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. . . And reform to save money

WELFARE REFORM is at stage center in America today. And that has focused attention on Wisconsin, a state that has reduced its caseload in Aid to Families With Dependent Children or welfare by 24 percent since 1987.

Wisconsin's Gov. Tommy Thompson began state-initiated welfare reform in 1987, long before such efforts became fashionable. Not only have the apparent consequences been dramatic, but also Mr. Thompson has demonstrated that welfare reform is a winning political issue.

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But suppose you're a governor and you want to imitate Wisconsin's success. What do you do? Here's the recipe:

First, you cut benefits. The longest-standing Wisconsin welfare reform is a freeze in both the level of payments in AFDC and the amount of income a family can have to be eligible for assistance.

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Second, you propose many state welfare-reform experiments, but for the most part you keep them small. This strategy, which is sensible from a research standpoint, limits state fiscal exposure while not detracting from the political mileage you gain from announcing reforms.

Third, you use federal funds to pay for employment and training initiatives. Wisconsin has increased its level of outlays on employment and training efforts almost fourfold in real terms since Mr. Thompson, a Republican, came to office.

The state has mixed this infusion of funds with major and imaginative efforts to restructure its county-run welfare operations.

Fourth, you do all this in the context of a vigorous economy. The state's economy is healthy -- with a 4 percent unemployment rate.

While we may like what this recipe seems to have produced, a closer look reveals some problems for Mr. Thompson, for potential imitators and, indeed, for national policy.

The Thompson problem is this: That 24-percent caseload-reduction figure covers two distinct episodes, roughly coincident with the governor's two completed terms in office.

During his first term, there was a 19 percent drop from 1987 to 1991. But during the second term -- data are still incomplete -- it appears that the caseload decline of the past four years will be a more modest 7 percent.

Many of the governor's touted reforms came after the major portion of the caseload decline was achieved, and it may be difficult to achieve further reductions -- an objective made particularly important by the 1996 elections.

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The governor and legislature have responded by pumping more money into training programs. The budgeted increase for employment and training outlays for fiscal year 1995 exceeds actual expenditures last year by 25 percent.

While this outlay will probably keep the caseload decline going, it cannot be sustained. About 40 percent of budgeted training funds come from state general-purpose revenues. The governor and the legislature have committed the state to $1 billion in school property tax relief beginning in the 1996-97 school year.

To date, the governor hasn't found the $1 billion needed for schools, and he has sworn no new taxes. In the struggle between welfare and tax relief, welfare is likely to lose. The fallback could be an acceleration of the dark side of the Wisconsin miracle -- benefit cuts and eligibility restrictions.

The problem for imitators is the same. If welfare-to-work programs do account for a significant part of Wisconsin's achievement, the stake required to play the same game is substantial.

Moreover, the Thompson prescription calls for hard work at reforming bureaucracy and delivery systems but few if any cuts in personnel. This is not the message most governors want to hear.

The challenge is to find a way to imitate the Thompson administration's success in welfare administration, to continue funding welfare-to-work efforts and to resist a rush to indiscriminate cuts in benefits. It is not evident at all that either President Clinton or Tommy Thompson knows how.

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Michael Wiseman, a professor of public affairs at the University of Wisconsin-Madison, wrote this for Newsday.


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