At the state level, Wisconsin's Department of Workforce Development supervises Title IV-D of the Social Security Act, which guides the establishment and enforcement of child support orders. Wisconsin's 72 counties operate the child support system with the assistance of sheriffs, clerks of the court, and offices of the corporation counsel or private attorneys. Wisconsin continues to be a national leader in child support enforcement, both in terms of the number of paternities established and the amount of child support collected. In 1994, Wisconsin ranked third nationally for the efficiency with which it collected child support payments. Child support collection should be further facilitated by a new, automated system that was implemented in late 1996.

Unlike many other states, Wisconsin serves noncustodial parents. The Children First program provides work experience, job training, and case management services to noncustodial parents who are not paying child support. These parents enter the Children First program through the court system and may face imprisonment if they do not comply with the program's requirements. A 1993 study found that Children First was highly successful—substantially increasing both average child support payments and the number of parents paying support.

Medicaid and Other Health Insurance

Wisconsin has one of the most generous Medicaid programs in the country. The state's Medicaid coverage for low-income families and those associated with the welfare system goes beyond federal law in its coverage of categories of recipients and optional health services. Pregnant women and children under the age of six living on incomes up to 185 percent of the federal poverty level are covered. In addition, as required by federal law, children born after September 1983 who are living on incomes up to 100 percent of the federal poverty level are also extended insurance. Medicaid is available to families on AFDC, with coverage provided for up to 12 months after these families leave welfare for work. Given this generous program, it is not surprising that Medicaid is Wisconsin's third-largest budget item.

Some areas of the state also provide General Relief health services to poor, single adults through an optional county block grant program. In 1995, $67.8 million in state and county funds were used for General Relief services,

80 percent of which went to medical assistance. Through the state's Health Insurance Risk-Sharing plan, Wisconsin offers coverage to the nonelderly who are denied coverage or whose coverage has suffered because of an increase in premiums or a decrease in benefits. Finally, the WisconCare program annually provides limited primary care services and inpatient maternity care to 1,500 low-income persons.

Last-Resort Safety Net Programs

Child welfare, housing, and emergency services are three resources for families with serious and immediate needs that cannot be met by financial assistance alone.

Child Welfare

Counties in Wisconsin are responsible for all child welfare functions except adoption services. The state's primary role is to administer and oversee federal funding. This responsibility falls under the purview of the Department of Health and Family Services, which distributes federal and state monies for child welfare through Community Aids. Counties are then required to put up a 9.89 percent match. During the 1980s and early 1990s, counties saw tremendous growth in the number of reports of abuse and neglect. This trend has reversed itself in many areas, but variation exists among counties. Milwaukee County continues to have the largest share of the child welfare caseload.

Historically, some tension has existed between the state and counties regarding how child welfare services are delivered and, in particular, how services are financed. Counties argue that Community Aids funds have not kept pace with growing demands on their systems and that the state is withholding additional federal revenue. State officials contend that they are not violating any federal regulations under the current funding structure.

Tensions between the state and Milwaukee County in particular are evident. In 1993, the American Civil Liberties Union filed suit against Wisconsin and Milwaukee County on the grounds that the two failed to protect children and families as required by state and federal law. As a result of this lawsuit, the state began running Milwaukee's child welfare system in 1998. The takeover entails a decentralization of Milwaukee's system. The county will be divided into five regions, with county staff overseeing two regions and private agencies responsible for the remainder.

Child welfare is also affected by Wisconsin's welfare reform changes. Prior to W-2, a child living with a grandparent or other relative (called a nonlegally responsible relative) could receive a child-only grant under the AFDC program. W-2 disallows this practice; nonlegally responsible relative cases are now referred to the Kinship Care program. Not only does the Kinship Care program pay less in benefits, but cases are assessed to determine if children need protective services and to subject relatives to criminal background checks. This change in policy reflects the state's belief that these types of cases are inappropriate for W-2, given the program's emphasis on work.

Emergency Services and Housing

Wisconsin's housing policy is focused on preventing homelessness and moving people into self-sustaining employment, rather than on proliferating the number of homeless shelters. The state's Division of Housing within the Department of Administration is responsible for housing and homeless programs, but its role is primarily to administer funds. Most of the funding for housing in Wisconsin comes from the U.S. Department of Housing and Urban Development. Wisconsin does supplement federal funds and sponsors its own discrete programs.

State reports indicate that homelessness has increased annually, and at the time of the Wisconsin site visits, the city of Milwaukee was experiencing serious overcrowding problems in its homeless shelters. Some advocacy groups attributed this overcrowding to Wisconsin's welfare reform measures. State officials pointed out that welfare caseloads were dropping at a rate much greater than the increase in homelessness. In the state's more rural areas, such as Rusk County, the dispersed nature of the population makes homeless shelters impractical. In addition to increased homelessness and the need for more and better public housing, Wisconsin also has an increasing demand for more traditional emergency services such as food pantries and meal programs.

Welfare Reform Plans

Wisconsin was the first state to gain federal approval for its TANF plan because the state had already designed its welfare replacement program—Wisconsin Works, or W-2—prior to the 1996 Personal Responsibility and Work Opportunity Reconciliation Act. W-2 builds on the state's 10 years of experience operating welfare reform demonstrations and pilots. As part of the planning process, the state developed eight overarching principles for W-2 and held listening sessions with community stakeholders; still, some community members believe that W-2 reflects state policymakers' priorities.

As a replacement program, W-2 completely recasts the contract between government and those seeking aid and thus alters just about every aspect of the old welfare system. With few exceptions, everyone is expected to participate at some level, even those with limited work experience. The state designed an employment ladder intended to correspond to the various levels of job readiness that exist among the welfare population. Support services are available, but a cash grant is not guaranteed. W-2 recipients are expected to share in the cost of child care: the state's child care system imposes copayments that are based on income and family size. Child support is another important component of W-2. Wisconsin Works significantly changes the child support system for W-2 clients: Under the old AFDC system, the government kept all but the first $50 of child support collected on behalf of AFDC recipients in order to offset the costs of the AFDC program; W-2 gives clients all of the money collected on their behalf.

One of the most notable aspects of the W-2 program is the state's design for service delivery. Under the old AFDC system, counties were the de facto providers of welfare services. W-2 challenged this assumption by requiring counties to earn the right to deliver services. A handful of counties did not meet the state's criteria for the "right of first selection," and others declined to run the program despite having earned the right to do so. In those counties, the delivery of services was contracted out via an open bidding process. As a result, Wisconsin has a number of private entities running the W-2 program—both for-profit and nonprofit organizations. All W-2 providers operate under similar contracts and are given a fixed amount to serve eligible clients in their service area. They may profit under these contracts by delivering services for less than the fixed amount.

Advocates have voiced concern about using profit-oriented contracts to serve needy families. In particular, they worry that W-2 providers may fail to assist hard-to-serve clients whose barriers to employment might cut into profit margins. W-2 agencies are subject to fines for failing to serve eligible families, but the process was seen by some as potentially arbitrary, since it must be initiated by the client. Other concerns about implementing W-2 stem from the work-based focus of the program. Officials in Milwaukee and Rusk Counties were skeptical about their ability to develop enough community service placements for those who are not ready for unsubsidized employment. Furthermore, participants may face more difficulties finding work in areas of the state with high unemployment and little economic growth (as is the case in Rusk County). Finally, the treatment of children whose parents receive SSI has been noted as troublesome. Under W-2, these families receive significantly less income than they did while on AFDC.

