Time limit strikes back: Cut in aid to needy families costs DES millions

Jillian Vigil lost everything. Literally everything. As she was fleeing a domestic violence relationship, leaving nearly all her possessions behind, her partner even burned her Social Security card.

Gradually, the 34-year-old mother of five started to rebuild. She stayed at a shelter with her youngest child, while the four other kids lived with her ex-husband. Once she was out of the shelter and had her own place, she still needed help to pay for things like toilet paper and bus passes to get to job interviews.

The $235 monthly cash assistance she received from the federal Temporary Assistance for Needy Families program “saved my butt” for a full year, Vigil said.

“Even if somebody paid my electric bill and my house bill, but nothing else, we’d be in an empty shell of a house, no food, no toilet paper or whatever. We’d be better off in a shelter. … (Cash assistance) is vital, and it changes the experience for the kids during hardships dramatically,” she said.

But she’ll likely never be able to use the program again, thanks to a one-year lifetime limit put in place by state lawmakers effective in July 2016.

The TANF time limit isn’t only affecting people like Vigil — it’s hurting the Arizona Department of Economic Security’s bottom line.

Now, DES has a $9 million shortfall in its child support division caused by repeated limits to TANF, according to a budget request it sent to the Governor’s Office. Without the backfill of funds, DES says its services, like finding child support scofflaws, could be hobbled.

The $9 million shortfall represents about 20 percent of the child support division’s annual budget, according to DES. The money helps track down non-custodial parents to get them to pay child support, establishes paternity in disputes, pays for court orders and ideally leads to more child support collected.

DES said it expects to save just $3.8 million – much less than the $9 million savings projected by the Legislature when it debated the policy change – on the 12-month time limit this fiscal year. That savings will go to the Department of Child Safety to help pay for its programs.

Meanwhile, 1,400 families lost cash assistance benefits because of the time limit, as of September 30, according to DES.

For Sen. Katie Hobbs, D-Phoenix, the shortfall for child support services is an unintended and unforeseen consequence stemming from a swift budget process.

“This is an example of how bad things happen when you make bad policy without thinking through all the consequences,” Hobbs said.

The TANF program is funded entirely through federal dollars as a block grant. The state would likely have to backfill the state’s share of the child support shortfall from the general fund, if the governor and Legislature decide to include the money in the budget.

If the TANF limit were increased to 24 months again, DES estimates the shortfall in child support funds would be decreased by about $550,000 annually, which would be matched with federal funds for a total of $1.7 million, reducing the $9 million to $7.3 million, according to DES spokeswoman Tasya Peterson.

DES didn’t suggest any increases to the TANF limit in its budget request because the impacts on the state’s share of retained earnings for child support services didn’t simply come from the 12-month limit, but from cumulative cuts to assistance over several years, Peterson said.

The governor’s office said it is reviewing budget proposals from agencies ahead of recommending an executive budget.

“We are consistently open to implementing fiscally sound proposals and reforms and will gave careful consideration to the recommendations provided by each agency,” spokesman Daniel Ruiz said.

WHY THE SHORTFALL?

When people receive assistance through TANF, they turn over the rights to child support collections to the state, and the state can either retain the collections or forward them to the family, depending on each family’s situation. The amount the state gets is then split, with two-thirds of the money going back to the federal government to help pay for the TANF program, and one-third going to the state’s coffers. The money retained by the state then matches a separate federal grant used by the agency for child support programs.

Because there are now many fewer families receiving TANF in Arizona, the amount of child support retained by the state is much lower. And because the retained earnings are much lower, the amount the state can match to receive federal funds for child support is also, in turn, lower. The state is short $3 million, which leads to a loss of $6 million in federal matching funds, for a total shortfall of $9 million.

The Arizona Legislature cut the time limit from five years down to three years in fiscal year 2011, then cut it one more year down to 24 months the year after. Starting in July 2016, the lifetime limit for cash assistance was cut to one year.

DES wants $3 million from the state’s general fund, which would bring in another $6 million in federal match dollars. Without it, the agency asserted in the budget request it sent to the Governor’s Office, the agency’s ability to provide child support services to Arizonans “will be severely compromised.”

Vigil’s 7-year-old daughter has never received a child support payment, despite much paperwork and effort put into tracking down the father. Vigil said the girl’s father makes a lot of money, but she doesn’t have the money to have him served multiple times or hire a headhunter.

