Funding Resources - Welfare to Work Vouchers

Job Training Resources: Department of Labor Welfare to Work Funds

With the passage of the welfare reform legislation in 1996, the nature of federal welfare policy changed significantly. To support the new focus of moving people from welfare to work, the Balanced Budget Act of 1997 authorized the U.S. Department of Labor to provide Welfare to Work Grants to states and local communities to create additional job opportunities for the hardest-to-employ recipients of TANF.

Significant WtW resources remain available at the local level, so housing authorities should contact their local Private Industry Council (PIC) or Workforce Investment Board (WIB) to learn about accessing funds or partnering with local service providers receiving WtW funding!

DOL Funding Basics

Funding. Congress authorized $3 billion for the WtW grants--$1.5 billion for fiscal year 1998 and $1.5 billion for fiscal year 1999. Approximately one quarter of the grants funds were distributed competitively, while the other three-quarters were allocated to states based on a formula that considered the states' shares of the national poverty population and TANF caseload.

Timeframe. DOL awarded the grants over an 18-month period, from March 1998 to September 1999. Under the original legislation, grantees had up to three years to spend the funds. However, program design issues such as overly restrictive eligibility criteria and coordination with TANF and WIA funding streams have slowed program implementation. Consequently, the Administration's FY 2001 budget is proposing two additional years for grantees to expend funds.

Formula Grants to States. Approximately 75 percent of grant funds were allocated to states based on a formula that equally considers the states' shares of the national poverty population and adult TANF caseload. States were required to pass through at least 85 percent of the money to local PICs (or WIBs), which oversee and guide job training programs in geographical jurisdictions called Service Delivery Areas (SDAs). States were allowed to retain 15 percent of the money for Welfare to Work projects of their choice. States were also required to provide one dollar of non-federal funding match for every two dollars of federal funding provided under the formula.

Competitive Grants to Local Communities. The 25 percent of funds not allocated by formula were awarded competitively to local governments, PICs, and private entities (such as housing authorities, community development corporations, community action agencies, and other community-based organizations) that applied in conjunction with a PIC or local government. The Housing Authority of the City of Los Angeles, the Chicago Housing Authority, and the Alexandria (VA) Housing and Redevelopment Agency were all awarded competitive grants.

Relationship to TANF Time Limits. Assistance can be provided to individuals who have reached the 60-month TANF time limit. Such assistance does not count toward the 60-month limit unless it is cash assistance provided directly or through wage subsidies. In those cases, the months do count toward the 60-month limit.

Allowable Uses of Funds. Funds may be used to help move eligible individuals into long-term unsubsidized jobs using the following strategies:

• Job creation through short-term public or private sector wage subsidies;
• On-the-job training;
• Contracts with public or private providers of job readiness, job placement, and post-employment services;
• Job vouchers for placement, readiness, and post-employment services;
• Community service or work experience;
• Job retention and supportive services (if such services are not otherwise available); or
• Six months of pre-employment vocational education and job training.¹

Participant Eligibility

As originally enacted, the WtW legislation contained restrictive eligibility criteria, requiring that grantees concentrate the majority of funding on long-term TANF recipients with two of three specified barriers to employment. The 1999 WtW Amendments retained the program's focus on the hardest to employ, but simplified the criteria.² The eligibility criteria are as follows:

70 Percent Funding Category

At least 70 percent of funds must be spent on TANF recipients who:

• have received assistance for at least 30 months (whether consecutive or not);
• are within 12 months of reaching their TANF time limit; or
• have exhausted their receipt of TANF due to time limits.

In addition, noncustodial parents are eligible under the 70 percent category if they meet all of the following requirements:

• They are unemployed, underemployed, or having difficulty paying child support obligations;
• Their minor children are eligible for or receiving TANF benefits, received TANF benefits during the preceding year, or are eligible for or receiving assistance under the Food Stamps program, the Supplemental Security Income program, Medicaid, or the Children's Health Insurance Program; AND
• They enter into a personal responsibility contract under which they commit to cooperate in establishing paternity and paying child support, participate in services to increase their employment and earnings, and support their children.

30 Percent Funding Category

Up to 30 percent of funds may be used to provide services to the following groups:

• "recent" TANF recipients that have characteristics associated with long-term dependency (e.g., school dropout, teen pregnancy, poor work history);
• youth who have aged out of foster care;
• custodial parents with incomes below the poverty level; and
• TANF recipients who face barriers to self-sufficiency under criteria established by the local Workforce Investment Board.

For more information, visit the Department of Labor's Welfare to Work Web site.

¹ Vocational education and job training were added as allowable activities under the 1999 Amendments.

² WtW competitive grantees were allowed to implement the new eligibility criteria and provide vocational education and job training beginning January 1, 2000. Formula grantees may implement the new eligibility criteria and begin providing vocational education and job training as of July 1, 2000, but federal formula funds may not be expended for these purposes until October 1, 2000 (i.e., competitive grantees must use state matching funds between July 1 and October 1, 2000). The amendments were effective immediately for Indian and Native American grantees.