LC, ILL. :8/2.7 —CB"‘ 3105' N O N G E R ?g0v£R?Y *1} 5 {:3 L 3 N " %_ ‘V I fi’rHMnglmfl hjergfly . ’ 6 I‘ I‘; K‘; g . 1 ‘_ 3: rig"? _:‘: 2:2. ‘H’: ; : S"; l“; H. % z:::z:iim;@mq:@n;ijy]@[;mW: BUDGET CUTS IN AFDC ISSUE BRIEF NUMBER IB8l05l AUTHOR: Burke , Vee Education and Public Welfare Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED 03/20/81 DATE UPDATED O1/15/82 FOR ADDITIONAL INFORMATION CALL 287-5700 0121 CRS— 1 IB8105l UPDATE-O1/15/82 ISSUE DEFINITION The Omnibus Budget Reconciliation Act of 1981 (P.L. 97-35) made 11 changes in AFDC that the Congressional Budget Office (CBO) has estimated will cut FY82 Federal benefit outlays by about 13%, or slightly more than $900 million. This implies companion benefit savings of almost $800 million in State and local funds. The Administration has estimated that the new law will end AFDC benefits and automatic medicaid eligibility for more than 400,000 families, 10.5% of the total, and reduce cash aid for another 7.5%. The thrust of the changes is to reduce or end benefits for families with earnings; for families with a stepparent in the home; and for students beyond high school, plus their mothers, unless the family includes a younger child. The new law also authorizes States to require AFDC recipients to "work off" their AFDC grants, but no immediate budget savings are expected from this provision. some Members of Congress have introduced bills to soften the impact of some of the new AFDC rules, especially those affecting Medicaidf eligibility; but President Reagan has indicated that his FY83 budget will include more cost—cutting AFDC provisions. Further, the 1980 GOP platform endorsed a block grant program "to help return" control of welfare to the states. Thus, the question of the scope and nature of AFDC can be expected to recur in the second session of the 97th Congress. BACKGROUND AND POLICY ANALYSIS A major change in AFDC law contained in the Omnibus Budget Reconciliation Act is expected to have no budget impact in FY82. This is the new authority for States to establish community work projects and to require many AFDC recipients to "work off" their grants by participating in one of the projects. This is widely known as "workfare." The Administration said start-up costs would exceed savings in FY82, but precise numbers were not available. In passing FY82 Budget Reconciliation bills, both Houses of Congress made community work experience programs a State option, rather than a requirement, as the Reagan administration had urged. Further, they authorized other job alternatives for AFDC recipients. In his final (FY82) budget, President Carter proposed five changes in AFDC that he estimated would save $406 million in FY82: assume payment of the Earned Income Credit (EIC) for all eligible families; adopt a standard work expense deduction and put a cap on the allowable deduction for child care costs; "adjust" the earnings disregard; permit States to count a portion of the income of a stepparent in determining an AFDC child's eligibility and benefit; and prohibit monthly payments smaller than $10. All had been proposed before, and three had passed the House as provisions of H.R. 4904. President Reagan's Mar. 10 budget contained in all some 21 proposals, including all of the Carter concepts, two in identical form (plus 5 proposals dealing with child support enforcement). However, only 11 of the AFDC proposals were credited with FY82 savings in benefit outlays. Congress enacted all but 3 of the 21 March proposals of the Administration after modifying half of them. It also enacted two proposals advanced later by the Administration and two initiated by the Senate Finance Committee. CRS- 2 IB8lO5l UPDATE-O1/15/82 Collectively, the AFDC proposals in the final Reagan budget were estimated by DHHS to have these effects on FY82 outlays: ' Millions Federal State=Local AFDC benefit payments $~936 $~798 AFDC administrative costs - 92 - 65 Food stamp benefits +266 0 Medicaid savings N.A. N.A. Net impact on outlays $-762 $-866 After Congress passed the Omnibus Budget Reconciliation Act, completing action on the Administration's AFDC recommendations, DHHS analysts estimated the impacts of the final law. Their October 1981 estimates were that eligibility would be lost by 10.46% of the families enrolled in AFDC and by 9.71% of the program's children and 7.93% of its adults (approximately 408,000 families, consisting of about 744,000 children and 278,000 adults). In addition, DHHS estimated that benefits would be lowered for 7.51% of AFDC families, 9.39% of the program's children and 7.79% of its adults (approximately 293,000 families, consisting of about 720,000 children and 273,000 adults). Thus, in all, the Department estimated that almost l8% of AFDC families and 19% of AFDC children would either be dropped from the program or receive lower benefits because of the new law. When the Reagan Administration had advanced its AFDC program in March, DHHS officials said it would remove from AFDC in FY82 more than one-tenth of the Nation's caseload, some 400,000 families, more than half of whom had earnings; and would reduce benefits for another 259,000 families. The early DHHS analysis indicated that 58% of the families who would lose all or some of their AFDC benefit dollars then had combined AFDC, wage, and food stamp income above the poverty threshold. DHHS analysts said in March that the recommended changes were expected to increase the number of families with cash and food stamp income below the poverty line by about 66,000. It should be noted that provisions that decrease AFDC cash benefits to a family will cause a rise in their food stamp benefits, at the rate of 30 cents per lost AFDC dollar, unless the household's gross income exceeds the food stamp limit, established by P.L. 97-35 at 130% of the poverty level. Similarly, a drop in AFDC cash will cause an increase in a family's subsidy from the low-rent public housing program or the Section 8 lower-income housing assistance progra, at the general rate of 24 cents per lost AFDC dollar. Some 74% of AFDC families were enrolled in the food stamp program, and 15% lived in public housing, as of March 1977. At the same time, provisions that reduce AFDC caseloads by lowering limits for eligibility automatically also decrease Medicaid rolls except in in the 33 jurisdictions with medically needy programs, for which higher income limits are used. Thus, the Carter budget estimated Medicaid savings of $18 million FY82 as a byproduct of AFDC budget proposals. On May 5, l98l, the Senate Finance Committee voted to accept 18 of the Reagan Administration's 21 proposals after revising some and adding 3 others. The next day the Administration's AFDC bill, Social Welfare Amendments of l98l (H.R. 3486), was introduced, providing elaboration on its budget CRS- 3 IB8l051 UPDATE-O1/15/82 proposals and some modifications. on May 29, 1981, the House Ways and Means Committee announced completion of work on a different bill, which it estimated would cut FY82 AFDC program outlays by $710 million, about $300 million less than the savings attributed to the Reagan proposals.