“That’s a huge burden, and it’s neglectful to her not to have that. … If the agency had more funding, more hours … maybe that’d be moving faster,” Vigil said.

But the bleeding may continue for the child services division of DES. The agency said in its budget request it doesn’t believe the decline in child support funds has fully leveled out yet, and more should be expected as more people get dropped from TANF.

When lawmakers debated the 12-month time limit in 2015, Republicans gave both philosophical and fiscal arguments in favor of the drop.

Republican Rep. Steve Montenegro said in a floor speech that the state had to make some tough decisions to balance its budget.

“We have to remind ourselves that if we don’t do something, that in two years or three years, there may not be a TANF program from which we can provide services to families,” Montenegro said.

But Sam Richard, executive director of Protecting Arizona’s Family Coalition, said the TANF limits have proven to be fiscally detrimental to DES.

“This is costing the department money. This is costing the women and children that make up a majority of the beneficiaries of this program. If the ultimate goal is to make poverty a temporary experience, reducing the lifetime eligibility on key programs is not the way to go about it,” Richard said.

DEFINING THE WORD ‘SHORT’

DES previously received general fund money in fiscal year 2013 to backfill shortfalls after policy changes, starting in 2010, led to negative impacts on the child support division. Cash assistance was decreased by 20 percent, the time limit was reduced to 36 months and then 24 months, reducing the amount of money coming from the state’s share of retained earnings.

Richard argued the 24-month limit could be restored, with a small initial cost from the rainy day fund to cover the transfer of savings that’s now sent to DCS. And, once the state share of retained earnings leveled out again, it could be self-supporting, he said.

“If restoring these services actually would create a net gain to the department, I don’t see why we wouldn’t at least have the conversation,” Richard said.

House Speaker-elect J.D. Mesnard, R-Chandler, supports the 12-month time limit, but said he’s willing to have a conversation about its financial impacts, if that’s something his caucus wants.

“I’m less willing to have that discussion if it’s just revisiting the policy for the sake of the policy. I’ll hear out anybody, but if it’s just revisiting the same arguments, the same debate, I’m not interested,” Mesnard said.

Many new lawmakers will join the Republican caucus in January, and Mesnard said he’s still getting to know them and their priorities. If one of them wants to push for an increased time limit, be it 24 months or somewhere in between like 18 months, Mesnard will hear them out.

“My caucus members will be driving the budget, so I’ll be listening to them,” he said.

But the argument against a longer time limit isn’t just financial, Mesnard said. Most conservatives agree with the philosophy of keeping time on welfare as short as possible, but defining short differs, he said.

“This is meant to meet a need for a period of time for families, hence the name. But what the right length of time is is obviously the policy debate. … If somehow the one-year policy has created a negative financial impact, that’s a little surprising to me, then obviously we will revisit in the totality what is the best policy, from both a philosophical and financial standpoint,” Mesnard said.

Richard said he doesn’t think it was the intention of the Governor’s Office to make poverty a punishment — potentially now on two levels, as some may be cut from assistance while others can’t get adequate help with child support services – but that’s been the effect.

“I don’t believe that was the intention of the governor, and I would hope that with new leadership (in the Legislature)… the governor would look at ways in which we can restore some of these draconian cuts,” Richard said.

THE NEED TO GIVE BACK

After Vigil used one year of cash assistance, she got a job working for the state. But within months, she contracted MRSA, an intense type of staph infection that’s tough to treat, followed by a series of other illnesses caused by her weakened immune system.

She got a grant to help cover household expenses for a few months while she healed and searched for a new job. She also got permanent supportive housing for herself and her five kids through the help of homeless shelter UMOM.

Without those services when she left an abusive relationship and got sick, Vigil said she doesn’t know what she would have done. She doesn’t have family members to help her or provide her with a place to stay.

She just started a new job as an aide at a Mesa Public Schools after-school program, tutoring and running activities for kids. Eventually, she wants to go back to school to become an advocate for those experiencing domestic violence.

“I have a lot of things that I feel the need to give back for. It’s a motivator, in all the steps I take,” she said.

She doesn’t think there should be a time limit for cash assistance, though she said the state could continue to monitor those who receive it to make sure there’s no abuse. It costs less for a small monthly stipend than it does to care for kids who get taken out of homes or people who end up in homeless shelters when they can’t afford a home or basic needs, she figures.

“If the need is there, it’s not just going to stop being there because you take it (cash assistance) away. That’s ridiculous,” Vigil said.