TheGeorgetown PublicPolicy Review - Georgetown University

The Georgetown Public Policy Review

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The Georgetown Public Policy Review (ISSN 1083-7523) Fall 1996 Vol. 2, No. I.All copyright privileges retained by 111eGeorgetown Public Policv Review unless otherwise stated.

Copyright 1996, SOYP. All rights reserved. Printed in the United States.

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80 Tur NEW I:-lFORi\IATJO:-l INfRASTRUCTURE: STRAfECIES FOR US POLICY,

EDiT/.'[) BY WIUJIfMI DR,1KF:

Logan Kleier

81 TI-IE KEY TO TI IE ASIAN .Mm./\CLE, HI' EDGIfRDO CA;1.1POS AND HI/JON L ROOT

Sumona Guha

83 PARTNERS Il\; PUBLIC 11'\PUBLIC SERVICE: GOVERK'vIENT-NO:.IPROFlT RELATIO:.IS

IN TIlE MODER]\; WELFARE STATE, BY LU;TER. M. SAL1;vION

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Prefacef0 0J1

In this, our second volume of the Georgetown Public Policy Review,we continue to uphold the journal's mission of providing a venue for usefuland intelligent discourse among those who influence, analyze, and imple-ment public policy. Since our inaugural issue one year ago, The Reviewcontinues its commitment to providing a unique voice within the existingbody of public policy literature. It is our belief that by publishing analyti-cally-based articles by graduate students, academics, and practitioners, wewill allow for the cultivation of ideas that provide insight into the manyfacets of public policy.

In this issue, The Review highlights two contributions from the field ofjuvenile justice. In our feature interview, Shay Bilchik, Administrator of theOffice of Juvenile Justice and Delinquency Prevention at the Department ofJustice, discusses prevention and rehabilitation policies for youthfuloffenders in a disciplinary political and social climate. In "Boot Camps forJuvenile Offenders: Public Appeal, but Effective Public Policy?" DavidThomas explores one possible solution to the problem of increasingrecidivism in juvenile offenders by examining the findings of a recentDepartment of Justice study on the effectiveness of juvenile boot camps.

the Review then examines four salient issues on the domestic policyagenda. First, in her article "The Adoption Assistance and Child WelfareAct of 1980: Three Case Studies in Intergovernmental Conflict," Catherine T.Kelliher examines federal and local factors that hinder the Act's implementa-tion in California, Missouri, and the District of Columbia. The Review'ssecond article in this section, "Maryland's One-Stop Career System: A NewStrategy in Job Training and Employment Services," by Clemente Perez andSean Ryan, singles out a local, federally funded program-Maryland'sCareerNet-and studies the organizational innovations used to administer anetwork of career development centers for job-seekers. The third and fourtharticles in this edition provide a review and analysis of two contemporarypublic policy topics: health care and welfare. In "Medical Savings Accounts:Their Place in the US Health Care System," Niall Brennan critiques the claimsmade by proponents of MSA 'so In our last article, "Welfare Reform: AnAnalysis of the Factors that Influence Policy," Eric N. Mader reviews themajor issues surrounding the welfare reform debates of the past few years.

We hope that you find the ideas and analysis presented in this editionof The George/own Public Policy Review both timely and insightful. We aregrateful for your continued support of our publication, and welcome yourcontributions to forthcoming issues.

THE EDITORS

Interview with Shay Bilchik,Administrator for the Office of JuvenileJustice and Delinquency Prevention

In the criminal justice policy arena, policymakers often disagree as towhat combination of rehabilitation and punishment is appropriate to achieve thedesired result of reducing crime. With respect to juvenile justice, the difficulty ofthis issue is compounded by the relative youth of the offenders. Steady increasesin juvenile crime over the last two decades-coupled with the current politicalclimate-have resulted in calls for a tougher response toward youthful offenders.

III this feature article, The Review's Academic Co-Editor, LouisaMerianos, together with Vch Bczdikian, a Social Science Analyst at the De-partment of Justice and GPPP alumnus, spoke with one of the country's leading ex-perts ill juvenile justice policy, Mr. Shay Bilchik. In the following interview heoffers his expertise and provides a unique perspective to the current debate.

OVERVIEW: PREVENTION AND

!:\7CARCERATIO:\,

f0 ~

Lately, there has been a considerableamount ~f attention given to the in-crease in ju-venile crime. Tbc FBIreports that juvenile crime bas moretban doubled in the past decade. Com-bined with an impending growtb in thejuocniic population, there is porentialfora juoenile crime explosion. Giucn thatju-venile crime has increased despiteqllDr's focus on prevention, do youbelieuc tbat cmpbasis shollld continueto he placed on prevention? Wbat is yourresponse to those who [auor tougber sen-tcnces for juveniles and lessfocus onrcbabilita tion and pre·ven tion?

This question reflects the currentpublic debate over how we need toapproach the increases we have seenin violent juvenile crime over the pastseveral years. The debate allows us toconsider what has really taken placein the past ten years or so in the juvcn-

ile justice arena. Although we havetalked about emphasis on preventionfor a number of years, I am not surethat we have seen a sustained, inten-sive emphasis on prevention in thiscountry as a whole, or in our individualneighborhoods and communities. Wesimply have not see the type of effortthat could have the kind of impact weneed on juvenile crime-and in partic-ular on juvenile violence.

.lVlentoring programs are an exam-ple of the type of programs that canhave a big impact. Recent research,conducted by Public/Private Venturesto investigate the impact of mentoringat Big Brothers/Big Sisters (a nonprofitservice provider for youth), shows thatmentoring can result in tremendouspositive outcomes . .lVlentoring pro-grams implemented in the right wayprovided numerous positive results foryoung people. The youth in the men-toring programs investigated in thisstudy were less drug-involved andless alcohol-involved than youth who

The Georgetown Publ ic Pol icy Review. 21 (Fall 1996). 7-13. Copyright () 1996

were not involved in a mentoring rela-tionship. They also had better aca-demic outcomes in school, more pos-itive relationships with their parents,and were less aggressive in theirbehavior. These positive results werealso found in an evaluation of Boysand Girls Clubs, which showed theirprogram reduced delinquency by 13percent. These types of positive acti-vities can keep children away fromdelinquency. Unfortunately, a largenumber of children in this countryneed this kind of support but are notgetting it. Critics ask why we still havedelinquency problems if these programswork-the answer is at least in part thatonly a small number of youth whoneed these programs are actually inthem. So, the bottom line on preven-tion efforts is that it is a scale issue.Our prevention efforts have not beenbrought to scale to make a widespreadimpact on juvenile crime.

But it is not going to be preventionalone that solves the juvenile crimeproblem. We also need to look at theincarceration of certain serious juven-ile offenders and strong juvenile jus-tice system programs. There are thosewho favor tougher sentences for ju-veniles (and thus less emphasis onrehabilitation and prevention for thisselect group). There will always bea core group of juveniles, who maycomprise a small percentage of offen-ders, who are perhaps beyond ourreach because of the perniciousnessof their behavior or the seriousness ofthe individual crimes that they arecommitting. For public safety reasons,these children may not belong in thejuvenile justice systems, and we mayneed to move them into the adultcriminal system. Having said that,I would still answer your question bysaying that we're not going to give upon prevention, at least in terms of thefocus of this Office. I do not think

The Georgetown Publ ic Pol icy Review. 21 (Fa]] 1996)

the Administration wants to give upon prevention-we are pushing for avery balanced approach.

Although alternatives to traditionalincarceration baoe gained popularityin recent years, there are still questionsas to whether these initiatiucs achievethe desired outcomes of rehabilitatingyouthJit! oJfenders. What role do youthink alternatiue programs (e.g., bootcamps, electronic monitoring) shouldplay in juoenile justice?

We need to look at programs thatare alternatives to incarceration,determine the level of success theyare finding, and then look to why theyare finding that success. After suchresearch, we can then apply theknowledge we gather in determininghow best to utilize these types ofefforts. With respect to all of theseprograms, however, we need to lookat the aftercare component.

I can remember my first years asa prosecutor-first seeing what kind of"aftercare" we had. We saw juvenilesgoing into programs, given bus ticketshome, and going back home on aprobation officer's caseload of ahundred, if not more. It was expectedthat this routine would sustainwhatever benefits occurred in theprogram. This was, and still is, notrealistic. There needs to be a goodqualitative input in the child's life. Interms of your question, aftercare hasa very critical role in the process ofdetermining appropriate alternativejuvenile justice placements and shouldbe seriously considered.

Let me describe a program thatI think is an exciting example of asuccessful alternative to incarceration:The Multi-Systemic Therapy (MST)Program at the University of SouthCarolina. MST has taken juvenileswho ordinarily would be in residentialcare and put them in a four month

Feature Interview: Shay Bilchik

intensive community-based programthat is non-residential. Workers fromthe program intervene in each youngperson's life in relation to his or herindividual needs, and work exten-sively with the family and with thesupport systems that surround thatchild. What they are doing, sevendays a week, 24 hours a day, on calland with daily contact, is buildingstrength in that family, so thatparents learn how to best supporttheir child within the school system,within the juvenile justice system,within the health system, all for thebenefit of their child. When thatintervention is gone, four monthsdown the road, what's left behind isa parent (or parents) who have theability to maintain an environmentthat is conducive to law-abiding,positive behavior by the child. Whenthere is a crisis, they'll know how todeal with it as a family. When there'sa problem with school, they'll knowhow to cope with it. If the child is re-arrested and enters the juvenile jus-tice system, they'll know how tointervene, who to contact, and howto work for the child's benefit.

That kind of alternative approachto incarceration has been evaluated inthe Multi-Systemic Therapy program,and two and a half years down theroad, it is still having tremendoussuccess in reducing recidivism and inreducing the severity of the types ofoffenses that were committed. So, wecan consider this model, which researchshows is effective, and use it as analternative to incarceration, or, ifpossible, incorporate the model andsome of its principles into aftercareprograms.

I think boot camps can be viewedin the same way. We saw some goodoutcomes from the boot camp pro-grams funded by O]]DP. Participantsmade great academic gains, learned

good vocational skills, and-in manycases-changed their attitudes. Onceagain, where I think we saw a weak-ness was in the aftercare component-there wasn't a strong sustained in-volvement with the juveniles-so welost a lot of the benefits, and as a resultthe recidivism rate was higher thanwe had hoped to see in those pro-grams. By improving aftercare, whichis presently underway in the twoactive O]]DP boot camp sites, and inenhancing alternatives to incarcerationprograms in the way I have described,we have a chance for a sustainedimpact on the lives of these juvenileoffenders.

THE CURRE!,;T POLITICAL A:"JD

SOCIAL E~V1RONME:"JT

The Juvenile Justice and DelinquencyPreuention Act is currently up for re-authorization. Under the act, statefun-ding has been linked to states meeting[our core requirements, or minimumstandards of protection for children oryouth in their ju·venile justice systems,including: (1) rcmouing status offendersj"0171 jails, (2) separating juveniles j"01Jladult criminals in common facilities,(3) removing juveniles from adult jailsand lock-up facilities, and (4) requiringstates to address disproportionate minor-ity confinement. First, how importantis it to maintain these requirements?And second, should we be placing greateremphasis on incarcerating hard-corejuvenile offenders or protecting statusojlenders?

I think the requirements reflectsome basic principles around which agood juvenile justice system shouldoperate. If you have a dedicatedsystem for juveniles you think youcan rehabilitate, then you should beable to provide dedicated juvenile

10

facilities for those children and notmix them in with the adult offenderpopulation. Status offenders should bereached, at least initially, without anylengthy period of detention or incarcer-ation, and they certainly should notbe mixed in with the adult offenderpopulation. However, the Act docsallow for certain flexibility. The Actallows status offenders, when initiallytaken into custody, to be held for aperiod of time- 24 hours, exclusive ofweekends and holidays, pending acourt review-and then allows another24 hours to place the child. We'vetried to be sensitive to local needsand flexible about implementation ofthe core requirements. We do nottake an absolute approach to theserequirements. I maintain that theseare good fundamental principles forthe juvenile justice system and thatwe should not stray from the beliefthat a dedicated juvenile justice systemcan be successful in working with ouryouth.

The issue of disproportionateminority confinement is one thatbecame a part of the four core require-ments in the last few years (with the1992 amendments). I think thisrequirement reflects Congress' con-cern about the dramatic difference inthe percentage of minorities being con-fined and their representation in thegeneral population. The requirementdoes not impose a quota system, nordoes it require in absolute terms thatyou reduce disproportionate minorityconfinement in order to be in compli-ance. However, it does require thestate to thoughtfully review whetherit has a disproportionate minorityconfinement situation, and if so, toanalyze it and make appropriateattempts to address the situation.

I don't think the core requirementsare unreasonable tasks for states, nordo they prevent states from engaging

The Georgetown Public Policy Review. 21 (Fall 1996)

in broader juvenile justice and preven-tion activities. Thus, I would hope thatthe states would support maintainingthese requirements. Whether theyare part of a federal code or not, theseare good, sound principles.

As for making a choice betweenemphasizing incarceration of hard-core juvenile offenders or protectionof status offenders, I don't think thatis an either/or proposition. I reallythink that you can do both. We needto focus on the hard-core, chronic,and serious juvenile offenders andmake sure that our public safety needsare met. We can accomplish theseobjectives through law enforcementand correctional approaches. At thesame time we cannot lose sight of thefact that we need to be working at thefront end of the system as well. Inworking at the front end of the systemwe need to focus on our status offen-ders, work to ensure that fewer ofthem go down that path towarddelinquent behavior, and look atwhat's been effective in working withstatus offenders and put thoseprograms in place.

The truth of the matter is that manyparts of the protective services anddelinquency systems are not function-ing well. Before we give up on theseefforts, however, we have to look atwhy these systems are not effective.What do we expect to accomplish inworking with status offenders who gointo a system that has hundreds ofchildren being served by too few wor-kers without the kinds of servicesand counseling available to deal withtheir problems. You have probablyheard the phrase that runaway kidsare not usually running to some-thing-they are running away fromsomething. How do we help themdeal with those situations beforethey do runaway and potentially arevictimized, or become delinquents?

Feature Interview Shay Bilchik

That aspect of the system isn't gettingthe job done-we need to bolster it.Our protective services system (forabused and neglected youth) hasproblems in terms of our investigationwork, supervision, and foster care..:Ylany of these children, when they donot have their problems addressedadequately, end up in the juvenilejustice system.

Your qllice recently proposed a num-ber of rule changes to certain pro'visiomof the .!/DjlA which 'would essentiallypro-vide states witb greater flexibility10 comply witb tbe four core require-ment, q/lhe /lct. lVould YOlt my that thesechanges are needed because old policieshtn»: not been working, or because ofthe changing political climate? Andsecondly, do you belicoe tbat states shouldcontinue to bauc greater discretion overthe treatment of their ju-veniles?

The proposed changes in theregulations that pertain to the four]]DPA requirements respond to theconcerns of local jurisdictions andstates. We were hearing that theirsystems were strained, that demandson their systems were such that theywere having a hard time dealing withthe regulations. In drafting theregulatory changes, O]]DP guideditself in the following manner: firstwe asked how can we institute in-creased f1exibility in light of theincrease in violent juvenile crime,greater demands on local and statesystems, and the time it takes tobuild the capacity within thosesystems to deal with the problem.Second, we considered how we canrespond to the above concerns, whileat the same time being protective ofchildren's needs and safety interests.We then analyzed the Act andlooked for ways to create additionalflexibility that would not jeopardizethe children in state or local care. So, I

II

don't think the re,gulatory changes area reflection of old policies not working.They are a ref1ection of making surethe states and the localities have theflexibility they need to operateeffectively, while still protectingyouths' interests.

I think the states should havediscretion in how they treat theirjuveniles. As long as we govern our-selves by the standards and prin-ciples we've set, perhaps we-O]JDPand the states-can come up with avariety of ideas to introduce f1exibilityto the states. That is what I thinkO]]DP is about right now-trying todevelop a relationship with states sowe can be as responsive as possible. Ido not want to paint the states as the"bad guys", because they are not.They are dealing with difficult issues,difficult financial constraints, and theyare trying to act in the best interestsof the kids in their systems, while alsorespecting their public safety needs.

I:\,TEIV\GE:\,CY COOPERATION A:\'I)

COLLABORATION

One ioould tbinl: that there issignflical1t oucrlap between the pop-ulation served by your office and thatserved by the Department of Educationand ttu: Department of Health andHuman Services. Haue there been anyattempts at interagency collaborationto prouide services and develop pro-grams? How successful do you thinksuch collaboration would be or has been?

We have had a very good relation-ship during this administration withthe Department of Health and Hu-man Services (HHS). We workclosely with them on the Coordinat-ing Council on Juvenile Justice andDelinquency Prevention which ischaired by the Attorney General.

12

Together with the Department ofEducation, the Department of Labor,the Office of National Drug ControlPolicy, the Department of Housingand Urban Development, practitio-ner members and others, we devel-oped a National Juvenile Justice ActionPlan. The purpose of the Action Planis to help communities implement astrategy that deals with juvenileoffenders in a way that protects thecommunity from our worst juvenileoffenders while we provide opportu-nities for children and take aggressivesteps to prevent delinquency andjuvenile violence.

Specifically, as an example ofcoordination, we produced along withHHS a bulletin for the field showinghow our Title V community preven-tion program can be coordinated withHHS' Family Preservation Programson a local level. This is useful forplanning and implementation, becausethese two fields are closely related.This publication has been distributedto all state agencies that coordinateHHS or O]]DP programs in order toimprove coordination on the local level.

We have a good track record ofcooperation on the federal level thatbenefits operations at the local level.We have produced a matrix of commu-nity-based initiatives that shows howfederal and private initiatives areworking in different localities acrossthe country. So, for instance, Phoenixcould look in the matrix and findwhat HHS, Education, Labor, orJustice is funding in its city, along withprivate organizations. I worry thatwithout this collaborative elementthere may be five organizations doingwork in one program area in a city,and the organizations may not beaware of each other's work. This jointlyproduced matrix helps programs reachout and contact others doing similarwork.

The Georgetown Public Policy Review, 2:1 (fall 1096)

I think we have done some goodwork on mirroring on a federal levelwhat we have asked local communitiesto do-that is, planning comprehen-sively and collaboratively to integrateprograms and services as much aspossible.

LESSO:\1S LEARl\'ED

£0 ~

What would you say baoe been themajor successesand the major challengesof the OJJDP since the time q/your ap-pointment as Administrator of theagency?

Focusing on a balanced approachand getting this message out to thefield have been major successes andhave created major challenges. Whenyou are operating in an environmentof increasing juvenile crime and, inparticular, violent juvenile crime,there is a tendency to see "knee-jerk"reactions. Trying to deal with theseproblems in a thoughtful way is achallenge. We have met this challengeby developing high quality productsinform those in the field about the truenature of violent juvenile crime (e.g.,national reports on juvenile offendingand victimization). For instance, whenindividuals read the reports, they seethat only 0.5 percent of juvenilesbetween the ages of 10-17 commit aviolent offense in a year and only 14percent of all violent crimes clearedby law enforcement are committed byjuveniles. People then realize thatperhaps the era of the violent juvenilepredator or the lost generation doesn'texist. This is the kind of informationwe need to get out to the field so therecan be an informed, educated debate,that will enable us to understand thetrue extent of the problem and whatwe need to do to adequately address it.

To complement the statistics weget out to the field, we also provide

Feature Interview: Shay Bilchik

information regarding what can bedone. Our Guide on the Compreben-siuc Strategy Jar Serious, Violent andChronic Offenders is a significant toolfor the field. This guide highlightsboth prevention activities, completewith information on how to get started(e.g., the risk-focused preventionmodel), and the actual programs andexamples of what's been researchedand found to be effective. The eight coreobjectives from the National JuvenileJustice Action Plan came about froma meeting of the minds of a variety offederal agencies and departmentmembers. Setting these objectives isan accomplishment of our nationalleaders, our department, and ofcommunity representatives andpractitioners. Assisting state and localgovernment to meet these objectives-through our various publications andongoing training in the field-all help toget beyond the knee-jerk "just do it"reaction to the question of how bestto develop and implement programsand services that will prove successful.We need to have detailed informationfor communities to usc, and we havededicated ourselves to providing thatinformation in such a way that it canbe used most effectively.

THE FUTURE OF JUVn.;JI,E JUSTICE

f0 ~

What is your vision of the future ofjuvenile justice and delinquency? Whatrole do you see yourself playing in thefuture offederal justice programming?

Let me answer the first questionand let other people talk about the

13

second question. My most immediatevision for the future of juvenile justiceand delinquency prevention is thatwe work through the current debateof how we deal with the increases ofjuvenile delinquency, recognize thatwe may be seeing a downturn inviolent juvenile crime, and pause for awhile to determine what can continueto be done to have the greatest impacton juvenile crime.

What has caused the downturn?Is it a combination of law enforce-ment and correctional efforts? Or isit also the result of communities,mobilizing around these issues, de-veloping programs and sendingmessages to their children aboutviolence? Is it perhaps the focus onguns and getting them out of thehands of juveniles?

IvIy vision is that we see a systemdevelop that reflects a strong juveniledelinquency prevention effort and ajuvenile justice system that can havea positive impact on children. We seepieces of that in pockets around thecountry, but my vision is that it willcome to scale on the national level. Ihope that people realize that thiscombination can really work if we giveit a chance. And maybe this recentdownturn will help us focus on thatand help people realize that this is aninvestment, in both human andfinancial resources, in our childrenand in our future, that we cannotafford not to make.