‘ The two committees acted to satisfy reconciliation directives in budget resolutions adopted by their respective houses, and their AFDC provisions were incorporated in the FY82 Budget Reconciliation bills recommended by Senate and House Budget Committees (S. 1377 and H.R. 3982, as amended by H.R. 3964). The Senate ratified the Finance Committee provisions in adopting S. 1377 on June 25, 1981. The following day the House rejected the Ways and Means Committee provisions and adopted instead those of the Finance _Committee, as embodied in the Latta amendment. The conference report passed both Houses on July 31, 1981. On Sept. 24, 1981, President Reagan said he planned to send Congress this fall a new package of welfare reform and "entitlement" measures, excluding Social Security, that would cut spending by almost $27 billion in FY82-84. However, he later said he would defer these proposals until submission of his FY83 budget in January 1983. AFDC CHANGES MADE BY P.L. 97-35 The AFDC provisions enacted by congress in the Omnibus Budget Reconciliation Act of 1981 fall into five groups: (a) treatment of recipient's earnings, (b) use of other potential income and resources, (c) categorical limits on eligibility, (d) work rules, and (e) other. Federal benefit savings from the new law were estimated by CEO as follows: CRS- 4 Treatment Of earnings Place time limit on work incentive bonus and limit the expense allowance (items 1 and 2 in detailed account below) Assume advance payment of EITC (item 4) Use of other potential income and resources Adopt retrospective accounting and periodic reporting (item 6) Count a portion of stepparents' income (item 7) Require States to recoup over- and underpayments (item 8) Permit food stamps and housing subsidies to be treated as income (item 9) Enact Federal resource limit (lower than limit imposed by prior regulation (item lo) Treat lump-sum payments as income (item ll) Deem part of the income and resources of an immigrant's sponsor as available to an alien (item ll) (cost estimates by DHHS) Categorical eligibility limits End childs' eligibility age at l8 (State option for age 19 student deadline) (item 13) Prohibit eligibility for entire family of a striker (item 14) Prohibit AFDC for pregnant women with no other children until last trimester (item l5) work rules Permit States to require work in exchange for an AFDC check (item 17) Total IB8lO5l Millions FY82 FY83 $374 $384 5l 49 0 187 108 lll ll5 110 100 103 l6 l7 5 5 l5 15 100 l04 5 5 0 20 $905 $l:l27 UPDATE—Ol/15/82 CRS- 5 IB8l05l UPDATE-Ol/15/82 Below are the,new provisions of law, along with a comparison of prior law: (A) Treatment of earnings States determine maximum benefit levels in the AFDC program, which now provides some $13.8 billion yearly to more than 7 million children (and their needy caretakers), who are needy because one of their parents is absent, incapacitated, or, in half the States, unemployed or underemployed. However, the Federal Government, which pays 54% of the national bill for AFDC benefits, determines how sharply States can reduce benefits for recipients who go to work. Before the Reconciliation Act, the law required States (a) to disregard a portion of a recipient's earnings (the first $30 earned monthly plus one=third of the rest) as a financial work reward and (b) to reimburse the recipient's taxes and other expenses. Thus, the rate pat which earnings reduce AFDC benefits (the marginal benefit—reduction rate, analogous to a marginal tax rate) was 67% of each extra gross wage dollar, minus taxes and other expenses. If taxes and other expenses took 15% of extra earnings, the marginal benefit—reduction rate dropped to 52%. Recipients usually could not work their way completely off AFDC until their gross earnings were double or more their State's maximum benefit level, the guarantee paid to the penniless. The actual exit point depended on the size of work expenses and the State's AFDC payment standard (equal to the maximum benefit level, except in four States). The law did not define or limit what might .reasonably be considered a work-related expense, and State practices varied. The U.S. Supreme Court (Shea v. Vialpando, 1974) held that States could not adopt a standard work expense allowance unless they made provision for actual expenses that exceed the standard. In the Omnibus Budget Reconciliation Act, Congress altered AFDC rules for those with earnings by placing a time limit on the work incentive bonus and dollar limits on the work expense allowance, by establishing a gross income limit for eligibility, by requiring States to assume that eligible parents receive advance payments of the Earned Income Tax Credit (EITC), and by disallowing benefit payments unless the entitlement were at least $10 monthly. 1). Work incentive bonus. As recommended by the Reagan Administration, Congress voted to limit the duration of the work incentive bonus (disregard of the first $30 monthly in earnings plus one-third of the rest) to the first 4 months of a job. In addition, both House and Senate accepted an additional rule, included in the Administration's May 6 AFDC bill (H.R. 3468), to require a former AFDC family to wait 12 months before re-establishing eligiblity for the $30 and one-third earnings disregard in benefit calculation. " 2). Work expense allowance. The Reagan Administration proposed to cap the child care deduction at $50 per child monthly, to standardize the deduction for other work-related expenses at $75, both prorated for less than full-time work, and to deduct these sums before the work incentive bonus (a reversal of then-current law), thus reducing the size of the residual one-third disregard by basing it on net rather than gross earnings. The Carter Administration's FY82 budget also had proposed to standardize the work expense, cap the child CRS- 6 IB8l05l UPDATE—01/15/82 care expense deduction, and "adjust" the earnings disregard ($30 and one-third bonus), but it offered no elaboration. (See chronology below for long history of attempts to revise these provisions of AFDC law.) In passing their FY82 Budget Reconciliation bills, both Houses of Congress adopted the Reagan formula for treatment of earnings, with this change, proposed by the Finance Committee: cap the child care expense disregard at $160 per month per child, rather than $50, as the Administration proposed. (The Ways and Means Committee had recommended a more generous work incentive bonus and higher allowances for expenses, including child care costs.) CBO estimated FY82 Federal benefit savings from these changes in the ,work expense allowance and work incentive bonus at $374 million. 3). Gross income limit. Congress accepted the Reagan Administrationks proposal to establish a gross income ceiling for AFDC eligibility. In passing their FY82 Budget Reconciliation bills, both Houses adopted the ceiling proposed by the Administration, namely, 150% of a State's need standard. The standard of need, which is set by each State, is used to determine initial financial eligibility. Families with net income above the fstandard are deemed to be non~needy. However, in all but three States (Alaska, Idaho, Vermont) the Nov. 1, 1981 need standard for a family of three was below the U.S. Census Bureau's 1980 poverty threshold of $548 per month (the range among States was from $168 in Texas to $751 in Vermont). Further, in more than one—half of the States the new law's gross income limit also ;is below the poverty level. The Ways and Means Committee had recommended ,a generally higher gross income ceiling, either the poverty level, or, at State option, 200% of the State standard of need. (It should be noted that ;the maximum AFDC payments of 24 States, the sums paid to families with .zero countable income, are below the States‘ own standards of need.) As noted earlier, under previous law the