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Answer. Earlier studies of welfare-to-work programs have found that they are effective in reducing welfare dependency and increasing earnings for the more disadvantaged subgroups of AFDC applicants and recipients. They found that earnings increases were greatest among welfare applicants who were moderately dependent on welfare (that is, those who had some prior work history, but also some prior welfare receipt). These studies also show significant decreases in welfare dependency for the most disadvantaged recipients. In fact, the only group which did not consistently show gains from these programs was the most job-ready group of applicants.

The JOBS program may be even more effective than these earlier programs in reducing welfare dependency. JOBS provides the states with much greater federal resources, and targets these resources to potential long-term recipients. Thus, under JOBS, we should see more intensive programs and greater participation than was seen in earlier welfare-to-work programs. The results of the Saturation Work Initiative Model (SWIM) program in San Diego suggest that these changes could produce greater impacts. SWIM, which consisted of a sequence of job search, work experience, and education and skills training, and involved high levels of participation, produced earnings and welfare impacts for AFDC recipients that exceeded those of other broad-coverage programs studied, and equalled the levels achieved in much smaller and more selective programs. JOBS also includes basic education in its array of services offered, which should benefit the most disadvantaged welfare recipients.

While we believe that JOBS has the potential to achieve its goal of increased employment and decreased welfare dependency for more disadvantaged welfare recipients, there are many gaps in our knowledge about the impacts of specific types of programs on particular subgroups of recipients. Therefore, we have undertaken a multi-year evaluation of the JOBS program, which will fill some of these information gaps and enable states to design more effective JOBS programs in the future.

GROWTH OF AFDC CASELOAD

Federal welfare payments are expected to increase by $1.1 billion in FY 1992, for a total of $14.5 billion. The number of families receiving AFDC benefits is expected to grow to 4.46 million in FY 1992, compared to 3.97 million in 1990.

Question. What are the major reasons for the growth in welfare costs, and the increasing caseload?

Answer. We are concerned about the increase in the AFDC caseload, but do not yet fully understand its causes. The rise in the caseload began to accelerate during the fall of 1989 and has persisted through calendar year 1990.

Our analysis, which has been supplemented by input from state welfare officials, points to a number of causes for the increase. All probably had some influence in differing degrees from region to region across the United States.

Economic factors, especially increasing unemployment, are one likely cause of the rising caseload. Administrative changes in the welfare system, such as expansion and outreach in Medicaid and greater integration among welfare programs, are other possible factors. Some States, such as California, Florida and Texas, also believe they may be experiencing the effects of immigration reform, which may have increased the rate of participation in AFDC by American-born children of legalized aliens. Contributing demographic factors include increasing birthrates and a rise in divorces and outof-wedlock births.

We are continuing to look at caseload trends and are planning to initiate a comprehensive study of factors affecting AFDC caseload size. We expect to initiate this study prior to the end of the fiscal year. In addition, we will continue to assess information as it becomes available from States and other sources.

Question. Are States reporting difficulties keeping up with growing AFDC workloads?

Answer. A number of States have indicated that growing caseloads, sometimes combined with staff cutbacks, are making it harder to meet several of the AFDC requirements, including: processing timely applications within 45 days; completing a redetermination at 6 month intervals; processing and completing independent verification of computer match information under the income and eligibility verification system (IEVS). In order to process the growing workload, some states have modified their standard verification, error reduction and fraud prevention procedures.

Question. Is the JOBS program having any measurable effect in controlling welfare costs?

Answer. Although the Family Support Act was passed in October, 1988, States could not begin operating JOBS programs until July, 1989 and had until October, 1990 to actually initiate a JOBS program. In addition, States have until October, 1992 to implement statewide. Therefore, it is too early to say that JOBS has had a measurable effect on controlling welfare costs. We are encouraged by the efforts of States to implement the program in view of the other challenges that they are facing.

Question. Does the growing costs of welfare, for which the States pay up to half, threaten their ability to meet the matching requirements for participation in the JOBS program?

Answer: States are not expected to avail themselves of all available Federal funding before 1996. State budget deficits, as well as the increasing AFDC caseload, may affect States' ability to expand programs at the projected rate. However, States are not mandated to have statewide programs until October 1, 1992.

