On August 22, 1996, President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act, fulfilling his longtime commitment to ‘end welfare as we know it.' As the President said upon signing, “... this legislation provides an historic opportunity to end welfare as we know it and transform our broken welfare system by promoting the fundamental values of work, responsibility, and family.”


  • Overhauling the Welfare System with the Personal Responsibility Act: In 1996, the President signed a bipartisan welfare plan that is dramatically changing the nation' s welfare system into one that requires work in exchange for time-limited assistance. The law contains strong work requirements, performance bonuses to reward states for moving welfare recipients into jobs and reducing illegitimacy, state maintenance of effort requirements, comprehensive child support enforcement, and supports for families moving from welfare to work -- including increased funding for child care. State strategies are making a real difference in the success of welfare reform, specifically in job placement, child care and transportation. In April 1999, the President unveiled landmark new welfare regulations that will promote work and help those who have left the rolls to succeed in the workforce and stay off welfare.
  • Law Builds on the Administration' s Welfare Reform Strategy: Even before the Personal Responsibility Act became law, many states were well on their way to changing their welfare programs to jobs programs. By granting federal waivers, the Clinton Administration allowed 43 states -- more than all previous Administrations combined -- to require work, time-limit assistance, make work pay, improve child support enforcement, or encourage parental responsibility. The vast majority of states have chosen to build on their welfare demonstration projects approved by the Administration.


Welfare Rolls Decline as More Recipients go to Work

  • Caseloads Have Fallen to Historic New Lows. In August 1999, the President released state State-by-state data (from March 1999) showing that welfare caseloads are at their lowest level since 1967 and that the welfare rolls have fallen by nearly half since he took office. Since January 1993, 31 states have had caseload declines of more than half, and nationwide the rolls have fallen by 48 percent, from 14.1 million to 7.3 million. According to the Council of Economic Advisors, the single most important factor contributing to this historic decline is the implementation of welfare reform. Of the caseload reduction from 1996 and 1998, approximately one-third is due to federal and state policy changes resulting from welfare reform and about 10 percent is due to the strong economy.
  • Four Times More of Those on Welfare are Working than in 1992. The first full year of work data since welfare reform, released in August 1999, show that all 50 states met the law' s overall work requirement for 1998, confirming that record numbers of people are moving from welfare to work. Nationally, 35 percent of all welfare recipients were working in 1998. The data also show that nationwide, the percentage of welfare recipients working has nearly quadrupled since the President took office, rising from 7 percent in 1992 to 27 percent in 1998, with the remainder fulfilling their participation requirements through job search, education and training.
  • Independent Studies Confirm People are Moving from Welfare to Work. Numerous independent studies also confirm that more people are moving from welfare to work. A national survey released by the Urban Institute found 69 percent of recipients had left welfare for work, and 18 percent had left because they had increased income, no longer needed welfare or had a change in family situation. A recent General Accounting Office report found that between 63 and 87 percent of adults have worked since leaving the welfare rolls – results similar to state studies funded by the Department of Health and Human Services. At the same time, the Census Bureau' s Current Population Survey shows that between 1992 and 1998, the employment rate of previous year welfare recipients increased by 70 percent.