earned income limit for continued AFDC eligibility depended on the State's payment standard and the level 'of "reasonable" work expenses, as determined by the State. The purpose of the permanent work incentive bonus and the unlimited work expense deduction was to encourage recipients to decrease their dependence on AFDC. One result, however, was that many recipients could not earn enough to reach the AFDC exit point. DHHS estimated that about 20,000 AFDC families had more than $9,300 yearly in earnings, of which about 800 had earnings above $14,500 and about 200 above $18,000. DHHS estimated that an income ceiling at 150% of the State's need standard would remove 7,000 families from AFDC rolls and save $2 million in FY82 Federal administrative costs. Savings in benefit outlays were estimated 'as negligible, as benefits are assumed small for these working families. The gross income ceiling on eligibility at 150% of "need" will operate ;to prevent full use of the $30 plus one-third work bonus by families of three during the first 4 months of a job in 29 States. As the following examples show, the Reconciliation Act's gross income ceiling sharply reduces earned income limits for AFDC. Gross Annual Earnings Limits, Family of Four PoLo CRS- 7 IB8l051 UPDATE-01/15/82 Previous law(a) (First 4 months of job)(b) % decrease (July 1981) (July 1981) California - $15,967 A» _ M $10,818 % 6 32 Florida 6,429 4,140. 36 Illinois 9,977 6,624 34 Iowa 11,288 7,542 33 New York City 13,937 9,396 0 33 (a) Calculations assume child care and other work expense deductions equal to 20% of gross wages, and take no account of the Earned Income Tax Credit (available to those with gross earnings below $10,000). (b) All represent 150% of the State's needs standard, a ceiling that prevents full use of disregards. (c) Illinois later raised its need standard, but not payment standard. Thus, as of November 1981, the gross income limit for a family of four in the first 4 months of a job was $9,804 reflecting full use of the $30 and one-third transitional earnings disregard. After the first 4 months on a job, under the new law, only child care expenses and work-related expenses within permitted limits can be deducted from earnings charged against the grant. As a result, in most States a four-person family cannot remain eligible for an AFDC supplement if it has a full-time minimum wage job, even though such a family would be in poverty. However, such working poor families would be eligible for food stamps if their assets were low, since their annual earnings would fall $1,442 short of their poverty threshold. By November 1981, the second month of effect of the gross income limit, four States had raised their need standards (and thus the gross income outer limit allowed by Federal law), but not their actual payment levels. They were Alabama, Georgia, Illinois, and North Carolina. 4). Earned income tax credit. Congress accepted the Reagan Administration proposal, which also had been a provision of the Carter 1979 AFDC bill, to assume that an eligible AFDC parent receives advance payments of the Earned Income Tax Credit (EITC), regardless of whether or not he has applied for it. The Earned Income Tax Credit (EITC) supplements earnings of low-income parents by providing tax credits or rebates through the income tax system. The credit equals 10% of earnings up to annual earnings of $5,000 (maximum credit, $500 per year) and reduces the credit by 12.5% for earnings above $6,000. Eligible workers may choose to receive EITC in the form of advance payments added to their paychecks, rather than waiting until the end of the year to apply for a rebate. The 96th Congress (P.L. 96-222) changed the law to require that the EITC, whether received as an advance payment monthly, or in a lump sum at year's end, must be treated by AFDC as earned income. The law forbids disregarding it or treating the lump sum as an addition to resources. 2 The Administration said AFDC recipients should be required ‘CO take advantage Of all nonwelfare sources Of income available t0 them" and that the CRS= 8 IB81051 UPDATE-Ol/15/82 proposal would eliminate the possibility that some recipients might not have the EITC counted at all, presumably be receiving it as a lump sum refund too big to be fully subtracted from the monthly grant. (Another Administration proposal, enacted in P.L. 97-35, requires that lump sum payments be treated as earned income both in the month when received and in subsequent months).l CBO estimated that this change would reduce FY82 AFDC Federal benefit outlays by $51 million. 5). $10 minimum payment. Congress (accepted the recommendation of the Reagan Administration, which also had appeared in the final Carter budget, to prohibit payment of AFDC monthly benefits smaller than $10. States set maximum AFDC benefits (guarantees) but under the law before Reconciliation most paid recipients the amount of benefit, no matter how small, to which the State schedule entitled them. The House voted in June 1971 (Family Assistance Plan, H.R. l) and in November 1979 (H.R. 4904) to bar monthly payments smaller than $10 as a way of reducing administrative and benefit costs. In its H.R. 4904 form, the provision specified that Medicaid eligibility would be preserved for AFDC families whose cash entitlement dropped below $10; and the Mar. 10 Reagan budget provided that those who lose AFDC cash because of this rule would be considered AFDC recipients for all other purposes, including medicaid eligibility. However, a policy of preserving medicaid eligibility for such non-cash recipients would require welfare departments to‘ maintain income records for former AFDC families. DHHS said 7,000 families would not receive AFDC payments because of the proposed $10 minimum and that benefit outlay savings would be negligible. (B) Use of other potential income and resources Several AFDC changes made by Congress fall into this category: retrospective accounting and periodic reporting; stepparents' income; recoupment; treatement of food stamps and housing subsidies as income; Federal outer limit on resources; and lump-sum income. 6). Retrospective accounting and periodic reporting. Congress accepted the Reagan Administration's proposal, which also was made by President Carter, to base benfits on circumstances in a past month (retrospective accounting) except in the month of application and to require periodic income reporting. The recommendations followed an experiment in Denver, Colorado, which concluded that monthly income reporting and retrospective accounting reduced erroneous payments significantly. The proposal was repeated in some subsequent presidential budgets and adopted by the House in November 1979 as a provision of H.R. 4904. Before Reconciliation, the law permitted a State to choose either prospective or retrospective budgeting for AFDC. Regulations adopted in May 1979 required States to specify which method they use and to follow special rules for retrospective systems. As of March 1981, 18 States required monthly income reports from all AFDC recipients with earned income and/or work histories. Of these, States, 12 had adopted retrospective accounting. States with retrospective accounting are: Arizona, California, Idaho, Illinois, Kansas, Michigan, Montana, North Dakota, Oregon, South Dakota, Washington, and Wyoming (plus parts of Colorado). CRS- 9 IB8lO5l UPDATE-O1/l5/82 CBO said that net savings from this proposal would commence in FY83 and estimated them that year