Immigrants and Welfare Reform

Wisconsin's noncitizen population is not substantial—at 2.1 percent, it is well below the national average of 6.4 percent. Even so, the state has taken steps to replace the benefits lost to immigrants as a result of federal welfare reform. For example, it appropriated $4.6 million for FY 1999 to create a benefits program for immigrants who lose federal Food Stamp eligibility. In addition to maintaining TANF and Medicaid eligibility for immigrants who resided in the United States at the time of PRWORA's passage (August 22, 1996), Wisconsin is using state funds to provide TANF to immigrants who entered after that date but are barred from receiving federal benefits for their first five years in the country.

Introduction

Over the past decade, Wisconsin has emerged as one of the nation's leaders on welfare reform. Since taking office in 1987, Governor Tommy Thompson has unveiled a variety of reform initiatives, ranging from efforts to encourage school attendance among children on welfare to reforms designed to promote work. The many reforms instituted by the state prior to federal welfare reform in 1996 are grounded in a belief that individuals should be paid only for work and that families, not government, are primarily responsible for providing for their own needs.

This report attempts to capture the processes and philosophies that have shaped the design and implementation of Wisconsin's response to the needs of low-income families, as well as to consider the direction in which the state plans to move in the coming years. Of particular interest is the state's implementation of its welfare replacement program, Wisconsin Works, more commonly known as W-2. W-2 constitutes Wisconsin's Temporary Assistance for Needy Families (TANF) plan as required under the federal Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. This report focuses on the findings of the Wisconsin case study, which seeks to provide a broad picture of the state's social safety net for low-income families with children. It examines the current goals, policies, practices, organizational structure, funding, and recent changes in a wide variety of programs serving children and their families. The review covers income support, employment and training, and child care programs targeted to low-income families. It also examines how other programs such as child welfare and emergency services work to assist families in crisis.

Researchers from the Urban Institute, the University of Michigan, and Child Trends, Inc., visited Wisconsin in March and April of 1997. At the state level, they conducted interviews with representatives from government, the legislature, and the advocacy community. To understand how programs impact providers and program recipients locally, they interviewed representatives from the local government and nonprofit community in the city of Milwaukee, the largest urban area in the state. Additionally, because Wisconsin is fairly rural, they visited Rusk County, which is located in a rural area of northwestern Wisconsin. There they interviewed county officials and nonprofit service providers.

At the time of the site visit, Wisconsin was gearing up for the implementation of W-2. While W-2 has received national attention in the media for its innovative approach to supporting low-income families through work, many of the central components of the reform were not in place in 1996 and early 1997. Also, the state was in the process of restructuring its workforce development system. As a result, services, programs, and policies detailed in this report are those that existed in early 1997.

This report begins with a discussion of the characteristics of the state in terms of its population, economic condition, and political environment. It describes the state's agenda for serving the needs of low-income families, including a discussion of spending in this area and an overview of the service delivery structure in the state. Three broad social program areas are discussed—support for basic income needs, policies for moving families toward financial independence, and programs that provide a safety net for families in crisis. The report ends with a discussion of the Wisconsin Works program and its implications for low-income families.

Wisconsin: A Brief Overview

This section presents a brief overview of Wisconsin's population, economy, and political environment as a context for understanding the social programs that are described in the rest of the report. It describes the state's political and budgetary landscape, indicating the climate of attitudes and resources within which state policy is shaped. The discussion highlights key factors such as the state's strong economy and low poverty rate, the executive strength of Wisconsin's three-term governor, and the importance of education-related tax relief. Table 1 synthesizes the information presented in this section.

Population

Wisconsin's population of 5.1 million people is less racially and ethnically diverse than that of the nation as a whole. Non-Hispanic blacks make up 6.3 percent of the state's population (compared to 12.5 percent for the nation); Hispanics constitute only 1.7 percent (compared to 10.7 percent for the entire United States); and noncitizen immigrants account for 2.1 percent of the population (6.4 percent nationally). The state is also considerably more rural than the rest of the nation; almost half of its population lives in rural areas, as opposed to 36.4 percent nationally. Population growth in the state during the 1990s has been slower (4.7 percent) than growth in the rest of the country (5.6 percent).

Milwaukee is the largest city in Wisconsin, with an estimated population of 617,000 in 1994.¹ (The city's population has been in decline since its 1980 peak of 636,000.) Milwaukee County (which includes the city of Milwaukee and surrounding suburbs) remains the most populous county in the state by far. African-Americans made up 30 percent of the county's population in 1990 and more than three-quarters of them resided in the city of Milwaukee.²

Most of the state's residents live in southeastern Wisconsin, which includes Milwaukee County. The areas extending north along the Fox and Wisconsin Rivers, as well as Dane County, where the state capital, Madison, is located, are experiencing rapid growth. Rusk County, on the other hand, is more typical of the counties in the far northern part of the state, which is more rural and less populated. Rusk County's population in 1996 was estimated at 15,433.³

Overall, Wisconsin's children and families are better off than the average child or family in the nation. The teen birthrate in Wisconsin, 39 per 1,000 women ages 15 through 19, is lower than in most states and compares favorably with the national rate of 59 per 1,000. Births to unmarried women, at 27.2 percent in 1994, are again lower than the national average (32.6 percent). In 1994, the state's overall poverty rate was 9.9 percent (14.3 percent nationally), and 14.4 percent of the state's children lived in households with incomes below the poverty line (as compared with 21.7 percent nationally). However, Wisconsin's poverty rate for Asian-American children (48.1 percent) is the highest in the nation and its rate for African-American children (60 percent) is the second highest.⁴

The city of Milwaukee stands in stark contrast to the generally positive picture regarding poverty among children in Wisconsin. Of the 50 largest cities in the United States, Milwaukee had the seventh-highest child poverty rate (38 percent) in 1989.⁵ Rusk County's child poverty rate for that same year (20.6 percent)⁶ was higher than the state average. In general, family poverty rates are low in southeastern Wisconsin, with the exception of Milwaukee, and higher in the northwest counties where Rusk is located.⁷

The Economic Environment

Wisconsin's economy is quite strong and has been for a number of years. The monthly seasonally adjusted unemployment rate at the time of this study had been lower than the U.S. average for every month since February 1988, and the state's 1996 unemployment rate of 3.5 percent was the lowest recorded by the state since 1969.⁸ The unemployment rate did tick upward during the recession in the early 1990s, but the state's monthly unemployment rate never exceeded 6.0 percent—a rate substantially below the national peak of 7.8 percent.

Because of the state's sound economy, Wisconsin residents are more likely to be employed than are residents of other states. This general pattern holds for women with children—45 percent of Wisconsin's mothers with children under age 12 work full-time, and 22.4 percent work part-time. Both of these figures are higher than the national numbers. In addition, Wisconsin's mothers in both one-parent and two-parent families are more likely to be working than is the typical U.S. mother in similar families.