  • Mobilizing the Business Community: At the President' s urging, the Welfare-to-Work Partnership was launched in May 1997 to lead the national business effort to hire people from the welfare rolls. The Partnership began with 105 participating businesses, and as of August 1999, has grown to more than 12,000 businesses. Since 1997, these businesses have hired over 410,000 welfare recipients, surpassing the challenge the President set in May of 1998. The Partnership provides technical assistance and support to businesses around the country, including: its toll-free number 1-888-USA-JOB1, a web site, a quarterly newsletter, and a number of resource guides for businesses. The Partnership also published “The Road to Retention,” a report of companies that have found higher retention rates for former welfare recipients than for other new hires, and strategies they used to achieve this success.
  • Connecting Small Businesses with New Workers and Creating New Entrepreneurs: The Small Business Administration is addressing the unique and vital role of small businesses who employ over one-half of the private workforce, by helping small businesses throughout the country connect with job training organizations and job-ready welfare recipients. In addition, SBA provides training and assistance to welfare recipients who wish to start their own businesses. SBA provides assistance to businesses through its 1-800-U-ASK-SBA number, as well through its network of small business development and women's business centers, one-stop capital shops, Senior Corps of Retired Executives (SCORE) chapters, district offices, and its website.
  • Mobilizing Civic, Religious and Non-profit Groups: Vice President Gore created the Welfare-to-Work Coalition to Sustain Success, a coalition of national civic, service, and faith-based groups committed to helping former welfare recipients succeed in the workforce. Working in partnership with public agencies and employers, Coalition members provide mentoring, job training, child care, transportation, and other support to help these new workers with the transition to self sufficiency. Charter members of the Coalition include: Alpha Kappa Alpha, the Boys and Girls Clubs of America, the Baptist Joint Committee, Goodwill, Salvation Army, the United Way, Women' s Missionary Union, the YMCA, the YWCA, and other civic and faith-based groups.
  • Doing Our Fair Share with the Federal Government' s Hiring Initiative: Under the Clinton/Gore Administration, the federal workforce is the smallest it has been in thirty years. Yet, this Administration also believes that the federal government, as the nation' s largest employer, must lead by example. In March 1997, the President asked the Vice President to oversee the federal government' s hiring initiative in which federal agencies committed to directly hire at least 10,000 welfare recipients in the next four years. In August 1999, Vice President Gore announced that the federal government has hired over 14,000 welfare recipients, meeting the goal nearly two years ahead of schedule. As a part of this effort, the White House pledged to hire six welfare recipients and has already exceeded this goal.
  • Funds to Help Move More People from Welfare to Work: Because of the President' s leadership, the 1997 Balanced Budget Act included $3 billion for Welfare-to-Work grants to help states and local communities move long-term welfare recipients, and certain non-custodial parents, into lasting, unsubsidized jobs. These funds can be used for job creation, job placement and job retention efforts, including wage subsidies to private employers and other critical post-employment support services. The Department of Labor provides oversight, but most of the dollars are placed through the Private Industry Councils, in the hands of the localities who are on the front lines of the welfare reform effort. In addition, 25% of the funds are awarded by the Department of Labor on a competitive basis to support innovative welfare-to-work projects. The President announced the first round of 49 competitive grants in May 1998, and the Vice President announced the second round of 75 competitive grants in November 1998. In January 1999, the Department of Labor announced the availability of $240 million in competitive grants for FY 1999. These funds will support innovative local welfare-to-work strategies for noncustodial parents, individuals with limited English proficiency, disabilities, substance abuse problems, or a history of domestic violence.

