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Replacing the AFDC, JOBS and prior child care assistance programs with the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) block grants represents a fundamental change in the nation's approach to social welfare policy. Instead of national entitlement programs guided by federal principles and policies, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was enacted, together with extensive waivers granted to states by DHHS prior to its passage. This resulted in 51 separate state welfare programs, individually designed in accordance with fewer federal requirements.
A stated goal for the new welfare reform law is to provide states greater flexibility to design and manage welfare programs responsive to their needs and resources. An expressed selling point of the block grant structure is that states have broad discretion in the use of their own funds. The new range of options available to states under the TANF and CCDF block grants, including previously unavailable funding arrangements, provides greater freedom for state administrators to design innovative programs consistent with their state's needs and circumstances.
Purpose of This Document
Government administrators are frequently urged to approach the management of programs and funds in a more business-like manner. Typically, this means in a manner likely to produce a good return on program investments. Like other wise investors, state managers and policy makers can maximize the overall returns on their state's investments in family economic security by carefully applying proven investment portfolio principles.
In this report, we describe basic investment portfolio management principles, and show how they can be applied by state managers in designing state welfare policies and programs. The benefits derived from this approach can be substantial. Once these relatively straightforward principles are understood, they can be readily applied to a broad range of issues and choices that arise when designing state welfare programs. It is not our intent to describe or categorize in detail the range of investments available to and/or being undertaken by states. Instead, the goal is to introduce the investment portfolio management framework, and show some of the advantages of diversified approaches to welfare investments.
Social welfare policies embody multiple interests, goals and objectives. Investments in the economic security of welfare recipients also embody multiple interests, goals and objectives. These differences translate into various perspectives from which to evaluate welfare investments. and the risks and returns involved. For example, risks and returns can be viewed from the perspective of state tax payers, policy makers and politicians, or welfare recipients. In each case the profile of risks and returns is different, though they overlap to a degree.
In this report our primary focus is on the perspective of state policy makers and officials designing and implementing state welfare programs. We discuss state welfare investments mainly from the perspective of decision makers who translate the interests and preferences of the citizenry into policies and programs whose implementation involves investment of funds available to the state. The perspectives of tax payers and welfare recipients are important, and are incorporated into the report, but are not its main focus.
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