What about your role?

I see myself playing a continuingrole in juvenile justice. It is my lifetimecommitment.

Shay Bilchik is the Adm in istrator ~lthe Office ofJuvenileJUJtice and DelinquencyPrevention (qUD?). Mr. Bilchik is responsible for the agency congressionally mandated tolead the (ffort to address the public safety issuesofju·venile crime and youth victimization.

Boot Camps for Juvenile Offenders:Public Appeal,

but Effective Public Policy?

DAV1D B. TlIOl'vlAS

Caliber Associates

In the last several years, boot camps for adult and juvenile offenders haveproliferated as frustrated states and local courts struggle to contend with increas-ing rates of recidivism and the escalating costs of traditional confinement. Theboot camp concept enjoys widespread public appeal-a clear manifestation ofwhich is the considerable recent federal and state funding for the constructionof new and operation of existing boot camps-but its effectiveness as an approachto juvenile corrections is yet to be convincingly demonstrated. This articlefocuses on the critical findings of the nation's first multi-site, experimental eval-uation of juvenile boot camps, and suggests necessary next steps for ensuringthat the boot camp model receives a full and thorough hearing.

If one were to discuss with a currentor retired member of the US armedservices his or her initial indoctrinationinto military life, it would be a comfort-able wager that the individual couldrecall certainly the likeness and, prob-ably soon after, the name of his bootcamp drill instructor, even if manyyears had passed, and perhaps with buta moment's thought. The experiencemay be so profound that a considerablenumber might include boot campamong the significant formative-and,for many, transformative-events oftheir lives (though the process fromexperience to realization might requireconsiderable hindsight to complete).

In the last several years, boot camps

as a correctional program for adult andjuvenile offenders have proliferated asstates and local court systems struggleto contend with increasing rates of reci-divism, the escalating costs of tradi-tional confinement, spiraling publicfear of victimization, and diminishingpublic confidence in courts and lawenforcement agencies. The concept ofboot camps as an innovative approachto adult and juvenile corrections ap-pears to enjoy a widespread intuitiveappeal. Perhaps driving their ascen-dancy more so than any other singlefactor is the prevailing public impres-sion that correctional institutions havedevolved into "country club" settings,where inmates enjoy conditions that

!\lJTHOR's NOTE: The original research from which this article is derived was conducted forthe Office of Juvenile Justice and Delinquency Prevention (O)JDP), US Department ofJustice, by a Caliber Associates team that included Michael Peters, Cynthia Gimbel, Ph.D.,Georgia Laxton, Ph.D., Stephanie Bullman, Kathleen Albright, Margarerh Opanga, MichaelAfflerbach, and Gerald Croan, in addition to this author. Copies of the reports to O))DP areavailable from the Juvenile Justice Clearinghouse in Rockville, MD. Points ofview expressedin this article are those of the author and do not necessarily represent the official position orpolicies ofO)JDP or the U.S. Department of Justice.

The Georgetown Public Policy Review, 21 (Fall 1996), 15-31. Copyright © 1996

16

hardly resemble punishment-despitethose who argue otherwise (McCarthy1996)-and that the system acts like arevolving door, where offenders "serve"fractions of their due and are releasedno better equipped than before and aslikely to continue illegal activity as ever.With a finger to the wind, it shouldbe no surprise that boot camps tendto be supremely popular with localpoliticians, who are often enamoredwith their confrontational and punitiveaspects and eager to exploit visual im-ages of the military regimen to counterthe public perception that the systemis "coddling" criminals.

A noteworthy manifestation of thepublic's apparent penchant for bootcamps-commonly referred to as "shockincarceration" in the corrections lexi-con-is the considerable recent federalfunding for the construction of newand operation of existing boot campfacilities. In the 1994 Crime Bill, a totalof $24.5 ~illio;; was-appropri~ted -bythe-Congress for adult and Juvenileboot camps.Jncluding $22 million allo-cated to support planning efforts, orrenovation of existing or constructionof new boot camps around the country,and $2:5 million allocated to providelocal jurisdictions with ongoing train-ingand technical assistance for start-up and implementation activities (USDepartment of Justice 1995). In 1993,operational adult or juvenile bootcamps were identifiec!p_a_minimumof 32 states (Bourque, Han, and Hill19-95T"By 1997, boot camps may beplanned or under construction, if notalready operational, in nearly all 50states.

BACKGROUNDA recent national report on juvenileoffenders and victims by the NationalCenter for Juvenile Justice continuesto paint a bleak and troubling portraitof the current condition of American

The Georgetown Public Policy Review, 2: I (Fall 1996)

family and community life. In 1992,the National Center on Child Abuseand Neglect found that child protectiveservice agencies received 1.9 millionreports of child maltreatment, withparents overwhelmingly the most likelyperpetrators among court-substantiatedcases (Snyder and Sickmund 1995). Arecent study by the American PublicWelfare Association found that nearly700,000 children were in some formof substitute care for at least part of1992, 75 percent of whom lived in fos-ter care (the remainder was dividedamong such facilities as group homes,emergency shelters, correctional insti-tutions, and hospitals); based on 1990data, more than half of all children en-tered substitute care for reasons relatedto personal safety (Snyder and Sick-mund 1995).

Perhaps not surprisingly, the Na-tional Institute of Justice found thatchildren with histories of abuse andneglect are more likely than childrenwithout such histories to enter thejuvenile justice system, to enter thesystem at a younger age, to commitmore offenses, to have an adult arrestrecord, and to have an adult or juvenilearrest for a violent offense (Snyder andSickmund 1995).1 Based on FBI data,the National Center for Juvenile Justiceestimated that law enforcement agen-cies made nearly 2.3 million arrests ofpersons under age 18 in 1992, inundat-ing the nation's juvenile court systems;from 1988 to 1992, the delinquencyand status offense case rates increasedby 21 and 18 percent, respectively(Snyder and Sickmund 1995).2 Thoughdata are not maintained on a nationallevel, gang-related crime involvingjuveniles has infected most, if not all,of the nation's major metropolitan areas(Snyder and Sickmund 1995). Accom-panying, if not contributing to, the in-creased flow of cases through the courtshas been a proliferation of guns as well

Boot Camps for Juvenile Offenders

as use and trafficking of illicit drugs.'Court statistics that testify to the

increasing burdens on the juvenile cor-rections system parallel trends observedin the adult system. Nearly 85,000 ju-veniles were committed to long-terminstitutional facilities in 1990. In 1991,tl1c""OfficebfJuvenile Justice and De-linquency Prevention found that nearlyhalf of all long-term institu-tlonaI facil-ities (-44-pcrcent) were operating abovetheir design capacity, compared with32-percent of facilities in 1983 (Snyderand Sickmund 1995). At the sametime, the number of adjudicated delin-quency cases placed on formal proba-tion increased 24 percent from 1988to 1992, from 197,000 to 244,000. 1thas become commonplace for proba-tion officers in many jurisdictions tobe managing cascloads of as manyas 200 offenders at any given point(Gowdy 1993).

Partly in response to these condi-tions, jurisdictions around the countryarc conducting experiments with var-ious forms of alternative interventions;these alternatives have come to be re-garded collectively as "intermediate"sanctions because they are intendedto establish a meaningful continuumof intervention options between incar-ceration on one extreme, and proba-tionary release on the other. I nterme-diate sanctions exist in a variety offorms, including (1) dayfines, ~herethe court establishes mnrmuunt inaccordance with the offender's abilityto pay, and where, in contrast to thefixed-sum approach, the objective isto impact the earnings of low and high-er income offenders in equal propor-tions; (2) intensive supervision probation,which imposes on offenders rigorousperformance and community observa-tion requirements such as mandatoryrestitution, employment or commu-nity service, submission to periodicsubstance abuse testing, and consider-

17

ably more frequent contact than tradi-tional probation; (3) house arrest, whichconfines offenders to their homes; and(4) electronic monitoring, which uses cur-rent technology in active (c.g., trans-mitter attached to wrist or leg) andpassive (e.g., computer-assisted ran-dom telephoning) forms, typically toenforce house arrest (Gowdy 1993).

§h!!!.kEl_Carceration, or boot camp,however, is currently one of the mostwidely tested among the emergingfamilyofintermediate sanctions. Bootcamp -programs around the countryarc built upon a short, but intense,period of incarceration in a military-style environment (IT2ically three toSLX months)/and tend to share a coreof common characteristics. A recentdescriptive study of adult and juvenileboot camps sponsored by the NationalInstitute ofJustice found that all pro-grams employ the mU.it~Jank struc-ture and military-style protocol, whiletlicoverwhclming majority house in-mates in facilities resembling barracks,use drill sergeants for physical train-ing, intake inmates in units or platoons,graduate inmates in public ceremonies,and outfit staff in military-style uni-forms (Cronin 1994). Programs alsotend to engage inmates in similar ser-vices and activities, including drug andalcohol counseling or education, mili-tary drill and discipline, physical fitnessand exercise, physical labor, and aca-demic education. A few programs alsoprovide individual and/or family coun-seling, vocational training or job prepa-ration, and challenge or adventure pro-gramming (Cronin 1994).

The boot camp intervention modelfor juvenile offenders has evolved overa period when a substantial body ofknowledge was emerging concerningthe nature and progression of delin-quency in young people. Recent studiesconducted both nationally and in localjurisdictions suggest that, for the major-

IR

ity of'juvcniles who encounter the ju-venile justice systcrri:; the first encoun-ter is also the last. Furthermore, mostjuvenile crime appears to be perpetratedby a relatively small minority of youths(Snyder and Sickmund 1995). Researchindicates that chronic juvenile offend-ers-toward whom considerable correc-tions humanpower and resources areconcentrated-tend to commit a varietyof delinquent acts rather than specializein one class of offenses (c.g., property);furthermore, as the delinquency careercontinues, more serious offenses tendto be committed, including eventuallyvi(~ent()~f(c-i1scs-(Snydcr and Sickmund1995). Statistics compiled by the FBI,in fact, indicate that arrests for violentcrime increased as proportions of totalarrests through the juvenile years. Inaddition, the probability of being arres-ted as an adult increases with the num-ber of juvenile arrests (Snyder andSickmund 1995).

Thu_?l_ol?,~()f the primary objectivesof boot camps is to interrupt this se-ql-lrnccand to deter future delinquencyb~l;;~or by ~ngaging -youth in a processof self-development through discipline,structure, and regimentation. In part,this strategy often includes confrontingthe sense of fatalism about life thattends to prevail among troubled juven-iles, restoring a locus of control, en-couraging victim awareness, as wellas f()l"Cingacknowledgment and engen-dering fear of the rcali ties of long-termincarceration. In addition to reducingrecidivism, among the other importantobjectives for jurisdictions planning oroperating boot camp facilities for adultand juvenile offenders are alleviatingcrowding in traditional institutionalsettings as well as reducing the percapita costs of confinement and, ulti-matclv, overall corrections outlays(Pare;lt 1996, MacKcnzic 1991).

InJuly 1990, the Of lice ofjuvenileJustice and Delinquency Prevention

The Georgetown Publ ic Pol icy Review. 2: 1 (Fall 1996)

(O]]DP), in cooperation with theBureau ofJustice Assistance (B]A),announced an initiative to developexperimental boot camp programsthat would test the effectiveness ofthe model in accomplishing theseobjectives with juvenile, rather thanadult, populations. In September 1991,cooperative agreements were competi-tively awarded to three public/privatepartnerships representing Cleveland,Ohio, Denver, Colorado, and Mobile,Alabama; experimental boot c.amps-Camp Roulston in Cleveland, CampFoxjire in Denver, and the Environ-mentalYouth Corps in Mobile-becameoperationalapproximately six monthslater.TnApril 1992. The focus of thisilrticlc--i"s'()-n-ihe'significant findings ofthe impact evaluation of 0]] DP's three-site demonstration, the nation's firstmulti-site study of boot camps forjuvenile offenders based on a rigorous,experimental research design.

RESEARCH AND DESIGN METHODS

The experimental boot camps wereintended to provide constructive inter-vention and early support to a popula-tion of juvenile offenders at high riskof continuing delinquency. Each pro-gram was designed to include a highlystructured, three-month residentialprogram, during which offenders wererequired to participate in physical con-ditioning, academic as well as sub-stance abuse education, individual andgroup counseling, and values training.Following release from confinement,offenders were required to participatein a community-based aftercare pro-gram for a period of six to nine monthsduring which they were expected topursue academic and vocational train-ing or employment while under inten-sive, but gradually reduced, supervision.

The Research Context

With the inception of the demon-

Boot Camps lor Juvenile Offenders

stration project in 1991-and particu-larly during its initial months of plan-ning and operation in 1992-boot campswere acquiring high visibility in thenational media, the Congress, and theexecutive branch of the federal govern-ment. As a consequence, OJJDP wasunder pressure to report meaningfulresults before the demonstration couldrun its full intended course. In responseto that pressure, an assessment wasconducted of the technical conditionsand statistical thresholds that would berequired to generate valid and reliablepreliminary analyses (i.e., power analy-sis was used to establish minimumsample sizes); the findings reportedherein are the product of thoseanalyses.

Sample SelectionThe cornerstone of the research

design, in accordance with O]]DP'soriginal announcement, was randomassignment of juvenile offenders toexperimental and control groups ineach site. In each jurisdiction, offendersawaiting disposition were screened foreligibility by juvenile court staff follow-ing a delinquency adjudication. Inaccordance with inclusion criteria est-ablished by OJJDP, youths ages 13-17who were considered at high risk ofcontinuing delinquency, had no historyof violent offenses or mental illness,were not believed to pose an escaperisk, and demonstrated motivation toparticipate in the program were admit-ted to the eligibility pool. In Cleveland,the selection pool was further limitedto youths committed by the CuyahogaCounty Juvenile Court to a term ofconfinement in a state- or county-operated institution. In Denver andMobile, on the other hand, the selec-tion pool was not similarly limited;some youths screened into the eligibili-ty pool were destined for a term ofconfinement, while others were to

1<)

be released to probation authorities.Among the pool of eligible candi-

dates, offenders were submitted in pairsfor random assignment to experimentaland control groups. At disposition, anoffender selected to participate in thestudy in the control group was heldto the court's sentence, to meet therequirements and receive the servicesso prescribed. An offender selected toparticipate in the experimental bootcamp-provided his selection was notjudicially overridden-awaited the tor-mation of the next lO-youth platoonfor transport to the boot camp facility.

Data Collection

Data were collected for the evalu-ation using instruments designed bya team from the American Institutesfor Research (AIR), in Washington,DC, in cooperation with the Institutefor Criminological Research (ICR)at Rutgers University. To supportsufficient comparisons between theexperimental and control groups-theircomparability being a fundamentalhypothesis and precondition of the an-alysis-supplemental data were soughtand obtained from the participatingjuvenile court systems (e.g., social andcriminal history variables). At a pre-established cut-off or censoring date,the critical court involvement andrecidivism data were compiled andsupplied by the local jurisdictions fromtheir respective juvenile court automa-ted management information systems.In addition, the jurisdictions providedmovement data summarizing the ori-ginal and any subsequent facility entryand release dates for both experimentaland control offenders, which were usedto calculate the length of time eachyouth was not in a secure facility and,therefore, free in the community torecidivate. Finally, cost data for thedemonstration, as well as for alternativecourt dispositions that would serve as

20

a basis for comparison (c.g., other in-stitutions, probation), were suppliedby the respective accounting and re-source management divisions in eachjurisdiction.

Data AnalysisRecidivism was defined as a court-

adjudicated new offense, rather thanmerely a re-arrest. Technical violations,or violations of a court order, were alsorecorded, but were not counted as re-cidivism. Cox proportional hazardsregression, a form of survival modeling,was used to test for differences in re-cidivism between the experimental andcontrol groups. This technique is de-signed to account for different amountsof time for which subjects are at riskfor an event (i.e., time free in the com-munity to recidivate), as well as to com-pare the rates of an event (i.e., post-release reoffcnding) between two ormore groups over time. In addition,Cox regression is capable of adjustingfor an arbitrarily imposed censoringdate, delimiting the period duringwhich new offenses are observed." Theoverall objective of the analysis was todetermine if there are any significantdifferences in recidivism between theexperimental and control groups, aswell as to identify characteristics thatmay be associated with the likelihoodof recidivating.'

Two comparative cost measureswere calculated for the experimentaland control groups as the basis for thecost-effectiveness analysis in each ofthe three jurisdictions: cost per youthper day and cost per offender. The costper day can be defined as the total costof providing services to an individualoffender on a daily basis and is a func-tion of the average total number ofoffenders served over a measuredperiod. The cost per offender can bedefined as the total cost of providingservices to an individual offender over

The Georgetown Public Policy Review, 21 (Fall 1996)

the full program duration, or his entirelength of stay. Together, the two meas-ures provide a useful basis for compar-ing the relative costs of providing ser-vices in boot camp as opposed to al-ternative placements."

CRITICAL FINDINGS

Despite common selection criteria, thethree experimental programs servedpopulations that differed in critical re-spects.1\Ilobilc's Environmental YouthCorps served the youngest youth pop-ulation of the three experimental bootcamps, with 58 percent age 15 or youn-ger, compared with only 35 percent age15 or younger in both Cleveland'sCamp Roulston and Denver's CampFoxfire. Camp Foxfire was the onlyboot camp to serve a significant His-panic population and was the mostracially balanced of the three experi-mental programs. In Cleveland andMobile, African -Americans consti-tuted respectively 78 percent and 68percent of offenders served.

Reflecting a relatively more seriousoffender population than in Denver orMobile, Cleveland's program served apopulation that was entirely composedof youth who, in the absence of bootcamp, would have served a term of con-finement in one of several secure facil-ities operated either by the OhioDepartment ofY outh Services or byCuyahoga County. In comparison, only56 percent of offenders participating inDenver's boot camp and an estimated27 percent of offenders in Mobile'sboot camp were destined for a termof confinement in state- or county-operated, secure facilities." The over-whelming majority of offenders acrossthe three sites entered boot camp withat least one prior offense on record forwhich he was adjudicated delinquent;many entered with multiple prior ad-judications. In Mobile, 70 percent ofexperimental youth entered boot camp


with two or more prior adjudications,compared with 63 percent in Clevelandand 42 percent in Denver. However,offenders in Cleveland were more likelythan offenders in Mobile to have aprior felony offense on record uponentry.

In addition to important differencesin the populations served, the threejurisdictions implemented residentialand aftercare programs that reflectedtheir distinctive philosophies. In theresidential phase, the three programsdistinguish themselves in their relativeemphasis on military as opposed totreatment activities. More so than pro-grams in Denver and Mobile, Cleve-land's Camp Roulston placed the great-est emphasis on treatment; military-style training and procedures play animportant role-particularly during theconfrontational period immediatelyfollowing the youth's entry-but recedeconsiderably in importance over timeas the youth is increasingly engaged inlearning and skill-building activities inanticipation of release and graduationto aftercare. Denver's Camp Foxfireprogram is distinguished from its coun-terparts by its emphasis on intensivediscipline and rigorous physical require-ments and, of the three programs, ismost consistent with the prevailingpublic perception of boot camp as amilitary-style, punitive sanction. InMobile, military training and treatmentactivities co-existed in relative balance.

In the aftercare phase, operationalproblems plagued each of the threeprograms over the course of the dem-onstration. Cleveland, in fact, was theonly site whose program approachedthe design specifications promulgatedin its grant application to O]]DP. Inrequiring daily attendance during theinitial months following release fromconfinement, the aftercare program inCleveland was considerably more rig-orous than aftercare programs implc-

21

mented in Denver and Mobile. Den-ver's aftercare program was never sub-stantial; youth attendance and confu-sion over lines of responsibility amongprogram staff, probation officers, andclient managers were major problems.In Mobile, the aftercare program failedin the first year and was later restartedwith a new model. As a consequenceof important differences in the popula-tions served as well as the unique resi-dential and aftercare environments in'which youths were confined and re-leased, comparisons in outcomes acrossthe three programs are not consideredappropriate.

Positive Outcomes

In two sites where standardizedtests of academic skills were adminis-tered while in boot camp, most youthdemonstrated ~ig!!ifj~.pillgiess fro;nthe l~i!ial test to the. follow-up threemonths later (Exhibit 1). In Cleve-l;ncC'6~fpercent of graduating youthimproved one grade level or more inreading skills on the Wide RangeAchievement Test (WRAT-R); 60percent of graduating youth improvedone grade level or more in math skillsand 56 percent improved one gradelevel or more in spelling skills. In Mo-bile, 88 percent of graduating youthimprovedonegrade level or more inboth language and reading skills usingthe Test of Adult Basic Education(TABE); 85 percent of graduatingyouth improved one grade level ormare in math skills and 77 percentimproved one grade level or more inspelling skills. Standardized academictesting was not conducted in Denver.

In addition, of all offenders whograduated from boot camp and tran-sitioned to aftercare in Cleveland, atleast two-thirds returned to school orentered a G ED program prior to after-care release." In addition, 31 percentof offenders in Cleveland obtained full-

22 The Georgetown Public Policy Review, 2: I (Fall 1996)

Exhibit 1: Academic Improvement while in Residential Phase"(Improvements of one or more grade levels)

Reading Spelling Math

Cleveland

* Standardized tests of academic skills were not administered in Denver

Reading Spelling Math Language

Mobile

or part-time employment while en-rolled in aftercare; in Mobile, 21 per-cent of offenders for whom informationwas available obtained employmentwhile in aftercare. Data on school orG ED program enrollment, as well asyouth employment, were not availablein Denver.

