UNIVERSAL WORK REQUIREMENT FOR WELFARE RECIPIENTS COULD COST CITY
MORE THAN $500 MILLION EACH YEAR FROM 2000-2002

The city has already exceeded federal work requirements for welfare recipients.

Mayor Giuliani’s recent announcement of plans to require that all able-bodied welfare recipients leave the rolls for private employment or take city workfare jobs by the end of 1999 could mean costs to the city budget of more than $500 milllion annually, according to a study by the New York City Independent Budget Office (IBO).

Even if the current dramatic reduction in welfare caseload in the city continues to the point that the rolls are reduced by half from their 1995 level—to approximately 600,000 individuals—providing training, workfare jobs and child care would cost the city $510 million in 2000, rising to $580 million in 2002. These costs include full-time child care at more than $6,700 per child and the pay of supervisory personnel for workfare workers.

Under Mayor Giuliani, New York City has seen its welfare caseload diminish from 1.16 million to 763,000 driven in part by federal and state mandates to reform the welfare system. Welfare centers are being renamed job centers, and city officials have said they are moving people off the welfare rolls and discouraging new applicants from applying. On July 20, 1998, Mayor Giuliani announced plans to put a universal work requirement fully in place by the end of 1999.

City officials have broad financial and legal leeway in how they implement federal welfare reform, according to IBO. The city does not have to increase the number of welfare recipients enrolled in work programs in order to meet either federal or state requirements. Under federal law, the city’s workfare quotas have been reduced as a result of declines in the welfare caseload since 1995.

Douglas A. Criscitello, IBO Director, said, "Reducing long-term welfare dependency has been a goal of local and national officials across the range of political opinion. The IBO analysis of Mayor Giuliani’s proposal was designed only to look at the fiscal implications of this major public policy initiative, and represents neither an attack on nor an endorsement of a universal work requirement."

Because the city has provided virtually no data on the welfare and labor market experience of work program participants, a broader analysis of the city’s work programs is not possible. Without information on what work program participants contribute to city government services and follow-up on individuals who have left the welfare rolls or been discouraged from applying, it is impossible to determine whether universal work requirements—as opposed to other options such as education or job training—are in the best interests of the city and its residents.

IBO’s conclusions are based on an analysis of the city’s current welfare program, including the federally funded Family Assistance program (formerly known as Aid to Families with Dependent Children—AFDC) and the state-local program Safety Net Assistance (formerly known as Home Relief).

Family Assistance provides funds on a sliding scale (up to $577 per month for three persons) to families with minor children. Safety Net Assistance provides funds to adults without minor children, families that have reached the five-year time limit for Family Assistance, and others.

Both programs are the result of dramatic changes to federal and state welfare policies enacted in 1996 and 1997. These changes—including penalties for jurisdictions not complying with the new laws’ requirements—set time limits on assistance, work quotas for adult recipients, restrictions on federal SSI benefits for children, and limits on eligibility of legal aliens for some kinds of assistance.

As of the end of 1997, about 67,000 welfare recipients were participating in work or education training programs in return for their welfare grants. These included about 33,000 in the Work Experience Program (WEP) who were doing clerical work in city agencies and a range of other tasks including street sweeping and clean up and maintenance in city parks.

Studies by the Urban Institute and others have indicated that a large portion of welfare recipients nationwide and in New York City, in particular, have little education, limited work experience, and difficulty with the English language. Those people are more likely to stay on the rolls for long periods and should prove to be the most difficult to place in private sector employment.

Established in 1996 pursuant to the New York City Charter, IBO provides nonpartisan analysis to both elected officials and the public on fiscal issues facing the city. Copies of the full 18-page report are available by calling (212) 442-0632, writing to the Independent Budget Office, 110 William Street, 14thFloor, New York, NY 10038, or by accessing IBO’s website at www.ibo.nyc.ny.us.

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