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ELECTRONIC BENEFITS TRANSFER PILOT PROJECT Senator HARKIN. Thank you very much.

Senator Mikulski hoped to be here. However, she had to be in Baltimore and could not be here. She wanted me to raise this issue with you.

Maryland currently participates in a pilot project to provide AFDC, food stamps, and child support benefits using electronic benefits transfer. The project has been successful in Baltimore City and the State with approval from OMB and the Department of Agriculture. They would like to test the project on a statewide basis rather than just in Baltimore.

The Family Support Administration has some technical concerns that Maryland officials believe can be easily resolved even if the program is operating statewide. : Given these assurances, why is the Family Support Administration refusing to authorize expansion of this effective, cost-saving program, especially since other Federal agencies, particularly OMB, are supportive?

Ms. BARNHART. Let me say, Mr. Chairman, this is a situation that I am on top of on a daily basis. In fact, I have raised a number of concerns about expanding the scope of that pilot EBT project from Baltimore County out to the State of Maryland as a statewide project. Let me point out and mention for the record just a couple of the reasons that I think are particularly important in terms of my objection at this point and also mention that I am working with the Office of Management and Budget, the Food and Nutrition Service, and the State of Maryland to resolve.

One of those concerns, Mr. Chairman, is the fact that as a demonstration project obviously we are interested in demonstrations for potential replication purposes. In the State of Maryland the vendor has made a proprietary claim on the software that has been developed during the demonstration project and up to this point in time is refusing to allow it to be duplicated and used elsewhere. Obviously, that substantially negates any benefit that could be derived from a demonstration project.

So one of the terms and conditions that I am requesting in terms of expanding the project statewide is that the vendor would have to agree to make all software available to anyone who would choose to use it after this demonstration is completed and to release its proprietary claim.

A second point of particular concern to me is the fact that in the proposal there is the possibility they will be reducing the number of times that an AFDC recipient could access funds through an ATM machine. As I am sure you can appreciate, Mr. Chairman, given the neighborhoods some of the AFDC recipients live in, it is not a good idea to have to withdraw large sums of money from an ATM machine. Rather, it is better to be able to draw the money out as you need it and as you are going to spend it.

A further concern of mine is that the cost per transaction to AFDC recipients that they are talking about could be anywhere from 50 cents to $2 per transaction, and since we are talking about people who are already some of the most vulnerable and certainly some of the poorest in this Nation, I really do not think that we should be promoting projects that are going to charge recipients of welfare programs a fee to access the welfare dollars they are being paid.

Those are just a couple of my concerns, Mr. Chairman. I could provide more for the record, but my hope is that by the time the record is printed this issue will be resolved. Again, as I said, I have been in contact on a daily basis with OMB, the State of Maryland, and FNS, and we hope to reach an early resolution next week.

GROWTH IN AFDC CASELOADS AND COSTS Senator HARKIN. I appreciate that.

One last question on AFDC. Federal welfare payments are expected to increase by $1.1 billion in fiscal year 1992, for a total of $14.5 billion. The number of families receiving AFDC benefits is expected to grow to 4.46 million in fiscal year 1992 compared to 3.97 million in 1990. In other words, the welfare caseload grows, AFDC grows, and we have to put out more money.

What do you see as the major reasons for the growth in welfare costs and the increasing caseloads?

Ms. BARNHART. Mr. Chairman, that is a question that I have been asked a lot lately by other Members of the Congress and by reporters and people interested in welfare and public policy issues. I would tell you that I wish I had a precise answer to give you, but I do not. I can tell you some of the things that we think have contributed to the recent caseload increase: things like economic downturn in some parts of the country, New England in particular; and things like integration of services and one-stop shopping.

The conjecture is, quite frankly, Mr. Chairman, that we are doing a more effective job of outreach and making programs and benefits available to people, and they are taking advantage of that. So on the one hand I suppose you could say the programs are working.

We are concerned about it because this caseload growth is sort of an anomaly. Generally what happens is that when the unemployment rate goes up, there is a 6-month lag time before the AFDC caseload goes up. We did not have that situation. The rise that you are talking about really began in August 1989, almost concurrent with some of the economic slowdown we saw in New England in particular.

We are very concerned about this new phenomena that we are unable to explain fully. We are getting ready to undertake a study as part of our research and evaluation program for the current year to look at factors that affect the caseload, not just in this particular circumstance, but to get a better handle on that for future fluctuations in caseload as well. It is something that we are monitoring closely and have some of our most talented research and evaluation folks looking at.

Senator HARKIN. Thank you again for appearing here. Keep up the good work, and I look forward to working with you during the remainder of the year.

Ms. BARNHART. Thank you, Mr. Chairman. I appreciate the opportunity.

QUESTIONS SUBMITTED BY THE SUBCOMMITTEE Senator HARKIN. There will be some additional questions from various Senators which we will submit to you for your response.

