Vermont’s Welfare Restructuring Project (WRP) was one of the first statewide welfare reform programs initiated under waivers of federal welfare rules that were granted before the passage of the 1996 federal welfare law. WRP, which was implemented in July 1994 and will run through June 2001, aims to increase work and self-support among recipients of cash assistance. To this end, the program requires most single-parent recipients to work in wage-paying jobs once they have received welfare for 30 cumulative months (two-parent families with an able-bodied primary wage earner face a full-time work requirement after 15 months of benefits receipt). The state assists recipients in searching for jobs and also provides subsidized minimum-wage community service jobs to those who cannot find jobs by the time they reach the 15- or 30-month time limit. WRP also includes a set of financial work incentives, consisting of supports for families who leave welfare for employment, as well as welfare rule changes intended to encourage and reward work.

The Vermont Department of Social Welfare (DSW), the agency that administers WRP, has contracted with the Manpower Demonstration Research Corporation (MDRC) to conduct a comprehensive evaluation of WRP. The study, which is based on a rigorous random assignment research design, uses data from the entire state, but focuses in detail on six of Vermont’s 12 welfare districts. It began in 1994 and is scheduled to end in early 2002. MDRC is a nonprofit, nonpartisan organization that designs and evaluates social policy initiatives for low-income individuals, families, and communities.

This first report in the WRP evaluation describes WRP’s implementation through mid 1997 and provides early information on how the program is affecting patterns of employment and welfare receipt for WRP’s target population. The analysis of WRP’s effects should be viewed as preliminary because of the report’s timing: the period covered by the report ended just as some single-parent cases (who make up about 80 percent of the state’s welfare caseload) were beginning to reach the program’s 30-month time limit. The work mandate, which is imposed when recipients reach the time limit, may affect their behavior in dramatic ways, but such impacts are not fully captured in this report. Two future documents, a brief update in 2000 and a final report in 2002, will include longer-term data on WRP’s effects and will also compare its financial benefits and costs.

A Brief Summary of the Findings

For purposes of the study, parents who applied for or were receiving welfare in Vermont were assigned, at random, to one of three groups: the WRP group, whose members are both eligible for WRP’s financial work incentives and subject to its time limit; the Aid to Needy Families with Children (ANFC) group, whose members are subject to the welfare rules that were in effect before WRP began; and the WRP Incentives Only group, whose members receive WRP’s incentives but are not subject to its time limit. Because individuals were assigned to the groups by chance, there were no systematic differences among the groups’ members when they entered the study. Thus, any differences in employment rates, welfare receipt, or other outcomes that emerge among the groups during the study’s follow-up period can reliably be attributed to WRP’s policies. Such differences are referred to as the program’s impacts.

The report focuses primarily on about 8,000 people who were randomly assigned to the three groups from July 1994 (when WRP began) through June 1995 in the six districts targeted for intensive study. It examines each individual’s ANFC and Food Stamp receipt, employment, earnings, and income during a 21-month follow-up period. A subset of people — the roughly 1,500 single parents who entered the study in July, August, and September 1994 — is tracked for 33 months.

Results for single parents prior to reaching the time limit. Single parents could not have reached WRP’s time limit during the 21-month follow-up period. Thus, the key question about this "pre-time limit" period is whether recipients’ awareness of WRP’s incentives and time limit caused them to alter their decisions about work, welfare, or participation in employment-related activities. (Participation in Reach Up, Vermont’s welfare-to-work program, is voluntary for single parents until just before they reach the time limit.) Apart from hearing about the policies that applied to their group, recipients in the three groups did not have dramatically different experiences with the welfare system during this period. WRP was well implemented and helped to give Vermont’s welfare system a more employment-oriented focus. Because this new emphasis appears to have affected recipients in all three groups, however, the study does not measure its impact.