at $187 million. “ as i 7). Count stepparents' income. Congress accepted the Reagan Administration's recommendation that States be required to count a portion of a stepparent's income as available for needs of his AFDC stepchild. However, it rejected a related proposal, that States also count a portion of the income of any non-AFDC recipient who lives with an AFDC family. CBO estimated that the new stepparent rule would save $108 million in Federal AFDC benefit payments in FY82. In general, the new rule provides that some of the stepparent's income must be reserved for support of his own income tax dependents, for payments or alimony or child support, and for work expenses. Under prior law, the U.S. Supreme Court had ruled that a State could not treat a stepparent's income as available to an AFDC child unless (1) that State made all stepparents financially responsible for their stepchildren, or (2) there was evidence that the stepparent contributed to the child's support. As of February 1981, the Department of Health and Human Services held that the stepparent responsibility laws of five States qualified them to treat income of an AFDC stepparent as potentially available to the AFDC child. These States were Nebraska, New Hampshire, South Dakota, Utah, and Washington. A DHHS official said the Department's legal office disputed the claims of four other States that their stepparent laws also were of general application: Iowa, Oregon, Missouri, and Virginia. Presidents Reagan, Carter, and Ford all proposed inclusion of a stepparent's income in determining an AFDC child's need, but Mr. Carter recommended that this be a State option rather than a Federal requirement. The purpose of the new rule is to reduce or end AFDC benefits for children of non—needy stepparents . 8). Recoupment. After modification by the Senate Finance Committee, Congress accepted a Mar. 10, 1981 recommendation of the Reagan Administration to require states to recoup AFDC overpayments and correct underpayments. The committee change, which later was recommended also by the Administration in its AFDC bill, H.R. 3468, prohibits recovery of overpayments in any month when the AFDC payment plus "liquid resources and all income" fail to equal at least 90% of the payment the family would receive if its gross earnings were counted. CBO estimated that this new rule would save $115 million in Federal benefit outlays in FY82, and DHHS said it would entail negligible administrative cost. Regulations issued under previous law give States the option to recoup overpayments, and 42 States have a recovery policy, according to DHHS. Of these, 30 recover from the AFDC grant when possible. However, the U.S. Supreme Court has held that recovery of overpayments cannot be made from a recipient who did not willfully withhold information unless she has income other than the AFDC grant from which to collect the sum. DHHS has reported that 9.2% of AFDC payments made frome October 1979 through March 1980 represented overpayments and payments to ineligibles. In CRS-10 IB8l05l UPDATE-Ol/15/82 the same period, the underpayment rate was 0.9%. AFDC benefits in those 6 months totaled about $5.8 billion. 9). Treatment of food stamps and housing subsidies as income.‘ Congress accepted a Reagan Administration recommendation to explicitly permit States to treat food stamps and housing subsidies as income available to meet needs of AFDC families. CEO (and DHSS) estimated that Federal AFDC benefit outlays in FY82 would drop by $100 million as a result. DHHS said the change would have "negligible" administrative cost but would increase food stamp benefits by an estimated $37 million. The new rule overrides a provision of food stamp law that prohibits any Federal or State benefit program to treat food stamps, as income. Despite this provision, all States have been free to consider the availability of food stamps in setting AFDC benefit levels, and some have done so. Also, some have made allowance for rent as paid, up to a maximum. 10). Outer resource limit. Congress accepted a Reagan Administration proposal to place a limit on allowable resources of $1,000 per family in equity value, and to exempt from consideration a home owned and occupied by the family and one motor vehicle, provided that the DHHS Secretary might establish a limit to the family's "ownership interest" in an auto. Under the new rules, States remain free to adopt lower limits. Previous law set no Federal resource limit, but Federal regulations issued under that law established an outer limit of $2,000 in counted assets per person ($6,000 for a three-person family) and gave States the option- to exclude from counted assets the home, personal effects, automobile, and income-producing property and required States to take a family's resources into account. Actual State practices varied widely. For example, as of Apr. 1, l978, 13 States restricted.the value of allowable homes; 2 permitted only old cars. DHHS estimated that this change would remove 16,000 families from AFDC and reduce Federal AFDC benefit outlays by $16 million in FY82, a dollar estimate agreed to by CBO. However, DHHS said it would boost food stamp benefits by an estimated $6 million. ' ll). Lump—sum income. Congress accepted a Reagan Administration proposal to require States to consider all lump-sum payments as income available to meet a family's needs. The household would be ineligible for AFDC if a lump-sum payment exceeded the standard of need. Any excess sum in the month when received would be carried forward for later use. Under prior law, according to DHHS, lump-sum payments that met the definition of income, such as retroactive Social Security payments, were counted as income in the month when received, and, if an excess remained, as resources thereafter. DHHS estimated that the proposal would remove 5,000 families from AFDC, reducing Federal AFDC benefit outlays by $5 million in FY82 (an estimate accepted by CEO) and yielding negligible administrative savings. However, it would boost food stamp benefits by an estimated $2 million. 12). Aliens‘ income test. Congress accepted a Reagan Administration proposal, included in the Administration's bill, H.R. 3486, but first advanced in the Ways and Means Committee bill, to provide that for purposes of AFDC eligiblity for a legally admitted alien, a specified portion of the income of the alien's sponsor would be deemed available for his support for a period of 3 years after entry into the United States. DHSS estimated FY82 CRS-ll IB8105l UPDATE-01/15/82 Federal benefit savings from this provision at $15 million. (C). Categorical income limits 13). Age limit. Congress accepted a Reagan Administration proposal to end a child's eligibility for AFDC on his 18th birthday unless his State chose to extend the limit through age 18 for those still in secondary school. CBO estimated the FY82_Federal benefit savings from this provision at $l0O million (up $35 million from the estimate of DHHS). The Administration estimated that the proposal would remove up to 25,000 families from AFDC and up to 75,000 children from the grants of families who continue to receive aid on behalf of younger children. 