Research Commentary: North Carolina Needs to Continue Reforming Welfare Programs

Published December 9, 2016

More than 20 years after the Personal Responsibility and Work Opportunity Reconciliation Act was first enacted, some governors and legislators have seized the opportunities offered by the law, developing thoughtful policies and integrating services needed to help recipients move into the workplace. However, many states’ current mix of welfare and anti-poverty programs is acting as a disincentive for work, trapping welfare recipients into long-term poverty. North Carolina has taken several major steps toward enhancing its welfare programs, but much remains in need of improvement.

In 2015, North Carolina implemented reforms that require food stamp recipients to meet work requirements to receive their benefits. The new rules give food stamp recipients three months to find a job, volunteer somewhere, or enter a work-training program. Similar reforms in Maine helped to shrink the number of Supplemental Nutrition Assistance Program recipients in the state by greater than 9,000 while saving approximately $21.6 million a year, according to the Maine Department of Health and Human Services.

Welfare reform policies should focus on encouraging able-bodied recipients who are enrolled in these programs to become more self-sufficient and less dependent on government aid. Asset tests are one tool states can use to ensure all food stamp dollars are used only by those families truly in need, but according to the Foundation for Government Accountability (FGA), 34 states have used loopholes to avoid implementing an asset test altogether. FGA estimates if asset testing were to be restored to the federal baseline, taxpayers would save more than $7 billion nationally.

According to FGA, if every state matched its asset testing for food stamp eligibility to the federal baseline, 749,000 fewer Americans would be trapped in food stamp dependence. Nationally, taxpayers would save more than $1.1 billion per year. 

The current income and asset test for SNAP requires recipients to have a gross income below 130 percent of the poverty level, a net income below 100 percent of poverty, and less than $2,000 in assets. Despite these income standards, many SNAP recipients are accepted under looser standards through “categorical eligibility.” In states using categorical eligibility for SNAP, such as North Carolina, recipients are determined by their participation in other cash welfare assistance programs, such as Work First Family Assistance, which can have more-relaxed eligibility standards. 

Critics of asset tests argue they discourage saving, but asset tests are an important tool that’s used to ensure individuals spend their own resources before turning to taxpayers for support and to prevent abuse by those who do not truly need the help. Establishing an asset test with a reasonable threshold allows room for savings while making sure those who truly need welfare benefits receive them. 

Other reforms FGA recommends are to implement data-matching technology that would check federal, state, and commercial databases to confirm the income, employment, citizenship status, and identity of recipients. Its plan also requires regular and automatic reviews of current welfare recipients to these databases to ensure continued eligibility, and FGA further recommends the public prosecution of recipients who knowingly abuse the welfare system in order to recover lost benefits and deter future abuse.

North Carolina should also consider integrating government services – such as job training, housing assistance, and drug and alcohol rehabilitation; empowering caseworkers to give welfare applicants one-time cash grant loans to meet short-term needs without first enrolling applicants in the welfare program; reducing or eliminating benefits for each additional child born while the mother remains on welfare; imposing lifetime limits on how long people can receive benefits; and enforcing sanctions, such as loss of benefits, for failure to seek and keep employment.

The real focus of social welfare programs must be to provide temporary or supplemental assistance while encouraging work and independence. States should reform their assistance programs, which often trap low-income Americans in poverty by disincentivizing work, using these and other reforms. By doing so, state governments would help people to become more self-sufficient and less dependent on government.

The following documents examine welfare reform in greater detail.

Kansas Lawmakers Approve Welfare-to-Work Reforms
Michael Bates writes in this Budget & Tax News article about a new bill in Kansas that would make reforms to the state’s welfare entitlement program. “If approved by the House and signed into law by Gov. Sam Brownback (R), Senate Bill 372 will enact reforms discouraging long-term dependence and welfare fraud and will encourage welfare recipients to seek employment,” wrote Bates.

Welfare Reform Report Card: A State-by-State Analysis of Anti-Poverty Performance and Welfare Reform Policies 
In 2015, The Heartland Institute published an updated version of its Welfare Reform Report Card. This report card compiles extensive data on five “inputs” and five “outputs” of state welfare and anti-poverty programs and assigns a final grade to each state for its welfare policies.

Research & Commentary: SNAP Update and the Return of Work Requirements–commentary-snap-update-and-the-return-of-work-requirements
In this Heartland Institute Research & Commentary, Matthew Glans examines the Supplemental Nutrition Assistance Program and recent proposals to reform food stamp programs by restoring work requirements.

Food Stamp Dependence in the States
This interactive map from Foundation for Government Accountability shows what percentage of each state’s population is dependent on food stamps and how much it costs the state.

Maine Continues to Lead Nation in Efforts to Fight Abuse of Food Stamps
In this Heartlander article, Matthew Glans discusses Maine’s efforts to fight abuse and waste within its SNAP program and the successes they have had reforming SNAP.

Welfare Rules Database 
The Urban Institute’s Welfare Rules Database provides a “comprehensive, sophisticated resource for comparing cash assistance programs between states” and for researching changes in cash assistance rules between states.

The Work Versus Welfare Tradeoff: 2013
The Cato Institute estimates the value of the full package of welfare benefits available to a typical recipient in each of the 50 states and the District of Columbia. The study found welfare benefits outpace the income most recipients can expect to earn from an entry-level job, and the income gap between welfare and work may actually have grown worse in recent years.

More States Enforce Food Stamp Work Requirements
With the U.S. economy emerging from the recession, food stamp work requirements suspended during the downturn will be reinstated in many states, says Jake Grovum notes in Stateline.

Top 10 Reasons Food Stamps Need to be Reformed
Andrew Montgomery of FreedomWorks examines serious flaws in current food stamp programs: “In recent years, food stamps have grown into a major financial obligation. Enrollment in SNAP has increased dramatically, rising from 26 million in 2007 (one in twelve Americans) to nearly 47 million in 2012 (one in seven Americans). Costs have increased dramatically as well, rising from $35 billion in 2007 to $80 billion in 2012, making it the second most expensive means-tested federal welfare program, behind only Medicaid.”

SNAP Rolls Continue to Increase as Program Ensnares Families in Dependency
In this Heartlander article, Jeff Reynolds discusses the increase in food stamp dependency and ways to reform the program.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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