RecidivismAcross most jurisdictions, including

all three participating sites, a youth canbe adjudicated delinquent following anadmission to the charge(s), or after the

court finds sufficient evidence to findthe youth delinquent through a judicialproceeding. The analysis of recidivismincludes only those offenders who werefree in the community a minimum ofnine months, but not more than 32months, and controls for any knownsubsequent periods of detention or in-carceration occurring following release.

Experimental offenders who com-pleted Cleveland's Camp Roulston bootcamp were found to have recidivatedat a significantly higher rate than theircontrol group counterparts (Exhibit 2).

Exhibit 2: Comparative Rates of Recidivism FollowingRelease from Confinement"

80%72%

70%

60%

50%

40%

30%

200/0

10%

Cleveland

lliSl±] Experimental GroupE Control Group

Denver Mobile

* Includes new adjudicated offenses only; technical violations excluded


Nearly three-fourths of experimentaloffenders (72 percent) committed anew court-adjudicated offense fol-lowing release from Camp Roulston,compared with half (50 percent) ofcontrol offenders released from OhioDepartment ofY outh Services (ODYS)and Youth Develpment (YDC) facil-ities. In both Denver and Mobile, ratesof recidivism were found to be compar-able between experimental and controloffenders. In Denver, 39 percent ofexperimental offenders were found tohave committed a new court-adjudi-cated offense following release from

23

candy more quickly-or demonstrateda shorter survival period-than reoff-ending control youths (Exhibit 3). InCleveland, for example, reoffendingexperimental youths averaged 176 days,or approximately 5.9 months, from thepoint of release from confinement tothe date of the new adjudicated offense,compared with 205 days for reoffend-ing control youths. In Mobile, reoff-ending experimental youths averaged156 days, compared with 232 for con-trol youths. In Denver, the measuresof days to new offense were comparablebetween experimental reoffenders (248

Cleveland Denver Mobile

Exhibit 3: Average Days to New Adjudicated Offense

270

Experimental GroupIl£!E] Control Group 275

19 240~o 210"Cl5 180'i3~. 150

~ 120

Zo 90

~, 60.5

30

Camp Foxfire, compared with 36 per-cent of control offenders. In Mobile,28 percent of experimental offenderswere found to have committed a newoffense following release from the En-uironmental Youth Corps boot camp,compared with 31 percent of controloffenders." In Cleveland, the Coxregressions indicated that the risk ofrecidivating for experimental offend-ers was 1.62 times (p=.0006)10 thatof control offenders; in Denver andMobile, no differences in the overallrisk of recidivating were found.

In two of the three sites, reoffendingexperimental youths were found tohave committed new offenses signifi-

days) and control reoffenders (275days).

Additional analyses were conduc-ted in Cleveland-where the most com-prehensive and reliable data were avail-able-to further explore the factors asso-ciated with the likelihood of recidivat-ing following release, and these analysesgenerated some surprising results. Of-fenders who had been committed toODYS facilities on prior offenses (P2 =6.20, df=1, p=.013), as well as offenderswho had committed the least seriousoffenses (P2 = 5.12, df=1, p=.024) werefound to be at greatest risk for recidi-vating. Another critical finding wasthat obtaining employment while in

24

aftercare was found to reduce the like-lihood of reoffending (P2 = 11.87, df= 1,p=.OOOI).

The type and severity of new of-fenses committed following releasewere compared to determine if therewere any differences between experi-mental and control offenders; theresults are summarized in Exhibit 4.As the exhibit demonstrates, thedistributions of offenses by degree, orseverity, were found to be similar. Ofthe 122 reoffenders in the experimentalgroup, approximately three-fourths(74.6 percent) were found to have


youths were more likely than controlyouths to have been drug-related of-fenses (30.3 percent, compared with22.1 percent of offenses committedby control youths), while offenses com-mitted by control youths were morelikely than experimental youths to havebeen violent offenses (25.6 percent,compared with 15.6 percent of offensescommitted by experimental youths),which were defined to include assault,menacing, robbery, and domestic vio-lence. In fact, violent offenses (15.6percent), along with public order of-fenses (15.6 percent), were the least

Exhibit 4: Degree and Type of New Offense-Cleveland, Ohio

EXPERII\IENTAL GROUP CONTROL GROUP

! Valid ValidCHARACTERISTIC

I Number Percent Percent Number Percent Percenti

Dn:IUT OF Ntw OITI:'ISI:

Felony 1 and 2 31 18.2 25.4 18 10.5 20.9Fclony S and 4 78 45.9 63.9 53 30.8 6l.6Misdemeanor 1.1 7.6 10.7 15 8.7 17.4Technical Violation 8 4.7 --- I ---. ---

None 40 23.5 --- 85 49.4 ---Total 170 100.0 100.0 172 100.0 100.0

TYI'!: OF NEW OFFE"SE

Violent 19 11.2 15.6 22 12.8 25.6Property 47 27.6 38.5 32 18.6 37.2Drug-Related 37 21.8 30.3 19 11.0 22.1Public Order 19 11.2 15.6 11 7.6 15.1Technical Violation 8 4.7 --- I --- ---

None 40 23.S --- 85 49.4 ----

L Total 170 100.0 100.0 172 100.0 100.0

committed lesser felonies (63.9 percent)or misdemeanors (10.7 percent), whileapproximately 25 percent were found tohave committed more serious felony 1and 2 offenses. Of the 86 reoffenders inthe control group, 79 percent werefound to have committed lesser felonies(61.6 percent) or misdemeanors (17.4percent); approximately 21 percentwere found to have committed moreserious felony 1 and 2 offenses.

The analysis of new adjudicatedoffenses by offense type indicates thatoffenses committed by experimental

common of new offense types amongexperimental youths, ranking belowproperty (38.5 percent) and drug-rela-ted (30.3 percent) offenses. Amongcontrol youths, on the other hand, vio-lent offenses ranked second among newoffense types. New adjudicated offenseswere most likely to be property offensesfor both the experimental and controlgroups. The observed differences areinteresting, but were found not to bestatistically significant.


Cost EffectivenessAn analysis was conducted to com-

pare the cost of providing services toexperimental offenders in the three-month residential boot camp and inaftercare following release, with thecosts associated with providing servicesto control offenders in alternative set-tings, as those settings prescribe. InCleveland, the estimated cost per dayof providing services to offenders inboot camp ($103) was comparable tothe estimated cost of providing servicesto control offenders in state-operated

25

only about half the overall cost peroffender for control youths in ODYS($25,549) and YDC ($28,004) facilities.The considerable savings over the costof traditional settings is attributed pri-marily to the fact that offenders wereheld in boot camp for a significantlyshorter term of confinement (90 days)than control offenders confined inODYS (224 days) or YDC (221 days)institutions.

Unlike Cleveland, results in Denverand Mobile are influenced by the factthat the control samples included sub-sets of offenders who were never con-

$30,000$28,004

Exhibit 5: Comparative Program Costs Per Offender"

'Includes cost of providing services while in confinement and in aftercare following release

$25,000

$20,000

$15,000

$10,000

$5,000

Ohio Department of Youth Services(ODYC) facilities ($99 per day) andthe county-operated Youth Develop-ment Center (YDC) ($114 per day).The cost per day of providing aftercareservices to offenders following releasefrom boot camp ($20 per day) was con-siderably higher in comparison withcontrol offenders who were providedaftercare services by either ODYS ($16per day) or YDC ($11 per day). How-ever, the overall cost per offender inboot camp ($14,021), including bothresidential and aftercare services, was

fined, but rather were released imme-diately to probation authorities. InDenver, the estimated cost per offenderin boot camp ($8,141) was approxi-mately one-third the cost per offenderfor the subset of control offenderswho were confined in state institu-tions ($23,425), but approximatelynine times the cost per offender forthe subset of control youth who werereleased on probation ($944). In Mo-bile, the cost per offender in boot camp($6,241) was about half the cost peroffender confined in state institutions

26

($11,616), but more than 10 times thecost per offender released on probation($516). The cost per offender measuresfor each of the three boot camp pro-grams are summarized in Exhibit 5,on the previous page.

DISCUSSION AND DIRECTIONS FORFUTURE RESEARCH

Though much has been learned aboutthe performance of the boot camp mo-del and its impact on juvenile offenders,considerably more remains to be exam-ined. The following paragraphs areintended to highlight the most salientoutcomes of the O]]DP demonstrationin the context of continuing researchon the viability of boot camps as an in-termediate corrections policy. In ad-dition, in this period of rapid growthand expansion of boot camps for bothadults and juveniles throughout thecountry, new directions for future in-quiry are suggested that will ensure thatthe model receives a fair and thoroughhearing, for the benefit of both policy-makers and practitioners who are en-gaged in implementing and operatingthe evolving model, and the offenderswho experience it.

Positive Change During Confinement

The boot camp environment ap-pears to create a setting that facilitateslearning and academic education, evenfor such a troubled population. Des-pite the extremely short period duringwhich youth were confined across theparticipating sites, major achievementswere made in two sites where youthswere subjected to standardized testsboth at intake and release. A signifi-cant majority of youths improved atleast one grade level in literacy andmath skills in the equivalent oflessthan half of an academic year, withmany improving two grades or more.Considering that so many of the often-ders had known only failure and diffi-

The Georgetown Publ ic Policy Review, 21 (Fall 1(96)

culty in school prior to boot camp-many of them were two or more gradesbehind at selection-these gains are like-ly to contribute to building self-esteemand may create a foundation for futuregains as they return to school or G EDprograms following release. Unfortu-natcly comparable data were not avail-able for the control groups in the par-ticipating sites. Thus, a continuingquestion is whether the boot campsetting is significantly better than theacademic settings offered by traditionalinstitutions. Available descriptive in-formation, however, suggests that bootcamp participants were in programsthat were smaller and that most likelyafforded more personalized attentionthan they would have otherwise re-ceived. Offenders released immedi-ately to probation received no suchservices and, therefore, were no betteroff academically than before.

Though other effects were notmeasured in this demonstration, bootcamps have been found to be associatedwith other kinds of positive, measurablechanges in adult inmates during theconfinement period. A consistent find-ing across a number of different bootcamp models has been that offenderscompleting boot camp programs devel-oped fewer antisocial attitudes duringconfinement than prison-incarceratedcomparison groups. In addition, bootcamp inmates were more likely to viewtheir confinement in positive termsthan comparison groups in traditionalprison settings (MacKenzie andSouryal 1996).

Recidivism

In the O]]DP demonstration, bootcamp participants were found to be noless likely to rcoffcnd fdlowing releasethan their control group counterpartsin any of the three participating sites; inCleveland, in fact, experimental offen-ders performed demonstrably worse


than control offenders. Though com-parisons are complicated by criticaldifferences in populations served, ser-vices provided, and outcome measuresand methods, these findings appear tobe consistent with much of the researchthat has been conducted to date onadult boot camps (Mackenzie andSouryal 1996, Austin, Jones, and Bol-yard 1996, Morash and Rucker 1990).I n Cleveland, offenders who had beencommitted to state institutions on prioroffenses, as well as offenders who hadcommitted less serious prior offenses,were found to be at greatest risk forrecidivating. These findings suggestthat the selection net may be too wideat both ends of the offense history spec-trum; therefore, jurisdictions mightconsider focusing primarily on felonyoffenders who have never before beenincarcerated.

One of the inescapable conclusionsof the demonstration of boot camps forjuvenile offenders is that the model,as originally conceived by OJJDP, wasnever fully implemented in any of thethree participating sites because of ex-tensive problems encountered by thesites in planning and sustaining mean-ingfi.Il aftercare services. Thus, the fun-damental questions that remain to beaddressed is: How would outcomes foroffenders change if they were releasedto a truly viable and effective programof aftercare? Secondly, how would thesenew results compare to outcomes ofthose completing traditional sentences?

Positive Indicators ofAdjustmentFollowing Release

A significant number of offendersin Cleveland and lVlobile took impor-tant steps toward individual goals whileunder supervision in aftercare. At leasttwo-thirds of offenders in Clevelandreturned to school or entered aGEDprogram in aftercare. In addition, one-third of offenders in Cleveland and

27

nearly one-fourth of offenders inMobile obtained full- or part-timeemployment while under supervisionin aftercare. In Cleveland, offendersreleased from boot camp who wereable to secure employment while inaftercare were less likely to recidivatethan offenders who did not obtainemployment. Unfortunately, compa-rable data were not available for thecontrol groups in the participating sites.Thus, a continuing question is whetheroffenders released from boot camp aremore likely to participate in self-devel-opment activities-indicating a morepositive adjustment-than offendersreleased from probation or other in-stitutions. In addition, data on thelong-term performance of youths whoreturned to school, enrolled in a G EDprogram, or obtained employment werenot available. Therefore, the questionof whether offenders are able to trans-late these initial steps into positive,long-term life change also remainsto be addressed.

Other research on intermediatesanctions indicates that intensive super-vision can be effective in encouragingoffenders to pursue positive, self-devel-opment activities in the community,though whether the catalyst is primarilyinternal (i.e., self driven because ofreal behavior and attitude change)or primarily external (i.e., responseto program requirements) is unclear(Brame and MacKenzie 1996). If itcan be demonstrated that boot camp,combined with an effective aftercareprogram, is more successful in helpingoffenders to participate in communityservices and activities that enhance theirlife chances, this would be a criticalprogram benefit.

COSf Effectiveness

The cost effectiveness of boot campdepends largely on the program's diver-sionary effect on alternative placements,

28

with the critical factor being the relativediversion from more costly confine-ment. In Cleveland, where all youthsselected for boot camp would haveserved a lengthier term of confinementin state or county facilities, the averagecost per day for each youth in bootcamp was similar to the average costper day for each youth in traditionalsettings. However, a significantly short-er total period of time in confinement-90 days compared with average termsof six to eight months-resulted in con-siderable savings. In Mobile, the costof boot camp was found to be signifi-cantly lower than the cost of confine-ment, but significantly higher than thecost of releasing offenders on probation.Assuming comparable rates of post-release recidivism, programs that solelyor overwhelmingly draw from a pop-ulation of youths destined for longersentences in traditional confinementsettings are likely to result in a netdecrease in correctional outlays, whileprograms that draw primarily froma population of youths destined forprobation are likely to result in a netincrease in correctional outlays.

It is important to point out thatthese savings are theoretical and un-realized without other critical precon-ditions. Actual cost savings can berealized only as traditional facilitiesare able to reduce their infrastructure,staffing, and other operating expensesover time. However, incarceration costsare only likely to change with major netincreases or decreases in the offenderpopulation; thus, in addition to a highdiversion rate from longer term tradi-tional confinement settings to a signifi-cantly shorter period in boot camp,jurisdictions must operate boot campswith sufficient capacity to reduce thefixed costs of these traditional institu-tions. These findings arc entirely con-sistent with prior research on the im-pact of adult boot camps on corrcc-


tional costs and institutional crowding(Parent 1996).

Concluding RemarkAt this point in their development,

boot camps do not appear to be thepanacea to juvenile delinquency thatmany hoped they would become.Nonetheless, boot camps do appearto offer certain practical advantagesand future promise that warrantcontinued testing and examination.As an intermediate sanction, bootcamps are a useful alternative foroffenders for whom probation wouldbe insufficiently punitive, yet for whomlong-term incarceration would be ex-cessive. Because offenders are confinedfor significantly shorter terms than intraditional institutions, under certainconditions boot camps can reducecrowding and free bed space which canthen be reserved for more incorrigibleoffenders, thereby reducing the finan-cial strain on correctional budgets.

As boot camp continues to evolveaway from a confrontational model-characteristic of its nascency as adescendant of the "Scared Straight"approach of the early 1980s-to moreof a therapeutic approach (while retain-ing the military overlay of physicaltraining and rank structure), the poten-rial for staff-on-offender abuse decrea-ses, but still must be aggressively mon-itored. Of course, with offenders re-leased to the same distressed familiesand neighborhoods in which theirtroubles originated, the challenge ofcommunity-based aftercare programscontinues to be in developing ways tosustain the behavioral and academicgains achieved in confinement. Link-ages to local service providers andhelping agencies, as well as to schoolsand representatives in the businesscommunity are absolutely crucial tothe fortunes of offenders once theyreturn to their communities. As with


all approaches to juvenile and adultcorrections, the expectations for bootcamps held by policymakers and thepublic must continually be regulatedby awareness of the economic realitiescharacteristic of these distressedcommunities.

Future research must focus on thekinds of questions raised in this conclu-ding section if boot camps are to receivea fair and thorough hearing as an inter-mediate corrections policy. In addition,the window of observation should beopened to the widest possible extentto assess the long-term impact of bootcamp participation. Until then, bootcamps for juvenile offenders can nomore be declared successful correctionspolicy, than they can failed correctionspolicy.

NOles1. The National Institute ofJustice

study compared the arrest records of908individuals who had cases of abuse orneglect prior to age 12 with the arrestrecords of 667 individuals in a matchedcomparison sample with no history ofabuse or neglect. Interestingly, however,the study also found that childhood abusedid not predict the likelihood of continu-ing criminal activity into adulthood, withabout half of abused/neglected childrenand half of children without abuse/neglect histories rearrested as adults.

2. Status offenses include truancyand curfew violations, ungovernability,and underage drinking. Many stateshave decriminalized status offenses,which has had the effect of divertingyouths to child protective serviceagencies (Snyder and Sickmund 1995).

3. Though survey results suggest thatdrug use has declined substantially in thelast decade among juveniles in general,the following are compelling findingspresented in O]JDP's recent release,Juvenile qffinders and Victims:A National

29

Report: juveniles in long-term institu-tional settings reported extensive drug usein a 1987 survey of Youth in Custody;Huizenga, Menard, and Elliott foundthat drug use tends to prolong delin-quency involvement; Altschuler andBrounstein found that delinquency ratesare higher among those who traffic,rather than use, drugs (Snyder andSickmund 1995).

4. Juvenile and adult court manage-ment information systems were searchedfor dates of offenses (generally an arrestor charge date) occurring between theoffender's release from boot camp orother institution up to the arbitrary cen-soring date. To be considered a newoffense for purposed of the analysis,there had to he sufficient evidence ofan adjudication (i.e., by a subsequentdisposition, or sentencing, date), or anindication that the case was continuedfor disposition.

S. Results of the comparability assess-ment demonstrate a remarkable resem-blance between experimental and controlgroups within each site across an arrayof critical background, parental, beha-vioral, psychological, criminal and priorplacement history, and committing off-ense characteristics. A few differenceswere observed with respect to lesser vari-ables, but such differences would not betheorized to have independent effects ofthe key questions and outcomes.

6. The cost per day measure is usefulin its sensitivity to labor intensity andmarginal costs, while the cost per offen-der measure accounts for duration ofservice; thus, one program may havea higher costs per day than another, asa consequence of higher staff-to-offenderratios, yet have a lower cost per offenderdue to a shorter duration of services.

7. In comparison with the 56 percentof experimental youths, approximately64 percent of control youths in Denverwere confined. In Mobile, data on thedispositions of experimental youths were

3()

not available; the estimate presented isinferred from what is known about thedispositions of control youths there.

8. I n recognition of the difficultyof returning offenders to the publicschool systems, the Cleveland aftercareprogr::tm implemented an AlternativeSchool in the second year of operationsat which time a GED progr~lIn becameavailable on site. Most offendersenrolled in this on-site program.

9. The control group in Clevelandwas homogeneous in the sense that allyouths experienced a term of confine-ment. Because of the heterogeneity ofthe control groups in the Denver andMobile, additional analyses were con-ducted to determine the rates of re-cidivism for the subsets of controlyouths who were confined and controlyouths who were probated. In Denver,of the 69 control youths serving a termof confinement, 37.7 percent committeda new adjudicated offense; of the 38control youths released on probation,31.6 percent committed a new adjudi-cated offense. In Mobile, of the 39control youths serving a term of con-finement, 38.5 percent committed anew adjudicated offense; of the 135control youths released on probation,28.9 percent committed a new adjudi-cated offense.

10. This Cox regression analysis wasperformed by Cynthia Gimbel. Theimportant issue of whether or not moreintensive monitoring of experimentalyouths during aftercare may increasetheir risk of detection ("monitoring"effect), and thus recidivism, relative tocontrol youths could not be examinedwith any degree of confidence due toinsufficient data; information on theorigin and circumstances of new of-fenses following release from confine-ment was never routinely collected.However, there is at least some avail-able data which lend credence to thehypothesis and make it worthy of future


consideration. First, experimentalyouths were significantly more likethan control youths to have beenadjudicated on technical violations(violations of court order) followingrelease (n=8 compared with n=l). Inaddition, is clear from interviews thataftercare staff played a role in pursuingcharges against some unknown numberof youth-perhaps a proactive role inssome cases and a support role in others-who committed alleged offense while inor around program facilities. Given therigorous attendance requirement forexperimental offenders in aftercare thancontrol offenders, it is plausible that theopportunity of being detected by staffwas relatively higher for the experimen-tal group, and perhaps considerablyhigher.

References

Austin, James, l'v'Iichacl Jones, andMelissa Bolyard. 1996. A survey ofjail-operated boot camps andguidelines fix their implementation.In Correctional boot ea17l/)5: A toughintermediate sanction, D.L.lVlacKenzie and E.E. Hebert (cds.).Washington, DC: National Instituteof Justicc.

Bourque, Blair, Mei Han, and SarahHill. 1995. An inventory of afiercareprovisiolls/orfipy-two boot campprograms. American Institutes forResearch.