The state's economic strength is due in part to the diversity of the economy. Historically known as a farming state, or "America's Dairyland, " Wisconsin also has a significant share of its labor force employed in manufacturing (23.2 percent in 1995).⁹ This is almost 50 percent higher than the national figure. Agriculture, including dairy production, continues to be a top industry in the state, while the trade, finance, and service sectors have experienced the most growth.¹⁰

The Political Landscape

Wisconsin is known as the birthplace of Robert LaFollette's progressive movement, but it is also the state where the Republican party was given its name. For more than 10 years, Wisconsin has had a Republican governor and a primarily Democratic legislature, although in recent years the balance of power has shifted.

The governorship has substantial influence, such as fairly broad authority to use the line-item veto on appropriation bills, including the biennial budget. The governor may use the line-item veto to eliminate words and whole programs in the budget bill. In addition, the governor has the authority to "write down" budget lines by lowering the amount appropriated for particular activities. Wisconsin's current governor, Tommy Thompson, has used this veto power freely. Since taking office, Thompson had issued 1,700 vetoes, none of which has been overridden during his three terms.¹¹

Governor Thompson was first elected in 1986. Prior to that, he served in the state assembly for 20 years and was twice elected minority leader. In his first gubernatorial bid he defeated a Democratic incumbent and won with 52.7 percent of the vote. He won subsequent elections in 1990 and 1994 by substantially wider margins. Wisconsin does not impose gubernatorial term limits, and at the time of this study, Governor Thompson was preparing to run for a fourth term.

Welfare reform has been a cornerstone of Governor Thompson's policy agenda. The governor's office has initiated several different welfare reform measures and has taken a hands-on approach to policy development and implementation. Governor Thompson has been a strong advocate of state block grants for income support and related programs, particularly in his role as chairman of the National Governors' Association.

Passage of federal welfare reform in 1996 prompted Wisconsin to move forward with its plan to replace the state's cash welfare system with a work-based model called Wisconsin Works. In general, Governor Thompson has spearheaded the development of W-2 and welfare policy, but the legislature has also played an active role and in fact, W-2 is an outgrowth of a legislative initiative. In 1993, Democrats in the legislature introduced and were able to pass Wisconsin Act 99. This bill called for the end of welfare in Wisconsin by 1999. To the surprise of some, Governor Thompson signed the bill, vowing to end welfare by 1997 and to replace it with an entirely new program. Two years later Wisconsin Act 289 was passed, creating W-2.

W-2, however, reflects the governor's vision of welfare reform. While the Democrats had a majority in both houses of the legislature from 1975 until 1992, the balance of power has subsequently shifted back and forth between the two parties. In the 1992 election, the Republicans won a one-seat majority in the Senate. In 1994, Republicans won both houses for the first time in 25 years. The Democrats were able to win back the Senate majority in 1996, but only by one seat. By that time, W-2 had received legislative approval. It is important to note, however, that W-2 was supported by Democrats and Republicans alike and was passed by the legislature with virtually no amendments.

The role of nonprofit and nongovernmental groups in developing policy is less clearly defined. Prior to the development of W-2, several listening sessions were held around the state to gather opinions about various approaches to an AFDC replacement program. All those involved in the welfare system were asked to participate: AFDC recipients, advocacy groups, businesses, county providers, legislators, and academics. Some in this group, however, felt their input was not taken into consideration.

Nonprofit service providers, advocacy groups, and local officials have had some impact in shaping final W-2 regulations. Nevertheless, many in the nongovernment sector (as well as some Democratic legislators) have serious concerns about the direction the state is taking for serving low-income families. While supporters of the state's policies see W-2 and the policy changes preceding it as necessary steps toward moving families into work and self-sufficiency, others fear the changes may move more families into poverty and homelessness.

The Budgetary Landscape

Wisconsin's strong economy has produced steady revenue growth. From 1990–91 through 1995–96, general revenue growth averaged 5.25 percent.¹² Biennial revenue growth for 1997–99 was projected to be 5.5 percent in fiscal year (FY) 1997, 4.6 percent in FY 1998, and 4.8 percent in FY 1999.¹³

Despite this anticipated growth in revenues, most state agencies have been required to cut their budgets or to hold spending steady so that more funding could be directed to the public school system. In order to provide property tax relief—a longtime fiscal priority for the state—Wisconsin has sought to use state appropriations to fund two-thirds of school costs. As a result of this commitment, state funding for public schools has risen. There has not, however, been a similar increase in state funding for other services.

From the viewpoint of the governor's office, school costs and increases in prison funding along with the state's constitutional requirement for a balanced budget have depleted the state's financial resources, leaving few funds for expanding other programs. As a result, departments were asked to submit budgets with cuts of 5 to 10 percent for the biennium 1995–97 and cuts of 2 percent for the biennium 1997–99. Most departments were then funded at a reduced level or at the same level as earlier years.

The final budget for biennium 1997–99, which should have gone into effect by July 1, 1997, was more than three months late. However, government operations did not come to a halt because state statutes allow for the continuation of appropriations at the previous fiscal year's level. A number of contentious issues caused the budget stalemate, including controversial proposals to increase gasoline taxes¹⁴ and a concern that the budget was being used to legislate local issues.¹⁵ The governor signed the final budget on October 11, 1997, after vetoing 152 provisions, including several sections that would have altered W-2. The final budget held to Wisconsin's commitment to providing property tax relief by increasing state funding to public schools. Public school funding increased by $239 million for 1997–98 and $212 million for 1998–99 (above the $6.3 billion appropriated in biennium 1995–97).

Setting the Social Policy Context

This section describes Wisconsin's philosophical and policy orientation, specifically with regard to helping low-income families. Following a discussion of policy commitments, the section outlines the organizational structure of the departments that provide income support and social service programs and reviews state and local spending on these programs. This information provides important background for understanding the structure and approach of the major social welfare programs in place during 1996 and early 1997.

Wisconsin's Agenda for Serving the Needs of Low-Income Families

Wisconsin is known throughout the nation as a leader in welfare reform and is one of the most prolific in terms of the number of welfare experiments conducted. Beginning in the late 1980s, the state applied for and received many federal waivers to experiment with various aspects of its welfare program. Throughout the decade preceding Wisconsin Works, reform efforts emphasized family, personal responsibility, work, privatization of social services, and the importance of the community.

Officials note that their experience with each waiver demonstration and pilot program shaped the state's current vision for reform. Early reforms reflected the state's view of what was needed to strengthen families and keep them together. Later reforms embodied the principles of work and self-sufficiency. These reforms culminated in W-2 (see Welfare Reform Plans in this report).

Along with reforming welfare, Wisconsin has been moving toward an integrated employment and training system. Through state and local planning efforts and the use of federal grants, Wisconsin has developed a series of Job Centers as one-stop employment and training operations that offer a range of services and programs to job seekers and employers alike. The centers have become models for other states to follow.

