The Balanced Budget Act of 1997 authorized $3 billion for welfare-to-work grants to state (the 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands) and local communities to move welfare recipients into jobs—$1.5 billion is available to be awarded by Labor each year in fiscal years 1998 and 1999. Labor also awarded a total of almost $500 million in competitive grants using all of the approximately $368 million in competitive grant funds available for fiscal year 1998 and about a third of the competitive grant funds available for fiscal year 1999. Of the states that applied for formula grant funding, Arizona was the only state that did not pledge sufficient matching funds to receive its maximum federal allocation. These six states chose not to participate for various reasons, including concerns about their ability to provide state matching funds. Of the six states that declined to participate in the welfare-to-work formula program, four states—Idaho, Mississippi, South Dakota, and Wyoming—neither informed Labor they would not be participating in welfare-to-work, nor submitted a welfare-to-work plan to Labor; the remaining states—Ohio and Utah—informed Labor that they would not participate. Most states had at least one local service organization that received competitive grant funds. Three States Set Specific Focus for Formula Grants, While Others Allowed Wider Local Discretion

Three of the six states we reviewed—Massachusetts, Michigan, and Wisconsin—specified populations to be served with formula grant funds, such as assistance to unemployed noncustodial parents or TANF recipients who are reaching their time limits on cash assistance. Plans for the other three states—Arizona, California, and New York—stated that the use of welfare-to-work funds would be determined by the local service delivery areas. For example, Michigan’s plan emphasized serving unemployed noncustodial parents who have child support payments in arrears and whose dependents are receiving TANF assistance. In contrast, three states defined their formula grant focus more broadly and did not emphasize a specific service strategy. California’s state plan noted that—given the diversity of the state’s local service delivery areas—no one service strategy could be effectively applied statewide. Stronger Partnerships Are Developing Between the Workforce Development and Human Service Agencies

State and local officials in the six states we reviewed noted that a stronger partnership was developing between the workforce development agencies and other human service agencies assisting welfare recipients. They attributed this stronger relationship, at least in part, to their joint involvement in the welfare-to-work planning process. For the welfare-to-work competitive grants we reviewed, competitive grantees also coordinated their plans with state and local officials. We also obtained information about the competitive grants Labor awarded on May 27, 1998, and November 20, 1998, with welfare-to-work funds available for fiscal years 1998 and 1999. New York submitted its welfare-to-work plan on June 29, 1998.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information about: (1) welfare-to-work formula and competitive grants awarded to, or declined by, states for fiscal year (FY) 1998; (2) how selected grantees are planning to use these funds; and (3) how selected grantees plan to meet welfare-to-work requirements to better integrate the states' workforce development services with other human services for welfare recipients.

What GAO Found

GAO noted that: (1) The Department of Labor (DOL) awarded formula grants to 44 states plus the District of Columbia, Guam, Puerto Rico, and the Virgin Islands with welfare-to-work funding available for FY 1998, and, as of November 20, 1998, it had awarded competitive grants to 126 organizations with combined welfare-to-work funding available for fiscal years 1998 and 1999; (2) six states--Idaho, Mississippi, Ohio, South Dakota, Utah, and Wyoming--did not participate in the welfare-to-work formula grant program; (3) these states, which would have received a total of about $71 million, chose not to participate for various reasons, including concerns about their ability to provide state matching funds; (4) Arizona was the only state that applied for formula grant funds but did not pledge sufficient matching funds to receive its maximum federal allocation; (5) the competitive grant funds Labor awarded represented all welfare-to-work funds available for FY 1998 and about a third of the FY 1999 funds; (6) most states had at least one local service organization that received competitive grant funds; (7) three of the six states GAO reviewed--Massachusetts, Michigan, and Wisconsin--outlined very specific uses for formula funds, while plans for the other three states--Arizona, California, and New York--indicated that the use of these funds would be determined by the local service delivery areas; (8) Michigan's and Wisconsin's plans emphasized assistance to unemployed noncustodial parents--these parents, mostly fathers, often have child support payments in arrears and dependents who are receiving welfare cash assistance; (9) Massachusetts focused on serving Temporary Assistance for Needy Families recipients who are reaching their time limits on cash assistance; (10) in contrast, California's plan did not emphasize a specific welfare-to-work service strategy because state officials believed that no one service strategy could be applied effectively throughout the state; (11) similarly, Arizona and New York allowed local service delivery areas to decide on strategies for using formula grant funds; (12) state and local officials in the six states GAO reviewed noted that a stronger partnership was developing between the workforce development agencies and other human service agencies assisting welfare recipients, in part because of their joint involvement in the welfare-to-work planning process; and (13) the welfare-to-work competitive grantees also coordinated their plans with state and local officials.