Gov. Bush Pushes A Welfare Overhaul, Texas Style
Locking horns with Washington could boost a 2000 bid
By Jennifer Petersen/AllPolitics
WASHINGTON (Aug. 12) -- When Texas Gov. George Bush kicked off his re-election campaign at his Midland elementary school earlier this year, he said he would champion "Texas values" -- limited government, local control and individual responsibility.
One of the policy areas Bush has applied this anti-big government stance to is redesigning the state's welfare program.
Welfare reform as an issue may have slid out of the spotlight on Capitol Hill, but hard work continues at the state level. The interplay of politics and policy in Texas' welfare redesign may provide a window into where the struggle over aid to the poor is headed two years after the landmark federal legislation.
Gov. George W. Bush
In Texas, as on the national level, much talk of welfare reform has centered on benefit time limits and work requirements. But in Texas, Bush has also turned his attention to getting the state out of state services.
In his governorship and in his campaign, Bush has often said that "government does not have a monopoly on compassion." It has become something of a catch phrase for the governor's position on welfare and other social issues.
The phrase, and the anti-big government philosophy behind it, are likely to accompany Bush on the campaign trail again if, as expected, he makes a bid for the Republican presidential nomination in 2000.
As governor, Bush has supported an increased role for private agencies -- both for-profit and non-profit -- in administering welfare benefits to the needy, a move which has at times pitted the governor's politics against federal policy.
Freedom to privatize
Under Bush's leadership, Texas sought to take advantage of the new freedom that welfare reform allowed the states in designing assistance programs, setting forth the most extensive of the states' privatization plans. The state's proposal, rejected at the federal level, would have consolidated several different assistance programs and put in place a private agency to run the program, from application decisions to delivery of benefits.
Texas' proposal was the most drastic of the state privatization plans, but it was far from the only one.
While limited privatization has long been practiced in some states' welfare plans, in the wake of welfare reform many states rushed to increase the programs under private contracts for a variety of political and economic reasons.
The decline in federal funding for work-training programs in the early 1990s, combined with specific goals and spending limits under welfare reform, put the states under increased pressure to cut costs and streamline programs, making contracts with private sector agencies increasingly attractive. With private contracts, states could scale back their employment rolls and, through competitive bidding, pay low fixed rates for services.
The welfare legislation also opened up the states' options for entering into contracts more than ever before. The passage of welfare reform, also known as the Personal Responsibility and Work Opportunity Reconciliation Act, greatly increased the states' options for benefit administration and distribution as it reorganized the nation's program for assisting the poor.
The legislation established a new government program, Temporary Assistance for Needy Families (TANF), to replace the Aid to Families with Dependent Children (AFDC), Job Opportunities and Basic Skills Training (JOBS) and Emergency Assistance programs. The restructuring allowed the states much more leeway to design their own assistance programs and to contract with private companies and non-profit organizations to administer these programs.
In particular, the new law allowed states to contract out eligibility and benefit determination for TANF-funded programs to private agencies. The food stamp program, however, still needed a federal waiver before such decisions could be made by private sector workers.
Many states stuck with limited plans for privatization that centered on TANF-funded programs. But the new freedom allowed under welfare reform induced some states to go further in their welfare plans, proposing that independent contractors take over the eligibility and benefit decision-making of their basic assistance programs.
The list of trail-blazing states includes Arizona, Texas and Florida, which have all proposed plans to privatize administration of at least their food stamp programs. Should these states' plans prove successful, more could rapidly follow.
Rep. Bill Archer
Of all of these plans, Texas' would have handed over the largest segment of state services to private interests. Texas politicians were eager to cut costs and reasoned that combining and automating the different assistance agencies would be cheap and efficient.
Bush, Rep. Bill Archer (R-Houston) and Texas Sen. Phil Gramm were among the political backers of the privatization plan submitted for federal approval in 1997. The plan aimed to integrate and automate eligibility assessment, enrollment, service referrals and client data for the state's cash assistance, food stamp and Medicaid programs, and contract out the administration of the combined programs to private high-tech firms. The contractors would have been responsible for redesigning and running the program, from application to delivery.
Supporters said that the plan would have saved the state as much as $120 million a year.
When the proposal went to Washington in the spring of 1997 for the necessary federal approval and waivers, President Bill Clinton rejected the plan, saying that needy families should not have to rely on profit-seeking companies for decisions on Medicaid and food stamp eligibility and benefits. Bush met personally with the president's chief of staff, Erskine Bowles, to dispute the decision as he appealed to Congress to save the plan.
In response to the president's decision, Republicans claimed he had been influenced by unions, which objected to privatization's proposed elimination of large numbers of government jobs. Jobs for which the automation plans made private sector replacements seem unlikely.
Sen. Phil Gramm
Even with Clinton's refusal of the waiver necessary to complete Texas' plans, Bush was free to continue negotiations and seek bids from private companies.