Job Centers will be the main service delivery point for W-2. But more broadly, they are the primary mechanism through which Wisconsin's vision for a new employment and training system—the Partnership for Full Employment (PFE)—will become operational. PFE seeks to integrate previously fragmented employment and training programs into a comprehensive and seamless delivery system (see Programs that Promote Financial Independence for a full description of PFE). Together, PFE and W-2 represent Wisconsin's effort to promote work and provide a variety of support services to low-income families, regardless of their welfare status.

Organization of Services and Administrative Structure

Changes to policy and service delivery for low-income families in Wisconsin have been accompanied by a reorganization of the departments that serve these clients. Before July 1, 1996, the Department of Health and Social Services (DHSS) oversaw income support programs, including Aid to Families with Dependent Children (AFDC), Food Stamps, and Medicaid; related services such as Job Opportunities and Basic Skills Training (JOBS) and child care; and child welfare programs. Most employment and training programs were administered through the Department of Industry, Labor, and Human Relations (DILHR). In an effort to bring all employment and training programs into one agency, Governor Thompson created the Department of Workforce Development (DWD).

Although DWD is a new department, most of its operating divisions were transferred from DILHR, which then ceased to exist as an agency. The Division of Economic Support, which oversees AFDC, Food Stamps, JOBS, child care, and child support, was transferred from DHSS into DWD (as was the Division of Vocational Rehabilitation). This reorganization coincided with a philosophical shift in program policy. Income support programs (as well as vocational rehabilitation programs) were becoming increasingly work oriented, so that organizationally it made sense to have one department oversee these related programs. DWD, which focuses predominantly on employment, was the natural choice. Child welfare and Medicaid remained part of DHSS, which subsequently changed its name to the Department of Health and Family Services (DHFS).

Wisconsin's service delivery system for income support and social service programs is administered at the county level, with major policy directives decided by the state. Prior to W-2, Wisconsin law required that the state contract annually with the counties for administration of income support programs (AFDC, Food Stamps, and Medicaid) and for most child welfare, mental health, and substance abuse programs. County boards of supervisors established the structure for delivering these programs. Most commonly, county human services or social services departments constituted the service delivery structure.

In Milwaukee County, a director of human services was responsible for overall program oversight and policy development, while separate divisions within the human services department oversaw financial assistance programs (including AFDC, Food Stamps, and Medicaid), adult services, mental health programs, and youth services—including child welfare. In early 1997, however, the state was in the midst of assuming responsibility for child welfare services in Milwaukee County (see Last-Resort Safety Net Programs).

Local administration of Wisconsin's employment and training services is not county based. Funds are channeled to the state's 17 Service Delivery Areas (SDAs), geographical entities established to administer Job Training Partnership Act (JTPA) programs. In most cases, SDAs cover multiple counties. Local Collaborative Planning Teams (LCPTs), which are composed of representatives from agencies that handle the major federally funded employment and training programs (e.g., JOBS, JTPA, Job Service, the technical colleges, and vocational rehabilitation, and, in some areas, local economic development organizations and community-based organizations), develop and implement Job Centers for their areas.

Localities are allowed a certain amount of flexibility in designing and operating their Job Centers. DWD's Division of Workforce Excellence, however, develops a set of functional and service standards, which the LCPTs must meet in order to have their one-stop operation certified as a Job Center. As of late 1997, 73 Job Centers were in various stages of planning or operation. Each SDA is expected to have at least two fully operational Job Centers by June 30, 1998. (See table 2 for an overview of programs and administrative arrangements.)

Social Welfare Spending and Coverage

In general, funding for social welfare programs has not kept pace with state spending in other program areas, particularly schools and prisons. The 1997–99 budget appropriates a total of $37.4 billion for the biennium, an increase of 9.5 percent from 1995–97. Within these funds, appropriations for public schools (through the school aids program and the school levy tax credit) increased by more than 188 percent.¹⁶ Funding for the Department of Workforce Development increased by only 13 percent, and spending for the Department of Health and Family Services increased by a mere 4 percent.¹⁷ Of the programs operated by these departments, Medical Assistance received the greatest share of state funds; $943.8 million of General Purpose Revenue (GPR) funds were appropriated for FY 1999, compared with $281.7 million for Community Aids, the mechanism by which counties receive state and federal funds for human service programs. The state appropriated $169.2 million for W-2, which was slated for implementation beginning September 1997. This amount meets the federal requirement that states appropriate at least 80 percent (or 75 percent for states such as Wisconsin, which met federal work participation requirements) of what they spent for AFDC in FY 1994.

In the 1995–97 biennial budget bill, the state's mandatory General Relief program was replaced with an optional county block grant program. Prior to this budget initiative, counties were legally required to offer cash and medical assistance to eligible persons (as defined by state statute and individual counties)—typically, very low income single adults. The change in the law offers counties, at their option, a block grant from the state to provide primarily medical assistance to this population. To receive the block grant, counties must match state funds with local monies. Little more than half of the state's counties (including Milwaukee County), which represent approximately 80 percent of the state's population, participate in the new block grant program. Another eight counties operate county-financed relief programs, six of which provide both cash and medical assistance.

The governor has also pushed for more flexibility in Community Aids spending. Currently included in Community Aids are federal funds from the Social Services Block Grant (Title XX), Title IV-E (Foster Care), Title IV-B (Child Welfare), the Substance Abuse Prevention and Treatment Block Grant, and the Community Mental Health Block Grant. State GPR funds are also allocated to Community Aids. Prior to 1995, Community Aids funding consisted of 15 categorical allocations and a basic allocation. With passage of Wisconsin Act 27, counties now receive four categorical allocations: (1) family support programs for families with disabled children; (2) substance abuse prevention and treatment; (3) community mental health programs; and (4) support for families and caregivers of individuals with Alzheimer's disease. Remaining funds (from Title XX, Title IV-E, and Title IV-B) were folded into the basic allocation pot.

With fewer categories, counties have more leeway to determine how to spend their Community Aids allocations. A number of Milwaukee officials, however, believe that Community Aids funds have not kept pace with need—especially in the area of child welfare. State officials recognize this shortfall and attribute low funding levels to cuts in federal spending.

From a national perspective, Wisconsin has been fairly generous in funding social welfare programs. For example, the state's spending per poor person in FY 1995 was higher than the U.S. average across a number of programs (i.e., AFDC, SSI, child nutrition, JOBS, child care, child support, child welfare, and Medicaid for children). Table 3 summarizes Wisconsin's social welfare spending for families with children. The federal government provides substantial support for these programs, with state and local funds accounting for only about 25 percent of the total cost. The federal Earned Income Tax Credit (EITC), JTPA programs, and IV-A Emergency Assistance are the only programs in Wisconsin for which combined state and federal expenditures are lower than the national average.

As shown in table 3, social welfare spending for families and their children increased from 1993 to 1995. Expenditures on benefits for income support programs, however, declined. From FY 1993 to 1995, for example, spending on AFDC benefits declined by almost 12 percent. In February 1996, total AFDC payments were just over $27 million. A year later payments were down by almost $10 million.¹⁸ A similar although not so dramatic trend is seen in Food Stamp payments. These reductions in AFDC and Food Stamp expenditures reflect the continuing decline in Wisconsin's caseloads, at rates that far outpace national trends. The exact causes of the caseload declines are not known, but they are most likely the result of many factors including Wisconsin's strong economy and welfare policies.