Brame, Robert, and Doris Mac Kenzie.1996. Shock incarceration andpositive adjustment during commu-nity supervision: A multi siteevaluation. In Correctional boot camps:A tough intermediate sanction, D.L.MacKenzie and E.E. Hebert (eds.).Washington, DC: National Instituteofjustice.

Caliber Associates. 1996. Evaluation ofthe impact ofboo: campsjor juven ileo//enders: Cleveland interim report. US


Department of}ustice, OHice ofJuvenile Justice and DelinquencyPrevention. Contract #OJP-91-C-011.

---. 1996. Evaluation oftbe impact

~rboot campsforjtrucn ile ~ffenden:Den-ocr interim report. US Depart-ment of Justice, Office of] uvenileJustice and Delinquency Prevention.Contract #OJP-91-C-Ol1.

---. 1996. Evaluation ~/tbe impactofboot campsforjuvenile ~[/endcrs:lWobile interim report. US Depart-ment of Justice, Office ofIuvcnilcJustice and Delinquency Prevention.Contract #OJP-91-C-011.

Cronin, Roberta C. 1994. Boot camps/oradult andjuoenile offenders: Overviewand update. National Institute ofJustice Research Report. Washing-ton, DC: National Institute ofJustice.

Gowdy, Voncile B. 1993. Intermediatesanctions. National Institute of justiceResearch ill Brief. Washington, DC:Office of Justice Programs.

MacKenzie, D.L., and C. Souryal.1991. Boot camp survey: Rehabilita-tion, recidivism reduction outrankpunishment as main goals. Correc-tions Toda_y, 53 (October 1991).

MacKenzie, D.L., and C. Souryal.1996. Multisitc study of correctionalboot camps. In Correctional bootcamps: A tough intermediate sanction,D.L. Mackenzie and E.E. Hebert(cds.). Washington, DC: NationalInstitute of Justice.

31

::VIcCarthy, Colman. 1996. A judge'sn:port from behind bars. WashingtonPost, March 30, 1996. A, 17:1.

Morash, Merry, and Lila Rucker. 1990.A critical look at the idea of bootcamp as a correctional reform. Crimeand Delinquencv 36: 204-222.

Parent, Dale G. 1996. Boot Camps andPrison Crowding. In Correctionalboot camps: A tougb intermediatesanction, D.L. Mac Kenzie and E.E.Hebert (eds.). Washington, DC:National Institute of Justice.

Parent, Dale G. 1996. Presentation tothe Office of justice ProgramsNational Correctional Boot CampPlanning Workshop, Dallas Texas,April 9-11, 1996.

Peterson, Eric. 1996. Juvcnile bootcamps: Lessons learned. Fact Sheet#36, March 1996. Washington, DC:Office of] uvcnilc Justice andDelinquency Prevention.

Snyder, Howard, N. and Melissa

Sickmund. 1995. [uucnt!e qlJendersanduictims: A national report.Washington, DC: Office ofIuvcnileJustice and Delinquency Prevention.

US Department of Justice. 1995.Summarv report: FY 1995AdultCorrections Boot Camp Grant aioards.Washington, DC: Bureau of]usticeAssistance.

---.1995. Summary report: FY1995juvenile Corrections Boot CampGrant asoards. Washington, DC:Bureau of] usticc Assistance.

f-:;) G8.David B. Thomas is a senior associate ·with Caliber Associates, a public poli~y

consultinyfirm in Fairfax, Virginia, and a Ph.D. candidate in public administrationat The GeOlge Washington Uniucrsitv School of Business and Public Management. Herecent~y participated as a presenter at the National Correctional Boot Camp PlanningConference in Dallas, Texas sponsored by the Ojjice of justice Programs (OjP), US.D{1J(lrtmellt of justice. Thomas earned a Master qI·Public Policyfrom GeorgetownUniversity in 1990, and graduated 'Witb a B.S. in political science j"OJJ1 TexasChristian University in 1986.

CALIBER Since 1983, Caliber Associates staff, like GeorgetownASS U C [ ATE 5 Public Policy alumnus David Thomas, have been

providing public policy research and consultingservices to Federal and state programs, such as:

• Office of Juvenile Justice and Delinquency Prevention• Head Start• National Center for Child Abuse and Neglect• Department of Defense Family Policy Office• Center for Substance Abuse Treatment• Department of Defense Education Activity• Runaway and Homeless Youth Program• Family Advocacy Program• Food and Consumer Service

We welcome Public Policy students from leading Public Policy schools to pursueexciting career opportunities through internships and professional research andconsulting positions. For more information on current opportunities, please call

Mrs. Lou RobertsDirector of Human Resources

Caliber Associates10530 Rosehaven Street, Suite 400

Fairfax, Virginia 22030703-385-3200

Call for Papers£0 G1

The Georgetown Public Policy Review publishes superior articles whichpromote useful discourse among members of the policymaking community.Articles pertaining to current public policy issues are welcome, withpreference given to those articles which utilize the accepted tools of policyanalysis.

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Articles are reviewed for publication on a rolling basis; however, they mustbe received by November 1 for publication in the Spring and lVlay 1for publication in the Fall. Authors should submit four hard copies of theentire work, a one paragraph abstract, and a brief biographical statementof each author. Articles should be no longer than 8,000 words andformatted in accordance with The Chicago Manual ofStyle.

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The Adoption Assistance and ChildWelfare Act of 1980: Three Case Studies

in Intergoverntnental Conflict

CXrI-IEHI:--JE TOO\IEY KELLIHER

Georgetown Unioersity

This paper examines intergovernmental conflict in the implementationof the Adoption Assistance and Child Welfare Act of 1980 (AACWA). Federalfinancial participation for foster care and adoption assistance is awarded to statesbased on the approval of state plans. Intergovernmental conflict in the imple-mentation of the AACWA results from several factors: administrative capa-cities of state and local welfare agencies; federal processes for monitoring andencouraging states' compliance with the law; vague statutory language; and legalchallenges to state child welfare systems. This paper highlights patterns of inter-governmental conflict in the District of Columbia, Missouri, and California.

INTRODUCTION

In 1980, Congress enacted theAdoption Assistance and ChildWelfare Act (AAC'vVA) to encouragestates to reform their adoption assis-tance, foster care, and child welfaresystems through permanency plan-ning for children. The law's perma-nency planning provisions seek toensure that foster care children areplaced in permanent living arrange-ments as quickly as possible. TheAACWA requires states to makereasonable efforts to prevent un-necessary foster care placements,facilitate family reunification whenappropriate, and expedite the adop-tion process for children unable toreturn to their natural homes. FederalFinancial Participation (FFP) is con-tingent on the approval of state plansby the Secretary of the US Depart-ment of Health and Human Services(HHS).

To encourage states to act inaccordance with the goals and ob-jectives of the MCW A, the federal'government utilizes a combination ofregulatory techniques and intergov-ernmental controls (Gormley 1992).In particular, HHS uses partial pre-emptions, allowing states to imple-ment a federal program if they meetcertain federal requirements, andhortatory controls, which encouragestates to achieve federal goalsthrough both incentives and sanc-tions (Gormley 1992).

Since the mid-1980s, states haveexperienced difficulty in implementingthe Mew A. While the federal gov-ernment has struggled to find appro-priate and effective ways to monitorand assist states, recent gmwth in thenumber of abused and neglectedchildren and the complexity of chil-dren's problems have overwhelmedstate welfare agencies, weakening

The Georgetown Public Policy Review, 21 (fall 1996),33-45. Copyright CO 1996

34

their capacity to engage in permanencyplanning. From 1985 to 1991, fostercare cascloads more than doubled,growing from 276,000 to 429,000(GAO 1993). The increased burdensplaced on state and local child welfareagencies, coupled with the law's un-clear reasonable efforts clause and in-consistent federal monitoring processes,contribute to considerable intergov-ernmental conflict. Applying illustra-tive policy frameworks, this article ex-amines the challenges faced by stateand local welfare agencies to achievethe goals and objectives of the AAew Aand the various processes used by thefederal government to monitor imple-mentation of the law. It also highlightsintergovernmental conflict in Missouri,California, and the District of Columbia.

Despite federal assistance for fostercare, states assume a large portion ofthe costs of child welfare programs.The poor fiscal conditions in manystates jeopardize their ability to pro-vide adequate child welfare services(GAO 1993). In several states, legalchallenges to state and local welfareagencies have sought to remedy themismanagement and lack of account-ability that results, in part, from suchfiscal distress. The District of Colum-bia, where the child welfare systemwas placed under federal receivershipin 1995 after six years of failed courtorders and consent decrees, illustratesthe unique challenges faced by urbancenters and financially-strapped citiesto implement the AACWA. Missouri,which has been involved in a legalchallenge to the Jackson County childwelfare system since 1977, highlightsthe challenges involved in transformingthe ecological capacities of child wel-fare agencies. Despite years of intensecourt oversight, Missouri continues tostruggle to ensure that foster care chil-dren in Jackson County receive ade-quate services. California, on the other

The Georgetown Public Policy Review. 21 (Fall 1()<)6)

hand, has responded to burgeoningstate foster care costs by adopting afunding scheme that places additionalburdens on localities. California, dueto its size and population diversity,presents unique administrative chal-lenges for state officials. Despite theirgeographical differences, diverse pop-ulation characteristics, and varyingadministrative approaches, however,these three states exhibit striking simi-larities. As case studies, they offer val-uable insight into policy implementa-tion in a federal system, suggestingthat patterns of intergovernmentalconflict may be relatively consistentacross regIOns.

POLlCY IMPLEMENTATION IN A

FEDERAL SYSTEM

Policy implementation in a federalsystem is inherently difficult. Thefederal system has a tendency tofragment administrative structures,thereby in-iting the development ofcomplex intergovernmental agree-ments (Derthick 1990). Policyimplementation is also subject tocapricious political cycles andinconsistent policy guidance,complications fostered by theseparation of powers among theexecutive, legislative, and judicialbranches of government (Derthick1990). Thus, as public policyproceeds from Washington to stateand local governments, intergovern-mental conflict is likely to occur.Consistent with the notion of "picket-fence" federalism, intergovernmentalconflicts are more likely to be horizon-tal (between different professionalsin the same level of government) thanvertical (between similar professionalsin different levels of government)(Wright 1988, Gormley 1992)."Picket-fence" federalism suggeststhat the federal system is morefragmented than coordinated (Wright

The Adoption Assistance and Child Welfare Act of 191;0

1988).J 11 general, the federal government

tries to bcilitate policy implementationand ensure that its goals and objectivesare achieved through regulatory con-trols and techniques (Gormley 1992).Controls range from permissive cata-lytic controls, in which states are affor-ded considerable discretion in design-ing an appropriate solution to a problem,to stringent coercive controls, whichallow states virtually no discretion.Hortatory controls provide a middleground by applying significant politicalpressure to achieve federal goals andinduce compliance through incentivesrather than mandates. Two regulatorytechniques, mandates and partial pre-emptions, are analogous to coerciveand hortatory controls, respectively.Mandates are direct orders and con-ditions of aid, while partial preemp-tions are strategies in which the federalgovernment maintains primary respon-sibility over a particular policy domainbut affords states administrative auth-ority (Gormley 1989).

Even in the presence of re,gulatorycontrols and techniques, however,policy implementation in a federalsystem often is complicated. VaguestatutOlY Iant,ruage, unclear goals andobjectives, and insufficient financialresources are all recipes for imple-mentation failure. Effective imple-mentation requires that the law'senabling legislation is clear and consis-tent, allows officials sufficient jurisdic-tion over target groups to attain desiredgoals, and structures the implementa-tion process to maximize the likeli-hood that officials will perform as de-sired. Effective implementation alsoassumes that leaders possess manage-rial skills and are committed to statu-tory goals; the program is supportedby legislative, political, and legal com-munities; and the objectives of theprogram are not undermined over

35

time (Mazrnanian and Sabatier 1983).Successful policy implementation,therefore, is contingent on state andlocal governments' organizational capa-cities (c.g., staff facilities, equipment)and ecological capacities (e.g., environ-mental features, history of past pro-grams, partisan composition of politicalstructures, political culture) (Goggin,Bowman, Lester, and O'Toole 1990).An institution's organizational capacityis a function of structural, personnel,and resource characteristics, whereasits ecological capacity is determined bysocioeconomic and political conditions.

TIlE ADOPTION ASSISTANCE ANDCHILD WELFARE ACT OF 1980By the late 1970s, officials in manyst~1tes reported that foster care hadbecome a permanent institution,rather than a temporary measure, forlarge numbers of children. AACW Aspecifically aimed to alleviate theproblem of "foster care drift"-chil-drcn languishing in the foster care sys-tem beyond a reasonable length oftime, often being transferred fromone foster home to another. Reflect-ing a dramatic change in philosophy,Congress sought to promote perrna-nency planning for children throughthe lv\CW A. Permanency planningis based on the notion that childrenneed to live in homes where they havea sense of belonging and permanentmembership, and where they can cul-tivate continuous and healthy relation-ships (Samantrai 1993). The law re-quires states to make reasonable cf-forts, a term which is vaguely defined,to preserve families by preventing un-necessary foster care placements; ef-fect expedient and safe family reuni-fication when possible; and ensureappropriate adoption of children un-able to return home (Edwards 1995).

The MCW i\ provides two essentialfunding streams to states: Title IV-I,

36

an open-ended entitlement based onthe number of children in foster care;and Title IV-B, a capped entitlementthat is appropriated annually. TitleIV -E reimburses states for a portionof the cost of placing children eligiblefor Aid to Families With DependentChildren (AFDC) in foster care (GAO1993). Title IV-E funds, which arematched 75 percent federal to 25 per-cent state, constitute a significant por-tion of states' child welfare budgetsand are considered the "big bucks"component of the AACWA. States thatmeet certain administrative require-ments, which include frequent inven-tories of children placed in foster care,the implementation of a statewideinformation system, a case review sys-tem, and a service program to facilitatefamily reunification, are eligible foradditional funds under Title IV-B ofthe AACWA. Title IV-B funds, whichare matched by the federal govern-ment evenly at SO percent, can beused for family preservation programsand services related to placement pre-vention, family reunification, adoption,protection, and abuse prevention(GAO 1993). Because federal fund-ing for foster care is an open-endedentitlement and funding for familypreservation and other preventionservices is limited, the law's fundingstructure provides pelverse financialincentives for states to place children infoster care rather than offer preventiveand high quality administrative ser-vices (McCart and Heller 1993). In1981, the ratio of foster care expendi-tures to family support services wasabout two to one; by 1992, the ratiohad ballooned to eight to one (GAO1993).

Although the enactment of theMCWAin 1980 marked an unpre-cedented national commitment tolong-term solutions for children incrisis, its capped entitlement under

The Georgetown Public Policy Review, 2:1 (Fall 1996)

Title IV-B precluded states fromoffering a wide range of preventiveservices. The Family Preservationand Support Services Program, passedas part of the Omnibus ReconciliationAct of 1993, sought to remedy theshortcomings of the AACWA and insti-tutionalize services aimed at preven-tion. The law increased Title IV-Bfunding, allocating $930 million toencourage states to provide a rangeof services that families may need toimprove their children's welfare (GAO1993). As defined in the statute, "Theterm 'family support services' meanscommunity-based services to promotethe well-being of children and familiesdesigned to increase the strength andstability of families ... to increaseparents' confidence and competencein their parenting abilities, to affordchildren a stable and supportive familyenvironment, and otherwise to en-hance child development" (PL 103-661993). Family preservation services,which include training in parentingand housekeeping skills, transporta-tion' and family counseling, have be-come popular in many states and areincreasingly seen as a way to help ar-rest the escalating costs of foster care.

Federal Financial Participationfor foster care, adoption assistance,and family preservation services iscontingent on the approval of stateplans by the federal government. Toreceive federal matching funds underTitle IV-£ and IV-B, states mustsubmit a plan to the Secretary of HHSdescribing the services it will provideto prevent unnecessary placement infoster care and reunite families afterremoval. Regional HHS offices workwith states to develop plans, whichalso serve as the basis for state legis-lation companion to the AACW A.States' "implementing legislation"is specifically designed to meet theconditions and requirements for FFP

38

Since the mid-1980s, federalauditors have used a checklist pro-cess to review states' compliance withAACWA provisions. Responding tocriticism that standardized checklistsare overly concerned with processrather than the quality of servicesprovided or outcomes achieved, theClinton Administration is institutingrevised monitoring procedures. Thenew reviews will allow states greaterflexibility in achieving outcomes forchildren and families who receivefederally funded services. Outcomeswill be examined in three areas:safety, permanency, and well-being.The new reviews will evaluate stateprogress in the areas of family preser-vation, child protection, foster care,and adoption by analyzing federaldata and by conducting on-siteexaminations and interviews withfamilies and service providers. Tounderscore the importance of thereviews as a quality assurancemeasure rather than solely for thepurposes of federal compliance, stateswill be encouraged to participate inthe reviews and also will conducttheir own audits. Based on feedbackand technical assistance from HI-IS,states will then be required to furnishan improvement plan that addressesareas of specific need. Under the newmonitoring procedures, fiscal sanc-tions will remain in place, but willnot be used as heavily as in the past.

The federal government's newmonitoring procedures imply a shift inregulatory emphasis from hortatory tocatalytic controls (Gormley 1992).Given the amount of intergovern-mental conf1ict and noncompliancein recent years, catalytic controls maybe viewed as a means of bolsteringfederal-state relationships and en-hancing cooperative relationshipsbetween federal and state officials.Fluctuations between draconian and

The Georgetown Public Policy Review. 2: I (Fall 1996)

more permissive approaches to fed-eral monitoring demonstrate the dif-ficulty of applying an appropriate mixof incentives, sanctions, and collabo-ration to encourage states to usc fed-eral money wisely and in accordancewith the law.

Implementation of the AACvVAalso has been uneven across andwithin states. While some states havebeen successful in improving theirchild welfare systems, serving asmodels for the nation, others haveperpetuated "Dickensian" conditionsand have ignored many "outrageousdeficiencies" in child protectionservices (Pear 1996). In recentyears, a number of private citizensand advocacy groups, prompted bythe poor capacities and practices ofstate welfare agencies, have lookedto the courts to protect foster carechildren. In 1996, approximatelytwenty-three states were targets oflitigation or bound by consentdecrees (McHugh 1996).2

As evidenced by the high degreeof legal activity surrounding theAACW A, juvenile court judges playa critical role in the implementationof the law. Juvenile court judgesdetermine whether state agencieshave made reasonable efforts topreserve families by preventingunnecessary foster care placement;reunite families with children in fostercare; and expedite the adoptionprocess for children unable to returnhome. More specifically, judges must:make reasonable efforts Endings ineach removal and reunification case;ensure that state agencies developappropriate case plans; review achild's foster care status every six:months; hold a hearing no later than18 months after removal to determinea permanent plan for the child; andensure that parents arc provided withprocedural safeguards when their

The Adoption Assistance and Child Welfare Act of 19,1W

children are removed from parentalcustody (Edwards 1995).

The federal requirements imposedon juvenile court judges under theAACvVA are numerous, though rota-tion schedules and lack of traininghave impeded many judges fromperforming their duties under theAACvVA adequately. Lack of infor-mation and resources, coupled withthe increasing quantity and complex-ity of foster care cases, have frustra-ted many judges. ]n a number ofjurisdictions, however, juvenile courtjudges have been successful in coor-dinating efforts with child welfareagencies, social workers, and adminis-trators. In California, for example, theJuvenile Court Judges of California,the State Department of Social Ser-vices, and the County Welfare Dir-ectors co-sponsor an annual Beyondthe Bench Conference (Edw;rds1995). The conference has inspiredimproved relations between judgesand administrators and fostered adeeper appreciation for the goals andobjectives of the AACW A. Recogniz-ing the burdens imposed on juvenilecourt judges, Congress affordedgrants to state courts to assess andimprove their handling of child abuseand neglect, foster care, ann adoptioncases as part of the Omnibus Recon-ciliation Act of 1993 (Edvlards 1995).

Vague statutory language em-bedded in the AACWA and similarlybureaucratic language contained instates' implementing legislation alsohamper judges' abilities to interpretthe law. The AAC\\'A does not definethe reasonable efforts clause, leavingjudges to interpret it on a case-by-case basis (Edwards 1995). To helpclarify the vague statutory lan,guage,most states have passed legislationaddressing reasonable efforts (Ed-wards 1995). The American BarAssociation's (ABA) Center on

39

Children and the Law has devotedconsiderable time and energy to theAACWA's reasonable efforts require-ments. In 1994, HHS enlisted theABA and the National Child wafare Resource Center for Organiza-tional Improvement at the Universityof Southern Maine to gather informa-tion concerning the national imple-mentation of reasonable efforts (ABA1995). An Advisory Panel on Reason-able Efforts convened by these twogroups explored several dimensionsof the requirements. They found thatmany agencies and courts focus onthe technical fulfillment of reasonableefforts rather than on the "spirit ofthe law" (i.c., family preservation).The panel also concluded that theauthority of juvenile court judgeswarranted their active involvementin child welfare.

Due to AACWA's V£1bTUe statutorylanguage, reasonable efforts deter-minations are more of an art than ascience (Edwards 1995). Suchfindings vary from case to case anddepend on a variety of factors, in-cluding the resources of state agen-cies and quality of state plans. Judgesare charged with the difficult task ofdetermining whether state agencieshave utilized their resources effec-tively and in accordance with the law.As states have become overburdenedwith outstanding numbers of case-loads and complex cases in recentyears, the task of determining reason-able efforts has grown even morecomplicated.