Into the summer, Texas Republicans continued to fight for their welfare reform plan, collecting bids for the best proposal for the redesign and operation of the state's welfare system.
When Congress finally got back to Texas' privatization plan in August, it was with an offer of compromise: Texas could go forward with a pilot program that would fully privatize a portion of the state's welfare population on condition that the remainder of welfare recipients continue to be enrolled in state-run programs.
To Bush, the compromise was bad news. He rejected the plan and stated continued support for full privatization of state assistance, claiming that the compromise would only create two welfare systems in Texas, an idea that was directly opposed to his purpose of minimizing the state's welfare program.
In response, lawmakers Gramm and Archer introduced measures in the Senate and House that would further the states' freedom to privatize welfare programs, and that would make Texas' welfare reform plan possible without a federal waiver.
Locking horns with Washington
While the federal offer of compromise was bad news for state politics, it may have been a boon for the governor's credibility as a potential presidential candidate. In rejecting the compromise, Bush had locked horns with the Clinton Administration at the federal level, enabling Bush to portray himself as a candidate capable of handling himself on Capitol Hill.
Back in Texas, Bush continued to push the involvement of non-governmental groups in providing services typically reserved for the state, encouraging the involvement of church groups in assisting needy families with legislative action under welfare reform's "charitable choice" provision.
Along with such legislative action as tax cuts, Bush's move toward reliance on privatization and community charity to provide assistance to the state's poor could endear him to conservatives in 2000.
Bush's political platform is already attractive from a conservative viewpoint: He lists a handful of conservative slogans as his major political goals, such as "strong families," "local control," "individual responsibility" and "limited government."
Political opponents, however, say that regardless of what Bush says, the governor has followed a program of big government in Texas.
"Bush is one of the last politicians who should claim to be against big government," said Billy Rogers, campaign spokesperson for Bush's gubernatorial challenger, Gary Mauro. "He's the biggest tax and spender Texas has ever seen."
Rogers said state spending had increased by $17 billion, or 24 percent, during Bush's term as governor and that Bush had tried to increase taxes for middle-class Texans.
Officials in Bush's press office counter that the governor passed the state's largest tax cut bill, which reduced homeowners' property taxes through cutting local school property taxes.
Bush had supported a more sweeping, $3 billion property tax cut which was defeated in the Texas legislature.
Rogers also suggested that Bush's interest in privatization may have to do with helping friends in corporate positions. A case in point, Rogers said, was former Bush legislative liaison Dan Shelly, who counseled Bush on the benefits of privatization before leaving the governor's staff for a lucrative job lobbying on the behalf of Lockheed-Martin, which was seeking the government services contract at the time.
Mindy Tucker, campaign spokesperson for Bush, said the governor's support for privatization was an outgrowth of his concern for the state's future.
"Governor Bush makes decisions based upon facts and principles and what is best for Texas," Tucker said. "He believes that privatizing portions of the welfare system will result in Texas delivering services in a more effective and efficient manner."
Since the federal defeat, the Texas legislature has re-focused its plan for streamlining state services, taking cues from corporate organization. The state still plans to consolidate many of its assistance services, and to enlist a contractor to overhaul the computer system to allow offices to share databases containing case information. The overhaul is supposed to ease the paperwork load for Department of Human Services (DHS) workers, and the footwork for assistance recipients.
But eligibility decisions remain, for the meantime, in the hands of state employees.
Politics could possibly change this fact, though that possibility remains remote. Archer's office said he was planning to continue lobbying for more flexibility for states to privatize their welfare services. Political pursuits could also motivate Bush to continue his 1997 fight for a full program of welfare privatization in Texas.
And, outside of Texas, the National Governors' Association is lobbying to increase the freedom of states to determine how to organize and administer assistance programs. While not directly aimed at privatization, their argument that local authorities know what is best for their own constituents could provide support for efforts such as Texas'.
Whether or not Texas ever realizes its privatization plan, other states are picking up Texas' lead in seeking to privatize their food stamp programs.
Since Texas' refusal of the congressional compromise, Florida and Arizona have applied to the U.S. Department of Agriculture (USDA), which administers the program on the federal level, for waivers that would allow them to enact limited pilot programs. The waivers would allow the states to privatize administration and delivery of food stamp programs for portions of the states' populations.
Phil Shanholtzer, branch chief for the USDA Public Affairs Office, said that most states are holding off on applying for waivers until the dust settles a bit on welfare reform. As other states wait it out, the successes or failures of the programs in Florida and Arizona may provide a roadmap for other states seeking to redefine their welfare programs.
Nancy Pindus, senior research associate for the Urban Institute's Human Resources Policy Center, agreed that other states will be interested in the outcome of the redefinitions underway in Texas, Florida and Arizona, especially if they think similar plans may help them to consolidate services.
"States are looking at each other seeing who's got a better system," she said. "Everyone will be watching them."