    The President' s FY 2000 Budget proposes to invest $1 billion to extend the Welfare-to-Work program to help more long-term welfare recipients and noncustodial parents in high-poverty areas move into lasting unsubsidized employment. The initiative would provide at least $150 million to ensure that every state helps fathers play a responsible part in their children' s lives. Under this proposal, states and communities would use a minimum of 20% of their formula funds to provide job placement and job retention assistance to low-income fathers who sign personal responsibility contracts committing them to work, establish paternity, and pay child support. This effort would further increase child support collections, which have risen 80% since the President took office, from $8 billion in 1992 to $14.4 billion in 1998. Remaining funds will go toward assisting long-term welfare recipients with the greatest barriers to employment to move into lasting jobs. The reauthorized program also would double the Welfare-to-Work funding available for tribes. The Administration' s reauthorization proposal is included in H.R. 1482 introduced by Congressman Cardin and S. 1317 introduced by Senator Akaka.

  • Tax Credits for Employers: The Welfare-to-Work Tax Credit, enacted in the 1997 Balanced Budget Act, provides a credit equal to 35% of the first $10,000 in wages in the first year of employment, and 50% of the first $10,000 in wages in the second year, to encourage the hiring and retention of long term welfare recipients. This credit complements the Work Opportunity Tax Credit, which provides a credit of up to $2,400 for the first year of wages for eight groups of job seekers. The Omnibus Budget Act of 1998 included an extension through June 30, 1999 and the President' s FY 2000 Budget proposes to extend both credits for an additional year.
  • Welfare-to-Work Housing Vouchers: In 1999, the President proposed and Congress approved $283 million for 50,000 new housing vouchers for welfare recipients who need housing assistance to get or keep a job. Families will use these welfare-to-work housing vouchers to move closer to a new job, to reduce a long commute, or to secure more stable housing that will eliminate emergencies which keep them from getting to work every day on time. Nearly all of these vouchers will be awarded to communities on a competitive basis, to communities that create cooperative efforts among their housing, welfare and employment agencies. The President' s FY 2000 Budget provides $430 million for 75,000 welfare-to-work housing vouchers, including $144 million in new funds for 25,000 additional vouchers.
  • Welfare-to-Work Transportation: One of the biggest barriers facing people who move from welfare to work -- in cities and in rural areas -- is finding transportation to jobs, training programs and child care centers. Few welfare recipients own cars. Existing mass transit does not provide adequate links to many suburban jobs at all, or within a reasonable commute time. In addition, many jobs require evening or weekend hours that are poorly served by existing transit routes. To help those on welfare get to work, President Clinton proposed a $100 million a year welfare-to-work transportation plan as part of his ISTEA reauthorization bill. The Transportation Equity Act for the 21st Century (TEA-21) authorized $750 million over five years for the President' s Job Access initiative and reverse commute grants. Of this amount, $50 million is guaranteed funding in FY 1999, rising to $150 million in 2003. The Omnibus Budget Act included $75 million for this program in FY 1999, and in May, Vice President Gore awarded $71 million of these funds to 179 communities in 42 states around the country. The President' s Budget proposes to double funding for FY 2000, bringing the program to the authorized level of $150 million. The Job Access competitive grants will assist states and localities in developing flexible transportation alternatives, such as van services, for welfare recipients and other low income workers.


  • Expanding the Earned Income Tax Credit: Expansions in the EITC included in the President' s 1993 Economic Plan are making work pay for 15 million working families, including former welfare recipients. A study conducted by the Council of Economic Advisors reported that in 1997, the EITC lifted 4.3 million American out of poverty -- more than double the number in 1993. The findings also suggest that the increase in labor force participation among single mothers who received welfare is strongly linked to the EITC expansion.
  • Improving Access to Affordable and Quality Child Care: Under the Clinton Administration, federal funding for child care has increased by 70%, helping parents pay for the care of about one million children. The 1996 welfare reform law increased child care funding by $4 billion over six years to provide child care assistance to families moving from welfare to work.

The President' s budget proposes to expand the Child Care and Development Block Grant to help working families struggling to meet the costs of child care. The President' s proposal: (1) increases funding for child care subsidies by $7.5 billion over five years, and these new funds, combined with funds provided in welfare reform, will enable the program to serve an additional 1.15 million children by FY 2004; (2) provides $3 billion over five years to promote early learning; and (3) provides $173 million to improve child care quality. Additional funds for subsidies are necessary because currently, only 1.25 million of the approximately 10 million families eligible for assistance under federal law receive help.

The President' s proposal also includes $5 billion over five years to expand the Child and Dependent Care Tax Credit (CDCTC) to provide greater tax relief for nearly three million working families paying for child care and eliminate income tax liability for almost all families with incomes below 200% of poverty. Additionally, the proposal includes $1.3 billion to enable parents who have children under one year old to take advantage of the CDCTC by allowing these 1.7 million families to claim assumed child care expenses of $500. The President' s plan also includes a new tax credit to businesses that offer child care services to their employees. The President has proposed spending $600 million in FY 2000 to triple funding for the 21st Century Community Learning Center Program, which supports the creation and expansion of after-school and summer-school programs to help roughly 1.1 million children each year. Finally, the President' s proposal includes a significant new investment in Head Start, our nation' s premier early childhood development program, with an additional $607 million in FY 2000 to reach 42,000 more children, enabling the program to serve 877,000 low income children.

  • Providing Health Care to Low-Income Working Families. The President has insisted on maintaining the Medicaid guarantee and has successfully fought to increase low-income families' access to health care.