CASE STUDIES

District of Columbia

The implementation of theAACWA in the District of Columbiaprovides valuable insight into the roleof the courts in foster care; the organ-izational and ecological capacities of

40

child welfare agencies, especiallythose located in urban centers; andthe process of monitoring states'compliance with federal law. TheDistrict has one of the largest fostercare populations in the United States.In 1990, 66 percent of childrenunder age 18 were not living withboth parents (Terry and De Witt1996). I n fiscal year 1994, FFP inthe District of Columbia amountedto approximately $14. 8 million dol-lars in Title IV-E funds and $447,456in Title IV-B funds (Ellis 1996).3

Legal challenges to the District ofColumbia's foster care system dateback to 1989, when the AmericanCivil Liberties Union (ACLU) filed aclass action lawsuit against the city,charging it with f~liling to protectabused and neglected children andprovide an adequate level of servicesfor children in foster care. In May1995, after six years of intense litiga-tion and a series of court orders, USDistrict Judge Thomas Hogan crit-icized the "outrageous deficiencies"in the city's child protection servicesand ordered the Department ofHuman Services (DHS) intoreceivership. He appointed JeromeMiller to serve as the receiver ofDHS and has allowed him threeyears to turn the system around.

Revamping the child welfaresystem in a city with a poverty ratearound 15 percent, declining tax baseand population, and budget deficit ofover $350 million is proving to be adaunting task (Holmes and Janofsky1996). Miller claims that the "bu-reaucratic intransigence" of cityemployees is severely inhibiting hisattempts at reform (Pear 1996).Several key District officials havechosen not to cooperate with thereceivership and have made con-scious attempts to stymie Miller'sauthority. Local leaders apparently


resent the fact that Judge Hoganawarded Miller, an outsider, suchsweeping powers when Districtofficials were consistently deniedsuch authority while the foster caresystem was under local control. As aresult, Miller faces resistance fromsocial workers and administratorsloyal to Mayor Marion Barry andattempts by the city's Office ofCorporation Counsel to abolish thereceivership, all while striving topromote reform in a financially-strapped city and in a system withan ecological culture that has tolera-ted mediocrity for many years. Shortlyafter arriving in office, Miller foundthat DHS had overspent its $90million IT 1995 budget by at least$20 million (Washington City Paper1996). With lVEller's appointment ina tenuous position and the District'sproven record of failure, the amountof conflict on the local level can onlybe expected to increase.

In addition to conflict on the locallevel, Miller faces scrutiny by thefederal government. Federal officialsadmit they arc willing to allow Millersome "breathing room" and theopportunity to effect much-neededreform in the District but are pro-ceeding with the city's agreement torepay $12 million in federal reim-bursements. Based on yearly auditsdating back to 1984 and settlementsreached through the federal GrantsAppeal Board, the District ofColumbia owes $12 million inerroneously-spent Title IV-E andTitle IV-B funds. Money that is notreturned up-front will be offset infuture FFP. HHS officials claim thatthe process of determining federal re-imbursement costs is a long andarduous one. States and the Districthave the right to appeal the resultsof federal audits to the Grants Ap-peal Board, an independent federal

The Adoption Assistance and Child Welfare Act of 19XO

agency. Reaching an agreementbetween the state and federal gov-ernment can take several years andoften results in unpleasant horizontalconflicts between professionals on thestate and local levels and vertical con-flicts between federal, state, and localofficials.

MissouriLike the District of Columbia,

Missouri has dealt with substantialcourt intervention and appeals againstfederal reimbursement charges. Al-though Missouri is a state-adminis-tered system, the organizational andecological capacities of its county childwelfare systems vary significantly. Thestate has faced numerous challengesin trying to equalize funding acrosscounties while adhering to consentdecrees and counties' actual needs.

Missouri is $12 million in debt tothe federal government. AlthoughHHS originally had pressed for $17million in federal reimbursementcosts, state and federal officials, afteryears of deliberation, have reached anagreement of $12 million. Since 1982,Missouri has also conducted its ownstate audits, of both Title IV-£ andTitle IV-B requirements, but thesehave yielded few charges of noncom-pliance (Mead 1996).4

The Missouri Department ofSocial Services (DSS), like theDistrict's Department of HumanServices, has endured years oflitigation and court supervision.In 1977, the ACLU filed a lawsuitagainst Missouri, challenging thestate's treatment of abused childrenin Jackson County. The lawsuit ledto a consent decree, and the stateallocated additional funds to JacksonCounty's child welfare system tomeet legal requirements. This ar-rangement, however, stirred fearsthat additional funding for Jackson

41

County came at the expense ofchildren in other parts of the state,especially St. Louis, which maintainsa foster care caseload larger than anyother county in Missouri (Shirk 1994).Jackson County has more foster careworkers than St. Louis, though it hasless than half as many children infoster care.

In 1983, the state reached a courtagreement with the ACLU. The agree-ment was designed to protect fostercare children by preventing over-crowding in foster homes, providingtraining for foster parents, and re-ducing the cascloads of social workers(Associated Press 1992). In 1992,however, US District Judge DeanWhipple held three top-ranking stateofficials in contempt of court for fail-ing to comply with the court order.He accused them of indifferenceand interfering with local attemptsto comply with the consent decree.Judge Whipple said the failure re-sulted from the officials' "lack ofcommitment to make a good-f.'1itheffort to make the consent decreework" (Pear 1996). In 1994,Missouri state and local officialsreached a new consent decree, whichprovides for closer monitoring of chil-dren in foster care and better effortsto reunite families; reducingbureaucracy in Jackson County andoffering medical and psychologicalservices to foster children; increasingtraining of social workers and fostercare parents; and reducing caseloadsfor social workers to minimize highturnover rates (Jackman 1994).However, some child advocatessuspect that there has been minimalcompliance with the new consentdecree (Pear 1996).

Years of intense litigation have ag-gravated both horizontal and verticalconflicts. Missouri has been forced tobalance the needs of Jackson County

The Adoption Assistance and Child Wei fare ,\C( or 19X()

crnrncntal conflict has arisen sincethe AAC'vVA was enacted in 1980.Over the past decade, state: welfareagencies have become overburdenedwith high numbers of foster care chil-dren who increasingly exhibit com-plex health and psychologicalproblems. As a result, states'organizational capacities to accommo-date children has diminished. Thefederal government, on the otherhand, has tested a variety of ap-proaches-ranging from programreviews to aggressive financialauditing-to encourage states tocomply with AI\.CW A provisions.Although HHS consistently has util-ized hortatory controls to encouragecompliance, its level of technical sup-port and collection of federal reim-bursements has wavered over time.

The desperate conditions inseveral state and county child welfaresystems has prompted' the judicialbranch to take extreme measures. Inthe District of Columbia, for example,the state child welfare agency hasbeen placed under federal receiver-ship. While drawing attention to theresistance of social workers andadministrators to change, the receiv-ership is yielding considerable conflicton the local level. Legal pressures toreform foster care in Jackson County,Missouri, also highlight the poorecological capacities of many localwelfare agencies and result in con-t1icts between state and local officials.California has tried to alleviate thestate fiscal distress by shifting costsfor foster care to the local level. Thisadministrative arrangement, however,is incredibly complicated due to Cali-fornia's geographical size and diver-sity, population characteristics, andfiscal constraints.

The importance of state compli-ance with the AACWA is underscoredby recent developments in the nation's

43

judicial branch. In a 1992 decision,Suter ·v. Artist J\i., the Supreme Courtdetermined that the AACVI/ A's rea-sonable efforts language was not en-forceable under a private right ofaction on behalf of children in fostercare. Thus, enforcement of the fed-eral statute now rests solely withSecretary of IrES (Dale 1992).Thirty-eight states, the District ofColumbia, and numerous state andcounty interest groups filed amicusbriefs on behalf the state of Illinois,the: defendant in Suter? As evidencedby these briefs, states are a powerfulinterest group, while children con-stitute a less powerful lobby.

Considerable intergovernmentalconflict in the implementation of theAACW A begs the federal governmentand Congress to reconsider the pro-priety of the originallcgislation. Thelaw's complicated requirements de-signed to preserve families and judicialdetermination of reasonable effortshave caused considerable confusionon the state and local levels. Since1980, the nation's child welfare sys-tem has witnessed dramatic changes,and most state administrative agencieshave demonstrated an inability tomanage increasingly difficult andnumerous cascloads. A primary ob-stacle to successful implementationof the AACWA is the organizationaland ecological capacities of state childwelfare agencies. The federal gov-ernment, therefore, should provideenhanced technical support to statesand encourage them to conduct in-ternal audits on a more frequent basis.

Recent actions taken by the 104thCongress and subsequent recom-mendations by the National Gover-nors' Association reflect a strongdesire among both national and stateleaders to make federal welfare pro-grams more state-centered. I3lockgrants have been touted as a means

44

of alleviating the perverse financialincentives included in the AACWAand increasing state authority overfoster care. These actions, coupledwith the Clinton Administration'sattempts to allow states greater flex-ibility in administration, suggest thatthe federal government is movingaway from hortatory and toward morecatalytic controls. The Clinton Ad-ministration's emphasis on improvedfederal-state partnerships, whilemaintaining fiscal sanctions in areasof noncompliance, offers a mixture ofboth hortatory and catalytic controls.Future implementation of the AAC\iVAwill need to balance state flexibilitywith appropriate and effective fed-eral regulation and assistance.

Noles

1. Former Commissioner, Adminis-tration for Children and Families. USDepartment of Health and HumanServices.

2. Administration for Youth andFamilies, US Department of Health andHuman Services.

3. US Department of Health andHuman Services, Region IIOffice,Philadelphia, Pennsylvania.

4. US Department of Health andHuman Services, Region VII Office,Kansas City, Missouri.

5. US General Accounting Office,San Francisco, California.

6. Interest groups included theCouncil of State Governments, NationalGovernors' Association, National Leagueof Cities, International City Manage-ment Association, National Associationof Counties, and National Conference ofState Legislatures.

References

American Bar Association (ABA)


Center on Children and the Law.1995. Reasonable efforts advisory pane!meeting. Washington, DC: AmericanBar Association.

Associated Press. 1992. Missouri officialsheld in contempt on foster care. TheNe-w York Times. 13 December.

Dale, Michael. 1992. May children suestate agencies to enforce the'reasonable efforts' provisions of theAACWA? Preuieurof tbc UnitedStates Supreme Court cases. Washing-ton, DC: American Bar Association.

Derthick, Martha. 1990. Agency understress. Washington, DC: TheBrookings Institution.

Edwards,Judge Leonard P. 1995.Improving implementation of thefederal Adoption Assistance andChild Welfare Act of 1980. Resourceguidelines improving court practice inchild abuse and neglect cases. Reno,Nevada: National Council of Juvenileand Family CourtJudges.

Ellis, Bob. 1996. Interview by author.Washington, DC, 22 April.

Goggin, Malcolm, Ann Bowman, JamesLester, and Laurence O'Toole, 1990.Implementation them) and practice.Glenview, IL: Scott, Foresman, andCompany.

Gormley, William T. 1992. Food fights:Regulatory enforcement in a federalsystem. Public Administration Revie-w.May/june.

Gormley, William T. 1989. Taming thebureaucracy. Princeton, NJ: PrincetonUniversity Press.

Goodman, Susan, and Joan Hurley.1993. Reasonable efforts: Wbo decidesuibat's reasollable?Washington, DC:US Department of Health andHuman Services.

Gunnison, Robert. 1995. Foster paymentmay change. The San FranciscoCbronic!c. 7 March.

Holmes, Stephen, and MichaelJanofsky.1996. Trying to fix capital where"everything is broken." The New York

The Adoption Assistance and Child Welfare Act of 1980

Times. 25 July.Horn, Wade. 1996. Interview by author.

29 April.Jackman, Tom. 1994. A decree: Help

the children;Jackson County, stateagree to reforms to ensure the 'care' infoster care. The Kansas City Star. 19Oct.

MacLafferty, Robert. 1996. Interview byauthor. 22 April.

Mazrnanian, Daniel, and Paul Sabatier.1983. Implementation and publicpoli~y. Glenview, IL: Scott,Foresman, and Company.

McCart, Linda, and Anne Heller. 1993.Puttingfamiliesfirst. Washington,DC: National Governors' Associa-tion.

l\1cHugh, Kathy. 1996. Interview byauthor. 5 April.

l\1ead, Bob. 1996. Interview by author.26 April.

Pear, Robert. 1996. Many states fail tomeet mandates on child welfare. TheNew York Times. 17 March.

Ryan, Kevin. 1995. Foster care introuble. America, 1July.

Samantrai, Krishna. 1993. Prevention inchild welfare: States' respo71se to federalmandate. NY: Garland Publishing.

Shirk, Martha. 1994. Suit formalizesimbalance in Missouri foster care. St.

45

Louis Post-Dispatch. 23 October.Terry, Don, and Karen De Witt. 1996.

Toll is even greater in forgottenAnacostia. The New York Times. 26July.

US Department of Health and HumanServices (HHS). 1996. Child welfareprogram monitoring fact sheet.

---. 1994. Office ofInspectorGeneral, Office of Audit Services,Region IX. Audit ~lTitle IV-E fostercare eligibility in Californiafor theperiod October 1, 1988 throughScptemberJt), 1991. Washington,DC: US Department of Health andHuman Services.

US General Accounting Office. 1993.Foster care: Services to prevent out-of-home placements are limited byfil71dingbarriers. Washington, DC: GencralAccounting Office.

US Public Law 96-272. 96th Congress,17 June 1980. Adoption Assistance andChild Welfare Act of1980.

US Public Law 103-66. 103rd Congress,10 August 1993. Omnibus Reconcilia-tion Act of 1993.

Washington City Paper. 1996.22March.

Wright, Dcil S. 1988. Understandinginteryouernmcntal relations, 3d cd.Pacific Grovc, CA: Brooks/Cole.

f0 ~

Catherine Toomey Kelliher earned a Master of Public Policy degree pomGeorgetoum University in May, 1996.A 1990 graduate of the Uniuersitv ~lMichigan-rlnn Arbor, Kelliher worked as all elementary school teacher ill Brooklvn, New York, andWashington, DC, from 1990-1994. She currently works in the Education Policy Division?lthe National Governor's Association.

Maryland's One-Stop Career System:A New Strategy in Job Training

and Employment Services

CLE:'-IE\:TE PEln:zSF;\:\ Rv i\\1

George tount UIZ iocrsitv

Following the 199J National Performance Review, the WorkforceSecurity Act of 1994 established grants to states to create and administer asystem of competitive, one-stop, career development centers open to all job-seekers. In this article, the authors examine Maryland's Career Net as oneexample of a state utilizing federal financial and organizational flexibility tobuild a system of services according to the new goals of the National Perfor-mance Review. This network introduces user-friendly information technologyand procedural innovations to integrate services and to make agencies account-able and universallv accessible. While the authors conclude that CarccrNct willsucceed, they do fiJnd obstacles to its implementation. The new technologyand training is costly, and difficult compromises will have to be exacted frompolitical figures ,111dcurrent agency personnel.

INTRODUCTION

In this era of corporate restructuringand global markets, the creation of ahighly skilled workforce has becomecritical to sustaining a healthy econ-omy. Conscious of these challenges,the Federal government has creatednumerous education and trainingprograms to assist low-skilled andunemployed workers during the lastthree decades. Currently, fourteengovernment departments and agen-cies invest $24 billion annually into150 separate employment and train-ing programs. However, this myriadof programs has been increasinglycriticized as ineffective and incffi-cient. Given the current pressure toimprove services with diminishedfunding, reform efforts have gainedmomentum.

The 1993 National PerformanceReview (NPR) assessed these dis-persed education and training pro-grams and concluded that the systemis organized to be convenient forthose who deliver the services, ratherthan for those who use them. Thereport also asserted that there isneither sufficient competition norincentives to improve the system.Each service has its own fundingstreams and regulations, and jobseekers are forced to consult a frag-mented and disorganized system forinformation. According to the NPR,job seekers often move "from office tooffice trying to fit themselves into aprogram. When they find a program,they may find that they are not eli-gible, that it is all filled up, or that theclassroom is across town" (US Con-

The Georgetown Public Policv Review. 12 (Fall 1<)<)6). ·17-55. Copyright 1<)96

4R

gress 1993). In keeping with its pri-mary goal to make government ser-vice-oriented and customer-friendly,the NPR proposed the creation of asystem of competitive, one-stop,career development centers open toall job-seekers. By consolidating ser-vices, these one-stop career centerswould enable job seekers to find edu-cation and training opportunities, jobinformation, comprehensive testing,and career counseling at a singlelocation.

These goals are also included inthe Workforce Security Act of 1994,which establishes competitive grantsto help states plan and implement aflexible, comprehensive network ofone-stop centers (US Department ofLabor 1994). This Act permits wai-vers of statutory, regulatory, or ad-ministrative provisions that obstructthe implementation of a comprehen-sive system. In addition, it providesthe financial resources needed to im-plement these systems. Though therehas been some debate surroundingthe legislation, several states andlocalities have received preliminarygrants to implement pilot one-stopsystems. In 1994, six states receivedthe initial year of funding of three-year grants from the US Departmentof Labor to fully implement one-stopsystems. Nineteen other states re-ceived awards to support planningand development of such systems.

The State of Maryland wasamong the first to receive a grantunder the Workforce Security Act.Under a mandate to develop a "comp-rehensive, seamless workforce invest-ment intake and service system forusers and employers," the Governor'sWorkforce Investment Board createdCareer Net, Maryland's one-stopcareer system (Governor's WorkforceInvestment Board 1994). CareerNetconsolidates information about

The Georgetown Public Policy Review. 2: I (Fall 1(96)

training programs and job servicesadministered by federal, state, andlocal entities. Using information tech-nology such as electronic linkages anduser-friendly interfaces, job seekershave access to numerous job trainingprograms and employment services.Ideally, CareerNet will make thesystem transparent, since it is de-signed to identify options and sortthrough the bureaucratic regulationsof the programs quickly and efficiently.

INNOVATION PRINCIPLES

Job seekers increasingly demand aflexible framework for service deliverythat allows them to gain access tomultiple services from a single point.Maryland's CarccrNet is an innova-tion in the provision of governmentjob training and employment servicesthat is designed to provide this flex-ible, yet comprehensive frameworkfor service delivery. It promotes prin-ciples that arc intended to correct theinadequacies of the current system:(1) Customer Focus; (2) UniversalAccess; (3) Integrated Services; and(4) Performance Accountability.These four principles are the foun-dation on which CareerNet is built(Governor's Workforce InvestmentBoard 1994).

Customer Focus

The principle of customer focuswhich emphasizes solving customerproblems which seeks to replace thecurrent program-based, agency-drivenfocus of service delivery. The one-stop system hopes to promote a cust-omer focus in the organization byhighlighting the availability of theinformation needed to make informedchoices. In sum, service delivery andresource allocation will be shaped torespond to customer needs. Cust-omer feedback and satisfaction indi-ca tors will be used as measures of

Maryland's One-Stop Career System

program effectiveness. In addition,Maryland's one-stop system willprovide as many as 70 centers to ad-dress the diverse needs of job seekers,students, and employers. This largenumber of centers will also encouragecompetition among service providersto supply the highest quality services.

Service IntegrationService integration is intended to

remedy the confusion caused by theorganizational structure of the currentsystem, which has multiple points ofentry. By making various employ-ment and training programs acces-sible to the customer at a single pointof entry, the one-stop center will bethe principal access point to the webof available services. Informationtechnology is a central clement ofservice integration as it has the po-tential to electronically link agenciesand services in a seamless manner.Over time, service integration will eli-minate the need for a physicalloca-tion, since information and serviceswill be accessible from remote lo-cations.

Service integration will also de-mand collaboration among federal,state, and local stakeholders involvedin job training and employment ser-vices. Initially, the one-stop systemwas designed to include State em-ployment services, unemploymentinsurance, Job Training PartnershipAct OTPA) training programs, andcommunity college services. Cur-rently, these programs have differentfunding streams, rules, and regula-tions. Thus, electronic interfaces atthe one-stop centers were installed tosimplify these services and programsfor the customer. Eventually, pro-grammatic and agency integrationmay take place if there is enoughcongressional support.

49

Universal Access

The principle of universal accessseeks to correct the current eligibilitysystem that targets service deliveryfor specific populations. By providingaccess to a comprehensive array ofcore services to all citizens, universalaccess principles represent the latestattempt to overcome the fragmentednature of programs and services. Theone-stop system will provide a coreset of services to meet the basic em-ployment and training needs ofyoung, chronically unemployed, andeconomically disadvantaged entrantsinto the labor market, as well as dis-located workers, skilled workers, andemployers. Job seekers who havemore specialized needs will be givenaccess to services at other agencies.

Performance ;1CC011J11abilityFollowing other public sector in-

novations, performance measures arebeing developed to gauge the eff-ectiveness of CarcerNct. Perfor-mance measures have also beenuseful in defining goals and promot-ing a customer orientation in servicedelivery. The proposed performancemeasurement system for Maryland'sone-stop plan is outcome-based,making service providers accountablefor participants' employment andtraining outcomes. Performance mea-sures are proposed for both employ-ment and training outcomes. Emp-loyment outcomes are defined asplacement, earnings, and employ-ment retention, and training out-comes are defined as achievementlevels, degrees, and certificates. Di-verse populations' ability to gainaccess will also be measured. Perfor-mance measures will also be used toassess customer satisfaction.