14). Ban on AFDC for strikers. Congress enacted a Reagan Administration proposal, as drafted in its bill, H.R. 3468, to prohibit AFDC eligibility for the entire family of a caretaker relative who was engaged in a strike on the last day of the month and to reduce the AFDC grant for a family in which another member was on strike, so as not to pay benefits on behalf of the striker. DHHS said its proposal would remove 1,600 families from AFDC rolls and some $5 million in Federal AFDC benefit oulays in FY82, a savings estimate accepted by CBO. Under prior Federal law, strikers were not banned from AFDC. In the AFDC program for Unemployed Parents (AFDC-UP), States had the option of .denying benefits to households if the parent's unemployment was caused by participation in a labor dispute. As of Sept. 30, 1979, according to DHHS, 18 of the 27 jurisdictions with AFDC-UP programs permitted benefits for strikers. 15). Unborn children. Congress enacted a Reagan Administration proposal, advanced in the Administration's bill, H.R. 3486, to prohibit AFDC during the first 6 months of pregnancy for a woman whose only child was unborn. This provision was included in FY82 Budget Reconciliation bills of both Houses of Congress after being revised by the Senate Finance Committee to permit medicaid for such otherwise AFDC-eligible expectant mothers from the time pregnancy was determined. CBO estiamted that this provision would reduce FY82 Federal benefit outlays by $16 million. Under prior law States had the option to extend AFDC to pregnant women with no other children. 16). Unemployed parent limitation. Congress accepted a Reagan Administration proposal to limit eligibility for AFDC for Unemployed Parents (AFDC-UP) to two-parent families in which the principal earner is unemployed. Negligible savings were expected from this provision. (D). work rules 17). Workfare. Congress rejected a Reagan Administration proposal to require States to establish community work experience programs in which specified persons would be required to perform work in exchange for their AFDC grant. It voted instead to permit States to set up such "workfare" programs. Start-up costs in the first year were expected to offset savings, but in FY83 AFDC benefit savings from this provision were estimated at $20 million by CEO ($17 million below the initial estimate of DHHS). cns-12 IB8l05l UPDATE-Ol/l5/82 Basic AFDC law requires specified persons deemed employable to register with the Work Incentive Program (WIN) for employment and training, and for up to 8 weeks of job search per year- The law prescribes these .penalties for refusal to participate in WIN or to accept an appropriate job, after a counseling period: (1) loss of AFDC for the entire family if the recalcitrant person is the second parent in the home and unemployed; (2) loss of AFDC for the offender, with AFDC payments continued for the child or children, but made to another person on their behalf, if the non-worker is the only able-bodied parent in the home. Regulations issued under prior law prohibited States from establishing any programs that would require an AFDC recipient to work in exchange for her welfare check. The new law permits workfare for all persons except those who are under 16 (under 19 if attending high school) or over 65; disabled; employed full-time: or caring for a child under 3 (or under 6, if suitable child care is unavailable). Before Reconciliation, the law exempted from WIN registration children who were under 16 or attending school full-time, and persons who were "of advanced age," disabled, employed not less than 30 hours a week or caring for a child under 6. The Department noted that the WIN unassigned pool in March 1981 held 800,000 recipients. Of 3.5 million AFDC families surveyed in March l977, 2.2 million had no child below age 3. 18). WIN alternatives. Congress accepted a Senate Finance Committee proposal to authorize States to establish 3-year demonstration projects of their own design as an alternative to the Work Incentive (WIN) program, in which program components could be varied by region or political subdivision and earnings from which would not make a family ineligible for AFDC supplementation. ‘ - Under this provision, not later than 60 days after enactment (thus, not later than Oct. 12, 1981) the governor of a State wishing to conduct a demonstration must submit a letter of application to the Secretary of HHS. Such program must be operated by the State welfare agency and must use WIN participation criteria. As of Oct. 19, 1981, 21 States had made application for WIN alternative projects. l9). Jobs as an AFDC alternative. Congress accepted a Senate Finance Committee proposal to authorize States to establish "work supplementation programs" in which jobs would be provided as an alternative to AFDC. In the work supplementation program, States would be permitted to reduce AFDC grants, use the savings to make jobs available directly or through subsidy and then offer recipients a choice between a job or the lower AFDC grant. The Finance Committee report noted that under this plan modifications "might be needed" to adjust for offsetting increases in food stamp entitlement caused by the reduction in cash aid and, thus, provide that States could reduce or eliminate the earnings disregard otherwise required by law (item 2) to further the purposes of the work supplementation program. 20). Work requirement for caretakers. Congress accepted a Reagan Administration proposal, included in its bill, H.R. 3468, specifying that to be exempt from the work registration requirement, the caretaker relative of child under 6 must give "personal" care to the child and be absent from him CRS-13 IB8lO5l UPDATE-O1/l5/82 only very briefly or infrequently. At the same time it enacted a related Administration proposal to limit the exemption from mandatory work registration otherwise applicable to AFDC children on their 15th birthday’~tos full-time students who attend elementary, secondary, vocational, or technical schools, but not college. These new rules are intended to bar young AFDC parents from attending college. Prior law permitted a yound AFDC parent to attend college, exempting her from the WIN work registration rule, on the theory that full-time schooling increases earning capacity. (B). Other provisions 21). Vendor payments. Congress enacted a Reagan Administration proposal, as drafted in its May 6 AFDC bill, to remove the limit on the Proportion of AFDC cases in which the family's AFDC grant could be paid to someone other than the child's caretaker relative (vendor or protective payments) and to permit such restricted payments without a finding of mismanagement of funds. Prior law limited restricted payments (such as direct payments by the welfare agency for houfing) to one-sixth of the total AFDC caseload in a State (the actual limit was expressed as 20% of the number of other AFDC cases) and disallowed vendor payments upon request of the AFDC family, unless the family was found to have minmanaged funds. This provision has no budgetary impact. 