    • Creation of the Children' s Health Insurance Program. The President, with bipartisan support from the Congress, created the Children' s Health Insurance Program (CHIP). The Balanced Budget Act of 1997 allocated $24 billion dollars over the next five years to extend health care coverage to uninsured children through State-designed programs. States project that they will ensure 2.5 million children when their new CHIP programs are fully implemented.
    • Allowing States to Expand Medicaid to Cover Families. The welfare law allows states to expand Medicaid coverage under section 1931 to families who earn too much to be eligible for Medicaid but not enough to afford health insurance. These expansions allow states to present Medicaid as a freestanding health insurance program for low-income families -- an important step towards removing the stigma associated with the program and reaching families who do not have contact with the TANF system.
    • Providing Medicaid Coverage to Low-income Two-Parent Families Who Work. In August 1998, the President eliminated a vestige of the old welfare system by allowing all states to provide Medicaid coverage to working, two-parent families who meet State income eligibility requirements. Under the old regulations, adults in two-parent families who worked more than 100 hours per month could not receive Medicaid regardless of their income level. Because the same restrictions did not apply to single-parent families, these regulations created disincentives to marriage and full-time work. Prior to eliminating the rule entirely, the Administration allowed a number of states to waive this rule. The new regulation eliminates this requirement for all States, providing health coverage for more than 130,000 working families to help them stay employed and off welfare.
    • Transitional Medical Assistance (TMA). TMA provides time-limited Medicaid coverage to low-income households whose earnings or child support would otherwise make them ineligible for welfare-related Medicaid under state income eligibility standards. The President' s FY 2000 Budget would reduce burdensome reporting requirements, including TMA eligibility procedures in the current Medicaid eligibility redetermination process. The budget also exempts those states that have expanded Medicaid coverage to families with incomes up to 185% of the federal poverty level from burdensome TMA reporting requirements, providing states with additional incentives to provide critical health care services.
    • Helping States Help Low-Income Families. In March 1999, the Administration released new guidance encouraging States to reach out to children and families who are no longer eligible for cash assistance but are still eligible for Medicaid or CHIP. It also establishes that states must provide Medicaid applications upon request and process them without delay. The guidance reiterates state responsibilities to establish and maintain Medicaid eligibility for families and children affected by welfare reform, and provides creative examples of the best way to liberalize eligibility.
  • Helping Working Families to Buy Food: In July 1999, the President took the following three executive actions to help ensure working families who need Food Stamps have access.
    • New policy guidance making it easier for working families to own a car and still receive food stamps;
    • New regulations making it easier for states to serve working families by simplifying rules so that families don' t have to report income as often and states won' t be penalized for small errors in projecting families' future earnings; and,
    • A new public education campaign to educate working families about food stamps, including a toolkit to assist local, state, and community leaders in understanding food stamp program requirements, as well as model strategies to improve participation and future efforts by Secretary Glickman to include new informational materials and an enhanced toll-free information line.
  • Investing for the Future: In 1992, the President proposed to establish Individual Development Accounts (IDAs) to empower low-income families to save for a first home, post-secondary education, or to start a new business. The 1996 welfare reform law authorized the use of welfare block grants to create IDAs. And last year, the President signed legislation creating a five-year demonstration program. Households that are either eligible for Temporary Assistance for Needy Families or qualify for the Earned Income Tax Credit and have a net worth below $10,000 are eligible to participate in the demonstration. The FY 1999 budget includes $10 million to launch this initiative, and the President has proposed to double the commitment to $20 million in FY 2000.


  • Increasing Parental Responsibility and Enforcing Child Support: Tougher measures under the Clinton Administration resulted in a record $14.4 billion in child support collections in l998, an increase of $6.4 billion, or 80% since l992. Not only are collections up, but the number of families that are actually receiving child support has also increased. In 1997, the number of child support cases with collections rose to 4.2 million, an increase of 48% from 2.8 million in 1992.
    • Improving the Collection System. A new collection system, proposed by the President in 1994 and enacted as part of the 1996 welfare reform law, has located over 1.2 million delinquent parents in its first nine months of operation. With approximately one-third of all child support cases involving parents living in different states, this National Directory of New Hires helps track parents across state lines.
    • Tougher Penalties. In June 1998, the President signed the Deadbeat Parents Punishment Act, a law based on his 1996 proposal for tougher penalties for parents who repeatedly fail to support children living in another state or who flee across state lines to avoid supporting them.
    • Increasing Paternity Establishments. Paternity establishment, often the crucial first step in child support cases, has dramatically increased, due in large part to the in-hospital voluntary paternity establishment program begun in 1994 by the Clinton Administration. In 1998, the number of fathers taking responsibility for their children by establishing paternity rose to a record 1.5 million, triple the 1992 figure of 512,000. In 1998, 40%, or 614,000 of all paternities were established through the in-hospital program.
    • Increasing Collections. Finally, President Clinton has taken executive action, including: collections from federal payments such as income tax refunds and employee salaries, and steps to deny federal loans to delinquent parents. The federal government collected over $1.1 billion in delinquent child support from federal income tax refunds for tax year 1997, a 70% increase since 1992.
  • Breaking the Cycle of Dependency -- Preventing Teen Pregnancy: Significant components of the President' s comprehensive effort to reduce teen pregnancy became law when the President signed the 1996 Personal Responsibility Act. The law requires unmarried minor parents to stay in school and live at home or in a supervised setting; encourages “second chance homes” to provide teen parents with the skills and support they need; and, provides $50 million a year in new funding for state abstinence education activities. Since 1993, the Administration has supported innovative and promising teen pregnancy prevention strategies, including working with boys and young men on pregnancy prevention strategies. The National Campaign to Prevent Teen Pregnancy, a private nonprofit organization, was formed in response to the President' s 1995 State of the Union. In 1997, the President announced the National Strategy to Prevent Teen Pregnancy. The first annual report on this Strategy reported that HHS-supported programs already reach at least 31% or 1,470 communities in the United States. In April 1999, the Vice President announced new data showing that we continue to make real progress in encouraging more young people to delay parenthood -- teen births have declined nationwide by 16% from 1991 to 1997, and have fallen in every state and across ethnic and racial groups. In addition, teen pregnancy rates are at their lowest level in 20 years.