Basic Income Support

Over the last decade, Wisconsin has gradually shifted the focus of its income support programs from writing checks to requiring work participation in exchange for benefits. The reforms instituted by the state prior to the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 reflect these overarching principles: (1) everyone capable of work should work; and (2) families, with some assistance from government, should provide for their own needs. These principles are embodied in many of the state's early reforms and in its welfare replacement program, Wisconsin Works.

W-2 was implemented in September 1997, but elements of the program were part of Wisconsin's reform strategy long before. By early 1997, components of W-2, such as Pay for Performance and Self-Sufficiency First, were already in place. These programs emphasized work by (1) requiring that "job ready" AFDC applicants look for jobs as a condition of eligibility for aid; (2) stepping up participation in the JOBS program; and (3) reducing recipients' grants by the minimum wage for every hour that recipients failed to participate in required job activities. These mandates were preparing welfare recipients as well as the counties for W-2. Counties interested in running W-2 in their area had to earn the right to be a W-2 agency by increasing JOBS participation rates and reducing caseloads.

Elements of Wisconsin Works can be seen evolving through the state's 10 years of experimentation with welfare waiver programs. These pilots and demonstrations taught Wisconsin what reforms would and would not help families become more self-sufficient. They also enabled the state to build the infrastructure (e.g., computer systems, community capacity) necessary for broad-scale reform.

An Overview of Wisconsin's Income Support Programs

In 1996–97, the major income support programs in Wisconsin were AFDC and Food Stamps. The state also offered its own Earned Income Credit (EIC) to eligible working low-income families. Families who qualified for the federal EITC received a state EIC of between 4 and 43 percent of the federal amount, depending on the number of children in the household. Like many other states, Wisconsin also provided a supplement to recipients of the federal Supplemental Security Income (SSI) program for elderly and disabled individuals.

The Food Stamp program was the largest of the state's income support programs in terms of number of participants; in FY 1996, some 283,255 individuals (or 104,529 households) participated.¹⁹ Average benefits per client were approximately $58 a month ($158 per household).²⁰ The state EIC was also widely used—195,980 tax filers received an average credit of $297 in 1996.²¹ SSI was the next-largest program, with a caseload of 118,489 in 1995–96, the majority of whom were disabled adults. Federal payments combined with the state supplement provided SSI recipients with an average monthly benefit of $483.²² In comparison to these programs, AFDC served far fewer families. In October 1996, some 48,451 families were on the rolls, receiving an average monthly payment of $407.²³

Wisconsin also used state funds for two small income support programs that served targeted populations. The Student 18-Year-Old Assistance program gave financial aid to high school students who had lost eligibility for AFDC because they no longer qualified as dependents. To receive benefits under this program, students had to attend high school regularly, but benefits ended when they turned 19. A small number of underage parents who were not living in an adult-supervised setting received benefits through the Minor Parents Living Independently program. Since TANF regulations prohibit minors from receiving assistance as heads of their own household, the state opted to provide this assistance through the phaseout of AFDC. Once W-2 is fully implemented, teens in the Minor Parents program will be required to live in an adult-supervised setting and the program will end.

Caseload Size and Trends

Wisconsin has received national attention not only for its welfare reform efforts but also for the extent to which its AFDC caseload has declined. From January 1993 to September 1997, the caseload dropped from 81,291 families to 31,336, a decline of more than 61 percent.²⁴ Only Wyoming has experienced greater caseload declines. Sixty percent of the caseload resides in Milwaukee County, where the decline in AFDC cases over the last several years has generally been slower than that experienced by other counties in the state.

The state's Food Stamp caseload has also declined, but not in such a dramatic fashion. In FY 1994, some 121,809 households participated in the program. Midway through FY 1997, that number had dropped by just over a quarter, to approximately 89,000 households.²⁵

State and local officials attribute the decline in caseloads to a variety of factors but primarily to a good economy and to changes in the message sent to clients: welfare, they are told, is a temporary program designed to prepare them for work. Some attribute caseload reductions to misperceptions about the new welfare system that leave some prospective clients believing they are not eligible for assistance when, in fact, they are. In Milwaukee, program officials and staff believe that the Two-Tier Demonstration waiver has affected welfare rolls. In this demonstration, individuals who moved to Wisconsin and applied for AFDC during their first six months of living there received a cash grant comparable to that of their former state of residence, regardless of whether that state provided higher or lower benefit payments.

Wisconsin introduced this demonstration because of a concern that its generous benefit levels (a maximum monthly cash payment of $517 for a family of three) and generally favorable standard of living were attracting poor families from other states, especially Illinois (where AFDC benefits were $377 a month). Although evaluation data are not available, intake staff in Milwaukee reported seeing far fewer out-of-state applicants once the waiver went into effect in 1994.

Unlike AFDC and Food Stamps, EIC receipt and SSI participation have increased. Between 1993 and 1996, the number of households receiving the state EIC grew by approximately 13 percent, paralleling growth in federal EITC receipt.²⁶ During those same years, the SSI caseload grew by just over 10 percent, despite a decline in the number of elderly receiving assistance.²⁷ The overall increase in SSI caseload numbers can be attributed to an increase in the number of individuals—particularly children—who were receiving SSI because of a disability. As is true in many states, the number of children in Wisconsin receiving SSI grew dramatically in the wake of the 1990 U.S. Supreme Court case Sullivan v. Zebley, which effectively broadened eligibility categories for disabled children. But annual increases in the number of disabled children receiving SSI in Wisconsin have outpaced national caseload growth in all but one year since 1991.²⁸ Federal welfare reform is expected to curtail some of this growth by making SSI eligibility criteria more restrictive.

Early State Innovations and Waivers

Well before passage of PRWORA, Governor Thompson had made welfare reform a priority. Since taking office in 1987, the governor has emphasized personal responsibility, and the state began experimenting with its welfare system and applying for waivers from federal law. In fact, Wisconsin has been one of the most prolific states in terms of the number of welfare experiments conducted. Along with the Two-Tier Demonstration, the state operated two other early and well-publicized experiments—Learnfare and the Parental and Family Responsibility project (commonly referred to as "Bridefare"), which attempted to promote a set of behaviors (school attendance, marriage, and delayed childbearing), and two other waivers designed to improve recipients' financial situation by increasing the vehicle asset limit from $1,500 to $2,500 and by allowing recipients to save money for education and employment-related needs. Although only Learnfare operated statewide, these experiments set the course for future welfare reform.

More recently, the state's reforms have focused on increasing recipient work efforts. The Work Not Welfare (WNW) demonstration began in 1995 and reinforced the message of finding gainful employment rather than receiving public aid. Applicants for AFDC were encouraged to seek other financial sources of support (e.g., friends, family, other community-based services) or to find a job. According to management data, approximately 30 percent of potential applicants were diverted during the first 20 months of the program.²⁹ Those who did receive AFDC were required to work or to be in training for work within 30 days of receiving benefits. After 12 months on the rolls, recipients were expected to be working in either the private or public sector. Benefit receipt was limited to 24 months in a 48-month period.