22). Federal matching rate for training. Congress enacted a Reagan Administration proposal to reduce the Federal matching rate for training expenses from 75% to 50%, the rate applicable to other AFDC administrative expenses. CBO estimated that this provision would reduce Federal FY82 outlays by $16 million ($5 million less than the original estimate of DHHS), but increase State and local outlays by an equal amount. Congress rejected three Reagan Administration AFDC proposals: to give States explicit permission in Federal law to place liens on homes for (value in excess of the average home in the State; to establish a national recipient file to which all states would have access; and to make information regarding AFDC applicants and recipients accessible to any Government agency to carry out its public duties. Neither House of Congress accepted these provisions- DHHS estimated that the national recipient file would increase FY82 AFDC Federal oulays by $1 million (and that the cost would rise to $10 million by FY86). It estimated only negligible savings from the other provisions. Under current policy, liens are permitted at State discretion, and in amounts set by them. As of Apr. l, 1978, 10 States had provisions for recovery .of AFDC from assets of recipients. CHILD SUPPORT PROVISIONS P.L. 97-35 also contains child support enforcement provisions to: require the Internal Revenue Service to withhold from tax refunds amounts that represent past-due support obligations assigned to a State as a condition of AFDC eligibility; authorize collection of alimony~ on behalf of an AFDC child's parents if she herself is an AFDC recipient and lives with the child, and permit collection of obligations established by administrative order as well as by court order; require States to charge a fee equal to 10% of the support collected for a non-AFDC family, charging the fee against the absent Fparent; reinstate a provision Of the Social Security ACt declaring that a Child support obligation assigned tO a State as ta condition Of AFDC CRS-14 IB8l05l UPDATE-Ol/l5/82 eligibility is not discharged in bankruptcy; and a provision first adopted by the House Ways and Means Committee in its bill, H.R. 3982), collect past-due child support obligations from the unemployment benefits or trade adjustment benefits of a delinquent parent. ‘ CONGRESSIONAL ACTION The AFDC bill (S. 1377) marked up by the Senate Finance Committee on May 5, l98l to help meet its FY82 budget reconciliation targets contained all but three of the Reagan proposals, in some modified form. The three rejected proposals concerned liens on recipients‘ homes, a national recipient file, and widened access to information about welfare families. The bill authorized States to establish community work experience programs, but did non require them to do so, as the Reagan Administration proposed. Such "workfare" programs would require AFDC recipients to work off their grants. In addition, the committee proposed two alternate job options for States, WIN demonstration projects and a wage subsidy plan for employers who hire AFDC eligibles. All provisions recommended by the Senate Finance Committee were enacted in P.L. 97-35. The AFDC bill (H.R. 3982) marked up by the full House Ways and Means Committee on May 19, 1981, but rejected by the House in favor of the Latta amendment (which incorporated the Senate Finance AFDC plan), contained these provisions, among others: Change in treatment of earnings -- for eligibility determination, disregards 20% of gross earnings, up to a monthly maximum of $175, and child care costs up to $200 per month per child ($400 per family); for benefit calculation, also deducts an additional $50 (except that States could adopt less generous disregards for two-parent families: 20% of gross earnings up to $175 monthly for eligibility, plus $50 for benefit calculation). The committee voted to permit States to terminate or gradually phase out the $50 plus one-third work incentive disregard after 12 months, of work, provided earnings then are above the poverty level, or at State option, above 200% of the State standard of need; preserve Medicaid eligibility for 12 months for families who are dropped from AFDC because of loss of income disregards; assume advance payment of EITC; require States to count a specified portion of income of stepparents; require retrospective accounting an monthly reporting; allow States for 6 years ending Sept. 30, 1987 to require up to 96 hours of work monthly from certain recipients in return for AFDC benefits (workfare); permit AFDC in two-parent families only if the principal earner is unemployed; allow States to cut off AFDC student eligibility at any age between 18 and 21; limit countable resources to $1,500 per family, but allow States to continue to exclude a home and a car, household and personal effects, life and burial insurance policies, and tools, equipment and other income-producing property. Unlike the Senate Finance bill, the Ways and Means bill contained no provisions to: count lump sum payments, assume advance payment of EITC, prohibit payments to strikers, authorize work incentive demonstration projects, eliminate AFDC payments to pregnant women before the sixth month, impose a work requirement on an AFDC parent who attends college, eliminate payments smaller than $10, remove the limit on the proportion of families who can be denied direct payments (vendor or other "restricted" payment cases now cannot exceed one-sixth of the total caseload). The Ways and Means bill also contained a provision proposed by the Reagan Administration in its May 6 AFDC bill rather than in its March budget: to deem a sponsor's income as available to an alien who applied for AFDC within 3 years of entry. This alien provision was contained also in the Latta amendment, in which form it CRS~l5 IB8lO5l UPDATE70l/15/82 passed the House. Subsequently, it was accepted by Senate conferees on the Reconciliation Act. The Ways and Means Committee deleted an original provision Of its May l,9 bill LIPQII reconsideration June 10: t0 reduce ‘E113; maximum Federal funding share of a State's AFDC payments to 57% from the current ceiling of 77.55% (by changing the Medicaid formula, but for AFDC use only). LEGISLATION P.L. 97-35, H.R. 3982 Omnibus Budget Reconciliation Act of 1981. Introduced June 19, 1981 as H.R. 3982 (Jones), a clean bill replacing H.R. 3964 on behalf of the Budget Committee. After being amended (Latta amendments), passed House June 26. Conference report passed both Houses on July 31. Signed into law Aug. 13. 1981. This new law reduces AFDC and child support enforcement expenditures of the Federal Government by more than $900 million in FY82. Provisions are described above. H.R. 268 (Albosta) Requires each State to establish a "jobfare" program and to require participation therein by recipients of AFDC, food stamps, and public housing benefits as a condition of State eligibility for Federal funding. Introduced Jan. 5, 1981; referred to Committees on Agriculture; Banking, Finance, and Urban Affairs; Education and Labor; and Ways and Means. Similar bills: H.R. 269 (Findley et al.), introduced also on Jan. 5, 1981; and H.R. 971 (Guyer), introduced Jan. 20, 1981. H.R. 819 (Rousselot) Makes clear the authority of States to impose work requirements as. a condition of eligibility. Introduced Jan. 9, 1981; referred to Committee on Ways and Means. similar bills: H.R. 1086 (Hinson), introduced Jan. 22, 1981; H.R. 1385 (Frenzel), introduced Jan. 28, 1981. P.L. 97-35 enacted this proposal. H.R. 1322 (Gradison) Establishes a 5-year block grant demonstration program to encourage at least three States and three counties to create alternative programs to AFDC. Introduced Jan. 27, 1981; referred to Committee on Ways and Means. See also H.R. 2429 (Solomon) and S. 660 (Boren). H.R. 1432 (Petri) Expands the AFDC work requirement by requiring mothers with no child younger than 3 to register with WIN. Introduced Jan. 28, 1981; referred to Committee on Ways and Means. (First introduced in the 96th Congress). H.R. 2429 (Solomon) Substitutes block grants for open-ended Federal matching in AFDC and authorizes a 5-year demonstration project in which eight States could