits. The EDT card, which state officials confirmed will, like EBT, be overseen by Citibank, will let its holders access two pools of money: the debit budget, which can be used in stores, and the tiny cash benefits. In a move that seems sure to spawn confusion, the state has decided not to combine EBT and EDT onto a single card.

The free Citibank machines distribute only bills in denominations of $20. If you’re making every penny count, the $10 or $15 dollars you can’t get that month really hurts. More than anything, though, recipients are furious that their cash benefits will be decreased to only $27 a month for a single adult and $58.20 for a family of three. The women of WRAP, who make every penny stretch each month, reacted bitterly to this change. They discussed the cost-saving options that would soon be gone to them: toiletries at the local dollar store, knock-off jeans on Canal Street, a used stroller from a church basement rummage sale.

“What about when my kid needs $10 so they can go to a museum for field trip?” asked Herminia Colòn, a single mother who is raising her four children with the help of her younger brother. She ticked off other school-related expenses–class photos, yearbooks and dance tickets. All require cash that Colòn won’t have under Safety Net. “He’ll be branded as one of those welfare kids,” she concluded, tears shimmering in her eyes.