Two other key elements of WNW, which were later integrated into W-2, were the Community Steering Committee and the Children's Services Network. Under WNW, the Community Steering Committee sought to forge a partnership between the welfare agency and the private sector. Members of the committee represented business, government, and education. They helped WNW clients identify job opportunities and provided mentorship and links to community agencies. The Children's Services Network linked WNW families to community services—housing, food pantries, and advocacy organizations—in an effort to protect children by helping their parents access needed services.

At about the same time that WNW was implemented, the Work First pilot program began in 18 counties. This state legislative effort, which required no waivers, was both a work-based and a diversionary program. Again, welfare staff attempted to divert potential AFDC applicants to other community resources and stressed job search and related activities to those already on assistance. The message of Work First was clear: AFDC is a temporary program.

Building on WNW and Work First, the state introduced Self-Sufficiency First (SSF) and Pay for Performance (PFP). Unlike WNW, which operated in two relatively small counties with low poverty and unemployment rates, SSF and PFP were statewide demonstrations. Both were implemented in March 1996. Under SSF, applicants for assistance had to meet with a financial planner to discuss alternatives to applying for AFDC. Additionally, applicants were required to perform 60 hours of up-front job search (some hours could be spent in the classroom on job search and related activities) before their case was opened. These requirements were designed to minimize AFDC usage by having clients "explore and utilize personal and community resources,"³⁰ including work.

Once on AFDC, PFP required recipients to work, to continue searching for work, or to participate in some approved JOBS activity. (JOBS was the work and training program for welfare recipients at the time.) The federal JOBS program mandated 20 hours a week of participation in a designated work or training activity, although certain clients (e.g., those with young children, those living in remote areas) were not required to participate. Wisconsin's PFP waivers, however, allowed that some clients could participate up to 40 hours a week, that a broader group of recipients (including women with very young children) could participate, and that the state could increase the penalties for noncompliance. Long-term postsecondary education was not an acceptable activity for meeting participation requirements.

These changes were designed, in part, to make the welfare system look more like the world of work. PFP clients were treated like any employee making an hourly wage—their monthly cash grant could be reduced by the federal minimum wage for each hour they failed to participate in assigned activities. If clients participated less than 25 percent of their scheduled hours, their families received no cash assistance and only $10 in Food Stamps. The sanction could be rescinded—or not applied—if clients had good cause for missing the hours, but it was their responsibility to document their reasons to staff.

While clients fulfilled a work or training requirement, their children ages six and older were also required to attend school under the Learnfare programs. This program required that children have no more than 5 full- or part-day unapproved absences in a consecutive 10-day period or 10 unapproved absences in a 60-day period. If a child was absent more frequently, the child's portion of the family's grant was not paid unless the family could show good cause for the absences.

Finally, Wisconsin's AFDC Benefit Cap Demonstration project eliminated the automatic grant increase for the birth of a child to a family already receiving government aid. Implemented in 1996 in pilot counties including Milwaukee, this waiver was designed to encourage families to think about becoming self-sufficient before having additional children. The benefit cap was also intended to mirror the world of work, where employees do not receive wage increases every time they have an additional child.

Local program officials, staff, and advocates reported mixed views regarding whether the state's many welfare reform efforts were achieving their desired ends of promoting work and other alternatives to public assistance. For example, staff in both Milwaukee and Rusk Counties reported that while the up-front job search requirement initially diverted some potential clients from applying for assistance, most saw it as another step in the application process. Staff noted that some applicants fulfilled the job search requirement in a week so that they could expedite their application. However, one metropolitan county reported that the job search requirement diverted a substantial number of potential applicants from seeking assistance.³¹

Many advocates and nonprofit leaders, especially those in Milwaukee, feared that the state's reforms were penalizing clients, rather than helping them move into work. These groups contended that many clients were inappropriately sanctioned and that penalties were too stringent. In fact, administrative errors were discovered, and some clients were inappropriately removed from AFDC rolls.³² However, the state believes it resolved these problems, and it set up a client hotline to help individuals who had questions about their case.

Programs that Promote Financial Independence

The cash assistance programs described in the previous section cannot always, by themselves, promote self-sufficiency. In addition, there may be low-income families who do not meet welfare eligibility criteria but who still need government support. To move out of poverty, some low-income individuals, especially those with limited work histories and education, need employment and training and other support services—most notably, child care and health care. Finally, receiving the child support to which a family is legally entitled can often be the key steppingstone from welfare to self-sufficiency. Therefore, this section explores the nature of Wisconsin's programs for employment and training, child care, health care, and child support as adjuncts to individuals' efforts to work.

Employment and Training

Service Delivery Structure

As noted earlier, Wisconsin created a new Department of Workforce Development in July 1996 to integrate all of the state's employment and training programs. DWD encompasses the operating, job training, and unemployment insurance divisions of the Department of Industry, Labor, and Human Relations along with the Divisions of Economic Support and Vocational Rehabilitation of the Department of Health and Social Services (now the Department of Health and Family Services).

As part of the process of reengineering the new Department of Workforce Development, the state created the Division of Workforce Excellence to implement Wisconsin's vision for a new employment and training system—the Partnership for Full Employment. PFE is designed to

• promote the well-being of individuals and families through work;
• meet employer needs for quality workers;
• offer quality job opportunities for job seekers;
• integrate services for employers and job seekers;
• help those who need a job obtain a job; and
• provide local leadership and direction.³³

PFE seeks to achieve these goals by integrating previously fragmented employment and training programs into a comprehensive and seamless service delivery system that functions through the state's Job Centers. Initially developed by a DILHR working group, Job Centers were later implemented with federal One-Stop, JTPA, JOBS, and Wagner-Peyser grants. The centers are designed to link job seekers to appropriate employment opportunities and to provide employers with a central location for advertising vacancies and recruiting qualified workers. Employers and job seekers can access a variety of services to meet their needs. The centers are also the primary delivery point for Wisconsin Works.

Job Centers are located throughout the state's 17 Service Delivery Areas, which are designated to receive federal job training funds. Within each SDA, a Local Collaborative Planning Team, consisting of administrators from the various programs offered through Job Centers, coordinates, plans, and oversees delivery of all workforce development initiatives operating through the centers. (At a minimum, local Job Center partners must include Job Service, local technical colleges, the JTPA Private Industry Council, and the JOBS program.) Since one goal of PFE is to provide a seamless service delivery system, most employment-related services are colocated in the Job Centers. Computerized links can provide access to services not on site.

Job Centers were in various stages of planning or operation at the time of the Wisconsin site visits, but all 17 SDAs were expected to have at least two operational centers by June 20, 1998. As of February 1997, all but one SDA had at least one functioning Job Center, and most had met the requirement for two.

In addition to partnering with various agencies, a Job Center candidate must offer specific services "on-site to a universal customer base."³⁴ These services include

career, job, and labor market information;

• information on locally available employment and training programs;
• information on program eligibility;
• information on support services;
• testing and assessment;
• lists of job openings, hiring requirements, and job referrals;
• job search assistance; and
• assistance in securing Unemployment Insurance benefits.³⁵

DWD uses federal One-Stop grants as the primary source of funding for Job Centers. These grants were part of a national effort to promote consolidated delivery of employment and training services; in 1994, Wisconsin received a $3.5 million grant. At the local level, a mix of staff representing various programs and agencies run the centers (e.g., a state Job Service person, a Private Industry Council director, county employees). Job Centers differ from more traditional Job Service agencies funded by the Wagner-Peyser Act in that Job Centers (1) have a multi-source funding base; (2) offer services beyond labor exchanges; and (3) provide integrated services rather than referrals to other agencies.