[The following questions were not asked at the hearing, but were submitted to the Department for response subsequent to the hearing:)

QUESTIONS SUBMITTED BY THE SÚBCOMMITTEE

IMPLEMENTATION OF NEW CHILD CARE PROGRAMS

Ms. Barnhardt, you should know that we consider the job you have of implementing new child care programs to be very important.

Question. Tell the Committee where you stand on developing the necessary regulations and the focus these regulations will have on the questions of Child Development and quality of care.

Answer. The Family Support Administration is moving quickly to issue preliminary guidance to the States and eligible Indian Tribes on planning for the Child Care and Development Block Grant. We plan to issue regulations by late spring. In addition, procedural guidelines were issued on 12/9/90 to States interested in administering programs which provide child care to families at risk of becoming welfare dependent. We also plan to issue proposed regulations for the At-Risk program by late Spring.

A number of advocacy groups have met with us to express their concerns about early childhood development and quality of care issues. As a result of these meetings, we are aware of the importance of balancing regulatory requirements relating to quality, early childhood development and parental choice.

Both the preliminary guidance and the regulation will specify that 25 percent of the block grant funds must be reserved for early childhood development, before-and after-school care and quality improvement. A portion of the remaining 75 percent may also be used for quality improvement.

The statutory language regarding the use of block grant funds for quality improvements and to increase the availability of early childhood development services including before-and after-school care, is clear. Although we cannot directly discuss the content of the regulations at this time, we will assure that programs implemented by the States comply fully with all statutory requirements, including those related to quality improvements, early childhood development services, and health and safety requirements.

Question. As you know, regulations for the discretionary block grant program need to be finalized in plenty of time to meet the funding window between September 7 and September 30. Do you foresee any difficulties in obligating all the FY 1991 funds in a timely manner?

Answer. We plan to begin obligating FY 1991 Child Care and Development Block Grant funds on September 7, 1991, in accordance with the FY 1991 Appropriation. Recognizing the narrow funding window, we will ask States, Tribes and Territories to submit their plans well in advance of September 7. Grant amounts will be determined by formula, which is a relatively straightforward process, rather than through the discretionary grant review process.

As for obligating all the FY 1991 funds in a timely manner, we will allow time for negotiation with States and Tribes before the funds must be obligated. Recently, FSA successfully implemented the JOBS program, as well as the child care provisions of the Family Support Act, under similar time constraints. The process was similar to that being used for the Child Care and Development Block Grant. We, therefore, fully expect to obligate the Block Grant funds on a timely basis.

CHILD CARE COORDINATION

In addition to the Child Care and Development Block Grant, you also have responsibility for administering child care services to welfare

clientele under the JOBS program, as well as child care assistance to low-income families "at-risk" of going on welfare.

Question. Tell us what you are doing to coordinate these programs, to avoid duplication and overlap?

Answer. We require that states coordinate JOBS Child Care, Transitional Child Care and At-Risk Child Care with other child care such as Head Start, Department of Education, and the Block Grant, as well as other public and private child care resources: A State must assure such coordination in its request for funding. The purpose of this emphasis on coordination is to assist States in avoiding duplication and any inappropriate overlap.

At the Federal level, we are working to insure coordination across child care programs. Intra-agency working relationships have been established and brought into play in the development of regulations and state guidance. These as well as inter-agency relationships will continue to be put in place. Further, to improve coordination with other Federal programs, FSA has been holding meetings with staff in other agencies who run related programs such as Head Start and the Social Services Block Grant.

Question. To what extent will you be able to standardize and simplify State administration of these programs, in such areas as licensing and data collection and reporting?

Answer. While, under law, specific requirements with respect to licensure, certification, and registration must be met, each State will have the flexibility to examine how best to organize services to meet its needs.

There is no requirement for standardization of administration of these programs across States, but each State must meet the respective program requirements for child care under each funding source. FSA is working to develop regulations that will enhance, rather than complicate, State administration of these child care programs.

FSA has efforts underway regarding simplification and standardization of data collection and reporting requirements, such as requiring the same data to be reported for all Title IV-A funded child care.

Question. How are you coordinating these child care programs with related services administered by the Office of Human Development Services, including Head Start and the Social Services Block Grant?

Answer. Coordination between the Job Opportunities and Basic Skills Training (JOBS) program and Head Start has been fostered through cross-training and technical assistance programs provided under contract in conjunction with the implementation of JOBS and special interagency initiatives.

Cross-training has occurred at the national, state and local levels through formal presentations on child care programs to program staff and at conferences sponsored by program agencies or professional associations.

Special initiatives are being undertaken as part of the Family Support Administration and office of Human Development Services strategic plans. This year's efforts include coordination between the JOBS and Head Start programs. Similar types of coordination activities with OHDS will be done for the at-risk child care and the child care block grant programs. FSA has held meetings for the purpose of coordinating with staff who are working on the Social Services Block Grant, At-Risk Child Care and Head Start. In addition, FSA has been strengthening inter- and intra-agency working relationships as work on the development of the regulations continues. FSA and OHDS staff are developing an information package

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