require work as a condition of eligibility. Introduced Mar. 10, 1981; referred to Committee on Ways and Means. H.R. 3004 (Rousselot et al.) AFDC. Family Welfare Improvement Act. Converts AFDC into a block grant program, providing States their base period (FY79) Federal AFDC dollars plus a share (based on population) of $1 billion, plus, for the 15 States with lowest benefits, a share of $400 million, the latter conditioned upon raising benefits. Block grant amounts would be adjusted for changes in the Consumer cns-15 IB8105l UPDATE-O1/15/82 Price Index (CPI), population shifts, and high unemployment. Permits spending of block grant funds for "social welfare purposes" other than AFDC benefits. Authorizes States to impose work requirements as a condition tof AFDC eligibility. Establishes, in 10 States, a 5-year pilot test of States’ (ability to develop alternate welfare programs free of all AFDC rules. Introduced Apr. 2, 1981; referred to Committee on Ways and Means. (First introduced, in somewhat different form, in the 96th Congress.) H.R. 3468 (Bafalis) AFDC. Social Welfare Amendments of 1981. (The Reagan Administration AFDC bill.) Reduces the earnings exemption; withdraws the work incentive bonus after 4 straight months of work; requires States to take into account income of stepparents; imposes gross income limit for "eligibility (l50% of State need standard); requires States to establish community work experience programs, in which AFDC recipients would be required to work sufficient hours at the minimum wage to "work off" their combined AFDC and food stamp benefit; establishes intergovernmental recipient information system; reduces age limit for student recipients from 21 to 18; permits aid to two-parent families only if the unemployed parent is the primary earner; prohibits payments below $10 monthly (but preserves Medicaid eligibility for persons denied cash for this reason); repeals limits on the proportion of restricted AFDC payments (those made as vendor or protective payments); attributes sponsor's income and resources to an alien beneficiary for 3 years after entry; prohibits AFDC to families of strikers; requires States to impose liens against homes of .AFDC families; and makes numerous other changes including several in the child support enforcement program. Introduced May 6, 1981; referred to Ways and Means Committee. Also introduced on June 1, 1981 as S. 1293 (Dole, by request) and referred to Senate Finance Committee. In modified form, many of these provisions were approved May 5 by the Senate Finance Committee in the markup of a bill to satisfy the budget resolution. Provisions NOT in rthe Finance bill: intergovernmental recipient information system; expanded access to information about AFDC recipients, and requirement for liens against homes of AFDC families. Also, Finance Committee bill made community work programs optional with States and authorized alternate job- programs, including Work Incentive (WIN) demonstration projects. H.R. 4771 (Traxler) AFDC. Permits AFDC payments in the form of housing vouchers for shelter and related expenses. Introduced Oct. 15, 1981; referred to Committee on Ways and Means. Reported, amended, July 12, 1981 (H.Rept. 97-143, Part 1). H.R. 4985 (siljander) Comprehensive AFDC Improvements Act of 1981 -- Part I. Reduces AFDC benefits payable to working recipients by lowering the work expense deduction and repealing the disregard of a child's earnings; requires States to count as income a family's food stamp benefits and any housing or rent subsidy; makes ineligible persons who dispose of assets that would put them over the eligibility limit for less than fair market value, in preceding 12 months; prohibits AFDC for an unborn child; makes an absent parent liable for administrative costs of child support collection from him; requires States to impose liens on homes of AFDC families. Various other provisions. Introduced Nov. l6, 1981; referred to Committee on Ways and Means. See also H.R. 4986. H.R. 4986 (Siljander) Comprehensive AFDC Improvements Act of 1981 -- (Part II. Reduces .the child care expense deduction for working recipients; prohibits eligibility CRS—l7 1331051 UPDATE-01/l5/82 for those whose gross earnings exceed 100% of the State need standard; prohibits AFDC for non-citizens, for mothers’ AFDC for a non-citizen, for a parent separated from his spouse but living "in a sexual relationship"; with _ another person, for a mother who fails a test in English (un1essYenrolled “in ' an approved English class); prohibits payments smaller than 9$25 monthly; requires high school students to work at least half time once they reach age 16 in order to continue receiving AFDC; requires unemployed fathers to submit at least 15 letters of job rejections from potential employers each week in order to receive benefits. Introduced Nov. 16, 1981; referred to Committee on Ways and Means. H.R. 5199 (Waxman et al.) AFDC and Medicaid. Medicaid Work Incentive Amendments of 1981. Permits States to provide Medicaid to families made ineligible for AFDC cash by the new rules of P.L. 97-35 concerning treatment of earnings and by its gross income limit. Introduced Dec. 11, 1981; referred to Committee on Energy and Commerce. H.R. 5226 (Gradison) AFDC and Medicaid. Authorizes States to use AFDC matching funds to make private health insurance "reasonably available" to AFDC families whose income disqualifies them for cash aid and, as a consequence, for Medicaid. Introduced Dec. 15, 1981; referred to Committee on Ways and Means. S. 641 (Inouye) Authorizes each State to establish standard work expense deductions, which may vary by locality; provides also for disregard of a standard $70 monthly from remaining income, and for 20.5% of that remainder. Prohibits these disregards for persons in community work experience programs or public service employment under WIN. Introduced Mar. 6, 1981; referred to Committee on Finance. 8. 660 (Boren) Family Welfare Demonstration Program Act. Establishes a period of 5 years during which States could either continue under AFDC or elect to conduct a block-grant demonstration project subject to only one Federal rule, namely, that they provide help which they feel will most effectively benefit and promote the social welfare of children and families with children. Introduced Mar. 10, 1981; referred to Committee on Finance. First introduced in the 96th Congress. S. 718 (Proxmire) Requires States to require AFDC recipients to participate in community work programs "if they are able to do so." Introduced Mar. 17, 1981; referred to Committee on Finance. S. 986 (Boren and Moynihan) (AFDC). work Incentive Demonstration Program Act. Provides for a demonstration program to test ability of States to develop alternatives to current AFDC work rules, but requires that the same agency that administers AFDC also administer the demonstration work incentive program, in contrast to current law. Introduced Apr. 10, 1981; referred to Committee on Finance. Enacted as provision of P.L. 97-35. S. 1293 (Dole). See H.R. 3468. CRS-l8 IB8lO5l UPDATE-O1/15/82 S. 1377 (Domenici) . Omnibus Reconciliation Act of 1981, as proposed by the Budget Committee. Introduced June 17, 1981. Passed Senate June 25. ‘Conference report passed. both Houses on July 31. For provisions, see "Congressional Action" t(Senate Finance action) above. S. 1762 (Moynihan) AFDC. Reinstates a permanent but revised work incentive bonus into AFDC, providing that after the first 4 months on a job, the bonus would drop from $30 plus one—third of remaining earnings to $30 plus one-fifth of earnings (instead of being eliminated). Introduced Oct. 22, 1981; referred to Committee on Finance. REPORTS AND CONGRESSIONAL DOCUMENTS U.S. Congress. House. Omnibus Reconciliation Act of 1981; conference report to accompany H.R. 3982. Book 2. Washington, U.S. Govt. Print. Off., 1981.. (97th Congress, lst session. House. Report no. 97-208) U.S. Congress. House. Committee on the Budget. Omnibus Reconciliation Act of 1981; report to accompany) H.R. 3982. Vol. III. Washington, U.S. Govt. Print. Off., 1981. (97th Congress, lst session. House. Report no. 97-158). U.S. Congress. House. Committee on Ways and Means. Description of the Administation's legislative recommendations under the jurisdiction of the Ways and Means Committee. Washington, U.S. Govt. Print. Off., 1981. 