Most individuals use the Job Center as a self-service vehicle, for example, to seek employment on their own via JobNet, the state's computerized job listing system. Customers needing a little more help might use the Lite Level of Assistance—generally, a series of workshops on topics ranging from resume writing to workplace behavior. Customers needing more in-depth assistance can access the centers' specialized services.

Services for Families on Welfare

Even before the creation of the federal JOBS program in 1988 as the primary employment and training approach for welfare recipients, Wisconsin was operating its own effort—the Work Experience and Job Training program—and implemented JOBS in 1989, essentially by modifying its existing program. Federal funding regulations for JOBS required states to match a certain percentage of federal allocations to receive the full amount of available funds. Unlike many states, Wisconsin was able to claim its entire JOBS grant by providing the required matching funds.³⁶ The state's track record for moving welfare recipients into the JOBS program—just under 32 percent of the mandated number of participants in 1994—beat the national average of about 22 percent.³⁷

During this same period, Wisconsin was also experimenting with its welfare program. In the early years of JOBS, relatively large numbers of participants were enrolled in some type of educational activity. In 1991, for example, almost two-fifths of enrolled participants were in high school completion or postsecondary education programs.³⁸ In more recent years, Wisconsin shifted its reform efforts away from educational activities and toward work. By 1994, the number of JOBS participants involved in educational activities had dropped to nearly one-third.³⁹ By early 1997, long-term postsecondary education was being phased out as an acceptable activity. Staff could only approve short-term training (less than six months) for individuals who had not been employed in the prior year. Otherwise, clients were expected to be working, looking for work, or participating in a community service job.

Single adults ages 18 to 50 who receive food stamps are another welfare population expected to be working or in training. Under federal welfare law, single able-bodied adults not working 20 hours a week or more may only receive food stamps for 3 months out of a 60-month period. This requirement may be waived when there is a labor surplus in a particular area of the state. Because of the overall health of Wisconsin's economy, Governor Thompson has yet to exercise this option. According to state officials, most counties were placing single adults into the county Food Stamp employment and training program, which helps recipients, including heads of households who receive Food Stamps but no cash assistance, find work.

Other Targeted Services

Although federal welfare reform, coupled with Wisconsin's own efforts, emphasizes employment for welfare recipients, PFE and Job Centers are designed to serve all job seekers and employers. Any job seeker may use these centers to facilitate a job search, and employers are offered the same three levels of services (self, light, and specialized). Employers may use Job Center services on their own (e.g., they can enter their job openings directly on the Internet or search for job matches on JobNet). Or center staff can provide employers with light services, for example, by running a workshop on strategies for coping with labor shortages, sponsoring a job fair, or hosting career days. Employers may also request specialized services, such as help with upgrading their current workforce or with planning for impending layoffs.

Youth are another focus of Wisconsin's employment and training system. Within DWD, the Division of Connecting Education and Work has administrative responsibility for the main youth program-School-to-Work (STW). Wisconsin received one of the first-round implementation grants under the 1994 federal School-to-Work Opportunities Act. According to the U.S. Department of Education, the state's STW program, called Skills for the Future, is considered one of the premier programs of its kind in the country. The goal of the program is to provide students with the academic and technical skills they need to compete for the jobs of the next century.

One of STW's major initiatives is the Youth Apprenticeship program, which was created prior to passage of the federal STW law. Through the Youth Apprenticeship program, eligible high school juniors and seniors combine school classes with work experience in a variety of industries, such as biotechnology, graphic arts, and manufacturing. Upon successful completion of the program, students earn a skill certificate along with their high school diploma, and they may receive credits toward an associate's degree at a state technical college.

Child Care

Priorities and Budget

Governor Thompson and his administration recognize that child care is crucial to transforming cash assistance into a work-based system. Working families must have affordable, convenient, and reliable child care. Wisconsin has set several goals for its child care system: (1) consolidate various federal funding sources into a single child care funding stream; (2) eliminate waiting lists for care; (3) provide child care to all eligible low-income families, not just those receiving cash assistance; and (4) expand capacity. Federal welfare reform has facilitated the state's ability to meet these goals. The federal government's decision to allocate child care funds via block grants to states made it easier for Wisconsin to create a single child care funding stream. Additionally, the windfall the state received because of its early implementation of federal welfare reform, coupled with caseload reductions, allowed Wisconsin to move more funds into child care and thus expand available resources to serve more families.

Along with streamlining child care funding, Wisconsin consolidated the administration of its various child care programs. Before state government restructuring in 1996, two divisions within the Department of Health and Social Services were responsible for administering child care programs. The Division of Community Services handled the Child Care Development Block Grant (CCDBG), At-Risk funds child care for low-income families, and state-funded child care programs. It also licensed facilities. The Division of Economic Support administered all other Title IV-A and JOBS child care for AFDC recipients. These divisions met monthly to coordinate child care activities and jointly promulgated child care administrative rules, policies, and training for local staff. When DWD was created in July 1996, all state child care responsibilities, with the exception of licensing, were transferred to its Division of Economic Support.

In order to deliver child care services, the state contracts with county agencies that administer subsidized child care. Counties are authorized to subcontract this function to other agencies. Seventeen Child Care Resource and Referral agencies also receive CCDBG funds to provide parents with information on child care resources and to support child care providers with assistance and training.

Funding for subsidized child care has increased dramatically in Wisconsin. In 1987, a total of $12.5 million was spent on subsidized care; by 1996, child care allocations were over $60 million. The state plans to move the maximum allowable TANF dollars into child care. Given the dramatic caseload decline in Wisconsin, the state has a substantial TANF windfall to devote to child care. The governor's 1997–98 budget proposed increasing child care funding from the $63 million spent in FY 1996 to $158 million in 1997 and $180 million in 1998.

At the time of the Wisconsin site visit, subsidized child care funding was in the process of consolidation. Before that, AFDC families were entitled to child care assistance through Title IV-A funding if they were working or participating in JOBS. As these families left AFDC because of increased earnings, they could continue to receive a Transitional Child Care subsidy. Families whose income did not exceed 75 percent of the state median income—approximately $28,000 for a family of three—were also eligible for At-Risk and CCDBG assistance.

Supply and Quality

Until July 1, 1996, counties received At-Risk and CCDBG monies directly, as part of their Community Aids funding. (Community Aids funds are allocated annually on the basis of estimated human services needs in a county.) Even though counties were required to provide a 9.89 percent match, the potential for shortfalls in child care funding existed if need was greater than anticipated. As a way of managing this problem, the state added categories beyond income eligibility for assistance, as follows:

• families with special needs children;
• families with income at or below 50 percent of the state median income;
• teen parents needing child care in order to complete high school or other approved educational activities;
• employed AFDC recipients if their child care expenses were greater than the dependent child care income disregard or if the child care income disregard was not yet available;⁴⁰
• working families who left AFDC within the prior 12 months because of increased earnings; and
• other low-income working families.

