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Public Papers - 1992

White House Fact Sheet: The State of Wisconsin's Two-Tier Welfare Demonstration Project


The President today announced approval of a second Federal waiver for the State of Wisconsin's welfare reform effort. The waivers will enable Wisconsin to implement a two-tier welfare benefit. Recipients of Aid to Families with Dependent Children welfare benefits who are new arrivals to Wisconsin would receive the benefit level paid in that person's State of origin, regardless of whether the State of origin's rate is higher or lower than Wisconsin's.

The Problem

Wisconsin's survey of new welfare recipients in Milwaukee County for June 1992 found 16 percent had moved to Wisconsin, applied for welfare benefits within 90 days of arriving in the State, and had never previously lived in Wisconsin. Of this group, 28 percent had moved from Illinois.

In explaining why it seeks waivers, Wisconsin notes that, except for Minnesota, welfare benefits in all adjoining and nearby States are lower than in Wisconsin. Wisconsin's welfare benefit for a family of three is 7 per month. The level in Illinois, the most populous adjoining State, is 7 per month for a family of three. Payments are 8 per month in Indiana, 6 in Iowa, and 2 in Minnesota for families of three.

The President's Proposal

In his State of the Union Address, the President pledged to help any State attempting to reform its welfare system to promote individual responsibility by making it easier to obtain quickly any waiver of Federal regulations that may be required.

Today's is the sixth such waiver to be approved since the State of the Union. It is the second for Wisconsin; Wisconsin received its first waiver on April 17. Other waivers have been approved for California, Maryland, New Jersey, and Oregon.

Wisconsin's Two-Tier Welfare Demonstration Project

The project will run for 3 years in up to six Wisconsin counties. The two-tier benefit will be in effect in Milwaukee, Kenosha, Racine, and up to three other counties. In those counties, AFDC benefits for a new arrival in the State would be paid at the level in that person's State of origin, regardless of whether the State of origin's rate is higher or lower than Wisconsin's. A person arriving in the State to take a job who is employed for at least 90 days and subsequently seeks AFDC will be paid at the Wisconsin rate. A person who is a former Wisconsin resident for at least 6 months will also be paid at the Wisconsin rate.

Results in the counties where the two-tier benefit is in effect will be compared to three other counties and the balance of the State where the two-tier benefit will not be in effect. The project will operate for 3 years, after which its effects will be evaluated to assess whether AFDC recipients move to the State for the purposes of obtaining higher AFDC benefits.

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