77 p. At head of titlegp 97th Congress, lst session. Committee print WMCP: 97-5:“ U.S. Congress. Senate. Committee on the Budget. Omnibus Reconciliation Act of 1981; report to accompany S. 1377. Washington, U.S. Govt. Print. Off., 1981. 1,034 p. (97th Congress, lst session. Senate. Report no. 97-139). CHRONOLOGY OF EVENTS 01/18/82 -- The Ways and Means Committee was scheduled to hold a field hearing, in Sacramento, Ca. (and another in Seattle, Wash., on Jan. 19) on the impact of budget cuts on cash welfare and health programs under its jurisdiction. Similar previous hearings were held: Memphis, Tenn., Nov. 14; Baltimore Md., NOV. 17; Indianapolis, Ind., Dec. 7; Detroit, MiCh., Dec. 8. . Sacramento, Ca1if., Jan. 18, 1982; and Seattle, .Wash., Jan. 19, 1982. 09/21/81 -- The Department of Health and Human Services issued interim regulations, generally effective Oct. 1, 1981, to implement changes in AFDC made by the Omnibus Budget Reconciliation Act (P.L. 97-35). 08/13/81 -= President Reagan signed the Omnibus Budget Reconciliation 07/31/81 -- 06/26/81 -- 06/25/81 05/14/81 -- 05/O5/81 -- 01/15/81 04/01/80 -- 01/28/80 ll/O7/79 -- 10/29/79 -- CRS-19 IB8l051 UPDATE-01/15/82 Act of 1981 into law (P.L. 97-35). House and Senate passed the conference report on the FY82 Omnibus Reconciliation Act, H.R. 3982. A 7 The House passed its FY82 Budget Reconciliation bill, after amending it to include AFDC provisions recommended by the Senate Finance Committee and Reagan Administration. The Senate passed its FY82 Budget Reconciliation bill, including versions of all the budget-cutting provisions sought by the Administration. The House Ways and Means public assistance subcommittee completed markup of legislation t0 satisfy reconciliation iI'lStI'11CtiO1'l.S in the first concurrent resolution on the FY82 budget of the House. The committee said its bill would cut AFDC FY82 spending by $710 million. The Senate Finance Committee completed markup of legislation to satisfy reconciliation instructions in the revised second concurrent resolution on the FY81 budget in the Senate. The committee said its bill cut AFDC FY82 spending by $928 million. In his FY82 budget, outgoing President Carter proposed to standardize the work expense allowance, adjust the earnings disregard, permit States to count a portion of a child's stepparent as income, bar payments smaller than $10, and revise treatment of the Earned Income Credit (EIC). " President Carter signed P.L. 96-222 (H.R. 2797), which provided that advance payments and income tax refunds resulting from EIC must be treated as earned income in the AFDC and SSI programs. In his FY81 budget, President Carter proposed to standardize the work expense allowance, adjust the earnings disregard, and permit states to count stepparent income. The House passed H.R. 4904, Social Welfare Reform Amendments of 1979, which included provisions to revise the AFDC earnings disregard and adopt a standard work expense allowance, permit benefit reductions for a child living with a non-needy relative, such as a mother supported by the AFDC child's stepfather; bar payments smaller than $10, and automatically treat advance EIC payments for which AFDC recipients were eligible as part of monthly earned income. In passing H.R. 3434, Adoption Assistance and Child Welfare Act of 1979, the Senate voted to adopt a standard disregard for all families ($70 monthly) in 01/22/79 -- 10/10/78 —= 01/20/78 11/04/77 01/17/77 01/21/76 02/03/75 02/04/743 11/30/73 10/05/72 cns-20 IB8l05l UPDATE-01/15/82 lieu of itemizing expenses other than child care, and to raise the fractional disregard to 40% of remaining earnings. President Carter's FY80 budget proposed that deductible work expenses other than child care be standardized as a flat percentage of gross earnings, that States be required to adopt retrospective accounting and monthly income reporting, and that States be required to count a stepparent's income. In passing H.R. 13511, Revenue Act of 1978, the Senate amended the bill to revise the earnings disregard thus: Disregard the first $60 monthly plus "reasonable" child care expenses, plus one-third of the rest up to earnings of $300, plus one—fifth of the rest. This proposal was first made by the Senate Finance Committee in 1972 as an amendment to H.R. l and adopted that year by the Senate. President Carter's FY79 budget proposed that deductible work expenses other than child care be standardized as a flat percentage of gross earnings. The Senate amended H.R. 9346, the Social Security Financing Act, to adopt the AFDC earnings disregard formula of the Senate version of H.R. l (1972). President Carter's FY78 budget proposed to adopt a standardized work expense disregard "which will establish more uniform eligibility limits." President Ford's FY77 budget proposed to require that stepparent income be counted and to change the earnings disregard thus: Deduct the first $60 monthly plus work—related expenses, plus one-third of the rest. President Ford's FY76 budget proposed to change the disregard as above and to adopt retrospective accounting. President Nixon's FY75 budget proposed adoption of the earnings disregard provision of the Senate version of H.R. 1 (1972). the Senate again voted for 1 (1972). In passing H.R. 3153, the income disregard proposal of H.R. In passing H.R. l, the Senate approved a Finance Committee plan to change the AFDC earnings disregard thus: Deduct the first $60 monthly, plus child care costs, one-third of the next $300, and one-fifth of the remaining earnings. CRS-21 IB8lO5l UPDATE-O1/15/82 ADDITIONAL REFERENCE SOURCESi Carle Levy, The Journal V. 5, No. 2. son, Robert B. The Reagan welfare reforms. of the Institute for Socioeconomic Studies. Summer 1980, 1-13. Frank. What Reagan can teach the U.S. about welfare reform. The Urban Institute Policy and Research Report Vol. 10, Vo. 2. Summer 1980. 11-14. Library of Congress. Congressional Research Service. The impact on welfare families of the Reagan Administration's proposed treatment of earnings (selected cities) by Carmen D. Solomon. Washington, 1981. CRS Report 81-136 EPW. The impact on welfare families of the Reagan Administration's proposed treatment of earnings (selected cities) by Carmen D. Soloman. Washington, 1981. CRS Report 81-136 EPW. Need and payment levels in the program of Aid to Families with Dependent Children (AFDC): legislative history and current State practices by Carmen D. Solomon. Washington, 1981. CRS Report 81-149 EPW. Work disincentives in income-tested programs by Vee Burke. Washington, 1980. 92 p. CRS Report 80-158 EPW l._§;"E3:33£%;*'-3%.?"-'!‘1r” OF 94 \N/5.€5HENG'TON