Question. What lessons are to be learned from the State of Wisconsin, which is bucking the national trend of increased welfare costs?

Answer. Just as the reasons for the national caseload increase appear to be quite complex and are not fully understood, so are the reasons for the lack of caseload increase in Wisconsin.

We believe that the strong economy in Wisconsin has contributed to the stability of its AFDC caseload. Wisconsin's unemployment rate in December 1990 was only 4.4 percent, compared to the national rate of 5.9 percent. In the Milwaukee metropolitan area, where over 40 percent of the State's AFDC families live, unemployment was only 3.6 percent last December.

Other factors also are probably contributing to Wisconsin's success in keeping its AFDC caseload down. The caseload in several other states stayed essentially flat from July 1989 to November 1990, including states as diverse as Iowa and Louisiana.

REFUGEES

It appears you are requesting a lump-sum appropriation, to replace the several line items that currently make up the Refugee Assistance account.

Question. What is the reason for such a change?

Answer. We are not requesting any change in the appropriation structure for this account. At the time the budget was submitted, we did not recommend a distribution of the appropriation by activity because of uncertainties about the refugee flow and the funding needs for cash and medical assistance. The principal question is how much will be needed to continue the special programs of refugee cash assistance and refugee medical assistance (RCA and RMA) during a refugee's first 12 months in the U.S.

As soon as we have more information on States' current FY 1991 expenditures, we will be able to estimate this better, and we expect to provide the Committee with a proposed distribution of funds by activity in May.

DROP-OFF IN EDUCATIONAL CLASSES

By the end of calendar 1990, amnesty applicants were required to have completed educational courses and passed English/civics exams, to avoid reverting to illegal alien status.

Question. How many amnesty applicants have reverted to illegal alien status?

Answer. The Immigration And Naturalization Service, U.S. Department of Justice, which handles adjudication of these cases, does not keep statistics on the number of applicants who have reverted to illegal alien status because of failure to complete educational courses and pass English/civics exams.

Question. Do you expect to see a significant drop-off in educational classes in FYs 1991 and 1992, when further attendance is strictly voluntary?

Answer. Yes, FY 1991 applications indicate that enrollment in educational classes is beginning to decline. This decline is expected to accelerate in FY 1992. In terms of costs, updated costs for adult education for FY 1990 were $243 million; however, States' estimates for costs for adult education for FY 1991 totaled only $174 million, a decrease of $69 million or 28 percent.

COMMUNITY SERVICES DISCRETIONARY GRANTS

Question. What has been done to eliminate the backlog of community services discretionary grants awaiting closeout? What recoveries of grant funds have resulted?

Answer. In February 1991, staff in the FSA Discretionary Grants and Contract Review Branch reached its FY 1991 professional staffing complement of eight grants management specialists. These personnel resources to date have been directed towards the acceptance of the terms and conditions placed upon grants awarded in the last quarter of FY 1990, negotiation and award of FY 1991 grants, and on the grants management clearance for FY 1991 program announcements. FSA's request for the Program Administration account includes additional staffing in FY 1992 to accomplish closeouts and closer monitoring of grantees' financial performance, in addition to other FSA responsibilities.

While we do not track recoveries resulting from closeout separately from other recoveries such as those resulting from audit findings, program reviews, and other monitoring activities, FSA has been able to determine that in the last 12 months, about 125 community services discretionary grants have been closed, with over $2.5 million of Federal funds recovered.

Question. How has discretionary grant monitoring been strengthened? Are financial and progress reports being received timely and evaluated? Are on-site reviews conducted timely and are appropriate actions taken on problems disclosed?

Answer. A computerized grantee data base system has been developed which facilitates, among other things, tracking receipt of program and financial reports; accounting for the purchase of such assets as equipment and property; and the review of accomplishments reported by grantees and documentation of on-site visits including problems identified, actions recommended, and actions taken; and the production of delinquency letters related to program and financial

reports. The system also provides program and financial managers with the ability to monitor and assure the currency of the data, including the receipt and analysis of reports, and the actions taken to address problems. In addition, funds for on-site monitoring have been increased by 24 percent which will assure that approximately 64 percent of the FY 1990 grantees are monitored on site.

