Americans tend to be ambivalent about welfare. We lack a unified national vision about the desired breadth and scope of our social safety net. We fluctuate between our commitment to fairness and the common good, and our deeply rooted attachment to individualism. And conflicting theories exist regarding the best use of public dollars, with periodic demands for welfare reform.

Current United States Reform Trends

To meet these concerns, major political and public policy shifts have been occurring at the national level and in states across the country. A consensus exists that critical elements of any reform proposal include work requirements, time limits, and emphasis on personal responsibility. Likewise, there is a sentiment that states should have greater flexibility in the design and delivery of services, with fewer federal dollars with which to implement programs.

The issue of removing the entitlement status from welfare benefits has been perhaps the most fundamental and divisive of all the proposed recommendations. From their inception, welfare programs in the United States entitled all citizens who met certain eligibility requirements to receive benefits. Removing the entitlement status would eliminate the guarantee of automatic qualification for benefits and obviate the federal government's responsibility as the primary source of welfare funding. Instead, states would be provided with a fixed amount of federal welfare dollars, an amount greatly reduced from current funding levels.

During the first Clinton Administration, the U.S. Department of Health and Human Services (HHS) gave 43 states the opportunity to test new welfare approaches. HHS was authorized to grant to the states waivers of current laws governing the AFDC and Medicaid programs. This authority was intended to give the states a chance to demonstrate alternatives that better matched their residents' needs.

On August 22, 1996, the President signed welfare reform legislation. Under the welfare reform bill, states with waivers that were approved before the law was enacted are generally free to continue their waivers, even when they conflict with the legislation.

North Carolina's Welfare Reform Experience

One state previously granted a waiver is North Carolina. In North Carolina, as in other states across the country, the governor has been the driving force behind welfare reform. Facing increasing pressure to implement immediate changes to the state's welfare system, Governor James Hunt felt that no time could be spared waiting for the state legislature to pass welfare reform legislation. Instead, as chief executive officer of North Carolina, he developed and submitted a package of waiver requests to HHS in August 1995. Approval of these waiver requests, in February 1996, freed North Carolina to depart from then-current welfare practices and implement his "Work First" policies.

North Carolina has been preparing for Work First since 1994, when the governor appointed a 40-member Welfare Reform Task Force. He asked the group to develop recommendations that emphasize work and preparation for work, personal responsibility and more rigorous collection of child support from absentee parents. It was also directed to ensure that the state sustained its commitment to provide supportive services that would enable welfare recipients to work. Finally, to meet federal waiver eligibility requirements, the governor directed that the recommendation package cost no more than the current total of federal, state and local welfare spending in North Carolina.

In 1995, state and local officials instructed local social services offices to shift their focus from determining welfare benefit eligibility to helping welfare recipients identify and overcome the obstacles that prevent their employment. These changes required a fundamental culture change for welfare recipients and service providers. Instead of establishing and monitoring eligibility and issuing checks, the new Work First system focuses on helping recipients enter the workforce and move into the economic and cultural mainstream. Official implementation of Work First took place July 1, 1996.

With a population of 7.2 million, North Carolina is the 10th largest state in the United States. Located in the southeast region of the country, North Carolina is fortunate to have a strong and well-diversified economy. Traditional manufacturing and agriculture/agribusiness flourish, along with high-technology industries including information and telecommunications, pharmaceuticals, microelectronics, and biotechnology.

North Carolina also benefits from having the eighth lowest unemployment rate in the nation, 4.4 percent vs. the national average of 5.5 percent. The paradox, however, is that despite economic success, it is also a low-wage state. North Carolina ranks first in the nation in the percentage of the workforce employed in manufacturing but 42nd in manufacturing wages. Its per capita income ranks 34th in the nation. While North Carolinians are willing to assist people who work in exchange for benefits, many are no longer willing to provide unconditional support to those who simply live off of the system.

Decreasing public support for the existing welfare system drives North Carolina's welfare reform movement, yet there is little room for reform through reduction in welfare benefits. Compared to other states, North Carolina's AFDC benefits are low, ranking 42nd in the country. Federally- mandated welfare budget reductions place immense pressure on the state to develop successful strategies to reduce welfare costs.

Without reducing benefits, the state is left with few options but to move people from welfare to work and off the welfare rolls as soon as possible.

Governor Hunt developed and is implementing Work First, North Carolina's welfare reform strategy, in response to these economic and political realities. This approach is based upon personal responsibility, work requirements, and the state's commitment to continue to assist those who accept their responsibilities. Work First requires able-bodied welfare recipients who have school-aged children to participate in work, training, or community service for 30 hours per week, and get off the welfare rolls in two years or less. Additionally, Work First requires welfare recipients to take responsibility for themselves and their families by strengthening efforts to collect child support, denying additional cash benefits for children born after their parent has been in the welfare system for 10 months, and requiring parents to ensure that their children are immunized and attend school regularly.

In exchange for fulfilling these responsibilities, welfare recipients receive AFDC cash assistance, Food Stamps, Medicaid, education/training, job placement services, child care, and transportation assistance. The state will also continue Medicaid and child care assistance for up to one year for those recipients who leave welfare for work. As resources become available, North Carolina plans to extend these transitional assistance programs beyond 12 months. In short, Work First asks recipients to meet certain basic responsibilities and to work toward independence in exchange for receiving cash benefits and support services.

Early Evidence of Success

North Carolina is already seeing positive results from Work First's efforts to change the culture of North Carolina's social services system. For example, twice as many welfare recipients found jobs between July 1995 and February 1996 as during the same period the year before 12,893 compared to 6,098. During the same time period, 16,155 recipients left the welfare system for jobs that paid them sufficient wages to disqualify them for AFDC. Overall, North Carolina's welfare rolls decreased by 6 percent compared to an average national decrease of 2.6 percent during that six-month period. Further, North Carolina's rate of decline was the sixth fastest in the nation.

Through Work First, businesses, and communities and churches are joining with local Departments of Social Services to fill job openings and to help welfare families become self-sufficient. The North Carolina Citizens for Business and Industry, North Carolina's leading business organization, has pledged to work with the state in that regard. Specific industry groups are joining in the movement to help welfare recipients form an attachment to the labor force. For example, the North Carolina Restaurant Association operates a program which trains its members to be mentors for people on welfare as they work their way up in the industry.

North Carolina is also enjoying success in improving collection of child- support payments. Since these crackdowns began, child-support collections statewide have exceeded first quarter collection projections by more than $3 million.

Although we are pleased with Work First's initial successes, we recognize that welfare reform is still in an early stage in North Carolina. Refocusing our welfare system from an emphasis on maintaining recipients' eligibility for benefits to an emphasis on helping families move into the mainstream economy is a huge undertaking. Continuing to integrate and strengthen education, training, and job placement programs is critical to the ultimate success of Work First. Concurrently, we must provide necessary support services to welfare recipients as they endeavor to become self sufficient. Further, benefits and services must remain available for those welfare recipients whose disabilities or other severe problems make them unable to obtain labor force attachment.

The enduring commitment of businesses and entire communities to work with state and local government to help welfare recipients obtain jobs is vital. Likewise, North Carolina must maintain a strong economy to support Work First and secure its long term success.

The state will conduct a thorough independent evaluation of the results of Work First over a period of several years. We expect to learn from those aspects of the program that work, as well as from those aspects that don t work, and make adjustments as needed. Recognizing that our task is difficult and complex, we remain committed to ensuring that North Carolina's welfare recipients have a genuine opportunity to move into our state's economic and cultural mainstream.