Department of Workforce Development

The following comments by DWD Secretary Linda Stewart are in response to the release Friday of a study by the Manpower Demonstration Research Corporation (MDRC) of the two-year results of Milwaukee’s experimental New Hope program to reduce poverty and reform welfare.

"The study validates our belief that a new work-based social contract now being established between low-income adults who can work and society as a whole will help reduce poverty in the years ahead.

"It also reaffirms the wisdom of many of the basic practices the Governor began putting in place when he started reforming welfare in 1987. He learned what to do from talking to public assistance recipients. That learning translated into Wisconsin Works (W-2), our work-based welfare reform program that began operations in September, 1997, and continues today.

"Some of the major lessons we see for W-2 from the study:

• "Placing emphasis on job-specific skill building and helping people advance in employment, coupled with time limits, leads to a greater individual commitment to work.

• "Community service jobs (CSJ’s) are an important element in welfare reform programs. They also can be of sufficient quality to be an effective bridge to increased employment and earnings by those who initially can’t find jobs.

"However, the W-2 and New Hope CSJ programs differ. New Hope paid wages which made participants eligible for the Earned Income Tax Credit (EITC). The CSJ program under W-2 offers flat grants for CSJ training and has an educational component.

• "The decision by Governor Thompson to triple funding for child care as part of the implementation of W-2 was right on target. In addition, it supports how he is continuing to address child care in his biennial budget proposal and his implementation of BadgerCare in mid-1999.

• "The support and encouragement participants receive from staff – important elements of case management -- during their time in the program can be as important in determining ultimate success for some of them as the financial benefits being provided.

• "What we've been hearing from families in W-2 and others -- that the experiences of working parents are having a positive influence on their children's success in school -- is supported by the findings in the study of New Hope. Perhaps the most informative part of the study is the survey evidence that school performance for boys under 12 is significantly better in the New Hope experimental group, compared to other groups.

"We make the above conclusions from these and other observations in the study:

• "Those members of the New Hope experimental group who were not working full time at the point they were assigned to their group showed a significant increase in employment and earnings over their counterparts in the control group. Most of this appears to be the result of the availability of community service jobs.

• "For those initially working full time, the availability of New Hope benefits reduced the amount of time in which they were working more than 40 hours a week. This may have been due to New Hope’s guaranteed wage supplement to increase income to 100 per cent of the federal poverty level when an individual worked at least 30 hours a week.

• "The New Hope treatment design recognized the importance of child care. That recognition and a New Hope subsidy measurably increased use of state-regulated child care. New Hope’s experiences also underscore the importance of assuring access to health insurance.

• "The combined role of eligibility worker (in New Hope) and case manager (in W-2) is similar in both programs. In both cases, the workers provide advice and emotional support which is valued by participants.

• "The cost-benefit analysis of New Hope shows that the program’s costs exceeded benefit savings to the state and federal governments. However, other benefits such as improved behavior in school – and, we hope, upon leaving -- are difficult to quantify in a cost-benefit analysis, but clearly can be significant."

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Notes to reporters:

Most of the results for the New Hope project are for the period just before implementation of W-2. Recruitment ended by late 1995, and nearly all of the data are for 1996 and early 1997. Many (but not all) of the families in the control group were eligible for Aid to Families with Dependent Children (AFDC), the program which W-2 replaced.