    The President made a commitment to fix several provisions in the welfare reform law that had nothing to do with moving people from welfare to work. In 1997, the President fought for and ultimately was successful in ensuring that the Balanced Budget Act protects the most vulnerable. In 1998, the President continued his proposals to reverse unfair cuts in benefits to legal immigrants. The Administration' s FY 2000 budget would build on this progress by restoring important disability, health, and nutrition benefits to additional categories of legal immigrants, at a cost of $1.3 billion over five years. The Administration' s proposal is included in the Fairness for Legal Immigrants Act of 1999 (S.792/H.R.1399) recently introduced by Senator Moynihan and Representative Levin. In addition, Senators Chafee, McCain, Mack, Jeffords, Graham, and Moynihan.introduced S. 1227, a bipartisan bill similar to the Administration' s proposal to restore health coverage to legal immigrant children and pregnant women.

  • Disability and Health: The Balanced Budget Act of 1997 and the Noncitizen Technical Amendment Act of 1998 invested $11.5 billion to restore disability and health benefits to 380,000 legal immigrants who were in this country before welfare reform became law (August 22, 1996). The President' s FY 2000 Budget would restore eligibility for SSI and Medicaid to legal immigrants who enter the country after that date if they have been in the United States for five years and become disabled after entering the United States. This proposal would cost approximately $930 million and assist an estimated 54,000 legal immigrants by 2004, about half of whom would be elderly.

  • Nutritional Assistance: The Agricultural Research Act of 1998 provided Food Stamps for 225,000 legal immigrant children, senior citizens, and people with disabilities who enter the United States by August 22, 1996. The President' s FY 2000 Budget would extend this provision by allowing legal immigrants in the United States on August 22, 1996 who subsequently reach age 65 to be eligible for Food Stamps at cost of $60 million, restoring benefits to about 20,000 elderly legal immigrants by 2004.

  • Health Care for Children and Pregnant Women: Under current law, states have the option to provide health coverage to immigrant children and pregnant women who entered the country before August 22, 1996. The President' s FY 2000 Budget gives states the option to extend Medicaid or CHIP coverage to low-income legal immigrant children and Medicaid to pregnant women who entered the country after August 22, 1996. The proposal would cost $325 million and provide critical health insurance to approximately 55,000 children and 23,000 women by FY 2004. This proposal would reduce the number of high-risk pregnancies, ensure healthier children, and lower the cost of emergency Medicaid deliveries.

  • Helping People Who Want to Work but Can' t Find a Job: The Balanced Budget Act, as amended by the Agricultural Research Act, also restored $1.3 billion in food stamp cuts. The welfare reform law restricts food stamps to 3 out of every 36 months for able-bodied childless adults, unless they were working. Acknowledging that finding a job often takes time, the BBA provided funds for work slots and food stamp benefits to help those who are willing to work but, through no fault of their own, have not yet found employment. In addition, the BBA allows states to exempt up to 15% of the food stamp recipients (70,000 individuals monthly) who would otherwise be denied benefits as a result of the “3 in 36” limit.

Last Updated August 1999

Information on Welfare Reform