4,000 welfare applicants (cases that applied for assistance on of after October 1993 without regard for whether applications were approved or denied). Random assignment to treatment (n=2,781) or control (n=1,409) group.

1,858 ongoing Food Stamp only (FSO) cases. Random assignment to treatment (n=1,240) and control (n=618) groups.

3,141 applicant Food Stamp cases. Random assignment to treatment (n=2,060) and control (n=1,081) groups.

Financial Disincentives/Sanctions: Clients who fail to sign or follow through with the provisions of a Family Investment Agreement (FIA) are assigned to the Limited Benefit Plan (LBP), which provides a reduced level of cash assistance for three months followed by no cash assistance for the entire family for six months.

Financial Incentives: Work expense disregards and earned income disregards are increased. Asset limit increased to $2,000 for applicants and $5,000 for recipients. Vehicle asset limit increased to $3,000 in 1994 (with annual increases based on the Consumer Price Index) for every adult and working teenage household member. Income, interest, and dividends deposited in an Individual Development Account (IDA) are disregarded when income and asset eligibility are determined.

Program operations/implementation: Study examines developing Iowa’s TANF program; policy changes; and changes in administrative procedures and services.

Program Requirements: Able-bodied FIP recipients are required to sign a Family Investment Agreement (FIA) which is a contract outlining the recipient’s plans to participate in education, job search, and employment activities and the state’s plans to provide support services and a date by which the family intends to leave FIP.

Social/Support Services: Transitional Child Care is extended from 12 to 24 months and to FIP participants with earnings who either leave FIP voluntarily or are terminated because of child support receipt.

Time Limits: FIP participants are eligible for five years total benefit receipt.

To describe the learning that occurs in the course of implementation and how the state adjusts its policies in response to that learning.

To provide Iowa with valuable feedback on program strengths and weaknesses and the effects of implementation of welfare clients, as the state continues to develop and refine its FIP program to meet TANF requirements.

To provide other state and ACF with insights into policy options, potential problems, and possible solutions in TANF implementation.

“There is strong evidence of increases in PROMISE JOBS participation for both applicant cases and ongoing cases, but when measured on a percentage basis, the increases are generally two to three times larger for applicants. These results confirm that welfare reform has brought about an increase in participation in employment-related activities through PROMISE JOBS”(xix).

“Iowa’s welfare reform has generated increases in both employment and earnings. Among ongoing cases, these effects were stronger during the second year of welfare reform than during the first year. In the second year, welfare reform led to 3 percent higher employment and 8 percent higher earnings among ongoing cases (although only the latter effect is statistically significant). Welfare reform had relatively large impacts on applicant cases, even in the first year following application. In that year, welfare reform increased applicant cases’ employment by 6 percent and their earnings by 12 percent”(xix).

“The positive impacts of welfare reform on employment and earnings have not been accompanied by reductions in FIP participation — at least, not during the first two years of welfare reform. Follow-up analyses might reveal such an impact later in the reform period. Although FIP participation was unaffected by welfare reform during the first two years, the average FIP benefit was 4 percent lower in the second year of ongoing cases exposed to reform policies. This is consistent with our finding of higher earnings among these cases in the second year of reform” (xix).

“Welfare reform has led to reductions in Food Stamp participation and benefits for ongoing cases. Significant reductions were achieved in both the first and second year of reform, with larger reductions in the second year. In that year, receipt of Food Stamps by ongoing cases was down by 3 percent as a consequence of the reforms and their average Food Stamp benefit was 7 percent lower”(xix).

“The previously discussed increases in employment among ongoing and applicant FIP cases due to welfare reform are a consequence of reform-induced increases in employment while on welfare. Welfare reform led to relatively large increases in the percentage of ongoing an applicant cases that combine work with welfare”(xxii).”

“Among ongoing cases, the increase in cases combining work with welfare in offset by reductions in both 1)receiving welfare but not working, and 2) working but not receiving welfare. These findings from the first two years of welfare reform indicate that the reform program encourages ongoing cases that remain on welfare to obtain jobs and discourages working cases from leaving welfare”(xxii).

“Among applicant cases, the increase in cases combining work with welfare is offset by a reduction in the percentage of cases that are not working. These results indicate that Iowa’s welfare reform is effective in encouraging applicant cases to work during their initial year following FIP application. However, they provide no evidence that the reform program indices applicants to reject welfare in favor of work during that year”(xxii).

