HHS News Release

HHS Secretary Donna E. Shalala today approved a welfare demonstration for the state of Colorado that seeks to increase personal responsibility and employment opportunities for recipients of Aid to Families with Dependent Children (AFDC).

"Colorado has developed a number of innovative changes to the AFDC program. The state is anxious to do more in the way of promoting self-sufficiency for welfare families, and I believe this demonstration will do precisely that," Shalala said.

The demonstration, called the "Personal Responsibility and Employment Program," contains a number of major revisions to the state's AFDC program. For instance:

*Parents who are able to work or able to participate in a training program must do so after receiving AFDC benefits for two years.
Individuals who refuse to perform the assignments will face a loss of AFDC benefits.

*Food Stamps will be "cashed out"; meaning that the value of the coupons will simply be added to the monthly AFDC payment.

*To encourage work and the accumulation of assets, three specific policies will be implemented. First, the income disregard formula will exempt the first $120 of monthly income, plus 58 percent of the remainder, when AFDC payments are calculated for working families.

Second, AFDC families who are employed will be allowed to possess up to $5,000 in assets; an amount five times the current $1,000 limit. Non-working AFDC families will be permitted to accumulate $2,000 in assets.

Third, AFDC families will be permitted to own a car regardless of its value or their equity in it. Current law limits a family's equity in one car to $1,500.

Finally, the demonstration provides for financial bonuses when children stay in school and graduate from a secondary (high school) or GED program, and permits financial penalties when parents fail to have their children immunized.

In addition, the Colorado plan eases and simplifies transitional coverage rules under Medicaid, so that more welfare recipients retain health care coverage as they move to employment.

The demonstration is expected to begin later this year in five counties. A rigorous evaluation, utilizing random assignment to control and experimental groups, will be included.

HHS Assistant Secretary for Children and Families Mary Jo Bane said the demonstration "is another example of this administration's commitment to state innovation and flexibility in welfare policy.

We look forward to working with state officials as this demonstration proceeds in the future."

Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.

Contact: David Siegel (202) 401-9215