These four principles have beenused to design Maryland's one-stopCareer Center to reflect the differ-

50

cnccs between the proposed systemand the current group of diverse<lgency-driven programs and services.Key innovative aspects of Marvlancl'sone-stop Career Center vision in-dude innovations: to integrate pro-grams and services into a comprehen-sive system, to make them universallyavailable, to increase and facilitateaccessibility, to make the providersuniformly accountable, and to bringcustomers into the system as partners.

ADDITIONAL, DESIGN ELEMENTS

iI?/Ol"1Jl([I ion Infrastrucntre

Easy access to an array of infor-mation-based services is central tothe design of Maryland's one-stopsystem. From the customer's perspec-tive, the information technology ofthe one-stop system will link existingservice providers. In addition, anarray of information-based serviceswill need to be provided directlythrough the workstations at the phy-sical one-stop locations. The actualworkstations are already in place atnumerous centers in Maryland andare based on a customer-friendlymultimedia interface, to facilitateuniversal access. Eventually, allphysical one-stop locations will beelectronically linked with otheragencies to provide a seamless jobtraining and employment system tothe customers. It is hoped that thenew information technology will alsoimprove customer choice and becomeperformance driven by providingcustomers with qualitative informa-tion about both service providers andprograms.

( iOl'CI"IWI1Ce

;\ major objective in Maryland'sone-stop planning effort is to in-tegrate the responsibility and author-ity for the entire system. Currently,

Thc Georgetown Public Policy Review, 2: I (Fall 1996)

programs wh ich provide workforcepreparation services operate underdifferent governing structures. JTPi\services are administered through acombined state and local structure,while Maryland's community collegesystem is locally governed, and emp-loymcn t/uncrn plovmcn t insu raneeservices arc provided at the statelevel. Integration of existing programsand services for service delivery iscritical. The Workforce Security Actenables integration by prescribing anew collaborative structure at thestate and local levels. Under this le-gislation, job training and workforcedevelopment programs would beconsolidated into block grants to fos-ter program and funding flexibility atthe state and local level. States wouldassume overall responsibility and finalauthority over the one-stop system.Local workforce development boards,composed of public and private sectorstakeholders, would be responsible fordetermining the type and emphasisof services to be offered at each one-stop location.

IMPLEMENTATION

Organizational Structure andFi 11 a n c i17 f!,

The CareerNet initiative inl'vIaryland has been spearheaded. bythe Governor's Workforce Invest-ment Board. Led by Hugh Davies,the Board convened a steering com-mittee comprised of state officials andother organizations. This committeeincludes business leaders, commu-nity-based organizations, commu-nity colleges, .lob Service and Un-employment Insurance offices, andJTPi\ Service Delivery Areas, as wellas representatives of the state, suchas the library system, the Depart-ment of Human Resources and theDivision of Rehabilitation Services.

r"lar\lalld's One-Stop Career Svstcm

While the Board was responsible forapplying for grant assistance, thesteering committee was in charge ofproviding policy direction, local planapproval, and oversight of the project.The Employment and TrainingAdministration of the US Depart-ment of 1.abor, also part of the steer-ing committee, directs the operationaldevelopment of Careerl\'et and over-sees financial management of thegrant.

Vv'ith this arrangement, the Boardanticipates Federal direction by cre-ating a participatory structure similarto that proposed in the WorkforceSecurity Act. Nevertheless, most ofthe major decisions must still be madeat the local level, closer to the cust-omers. Local business leaders servingas Private Industrv Council chairsconvened local CarccrNct planningteams. These teams consisted oflocal Job Service and Unemploy-ment Insurance office managers,Service Delivery Area .ITPA Direc-tors, community college representa-tives, additional business representa-tives, and other interested workforcegroups. These Councils represent theactual partners: the employers, thejob seekers, and the public sector.They developed the plan at the locallevel, suggested locations for one-stopcenters, and determined what typesof services should be available at thecenters.

Hugh Davies and the Covernor'sBoard chose to foster this type ofparticipJtory, cooperative decision-making structure to prevent anystakeholder opposition that couldhinder the project (Davies 1996).With so many agencies and actorsinvolved, generating consensus iscritical to CarcctNct's success. Al-though Unemployment Jnsuranccfalls under the Governor's directauthority, most of the other stake-

51

holders do not. Thus, while CarccrNcris partly under direct state authority,much of the implementation processrequires cooperation between variousactors.

Handy (1995) would describe sucha situation as a task culture organiza-tion since "it draws resources fromvarious parts of the organizationalsvstcm in order to focus them on aparticular knot or problem" (21).\Nith the CarccrNct, the partnershad defined the problem and ag-reed upon a solution. The appropri-ate resources have been allocatedto implement that solution, andsuccess will be measured by resultsachieved. The collaborative efforts ofnumerous stakeholders, rather than atop-down framework, drives theplanning and implementation of theCareerNet.

Federal funds will account forabout 60 percent of the program's$20 million cost during its first threeyears of implementation, with stateand local contributions making up theremainder. In addition, the Work-force Security Act expects that thecenters will also obtain some financialindependence in the future throughprivate contributions and user fees tobe paid by some organizations or em-ployers.

,,,'Iages of DevelopmentI-Jugh Davies has specified a two-

stage development process to im-plement the CarccrNct (Davies1996). First, the Blxlrd must phy-sically create the one-stop Centers.This stage requires identifying ap-propriate locations; equipping theCenters with the necessary tcchnol-0bry; installing program and serviceinformation; personnel training; andcustomer motivation efforts. To date,six centers have been installed andare currently being tested. Four of

52

them were located in Job Service/Unemployment Insurance offices toutilize existing infrastructure. Theremaining two were installed in com-munity colleges. Eleven additionalsites have been proposed for Spring1996 and about twenty-five for Fall1996.

The second stage of developmentis to make the services available toremote users. To increase availability,a Dial-In and Remote Access systemwill provide access to all informationavailable at the one-stop Centers.This remote system will eliminategeographical barriers, and make Ca-reerNet available to community in-stitutions such as secondary schools,vocational rehabilitation centers, othercommunity-based organizations, andpu blic libraries.

Technological InnovationsTechnological innovations are at

the heart of the CareerNet. Not onlydocs the system use the most up-to-date information technology avail-able; it also provides personneltraining so that staff may make thebest use of the technology. Stafftraining requires recognition thatcomputer workstations will performautomatically many tasks that werepreviously staff responsibilities. Staffand counselors must adjust theirexpectations, and adapt to the infu-sion of new technology. In thismanner, staff training will helpcounselors re-focus their prioritieson those services that computerscannot execute.

To meet this challenge, a trainingprogram has been designed by stateand local officials in conjunction withthe Maryland Institute of Employ-ment and Training Professionals(MIETP). Staff training includes fourareas: (1) overall orientation for localsite staff; (2) specific training for

The Georgetown Public Policy Review, 2: 1 (Fall 1996)

Resource Specialists who will assistcustomers at the center; (3) technicaltraining provided by the team thathas designed CareerNet; and (4)functional cross-training to instructthe Center staff on the variety ofexisting local programs and systems.

ObstaclesThere are two main obstacles

inherent in this innovation: frag-mented programs and expansive,expensive technological changes.Integration of different programs willrequire transforming an agency-driven perspective to a customer-driven orientation. Agencies will haveto adapt their requirements and thequalifications of training programsand services. Another major obstacleis that agencies are not legally re-quired to implement these changesin the absence of legislation. More-over, pre-existing programs may con-tinue to be administered by theseagencies. Finally, an integratedframework necessarily encroacheson agency turf and funding sources.

To avoid potential opposition, allaffected agencies were invited to jointhe steering committee. In addition,implementation focused mainly oncentralizing functions throughinformation technology, rather thanintegration of the program's require-ments and qualifications with existingservices. Thus, CarccrNct can beseen as a "virtual" integration ofservices, which could be as effectiveas an actual programmatic integrationin the long run, while avoiding somepotential turf battles in the short run.

The second set of obstacles areinherent to the technological dimen-sions of the innovation. Certainly themost important difficulty to date hasbeen the CareerNet system itself.Ann Cummins, the Resource AreaSpecialist of the one-stop center in

Marylund's One-Stop Career System

Columbia acknowledges that the jobfinder and career exploration funct-ions are usually unavailable becausethe connection to the wide area net-work often fails (Cummings 1996).Moreover, customers often complainthat the program is slow and unpre-dictable. l\!Iany of these difficultiesstem from the fact that the program isstill in its pilot phase. However, ifthese difficulties are not solved qui-ckly, the Carcct Net initiative maylose its momentum.

Finally, technological change alsoentails some human resource prob-lems. Hugh Davies notes that manyof the staff at the centers did notknow how to use basic operatingsystems (Davies 1996). Hence,training has been more time-con-suming and intensive than antici-pated. More importantly, automatingcertain functions may threaten thepositions of some personnel. Resis-tance to change is a threat to the sys-tem that will require special emphasisnot only in additional training, butalso in teamwork and confidence-building at each one-stop Center.

ANTICIPATED RESULTS OF THEINNOVATION

The one-stop system in Maryland isstill in the early stages of develop-ment, so it is difficult to make ameaningful assessment of it at thistime. Nonetheless, the CareerNet isexpected to remedy the current flawsof the existing service delivery system.Eventually, this new approach willbetter match public resources in-vested in the employment and jobtraining system to public needs. Thiseffectiveness will result from a moreflexible funding stream coupled withmore accurate indicators of servicedemand. The pending federal legis-lation that would fund job trainingand employment through block

53

grants will allow states and localitiesthe legal flexibility to move fundingwhere resources arc most needed. Inaddition, the governance structureprovides for state and local collabora-tion and requires input from the localprivate sector to better identify eachregion's employment and job trainingneeds. Lastly, the use of customerfeedback and performance measureswill provide information on the de-mand for, and effectiveness of,services.

Service integration should sub-stantially advance the customer focusand universal access principles of thenew system. If achieved, access topublic job training and employmentservices at one point will eliminatethe current multiple agency points ofentry into the job training and em-ployment services system. Ratherthan waiting in lines and filling outforms at various agencies, much ofthe intake and eligibility determina-tion functions should eventually becarried out at the one-stop location.The improvement generated by thisprocedural innovation should be clearto the customer. Less obvious, how-ever, is that agency coordination islikely to expand over time, as morecommon data elements concerningcustomers can be shared electroni-cally among the stakeholders in thejob training and employment servicessystem. A greater degree of coordi-nated casework among agencies willincrease the overall effectiveness ofservice delivery because duplicativeefforts can be reduced. Service int-egration therefore has the potentialto improve agency performance, in-crease customer convenience, andlower service delivery costs.

To promote a seamless job train-ing and employment system, serviceintegration must accompany an in-formation infrastructure strategy that

Maryland's One-Stop Career System

Strategy: One-Stop Centers HelpJob Seekers on Career Paths," /,0.1

Angeles Times. January 27, 1996.Moskal, Jerry. "One-Stop Job

Centers Heart of Clinton Plan,"Gannett News Service,February24, 1994.

Osborne, David and Ted Gaebler.1993. Rcin-oentine Government:How the Entrepreneurial Spirit isTransforminy the Public Sector.New York: Penguin.

US Congress. House. Committee onGovernment Operations. NationalPerformance Reoieu: Hearingbrfore the Committee on Goucrn-ment Operations. 103rd Cong.,lsr

55

sess., 21 Oct 1993.US Department of Labor, Employ-

ment and Training Administra-tion. 1996. National One-Stop/LMI Implementation MadisonConference Minutes. Washington,DC: USDOLIET NLMI Team.

---, Employment and TrainingAdministration. 1996. One-StopQlIarter6' Report. Washington,DC: USDOLlETNLMI Team.

---, Employment and TrainingAdministration. 1994. TheWoriforce Security Act ?/1994:Consultation Paper. Washington,DC: USDOLIETiVLMI Team.

Clemente Perez graduated 'from the Ge07getoW71 Public Policy Program in Mav1996. He also earned aJD ji'OJ71 the Pontifical Catholic University of Chile and 'was aFulbright scholar in 1994-96. He has worked at the World Bank, the Inter-AmericanDevelopment Bank, and the Office ?lthe Mayor ofSantiago, Chile. He has publishedseueral articles and wrote a biweekly columnfor the Chilean newspaper Diario La 'I'crccrafrom 1991-94. Currentlv, Perez is Chairman ofa presidential commission Oll go·vemmentmodernization ill Chile.

Scan Ryan graduatedfi'om the Georvctou»t Public Policy Program in May 1996with an emphasis in technology poli~y and regional economic dcuelopment. He bas workedcxtensiuely 077 tecbnology poli~y issues in go·vcnzment agencies, including the NationalTelecommunications and Information Administration and tbe Technology Administrationat the US Department of Commerce. Ife bas a!1Oworked with Andersen Consulting inanalyzingfcderal information tecbnology policy and government management issues. He iscurrently all internal consultant to the San Francisco Redevelopment Agen~y assisting inits redevelopment plan adoption ~lJorts.

Medical Savings Accounts: Their Placein the US Health Care System

NIALL]. BREI\NA~

Georgetown University

Medical Savings Accounts (_[VlSAs)have been the subject of much legis-lative activity in the l04th Congress and are said to solve many of the problemsof the excessive consumption of health care services that characterize the UShealth care system. MSAs are tax-free savings accounts that would be used inconjunction with high-deductible insurance policies in an attempt to force healthcare consumers into making decisions that reflect the cost of their health careservices. This study finds that despite the claims ofMSA proponents, MSAsare unlikely to reduce health care expenditures, and may contribute to increasedpremiums, as younger and healthier individuals choose MSAs over traditionalinsurance policies.

INTRODUCTION

Despite the defeat of comprehensivehealth care reform in 1994, the press-ing health care problems in the UnitedStates demand that reform remain onthe Congressional agenda. However,its defeat did ensure that subsequentreform proposals would be scaled backto reflect a more incremental approachto health care reform. For example, theKassebaum- Kennedy bill (S 10381HR 3103), passed by both houses inApril, and signed into law on August21, 1996 by President Clinton afterbitter debate in conference, containsmeasures for the reform of the privateinsurance market that are considerablymore modest than those contained inthe Health Security Act. Additionally,the Balanced Budget Amendmentof 1995 (HR 2491) contained sev-eral provisions aimed at health carereform-most notably in the Mcdi-care and Medicaid markets. DespitePresident Clinton's veto, reform ofthese large public programs is likely

to be revisited in future Congressionalsessions. One item that distinguishesboth Kassebaum-Kennedy and theBalanced Budget Amendment fromprevious reforms is the inclusion ofMedical Savings Accounts (MSAs).

1\lSAs have been the subject ofmuch legislative activity in the 104thCongress with at least nventy-onebills addressing the issue (Lyke andFuchs 1995). MSAs have alsoaroused much political controversy,as proponents and opponents havedisagreed on the cost-reducing poten-tial of MSAs and the broader effectthat they may have on the healthcare system.

This article examines the mainissues surrounding the impact ofMSAs upon the health care system,with two major health reform goalsin mind: reduced costs and increasedaccess. The article concludes thatdespite the many advantages pro-pounded by their supporters, botheconomic theory and empirical ana-

The Georgetown Public Policy Review, 21 (Fall 1996),57-66. Copyright (('1 It)96

5S

lysis suggest that MSAs may not bethe solution to the problems facingthe US health care system.

BACKGROUNDMost proposals for reform stem homa general acknowledgment that theAmerican health care system, as it iscurrently structured, costs too muchand delivers too little. In 1995, theUnited States devoted 14 percent ofits Gross National Product (GNP) tohealth care, considerably more thanin other industrialized nations. Despitethis level of expenditure, 40 millionAmericans have no health insurance(Schroeder 1996), and an additional29 million are underinsurcd in thattheir insurance leaves them exposedto considerable financial risk (Shortand Ban thin 1994). These fIguresindicate that any meaningful healthcare reform will have to balance twomajor tradc-offs: reducing costs andincreasing access. The question ofwhich issue should take priority is tosome extent a value judgement, onewhich can be seen in the debate over;\1SAs.

Those who believe that cost controlis the primary concern in health carereform point to the potential f()l'1VISAsto reduce spending. However, thosewho believe that improvements inaccess are paramount and can leadto long-run cost containment protestthat l\1SAs will serve only to segmentfurther the health care market intohigh- and low-risk groups. Both sidestend to agree that the current systemof third-party, employer-providedinsurance, while not directly respon-sible for the large increase in costs,provides the wrong incentives forconsumers when making health carepurchasing decisions. This has occur-red for several reasons.

The Georgetown Publ ic Pol icy Review, 21 (Fall 1')96)

Insurance

Insurance reduces the risks assoc-iated with health care by pooling largegroups of people with different risklevels, and offering coverage at a groupprice, without rate differentials basedon risk. Until the late 1960s, this isprecisely what happened. Insurers,mainly Blue Cross and Blue Shieldplans, offered health insurance whichwas priced according to the principleof "community rating", that is, all sub-scribers to a particular plan werecharged the same rate regardlessof risk factors such as age or healthstatus. Therefore, a system of cross-subsidization existed whereby thehealthy paid more for health insur-ance relative to their risk, and the sickpaid less. Private, for-profit insuranceftrtns began to realize that opportuni-ties existed to "cream-skim" the healthinsurance market, offering lower pre-miums to lower-risk individuals. Thisled to the emergence of widespreadunderwriting in health insurance andsegmented large portions of the healthinsurance market according to risk,although there is still substantial pool-ing in employer-related coverage andthe Medicare system.

Tax Subsidies

The structure of the tax systemin the United States promotes theprovision of insurance through an in-dividual's employer. Under currentlaw, all compensation that employerspay as fringe benefits is excludedhom both federal income taxation foremployees and payroll taxation foremployers. Due to the favorable taxtreatment, a dollar spent on healthinsurance is worth more than a dollarspent on other goods. This biases thesystem towards the provision of healthcare via employer-based insurance.Because the amount of the subsidy

Medical Savings Accounts

is related to marginal t~LXrates, thesubsidy also favors those with higherincomes. For example, the subsidy isworth more to a person with a marginaltax rate of 30 percent than to a personwith a marginal tax rate of 10 percent.This encourages the purchase ofexpensive, "Cadillac" policies in thepursuit of higher tax breaks for thosewho can afford them. Because thesubsidy reduces the price of insurancerelative to other goods, it creates in-centives for people to devote more oftheir total consumption to insuredmedical services than to other goodsand services. In addition, because thist~LXadvantage is available only to thosewho are employed, it can distort an in-dividual's choice in the labor marketand lead to the emergence of the "job-lock" phenomenon, where individualsare reluctant to change employmentbecause of the provision of healthinsurance.

Tax subsidies for health insurancepremiums also violate principles ofhorizontal and vertical equity. Hor-izontal equity is the principle thatpeople with similar incomes shouldbe treated in a similar manner. Thecurrent tax treatment of health insur-ance violates this principle becausethe subsidy is not contingent on in-come, but employment status. Eventhough two individuals have similarincomes, if one is employed and theother self-employed, only the em-ployed individual benefits in fullfrom the tax subsidies associatedwith health insurance. Vertical equityis the principle that the tax systemshould work to help lower-incomepeople more than higher-incomepeople. This is also violated becauseunder the current system the valueof the employer-provided tax subsidyis greater for higher-income workersthan for lower-income workers (Paulyand Goodman 1995).

59

The .\10m! Iheard ofExcess DemandAs a result of the t~LXadvantages

described above, the majority of in-surance in the United States is pro-vided through third-party, privateinsurers. Also, many people may be"overinsured" relative to their needs.Therefore when individuals becomeill, the majority of their health carecosts are met by third-party payersand the cost to these individuals atthe margin is reduced to zero, or nearzero. This leaves consumers with littleor no incentive to control the amountof health care that is consumed, or to"shop around" for better prices. Pauly(1986) identifies tV/Odistinct types ofmoral hazard. The first arises whenthe purchase of health insurance en-courages an individual to spend lesson preventive care measures. Thesecond occurs when the purchase ofinsurance induces an individual tospend more resources when ill. Underthe fcc-for-service system that formany years was the dominant formof payment, physicians were also left:with few incentives to control theamount of services that they providedto each patient. The reduction ofmoral hazard, by forcing patients tobear at least a portion of the true costof care, has been central to many ofthe recent changes in health care deli-very. The introduction of larger deduc-tiblcs and the widespread emergenceof managed care have contributed toreducing the excess demand broughtabout by a fee-for-service system.

MEDICAL SAVINGS ACCOUNTS

MSAs are similar to IndividualRetirement Accounts (IRAs) forhealth care expenses. Funds for rout-ine health care expenses up to a cer-tain level would be held in a tax-freeaccount to which both employers andemployees could contribute. How-

60

ever, most l\1SA proposals limitcontributions to those of an employeror an employee, but not both. Mostproposals would link MSAs with ahigh-deductible catastrophic insur-ance plan which only covers healthcare expenses after reaching a certainamount, typically $3,000. MSAs aresimilar in structure to Flexible Sav-ings Accounts (FSAs), which arespecial accounts to which employeescan contribute pre-tax dollars forhealth care or child care services. Onemajor difference of FSAs is that thereis no provision for funds to roll overhom year to year. Unspent funds inan FSA revert back to an employerat the end of the year, leading to a"use it or lose it" incentive for accountholders (American Academy of Ac-tuaries 1995). In contrast, MSAscreate incentives for individuals toaccumulate unspent funds fromyear to year.