“The FIP evaluation was designed to produce estimate of the impacts of the full welfare reform program in Iowa. The design is not one that will permit us to estimate with full confidence the impacts f specific components of the reform program. However, because certain identifiable segments of the FIP caseload are more likely than others to be affected by specific components or combinations of components, we can obtain empirical evidence that may be suggestive of the impacts of those components. Ongoing and applicant cases with young children were especially likely to demonstrate reform-induced increases in employment and earnings. These cases were likely to be subject to expanded PROMISE JOBS participation requirements under welfare reform”(xxii).

“Among all ongoing cases, the most significant impacts of welfare reform on employment and earnings were for those cases with young children but without recent earnings. Among all applicant cases, the most significant impacts on employment and earnings were for those cases with young children and with recent earnings. Cases without recent earnings were more likely to be eligible for the Work Transition Period than cases with recent earnings. Consequently, this pattern of impacts suggests, but does not prove conclusively, that the WTP, when combined with expanded PROMISE JOBS participation requirements, was more effective at promoting employment and earnings for ongoing cases than for applicant cases”(xxii).

“We found that Iowa’s welfare reform produced net benefits for society (for both ongoing and applicant samples) under a wide range of assumptions, even over the relatively short follow-up periods studied for this report. When viewed from the perspectives of specific subgroups, however the findings were more mixed. Ongoing FIP recipients benefited only slightly from the reforms in the first two years, while applicants benefited substantially within the first year. For ongoing cases, welfare reform produced net benefits to government as a whole and the federal government but small net costs to state and local governments. For applicant cases, welfare reform produced net costs to all branches of government in the first year, largely because of an increase in Medicaid claims paid under welfare reform”(xi).

“The direction of the results (whether there are net costs or savings) from the perspectives examined was largely insensitive to the specific assumptions we used. However, the size of the net costs or benefits from the various perspectives was sensitive to these assumptions. The net present value of welfare reform from the perspective of society as a whole roughly doubled as we moved from the most pessimistic to the most optimistic assumptions. From the perspective of social subgroups., the size of the net costs or benefits of welfare reform were sometimes even more sensitive to the assumptions used”(xii).

The report examines the effects that moving unemployed parents into jobs has had on the well-being of children, parents, and families, finding that standard work schedules usually enhance family relationships. For themes emerged from the case studies:

Employed parents with standard work schedules often spend less time, but higher quality time, with family members.

Support systems — family members, colleagues, and government assistance programs — make work more possible for low income families.

Employment usually improves financial well-being, but most families still have difficulty making ends meet.

Work can be physically demanding, but it is also emotionally rewarding.

The research findings presented in this report show that welfare reform in Iowa increased employment and average earnings during the first three and one-half years of the reform period. The findings further show that the increase in employment occurred because the reform policies encourage and allow families to work while receiving cash assistance. On the other hand, the findings provide no evidence that the reforms reduced FIP participation. However, there is evidence of small reform-induced reductions in the average FIP benefit beginning late in the second year of the reform period.

• Parents were able to find entry-level jobs, but many had considerable difficulty retaining employment.
• The most common challenges that interfered with parents working were child care problems, physical health, and family issues.
• Receipt of FIP and assistance from Medicaid and Food Stamps decreased when parents were working.
• The proportion of parents and children with no health insurance increased when parents were working.
• Both total household income and expenses increased when parents were working but overall, most parents experienced a higher standard of living.
• When employed, 4 out of 10 parents had higher self-esteem.
• One out of four parents felt their parenting skills improved or observed their family getting along better when the parent was working.
• Most parents were very satisfied with the quality of their child care arrangements.
• Family routines, children’s social behavior, and children’s engagement in school did not change in the aggregate when parents gained employment.
• When employed, parents felt more stress due to household finances than from parenting or employment.

• Income sources and amounts fluctuate from month to month for many low-income families. Yet, expenses such as rent, utilities, food, and transportation are often substantial and do not change much. As a result, families sometimes find themselves with large gaps between what they have and what they need to get by.
• In order to cover monthly expenses and debt accrued over time, families often engage in a variety of money-making and money- saving strategies. The strategies described by the 16 participants in this study parallel those described by low-income families in similar studies conducted in other parts of the country (Edin and Lein 1997; Danziger et al.2000).Some parents do odd jobs, collect cans, or pawn goods for extra cash, and most try to save money by bargain shopping and prioritizing bills. In addition, parents depend on family, friends, and to a lesser extent, government and community agencies to make ends meet.
• Even after employing money-making and money-saving strategies, almost all of the participants in this study were struggling to some extent to make ends meet. Often, financial struggles have implications for family well-being and family functioning. Though the participants were hopeful about their prospects for improving their finances and well-being, most faced issues and tough decisions that made the task more challenging.