Even with these new priorities, when funds fell short, poor clients who were working were put on a waiting list for child care. In 1996, the state's waiting list contained more than 9,600 children, more than 4,000 of them living in Milwaukee.

The state tackled the waiting list problem from the point of both funding and supply. It eliminated Community Aids as a funding mechanism for child care and moved CCDBG and the At-Risk funds into DWD's budget. Then in early 1997, it informed the counties that funds would be disbursed on the basis of actual need, rather than as a capped allocation based on estimated need. Clients would remain eligible for subsidized care for as long as they met income eligibility requirements and were working or in required work activities. This shift quickly reduced the child care waiting list. In addition, Wisconsin dedicated $5 million to building the state's child care infrastructure.

Until the recent changes in child care that accompanied W-2 (see Welfare Reform Plans), recipients of subsidized child care could choose from three types of eligible providers: licensed group centers, licensed family day care providers, and certified family day care providers. Providers must be licensed if they are caring for four or more children under the age of seven. Licensing is administered at the state level; certification is administered at the local level by a county department of social services. Whether a provider is licensed or certified affects the type and length of training required and the level of reimbursement the provider may receive.

The process of bringing these new providers into the subsidized child care system has been problematic. Milwaukee County staff reported frequent payment delays to new providers, who often submit incomplete or late paperwork. New providers must be certified with child care resource and referral agencies, a process that includes submission of an application package, participation in child care training sessions, and completion of a background check. Breakdowns were noted in this process. Some providers who may have incorrectly filled out a form were not told of their mistakes; their application was never processed and they were subsequently not paid. Additionally, the Planning Council for Health and Human Services, which sets reimbursement rates for the county and staffs the county's Child Care Advisory Committee, found that new centers open for business only to close down quickly.

The $5 million that Wisconsin dedicated to building child care infrastructure was also intended to enhance quality of care. Grants were issued to providers who had been licensed or certified for three years and who had no serious enforcement infractions during that period. Providers used the grants to improve program quality, become accredited, train staff, improve staff salaries, and reduce turnover. Despite these efforts, some advocates and service providers believe that the state is less interested in improving the quality of child care than it is in expanding its supply.

Early Childhood Development

The Department of Public Instruction oversees early childhood development programs, which along with child care programs are generally coordinated through a statewide coalition that includes Head Start providers, child care providers, and representatives from the Department of Public Instruction and the public schools' labor union. This group examines the status of early childhood development initiatives and proposes new approaches for serving young children. While progress has reportedly been made, the different ideologies among group members may slow the process of designing a single and cohesive early childhood development policy.

Currently, the state does not operate an extensive prekindergarten program. Head Start is the only major early childhood development program for low-income families. The Department of Public Instruction does administer $5 million in supplemental funding to Head Start, which is less than 10 percent of Head Start expenditures in Wisconsin (the state's federal allocation for Head Start in FY 1996 was just over $54 million). The supplement is used to provide all-day wraparound services in a select number of sites. Additionally, the state received a federal Head Start collaborative grant to facilitate coordination between Head Start and other early childhood development programs. Most of the grant is being contracted out to the state Head Start organization, but some of the grant will fund a collaborator position based in the Child Care Bureau within the Department of Workforce Development. The collaborator will oversee coordination efforts.

Head Start enrolled more than 12,000 children in FY 1996. Yet critics believe that these are mainly children of the very poor and not the working poor. Some are concerned about the impact that welfare reform will have on Head Start, especially with the implementation of W-2 and its increased emphasis on work, which may render half-day Head Start programs an impractical option for families. The state hopes families will not leave Head Start either because of the hours of care or because of income ineligibility. State policymakers believe that the federal Head Start program must adapt to the realities of a work-based welfare program—by perhaps increasing the number of full-day programs and adjusting current income restrictions, for example.

Child Support

The Title IV-D child support program is supervised on the state level by the Bureau of Child Support within the Division of Economic Support. Prior to Wisconsin's departmental reorganization in 1996, the bureau was located in the Department of Health and Social Services. It is now part of the DWD. This move reflects the state's view that child support is an essential component of self-sufficiency for those receiving public aid. While the state oversees child support efforts, its 72 counties operate the child support system through cooperative agreements with a number of interrelated entities: the clerks of the court, sheriffs, offices of corporation counsel or private attorneys, and other officials and agencies.

Wisconsin has been a national leader in efforts to establish paternity and collect child support. In 1995, it ranked first among the states in paternity establishment, establishing paternity in 80 percent of cases.⁴¹ Wisconsin ranked second nationally in child support collections in 1994 (in cases in which a child support order existed within the publicly funded child support system),⁴² with a collection rate twice that of the national average of 18.3 percent.⁴³ In 1994–95, Wisconsin collected more than $800 million in previously unpaid child support.⁴⁴

Wisconsin's child support collection efforts have been enhanced by federal and state incentives. In FY 1994, Wisconsin earned $5.8 million, or 7 percent of the child support collected on behalf of AFDC and Foster Care recipients.⁴⁵ These payments are calculated using a collection-to-cost ratio, which measures how efficient the state was in collecting support. In 1994, Wisconsin ranked third in the country, collecting $7.74 for every dollar spent on enforcement.⁴⁶ (The national collection-to-cost rate was $3.86 for each dollar spent on collections.⁴⁷) Federal incentive payments are passed on to counties according to the counties' collection-to-cost ratio. Wisconsin also provides its own incentives to counties. A minimum of $259,000 in General Purpose Revenue funds are dedicated each year to rewarding counties for increased paternity establishment, increased child support collections, and improved administrative efficiency.⁴⁸ The total child support enforcement cost to counties in FY 1995 was more than $44 million.⁴⁹

In September 1996, Wisconsin implemented its Kids Information Data System (KIDS), a statewide automated child support system that replaced the state's previous automated system in response to the Family Support Act of 1988. KIDS facilitates the collection of child support in Wisconsin by

• giving child support workers access to all child support cases statewide;
• interacting with federal and state computer systems to locate noncustodial parents;
• producing billing coupons for parents who owe support;
• tracking unpaid child support for tax intercept purposes;
• providing employers with a list of employees subject to income withholding; and
• automating required court documents and legal notices.⁵⁰

Wisconsin contracted out the development of KIDS to Integrated Systems Solution Corporation, but county support agencies and clerks of court were involved in the development process. In the 1995–97 biennial budget, more than $50 million was allocated for the development and operation of KIDS.

Wisconsin's child support system is probably best known for its Children First program, which exemplifies the state's philosophy that both parents, not just the custodial parent, must be responsible for the financial support of their children. Children First was created as a two-county pilot under Governor Thompson's Welfare Reform Act of 1987. Noncustodial parents are ordered into Children First through the court system when they are not paying child support, when they are not working full-time, and when they state that they have no means of paying their legal obligation of support. Noncustodial parents can fulfill the Children First requirements by meeting their support obligation for three consecutive months or by participating in job training for 16