A basic feature of current MSAproposals is that contributions toMSAs should be treated in a similarmanner to conventional health insur-ance; that is, employer or individualcontributions to an MSA should betreated as tax deductible. This is ne-cessary in order to "level the playingfield" in health insurance, allowingl\1SAs to compete with traditionalinsurance. Proponents of MSAs arbruethat they will work effectively to lowerhealth care costs through a series ofmeans. A high deductible catastrophicplan lowers premium costs to employ-ers and employees. A higher deduct-ible also requires health plans to payless of the cost of health care services,since the burden for less costly servicesis placed on individuals. The shift inresponsibility for routine health carecosts also reduces administrative costs(by as much as $33 billion, accordingto some estimates) as health plans donot have to devote resources to the


minutia of routine, everyday healthproblems (Tanner 1995). Finally,high-deductible plans lower coststhrough reduced utilization of healthcare services by consumers. The em-pirical results of the RAND HealthInsurance Experiment (HIE) are theprimary evidence cited in support ofthis assertion. The HIE was per-formed in the mid-1970s in an effortto ascertain the impact of cost sharingupon health care purchasing decisionsby consumers. One of the main find-ings of the study is the impact ofincreased deductibles upon purchas-ing decisions. The study found thata catastrophic insurance plan reducedexpcndi turcs by 31 percent relativeto a comprehensive plan with nodeductible (l\1anning et a1. 1987).

In addition to lowering health carecosts, proponents argue that MSAsmaintain the freedom of choice thatis so valued in the US health caresystem. In addition, the provision forunused funds to "roll over" from oneyear to another creates further in-centives for consumers to moderatetheir health care purchases. Thequestion of how these unused fundsshould be spent is still a matter ofcontention, however, some peopleargue that these funds should betransferred into lRAs while othersargue that in order to create the cor-rect incentives, withdrawals for anypurpose up to a defined amountshould be permitted.

The most prominent current ex-ample of an operational MSA planis one offered by the Golden RuleInsurance Company. Golden Ruleoffers MSA plans both to its employ-ees and to approximately 600 othercompanies. MSAs are widely seenas the brainchild of]. Patrick Rooney,the Chief Executive Officer of GoldenRule. In 1993, he instituted an op-tional MSA plan for the 1,300 Gol-


den Rule employees. Golden Rulecontributes $2,000 for each family and$1,000 for each individual under thepIan for employees to meet medicalexpenses. Employees are responsiblefor the $1,000 difference betweenthe company contribution and thedeductible ($3,000 and $2,000 re-spectively). Golden Rule claims that.;VISAs reduced company health carecosts by 10 percent in 1994, and thatemployees benefitted, on average,by $1,066 through receiving unspentfunds at the end of each year. Em-ployee satisfaction with Golden Rule's]VISA option is listed by the companyas 98 percent (Werber Serafini 1995).

Despite the advantages that arepropounded by MSA advocates,l\1SAs have been the subject of severecriticism by many observers. The maincriticism is that rather than reducingcosts, all ]VISAs will do is to furthersegment the health care market intothose who are sick and those who arehealthy. Arguments put forth by op-ponents can be discussed under threemain headings: financing, selection,and health care utilization.

Financ ingAdvocates of MSAs argue that the

average cost of traditional insuranceis approximately equal to the cost ofcatastrophic insurance, plus a depositin an individual's MSA equal to theamount of a deductible, typically53,000. Their argument is initiallyconvincing but somewhat flawed.The most common example given bysupporters is that of a typical familypolicy. Let us assume that a typicalfamily policy costs $5,400, with adeductible of $200. This, it is argued,imposes few incentives on health careconsumers to contain costs. Insteadof providing this traditional coverage,an employer could purchase a high-deductible, catastrophic insurance

61

plan for the employee and his/herfamily for $2,400, and deposit theremaining $3,000 into a tax-shelteredMSA from which the employee couldmeet health care expenses below the$3,000 deductible. MSAs, then,appear to be a win-win situation.If employees' health care coverageexceeds the deductible, they areassured first-dollar coverage, possiblyeven free of some of the coinsuranceconstraints that characterize tradi-tional plans. If health care expensesfall below the deductible, employeesare free to keep these unspent funds.

However, these claims ignore thefact that increases in dcductibles arenot matched dollar for dollar by de-creases in premiums. In practice,high deductible premiums save only$500-$600 over traditional plansbecause the majority of health careexpenses are for catastrophic care(Mechanic 1995). Therefore,employers will not be in a positionto cover the full cost of the deduct-ible. An analysis of MSAs by theAmerican Academy of Actuariesfound that decreases in insurancepremiums were significantly lessthan increases in deductibles. Theseresults are outlined in the table on thefollowing page. As we can see, in-creases in the deductible amountare not matched proportionally by re-ductions in premiums. With deduc-tiblcs of 33,000 or more, individualsare exposed to out-of-pocket paymentsof $1,000 or more in excess of a tra-ditional plan.

SelectionIf MSA proposals receive the same

tax: treatment as conventional insur-ance, many people fear that it willresult in significant favorable selectioninto MSA plans by the young andhealthy, with resulting adverse effectsupon premiums in traditional plans.

62

TvlSAs are likely to be more attractiveto those who are younger and health-ier, because they have a lower prob-ability of incurring high health care ex-penditures. This will make them lessrisk-averse and more attracted to theend-of-year "bonus" of unspent ;\"lS/\funds. Oldor individuals, or indivi-duals with chronic conditions, arc lesslikely to find l'vISAs attractive as theywould be faced with higher out-of- -pocket costs as a result of the higherdeductible. These people would in-

The Georgetown Public Policy Review. 2:1 (FaII19%l

deductibks.lf that happened, even peoplewho were sick would find it advantageousto elect the catastrophic-plus lVISAoption. Because most bmilies have lim-ited savings, those without an employercontribution to an .:vISA could thenbce unmanageable out-or-pocketexpenses" (\Vhite 1995,18).

Again, the merits or demerits ofsuch an approach may ultimately bea value judgement. Is it justifiableunder the current system that manypeople do not pay premiums which

l!

Cost of Different Copuvmcnr Designs-Family Plan

IiI bC[Qilllt~;: C0g_:;_l!llplicltioIl' :t.!Jd_Dcs.ig:n ISSlW.s Tahk II -4.'\.1. 0 _

Nu m hcr Percent

S·IOOS 1 ,()OOS2,()OOSl,OOOS4,OOOSS,O()()%,000

%,S(}7%,1705S ,411S4))4SS4,3SSS:;,lJS<JS:; ,(}61

Valid V;didPercent Percent

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S 1 ,(}OO S 1,1 S ()S2,(}OO S 1,71 <JS3,C>OO S2,1112S4,()OO S2,57SSS ,()OO S2,<)O()

stead opt for traditional insuranceplans. This suggests that the wide-spread introduction of ;vISAs mightnot be compatible with the currentsystem. Because it is the young andthe healthy who cross-subsidize thesick in the current insurance market(at least to some extent), if MSAsinitially attract all of the good risksfrom a particular pool, premiums intraditional insurance pools will rise.This rise in premiums will result ineven more people moving to the1VIS1\option until the risk pool intraditional plans deteriorates to theextent that they arc not viable. Asthe Congressional Budget Officereported:

"The process could continue until thedifferential between the premiums in thetwo plans exceeded the difference in

arc proportional to their risk, and thatin large plans healthy individuals arclorccd to subsidize the health carecost of the sick? If so, then [VISAsrepresent a way in which everyonecould pay the acrunrially bir amount()r their premium (i.c., a premiumthat accurately reflects their risk). Onthe other hand, many argue that therationale for insurance is to keep thelosers from losing too much (White199.5), on the basis that "excesspayment when healthy and under-payment when sick is the purposeand social function of combiningrisks into insurance pools" (Nichols,Moon, and \t\Tall 1996, 12).

The counterargument by lVISAadvocates is that in the event of ad-verse selection taking place, it can beoffset by risk adjustment. This is the


method by which insurers can be com-pensated for the effects of adverseselection, by receiving transfers hornother insurers for covering individualsexpected to have higher health careexpenses. Risk adjustment is usuallyperformed on the basis of demogra-phic factors such as age, race, andplace of residence. However, riskudjusrrncnt is problematic, primarilydue to the information asymmetrythat characterizes the health caremarket. This is because an enrollee isbetter equipped to evaluate his or herhealth status or risk factors that maynot be included in risk adjustmentcalculations (Rodgers anei Mays1995).

Health Care Utilization

Costs

A reduction in health care costs,brought about by more responsibleutilization of health care resources isoften given as one of the primary ad-vantages of NISAs. However, in 1993,80 percent of total health care spend-ing was spent on only 15 percent ofthe insured who had health expensesexceeding S3,OOO-the amount atwhich catastrophic coverage usuallybegins under most .!VISA proposals.Therefore, "as soon as someone iscliagnosed with a condition he or sheknows will cost more than $3,000 totreat ... the incentive to economize oncare is gone" (Ellwood and Enthovcn1995, 32). Conversely, 50 percentof the population accounts for only3 percent of health care spending.Therefore, the majority of health carespending will continue to be protec-ted underMSA proposals. In fact, if:;VISAs employ weaker cost-sharingtechniques above the deductible thanunder traditional insurance plans,l'\1SAs could suffer from adverse aswell as bvorablc selection, and health

care spending could conceivably rise.T f we accept the hypothesis that thegrowth of high-cost tcchnologv hasbeen a major source of health caregrowth (Nichols ct al. 1996), then,consistent with the statement fromElkwood and Enthoven above, oncethe deductible is exhausted, therewill be little or no incentive to con-strain costs. Individual preferences arelikely to favor high-cost technology insituations such as these. lVIanagedcare, with its emphasis on gatekeep-ing and utilization review, may actmore effectively to control healthcare costs.

Postponement of Care

In addition, there is a dangerthat individuals with 1\1SAs mayforego needed preventive care in aneffort to preserve the balance in theirMSA account, and thus reap theend-of-year payoff This postpone-ment of preventive care may havelonger term negative effects upontheir health status, and lead to higherlong-run health care costs. Ellwoodand Enthovcn (1995) provide apossible example of the effects ofsuch incentives when they cite theexample of patients in Californiacovered by an indemnity insuranceplan. These patients were 20 percentmore likely than patients in prepaidplans to develop ruptured appendi-ces. This is particularly appropriate incountering some of the statistics thatarc quoted from the RAND HIE byMSA advoc~tes. One HIE findingthat is not widely cited is the adverseimpact that copayments had on thehealth outcomes of lower-incomeindividuals, with respondents sig-nificantly more likely to have dis-played symptoms such as weightloss ann shortness of breath (White1995), Again, this suggests thatM SAs may have adverse long-term

64

public health consequences. AsEllwood and Enthoven (1995)argue, "the important opportunityfor savings is not in deterring primarycare, but in motivating doctors to pro-vide high-cost care only when it isappropriate" (32).

Supplier-Induced Demand

The extent to which physiciansmight respond to a decrease in thedemand for primary care services asa result of MSAs is unknown. Inhealth care, patients' demand forservices is a function both of theirdemand, and supply-side factors.This is due to the "principle agent"theory in which consumers, as a resultof their lack of knowledge of healthcare, delegate much of the decisionmaking to a responsible agent, i.e.,the physician. However, there hasbeen considerable debate in recentyears as to whether or not physiciansare "perfect agents"; that is, do phy-sicians value a dollar of benefit to apatient equally with the marginal costof the treatment (Ellis and McGuire1986). If individuals do reduce theircontacts with primary care providersas a result of incentives generated bya high deductible l\1SA, demand forphysician services will decrease. If aphysician is not a perfect agent, anddemand decreases, physicians mayincrease the intensity with which theytreat their remaining patients throughextra testing or unnecessalY returnvisits (White 1995). As White pointsout, the experience of cost controlsinternationally, and in the Medicaresystem have found that providerscan, on average, counter about halfof the potential savings from a givenchange.

The paradox is clear. If a largeproportion of the insured switch tolYlSAs, it is likely that some of thereduction in utilization and costs will

The Georgetown Public Policy Review. 2:1 (Fall 1996)

be offset by supplier responses. Yet,if MSAs attract only a small numberof people, they will not have a signifl-cant impact upon overall health carecosts (White 1995).

EMPIRICAL RESEARCH

One of the more comprehensiveempirical analyses of the impact ofMSAs on health care costs has beenperformed by researchers at the UrbanInstitute in Washington, DC. Usingdata from the 1987 National MedicalExpenditure Survey (NMES), theUrban Institute addressed severalquestions regarding lVISAs, including:(1) what would be the likely effect onnational health expenditures if allemployees were switched into lVISAplans; (2) who would gain and whowould lose financially, and by howmuch, under such an approach; (3)what would be the effect of a switchto MSAs upon premiums for tradi-tional coverage (Nichols ct al, 1996).

The results reinforce some of thetheoretical concerns raised in thispaper and suggest that there maybe considerable problems associat-ed with the introduction of tax-subsidized lVISAs into the healthinsurance market. First, the research-ers find that many estimates of ex-penditure reductions in response toMSAs are somewhat optimistic. Thisis due to several factors: (a) failure totake account of the fact that, at best,equalizing tax treatment for em-ployer-provided MSAs will affectonly 40 percent of health care spend-ing (Medicare, Medicaid, uncom-pensated care, and other publicprograms accounting for the remain-ing 60 percent); (b) many cost-savinginitiatives are already underway inmanaged care programs nationwide,accounting for approximately 50 per-cent of all covered workers. This willserve to limit the cost saving impact


of rviSAs; (c) health care purchasingdecisions made by individuals with:;VISAs depend largely upon whetherthey view the funds in their MSA asinsurance or as saving. Based uponthese qualifications, the researchersestimate a one-time 4 to 6 percentreduction in national health carespending. Even this figure, however,is contingent upon moving the entireemployer-provided insurance popula-tion into rviSA plans.

Tn addition, the study finds that alarge majority (80 percent) of workerswould benefit from a move to an lVlSAplan. As age increases (with an as-sumed decrease in health status), theprobability of losses under an J\1SAplan increases. The analysis alsocasts doubts upon the degree towhich lVlSAs could coexist withtraditional insurance plans in theemployer-provided market. Even ifonly 25 percent of "winners" under anNlSA plan actually switch, premiumsfor traditional insurance would in-crease by over 60 percent, with emp-loyee contributions rising fourfold.Because employers will be unable tosubsidize these premium increases, itis likely that MSA plans will be an"all or nothing" option if implemen-ted by firms. As the analysis of selec-tion issues earlier showed, it is likelythat MSAs will further segment thepool of insurance risks, as firms withyoung and healthy workers switch tol'vISA plans, leaving firms with olderworkers in the traditional insurancepool.

CONCLUSION

The passage into law of HR 3103has been hailed as the first in a seriesof steps of what has now become anincremental health care reform pro-cess. However, MSAs, with theirfocus on further defining risk pools,represent an incongruous partner

65

with other provisions in the reformpackage, such as increased portabil-ity. The }\lISA experiment provisionin HR 3103, limited to 750,000insurance policies, ensures that wewill have a large-scale test settingwithin which we can observe theoutcome between the theoreticalpositions outlined in this article andthe claims of ]'vISA proponents. Theopinion of this author is that any costsaving advantages of lVISAs on ashort-term basis are outweighed bylonger term adverse selection effectsupon the population as a whole, asthe young and the healthy benefitat the expense of older and sickerindividuals. Ultimately, time will bethe judge of the effectiveness of1VlSAs and their place in the UShealth care system.

ReferencesAmerican Academy of Actuaries. 1995.

Medical savings accounts: Costimplications and desig7l issues. PublicPolicy Monograph, Washington DC:American Academy of Actuaries.

Ellis, Randall, and Thomas McGuire.1986. Provider behavior underprospective reimbursement: Costsharing and supply.Journal of HcaltbEconomics, vol. 5: 129-151.

Ellwood, Paul, and Alain Enrhovcn.1995. 'Responsible choices': TheJackson Hole group plan for healthcare reform. HealtbAffairs 14 (2):24-39.

Farley Short, Pamela, and jessicaBanthin. 1994. New estimates qftbeundcrinsured. Center for IntramuralResearch, Rockville, MD: Agency forHealth Care Policy and Research.

Lyke, Bob, and Beth Fuchs. 1995.Medical savings accounts: Legislationill tbe 104tb Congress. 1995 Reportfor Congress, Washington, DC:Congressional Research Service.

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Manning, Willard,Joseph Newhouse,Naihua Duan, Emmett Keeler, ArleenI .cibowitz, and Susan Marquis. 1987.Health insurance and the demand formedical care: Evidence from a ran-domized experiment. Tbe rlmericanEconomic Review 77 (3): 251-277.

Mechanic, Robert. 1995. How wouldMSAs work in the real world? Businessand Healtb (November): 29-37.

Nichols, Len, Marilyn Moon, and SusanWall. 1996. Tax-preferred medicalsavings accounts and catastrophic bealtbinsurance plans: A numerical analvsis ofwinners and losers. Washington DC:The Urban Institute.

Pauly, Mark. 1986. Taxation, healthinsurance, and market failure in themarket economy. Journal ofEconomicLiterature, vol. XXIV (ju ne): 629-675.

Pauly, Mark, and John Goodman. 1995.T;Lxcredits for health insurance and


medical savings accounts. Healtb4ffain(spring): 125-139.

Rodgers, Jack and James Mays. 1995.Medical savings accountsfor Medicarebeneficiaries. Prepared for the KaiserFamily Foundation, Washington,DC: Price Waterhouse.

Schroeder, Steven. 1996. The medicallyuninsured-will they always be with us?The New EnglandJournal if Medicine334 (17): 1130-1133.

Tanner, Michael. 1995. Medical savingaccounts: Answering the critics. CatoInstitute Poticy rlnalvsis 228, Washing-ton, DC: Cato Institute.

Werber Serafini, Marilyn. 1995. Goingfor Gold. NationaIJolirnal(April).

VVhitc,joseph. 1995. Medical savingaccounts: Fact versus fiction. BrookingsOccasional Paper, Washington DC:The Brookings Institute.

Niall] Brennan rcceiucd his Master'sfrom tbe Georgetown Graduate Public PolicyProgram in 1996. In addition, Brennan hold, a Bachelors degree in History and PoliticalScience from University College Dublin. Brennan co-authored an article "/l Cross NationalComparison of Orpban Drug Policies: Implications for the Us. O,pban Drug Act" wbichhas been accepted for publication in tbejournal ?f Health Politics, Policy and Law. lIecurrently works as a Consultant in tbe Hcaltb Policy Economics Croup ill the WasbillgtolZNational Tax Services office of Price Waterhouse.

Welfare Reform: An Analysis of theFactors that Influence the Policy

ERIC N. rvIi\DER

Georgetown University

Welfare policy requires considering ;\ multiplicity of factors including societalvalues, budgetary constraints, welfare recipients' incentive structure, and the low-skilled labor market. Through an examination of current literature, this articleoutlines the decline in support Ior redistributive programs and the emergence ofdemands for welfare recipients to become self-sufficient. The article also reviewswelfare reform initiatives, which arc divided between supportive and coerciveapproaches. Current literature suggests that welfare reform through the statewaiver process has increased self-sufficiency while minimizing the potentially severeunintended consequences of sweeping federal reform. These consequences maynow become reality under the Personal Responsibility and Work Opportunity Actpassed by Congress and signed by President Clinton.

INTRODUCTION

The following analysis examines wcl-fare reform, with a specific focus onreform of Aid to Families with De-pendent Children (AFDC). Accord-ing to Rosen (1995), an optimal re-distributive policy is derived fromthe social welfare function, which isdefined as the utilities of individualsbased on income as well as on the co-rrection of the negative externalitiesassociated with inequality of consum-ption. In other words, welfare policyattempts to maximize efficiencythrough redistribution until the utilitygain hom fulftlling values of socialequity or fairness equals the utilityloss caused by lower consumption for

higher-income individuals. Rosen(1995) explains that redistributiveprograms provide a public good sincethe inequality of income distributionand consumption affects every indi-vidual. However, relatively recentsocial and economic transformationshave caused society to increasinglyinterpret welfare as fostering depen-dency among recipients. These cri-ticisms have motivated the current re-form measures.

Higher-income individuals cur-rently appear unsatisfied with mereequity gains from transfer paymentsto welfare recipients. They desireincreased self-sufficiency amongwelfare recipients through greater

EDITOR'S NOTE: As this edition went to press, President Clinton signed into law PL 104-193 (the Personal Responsibility and Work Opportunity Reconciliation Act of 1996)which replaced AFDC with Temporary Assistance for Needy Families (TANF). TANFis an historic and far-reaching bill whose implications for all programs, including thosenot mentioned in the bill, are only beginning to be understood. This new legislation isvery complex and contains many ambiguities that remain to be resolved before andduring implementation. This article provides a basis to examine specific consequencesthat may arise with this welfare reform initiative.

The Georgetown Publ ic Pol icy Review. 21 (Fall 1996). 67- 76. Cory right «:) 1996

labor force participation. In response,legislators have offered multiple ini-tiatives in pursuit of this objective(~ightingale 1994). The federalbudzct deficit and the low-skilledolabor market pose two barriers to ma-king welfare recipients more self-sufficient. Concern over the federalbudget deficit limits support for wel-fare restructuring initiatives thatrequire expenditure increases, suchas job placement, job training or edu-cation, child care, etc. The low-skilledlabor market pays low wages thatoften prevent female-headed house-holds from lifting themselves out ofpoverty and achieving self-sufficiency.This article argues that many of theinitiatives currently under consider-ation will indeed i;lCrease labor forceparticipation. The manner in whichlegislators attempt to accomplish this,whether through supportive transi-tional services or coercive benefitlimits, will depend on resolving thevalues tradeoff between equity andself-sufficiency.