Question. What actions have been taken to assure free and open competition for discretionary grants? In FY 1990 how many awards were made on an "urgent" basis outside of the regular awarding process? How many dollars were involved? How do these statistics compare to those of the prior 2 fiscal years?

Answer. We have reconsidered the approaches previously enunciated in our discretionary grants program announcements and are updating standing announcements. We are also reviewing procedures related to the specifications of annual announcements. It is expected that when discretionary grant announcements define the potential for multi-year projects, instead of shorter-term projects, applications from organizations which would not have been interested in responding for one-year projects because of the start-up costs will be stimulated.

Out of a total of over 300 discretionary grants issued in FY 1990, only seven grants were awarded on an unsolicited basis, none of which was defined as urgent. In FY 1989, four unsolicited grants were awarded, none of which was defined as urgent. In FY 1988, four unsolicited grants were awarded, two of which were defined as urgent. The total dollar amount for these two urgent grants was $475,000, including $136,000 funded out of FY 1989 appropriations. Over 230 discretionary grants were issued in FY 1989 and more than 210 in FY 1988.

Question. How may discretionary grants received no-cost : extensions in FY 1990 and how does this compare to the prior 2 fiscal years?

Answer. In FY 1990, FSA approved about 140 no-cost grant extension actions against the pool of all prior-year, active grants. In programs like Urban and Rural Economic Development, numerous grantees receive no-cost extensions because of the impact of any local-level delay on a work program which requires the purchase of .. property, contracting, and permits.

In FY 1988; FSA executed about 105 no cost grant actions. Data are not available for FY 1989, but we believe that the number of actions would have been relatively constant at about 100 per year.

Question. Has a grants administration manual, approved by the HHS grants management office, been developed and distributed to discretionary grants program staff? Has training been conducted?

Answer. FSA's recently augmented staff in the discretionary Grants and Contract Review Branch has been focused primarily on such urgent activities as negotiating and awarding current grants and issuing grant announcements and guidelines. While an FSA grants administration manual has not yet been developed, we have begun developing policy memos on the most critical topics this year, which will be released following in-house review and clearance by the HHS office of Acquisition and Grants Management. We have met with staff of two program offices to discuss initiating the application of several areas of policy as they develop and will continue to do so as relevant issues arise. In addition, in FY 1991 FSA contracted with the Public Health Service to conduct training for program and financial management staff in many aspects of grants administration.

DEMONSTRATION PARTNERSHIP PROGRAM

Last year this Committee provided nearly $1 million of Demonstration Partnership Funds for programs directed to special populations. Ongoing efforts in Milwaukee, Boston, Fresno, Philadelphia and Des Moines were brought to the attention of the Department so that the programs in these cities would receive strong consideration for funding under this new program.

Question. What is the status of these funds?

Answer. It should be noted that the FY 1991 appropriations did not include funds targeted directly to special populations. However, FSA plans that the FY 1991 Program Announcement covering the Demonstration Partnership Program will include a specific set-aside of funds for projects directed to special populations. All applications submitted under this category will be evaluated competitively and highly ranked applications will be considered for funding.

COMMUNITY SERVICES DISCRETIONARY GRANTS

The Secretary made his last report to the Congress on CSBG Discretionary program in June 1989. That report indicated that grants made with FY 1988 discretionary funds had led to real achievements which improve the quality of life for poor people including, creating business and job opportunities for low income people and attracting investment to poor communities, improving housing and community facilities in rural areas.

Question. Why doesn't the report mention the accomplishments of the National Youth Sports Program?

Answer. Accomplishments of the National Youth Sports Program were included in the report to the Congress covering grants made in FY 1987 and will be included in the report covering those made in FY 1989. Accomplishments for this program were omitted inadvertently in the report covering grants made in FY 1988.

Question. With such a record of accomplishment, what is the rationale for terminating programs for community economic development, rural housing and community facilities assistance?

Answer. Funding from other sources is available to continue these programs. Local organizations that historically have received

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