• The full WRP program — including both the incentives and the time limit — generated a modest increase in employment during the pre-time limit period. Sixty-eight percent of WRP group members worked at some point in the 21-month period compared with 63 percent of the ANFC group. In addition, the program slightly increased the rate of participation in Reach Up. WRP did not affect the rate of ANFC receipt — about 55 percent of each group were receiving ANFC at the end of the follow-up period — nor did it change the average amount of welfare received or people’s average combined income from public assistance and earnings.
• WRP’s time limit was necessary for generating impacts. WRP’s financial incentives alone had little or no impact on employment and slightly increased the proportion of people receiving ANFC during the last three months of the follow-up period. Adding the time limit to the incentives generated an increase in employment and a decrease in welfare receipt. In assessing these results, however, it is important to note that many of the benefits provided through WRP’s incentive package are also available, at least to some degree, to members of the ANFC group through other programs.

Longer-term results for single parents. A more substantial difference in the "treatment" provided to the three groups emerged when recipients in the WRP group began to approach the 30-month time limit. WRP group members are required to participate in job search activities during the two months before they are due to reach the time limit. Once they reach the limit, they must work in an unsubsidized job (if they can find one) or a community service job. To begin to capture the impact of WRP’s work mandates, the analysis looks at longer-term (33-month) results for people who entered the study early on.

• Once recipients started reaching the time limit, WRP began to increase substantially the proportion of those who were working while on welfare. DSW records show that in Months 27 and 29 of the follow-up period there was only a modest difference between the WRP group and the ANFC group in the proportion who received ANFC and did not report employment. However, by Month 33 a substantial difference had emerged: 32 percent of ANFC group members were receiving ANFC and had no reported employment compared with only 23 percent of the WRP group. Thus, once the time limit began to take effect, WRP began to reduce substantially the number of people who relied solely on public aid — a key goal of the program. Although these longer-term results are promising, two caveats are necessary. First, the results are based on a small group of early enrollees; results for the full sample may be different. Second, because the longer-term data were drawn exclusively from DSW records, it is not possible to say whether WRP generated an increase in employment or only an increase in employment that was reported to the department.
• Staff are making a serious effort to implement the post-time limit work requirement, and few recipients appear to be falling through the cracks. Nevertheless, at any point in time a substantial proportion of recipients are neither working nor exempt from the work requirement, despite having passed the time limit. Detailed case studies indicate that frequent changes in the status of recipients, the absence of strong enforcement tools, and other factors make it very difficult for staff to ensure that everyone is working at all times. Perhaps the most surprising aspect of the post-time limit experience so far is that very few clients have entered community service employment slots. This is seen as an encouraging sign, because it means that a large majority of the clients who are meeting WRP’s work requirement are in unsubsidized jobs.

Results for two-parent families. The "treatment" difference among the three research groups may be smaller for two-parent families in the ANFC-Unemployed Parent (UP) program than it is for single-parent families. Although WRP’s changes in welfare eligibility rules make it substantially easier for certain groups of needy two-parent families to receive assistance, the potential impact of the time limit (15 months for ANFC-UP cases) is muted by the fact that principal wage earners in all three groups are subject to work-related mandates throughout their families’ time on welfare.

• WRP generated a modest increase in ANFC receipt among ANFC-UP families: 79 percent of families in the WRP group received ANFC benefits at some point in the follow-up period compared with 73 percent of families in the ANFC group. In addition, parents in the WRP group were somewhat more likely to work: 62 percent of principal earners in the WRP group worked in the last three months of the follow-up period compared with 57 percent in the ANFC group; however, this difference was not large enough to be confidently attributed to the new policy. Finally, WRP group members were somewhat more likely to participate in Reach Up, especially in job search activities.

Just under 10 percent of Vermont’s ANFC cases are two-parent families in which one parent is incapacitated. The able-bodied parent in such families is subject to the same time limit and work requirement rules as the sole parent in a single-parent family.

• During the first 21 months of the follow-up period, WRP’s time limit increased employment among two-parent families with an incapacitated parent. In the last quarter of the follow-up period, 50 percent of families in the WRP group had at least one working parent, compared with 40 percent in the WRP Incentives Only group. Adding the time limit also increased the proportion of families who combined work and welfare: 21 percent in the WRP group, compared with 13 percent in the WRP Incentives Only group.