The article addresses the followingissues: it introduces the welfareprograms with a special emphasis onAFDe, describes the social transfor-mation motivating current welfare re-form initiatives, and discusses wel-fare block grants. The past andpresent welfare reform initiatives,with respect to the low-skilled labormarket, are discussed. The articleconcludes by commenting on thePersonal Responsibility and WorkOpportunity Act, a welfare reform billrecently passed by Congress and sign-ed by President Clinton. The articlecautions that federal welfare reformruns the risk of unintended conse-quences, the severity of which couldbe zrcatcr than the current state

b

waiver process created under section1115 of the Social Security Act.

The Georgetown Public Policy Review. 2.1 (Fall 1996)

WELFARE, SOCIAL TRANSFORMA-TION, AND WELFARE BLOCKGRANTS

Welfare programs include Supple-mental Security Income (SSI), FoodStamps, Medicaid, public housing,and the program most commonlyassociated with welfare, AFDC.AFDC became law under the SocialSecurity Act of 1935 as Aid toDependent Children (ADC). Ananti-poverty measure intended tofinancially assist widowed mothersand their- children, ADC was alsointended to prevent mothers frombeing compelled to join the laborforce (Gueron 1994). At the time,legislators and the public generallyaccepted the program as providinga public good (Rosen 1995).

Both states and the federal govern-ment administer AFDC. The statesadminister and determine benefitlevels, but share the program's costswith the federal government-whichalso sets other benefit and eligibilitycriteria (Blank 1994). The benefitamounts vary widely by state. Forexample, in 1994 the annual AFDCcash benefit for a three-person familyranged from $1,440 in Mississippi to$7,284 in California (Sawhill 1995).Over the 1970s and 1980s real AFDCbenefits became less generous, butMoffit (1992) notes that overallwelfare benefits increased due to in-creases in Food Stamps and Medic-aid. O'Neill (1993) notes that bet-ween 1960 and 1992 the overallAFDC caseload increased 460 percentthus causing government spending toincrease from 1.2 percent to 3.9 per-cent of GNP. Haveman and Scholz(1994) report that AFDC and othertransfer programs lifted 48 percentof the nation's pretax and pre-transfer poor above the poverty linein 1979 and then only 42 percent in1991.

Welfare Reform

As stated earlier, legislatorsoriginally created AFDC because itserved a redistributive purpose andalso fulfilled a social desire to assistfamilies burdened by the loss of theprimary income earner. However,major changes in the economic andsocial character of the United States,citizens increasingly view AFDC asoffering a detrimental form of as-sistance. Most citizens no longerbelieve that providing a minimalstandard of financial security servesas a remedy for poverty. Exa~ples ofsocietal ills associated with AFDeinclude teenage and out-of-wedlockbirths.' Rapid growth in female laborforce participation has also causedcitizens to expect able-bodied mothersto work to help support themselvesand their children (Nightingale 1994).In light of these changes, the publictends to consider AFDC a burden-some social cost both monetarilv andbehaviorally. ~

During the welfare reform neg-otiations in 1995, Congressionallegislators attempted to craft aresponse to criticisms of welfareprograms. The House of Representa-tives passed the Personal Responsi-bility Act (PRA) on March 25, 1995to reform means-tested programsincluding AFDC, Food Stamps, andSSI. The PRA replaced AFDC'sopen-ended matching grant to thestates with a fixed-sum block grant. Italso called for funding over the nextfive years to be set at the 1994 levelwithout adjustment for inflation orgrowth in the poverty population(Peterson 1995). The PRA repre-sented an attempt to accomplishseveral objectives: increase laborsupply among welfare recipients,achieve budget savings, and increaseprogram effectiveness by offeringstates greater flexibility to experimentand create innovative programs.

Critics have argued that in theeffort to accomplish these goals thelegislation would precipitate a "race tothe bottom" among the states. ThePRA requires that states comply witha 50 percent work participation rate, arate higher than has been ever achiev-ed, or risk federal fiscal penalties.'Some analysts predicted that stateswould respond by restricting welfareeligibility to increase their chances ofreaching the 50 percent level. ThePRA also ceased to require that thestates provide a matching grant-another strong incentive for statesto cut benefits or restrict eligibility.In theory, these changes could triggera race to the bottom since each statewould want to create a welfare prog-ram less attractive than surroundingstates' to discourage recipients frommoving into their state in search ofbetter benefits (Zedlewski and Sawhill1995). This scenario demonstratesthat combining the goals of greaterlabor force participation, federalbudgetary savings, and programeffectiveness may distort the deliveryof AFDC services.'> It also suggeststhat legislators arc prepared to aban-don welfare as an entitlement sincethe PRA offered no safety net tothose unable to find jobs (Weaverand Dickens 1995).

WELFARE REFORM INITIATIVES ANDTHE LOW-SKILLED LABOR MARKET

W elfare reform ini tia rives generallyattempt to either encourage work byoffering transitional benefits, orsimply require work by restrictingAFDC eligibility and reducingbenefit amounts. Both approachescarry the risk of unintended conse-quences. The supportive approachpreserves welfare's entitlement statusand a social commitment to equity byproviding transitional benefits. Yetthe transitional services draw some

70

low-income families onto AFDC whowould otherwise have been self-sufficient. The coercive approach, onthe other hand, weakens the socialcommitment by imposing benefitlimits, but increases the incidence ofpoverty and homeless ness amongthose recipients unable to supportthemselves (Weaver 1995).

AFDC Incentive StructureA brief discussion of the AFDC

incentive structure illustrates thetrade-off between the supportiveand coercive approaches. Since theOmnibus Budget Reconciliation Act(OBRA) of 1981, welfare recipientshave experienced severe restrictionson the amount of income they maycam. Recipients may earn $90 permonth for work expenses, $175 perchild per month for child care ex-penses and an additional $30 forpersonal expenses over the first fourmonths of consecutive welfare ben-efits. Income earned in excess of the$]0 is taxed at a 662/., percent mar-ginal tax rate. After four months ofconsecutive benefits, the recipientmay continue to set aside the sameamount for work expenses and childcare, but any additional income istaxed at 100 percent marginal taxrate. This requires that every ad-ditional dollar of income earned bepaid to the federal govcrnment(Haveman and Scholz 1994). Keane(1995) notes that this incentivestructure poses an obvious disincen-tive to part-time work. Recipientsdecide either to work full-time andnot receive welfare, or to collect fullwelfare benefits and not work at all.

By contrast, from 1967 until the1981 OBI~, Congress encouragedpart-time labor force participation bykeeping the marginal tax rate at 67percent for all work income. Congresschanged the marginal rate in 1981

The Georgetown Public Policy Review. 2:1 (fall 19%)

because the Reagan administrationbelieved the 67 percent tax rateencouraged people to work less andreceive AFDC. After the 1981OBRA, the basic AFDC caseloaddecreased significantly (O'Neill1993). The 67 percent tax rateattempted to encourage welfarerecipients to move into the laborforce, while the 100 percent tax raterestricted eligibility. In the end,Moffit (1992) notes that the econo-metric evidence suggests that theeffects of the supportive and coercivepolicy approaches canceled eachother out, leaving no net effect. Theinconclusiveness of these initial effortsprovided the impetus to pursue otherinitiatives.

IVork and TrainingThe Family Support Act (FSA)

of 1988 represents the last majorwelfare reform measure prior to theJaws enacted by the 104th Congress.Heralded as a dramatic transforma-tion, it mandated that the statesexpand work and training assistancefor able-bodied AFDC recipientsthrough the Job Opportunities andBasic Skills (JOBS) program (Blank1994). The FSA mandates that astate must also provide child care,transportation, and other work relatedexpenses "to the extent resources areavailable." The Act represented acompromise between conservativeswho wanted participation require-ments and liberals who supportedmore education and child care(O'Neill 1993).

Despite increased funding andstate flexibility in selecting a mix ofservices, on the whole JOBS appearsto have produced or resulted in onlyminor progress in reducing welfareparticipation (O'Neill 1993). Johnsonet. al (1994) found JOBS programsinitially had higher short-term case-

\V cl fare Reform

load growth because they attractedmore families onto assistance, part-icularly those with more extensiveprevious employment. Burtless (1994)hypothesizes that other factors alsocontributed to undermine the pro-gram's effectiveness, such as theFSA's extension of benefits to two-parent families and the 1990-91recession. The impact ofJOBS inRiverside, California stands out asthe clear exception, since Riversideachieved double digit increases inthe percentage of AFDC recipientsworking and a SO percent increase inaverage earnings, producing a onesixth reduction in welfare payments(Gueron 1994). Despite minorprogress overall, JOBS has also beencredited with improving women's in-volvement in the labor market, de-creasing reliance on welfare, andcreating small increases in total familyincome (Blank 1994).

IJIC and Income Subsidies

Proposals to increase labor forceparticipation through incomesubsidies include the EITC, wagesubsidies, and work subsidies. Thesuccessful expansion of the EarnedIncome Tax Credit in the 1993Omnibus Budget Reconciliation Actachieved the Clinton administration'sgoal of "making work pay." Theadministration's other three policygoals were addressed in the unsuc-cessful Work and Responsibility Act(WRA) of 1994: to strengthen thenation's system of child supportenforcement and collection; toprovide education and training topoor people; and to place time limitson benefits. Providing education andtraining represented a continuedcommitment to services suppliedby the JOBS program. Congressoriginally passed EITe in 1975 asa work incentive for low-income

71

individuals with children. The t,LXcredit phases out as wages increaseand becomes eliminated altogetherafter family income exceeds adesignated level (Burtless 1995).Due to the 1993 OBRA, by 1996EITC paid families with two or morechildren 40 percent of earnings up to$8,900 per year, or a maximum of$3,560. The EITC phases out asfamilies earn more than $11,620 peryear, with each $100 of addedearnings lowering the EITC paymentby $21. Outlays for EITC will reach$25 billion in 1996 (Lerman 1995).Although the actual effect of EITCon behavior remains unknown, intheory it unambiguously increasesthe incentives for those out of thelabor market to become employed(Blank 1994). However, Keane(1995) notes that the EITC expan-sion could encourage unintendedstrategic behavior; in particular, someindividuals may over-report their self-employment income which maxi-mizes the credit as a percentage ofincome. He also questions theEITC's cost-effectiveness, estimatingthat the expansion increases the totalgovernment cost of welfare programsfor single mothers by 93 percentwhile reducing the number of non-working single mothers by only 31percent.

Subsidizing wages and subsidizingwork initiatives offer two alternativesfor increasing labor force participa-tion. Subsidizing wages compensatesfor the low wages of the low-skilledlabor market. For example, a $1 perhour wage subsidy is predicted tocause a 23 percent reduction in thenumber of non-working singlemothers. However, as with the ElTCexpansion, the total governmentcost of welfare programs wouldincrease dramatically-by 160percent (Keane 1995).

72

The work subsidy represents apotentially more effective alternativeto either the EITC or the wage sub-sidy. Keane (1995) estimates that a$62 per week subsidy for at leastpart-time work (taxed at a rate of20cents per dollar of earned income)and paid to all single mothers wouldreduce the number of non-workingsingle mothers by 32 percent whileincreasing the total cost of govern-ment welfare programs by only 17percent. This accomplishes the samepercentage reduction of non-workingsingle mothers as the EITC expan-sion, but costs much less than theETTC's 93 percent increase in totalgovernment cost. However, the worksubsidy could suffer problems similarto the wage subsidy. A single mothercould obtain a subsidy larger than shedeserves if her employer exaggeratesthe number of hours worked.

Community Service JobsThe Work and Responsibility

Act's time limit requirement wouldhave transformed AFDC into atransitional program that suppliedbenefits for two years. After twoyears, WRA required that a recipientbegin a job search, job training, orother work-related activity. If therecipient failed to find employment,WRA required that he or she work ina minimum wage public sector job inorder to receive other benefits such aschild care (Blank 1994). This re-quirement was intended to assistparticipants in developing the skillsnecessary for a job in the privatesector.

Although the WRA responded topublic concerns over welfare depen-dency, the earlier experience of theComprehensive Employment andTraining Act (CETA) demonstratedthe limitations of the transitionalapproach. Between 1973 and 1983,

The Georgetown Publ ic Pol icy Review, 2: I (Fall 19lJ6)

CETA created 750,000 short-term,public sector jobs for less-skilledworkers. CETA's limitations included:uneven job quality; opposition fromunions who feared the loss of unionjobs; higher costs to supply jobs thanby simply providing cash benefits;and questionable effects in encou-raging private sector employment(Gueron 1994).

Family Cap. Teenage MotherExclusion. and l lard Time Limits

The Personal Responsibility Actnot only proposed block grants and afive year time limit, it also mandatedthat no federal funds benefit unwedteenage mothers or children born tomothers on welfare. This mandateintended to reduce the likelihood ofthose behaviors and to increasemarriage rates (Sawhill 1995). Unlikethe WRA, which promised a publicsector job for those unable to findemployment within the two year timelimit, the PRA forces welfare reci-pients into finding a job by notproviding any such safety net. Ifstates supplied benefits beyond thelimit, PRA requires that they pay thecost alone (Burtless 1995).

Weaver and Dickens (1995)describe the PRA proposals as boldpolicies that lack firm evidence ofsuccess. For example, no direct ev-idence exists regarding the effect ofteenage mother exclusions or hardtime limits. Some evidence on timelimits comes from studies on the ter-mination of the l\1ichigan GeneralAssistance (GA) program in 1991.Danzinger and Danzinger (1995)found that among former GA rec-ipients, only 28 percent of highschool dropouts-and 46 percent ofhigh school graduates-held jobs twoyears later. These results portend adramatic increase in national povertyfor a PM-like policy as signed into

Welfare Reform

law, since almost half of AFDC re-cipients lack a high school degree(Pavetti 1995).

The available evidence on familycaps is derived solely from the NewJersey Family Cap established inAugust 1993, and it is inconclusive.Initial results suggested a significantdecrease in births, but a subsequentstudy found the cap did not have astatistically significant effect (Dickens1995). Dickens (1995) theorizes thata family cap, teenage mother exclu-sion, or hard time limit will indeedhave the intended effects of decreas-ing birthrates and increasing marriagerates. However, they will also cause arise in poverty for those who lose theireligibility. Zedlewski and Sawhill's(1995) findings suggest that the truenet effects are unpredictable and arise in poverty could far outweigh theintended positive effects. They es-timate that if the PRA began at thestart of 1996, 20,000 f.'1milies wouldlose benefits by the end of the yeardue to behavioral penalties. After fiveyears the cascload would decreasefrom about five million to four millionfamilies. Unlike the initiatives of thesupportive approach, the teenagemother exclusion, family cap, andhard time limit signify dramaticdeparture from efforts to compen-sate for unequal societal consump-tion motivated by values of equity.

The Low-Skilled Labor Markel

A labor market transformation hasoccurred concurrentlv with the socialattitude changes towards fosteringself sufficient welfare recipients. Inthe late 1970s and early 1980s, thenumber of well-paid manufacturingjobs decreased while the number oflow-wage service sector jobs in-creased. Blank (J 994) reports thatless skilled women have received alow and stag-nant wage since 1969.

73

Consequently, individuals with fewskills were forced into lower payingjobs (Nightingale 1994). Even whileworking full-time, many low skilledindividuals find it difficult to stayabove the poverty level. Blank (1994)reports that less skilled women havereceived a low and stagnant wagesince 1969. This has occurredbecause the demand for less-skilledworkers has fallen faster than theirsupply, placing downward pressureon wages. The trend seems as thoughit will continue.

It appears that the nation can nolonger expect periods of economicgrowth to raise the living standard ofthe least skilled. Haveman and Sholz(1994) note that the period of econ-omic growth between 1983 and 1990failed to improve the economic posi-tion of lower income families. In thiscontext, welfare reform initiatives thatincorporate basic benefits such aschild or health care may tempt in-dividuals onto AFDC since thesebenefits arc largely unavailable to lowwage workers. Therefore, incorporat-ing labor force participation incentivesinto welfare policy risks drawing lowwage workers out of the labor force,which is the opposite of its intendedresult.

POLICY IMPLICATIONS

This article has outlined the tensionbetween minimizing consumptioninequality motivated by values ofequity and increasing welfare rec-ipient's capacity for self-sufficiency. Ithas argued that attempting, as thePRA docs, to both increase self-sufficiency and to cut social spendingso as to balance the budget could in-advertently cause states to enter intoa race to the bottom. It has conten-ded that although supportive, tran-sitional services such as child care,health care, education, and training

74

increase labor force participation, costmore, and arc likely to attract someworking mothers onto welfare as-sistance programs. The article hasshown that coercive initiatives, suchas teenage mother exclusions, familycaps, and hard time limits sacrificethe social commitment to equity byoffering little or no safety net. Lastly,the labor market discussion aboveexplains that employment may notlead to self-sufficiency as convention-ally understood-since even after wor-king full-time, low skilled workersmay remain below the poverty line.

The willingness of Congress andPresident Clinton to support the Per-sonal Responsibility and Work Opp-ortunity Act represents at least ashort-term resolution of the valuesclash. The Act ends the social com-mitment to equity by utilizing hardtime limits to coerce welfare reci-pients into labor force participationand hence greater self-sufficiency.It replaces the AFDC, JOBS, andEmergency Assistance programswith a single welfare block grant thatwill provide states with greater flex-ibility to devise welfare-to-work pro-grams. It encourages labor force part-icipation and achieves budgetarysavings by limiting recipients to twoconsecutive years of benefits andcreates a lifetime benefit limit of fiveyears. The Act also requires that statesplace 50 percent of families receivingwelfare payments into welfare-to-work programs by 2002 and penalizesthose states that fail to meet thisstandard (Nyitray 1996).

The evidence as presented by thisarticle recommends against this kindof welfare reform. Since it resemblesthe PRA by attempting to combinethe multiple goals of greater laborforce participation, federal budgetarysavings, and program effectiveness, itruns the risk of creating a race to the

TI1(; Georgetown Public Policy Review, 2: 1 (Fall 1996)

bottom. Through the use of hard timelimits, thc Personal Responsibilityand Work Opportunity Act may alsocause severe unintended conse-quences such as a dramatic increasein poverty. In contrast, the statewaiver process under section 1115of the Social Security Act pre-served federal control and oversightto prevent unintended consequen-ces while providing more and betterdata on the effects of different in-itiatives. Thirty-five state waivershad been approved allowing states toexperiment with initiatives within thefull range discussed above (GAO1996). This experimentation andinnovation with initiatives on a statelevel offered the opportunity todemonstrate the effects of a policyprior to applying it on a nationwidebasis. Now that the Personal Res-ponsibility and Work OpportunityAct has been signed into law, thefederal government should maintaina role similar to the one it played inthe state waiver process. The federalgovernment should accumulate dataon welfare reform initiatives anddistribute this data to the states inorder to help reduce the potential forsevere unintended consequences.Otherwise, the absence of thisassistance may hasten the onsetof widespread poverty andhomelessness.

Notes

1. Despite the commonly perceivedassociation between welfare and teenagepregnancy or out-of-wedlock births,little evidence supports the assertion(Moffit 1992).

2. PRA, Senator Dole's proposed bill,and Senator Daschlc's proposed billmandated 50 percent work participationrates by year 2000-2003.

3. Projected savings included 570

\ V.:I tare Reform

billion over five years. PRA achievedprojected budgetary savings by pro-hibiting states from offering cashassistance to unmarried mothers underage 18, most noncitizens, children bornwhile a family is receiving cash assistance,and families who have accumulated atotal of five years on assistance (Zclewskiand Sawhill 1995).

References

Blank, Rebecca. 1994. Proposals fortime-limited welfare. Journal ofEconomic Perspectives 8 4:183-193.

Burtless, Gary. 1995. What wouldhappen if time limits were put oncash AFDC benefits, followed by astrongly enforced work requirement?in Looking before we leap: Socialscience and welfare reform. cds. K.Weaver, and W. Dickens. Washing-ton, DC: Brookings Institution.

---.1994. Public spending on thepoor: Historical trends and economiclimits. in Confronting poverty. cds. S.Danzinger, G. Sandefur, and D.Weinberg. New York: Russell SageFoundation.

Danzinger, Sandra K. and SheldonDanzinger. 1995. Will welfarerecipients find work when welfareends? in Welfare reform: An analysisof the issues. eel. 1. Sawhill. Washing-ton, DC: Urban Institute.

Dickens, \,yilliam T.1995. \lVhat Effectsdo Family Caps Have? in Lookingbefore we leap: social science andwelfare reform. cds. K. Weaver andvv. Dickens. Washington, DC:Brookings Institution.

General Accounting Office. 1996.Welfare waivers implementation:States work to change welfareculture, community involvement, andservice delivery. GAO/HEHS-96-105.

Gueron,.J udith M. 1994. The route towelfare reform. The Brookings

75

Review 12 3:14-17.Haveman, Robert and John Karl Scholz.

1994. Transfers, taxes and welfarereform. National Tax Journal 472:417-434.

Johnson, Terry R., Daniel H. Klcpinger,and Fred B. Dong. 1994. Caseloadimpacts of welfare reform. Contem-porary Economic Policy 12,January89-101.

Keane, Michael P. 1995. A new idea forwelfare reform. Federal Reserve Bankof Minneapolis Quarterly Review. 19(Spring): 2-28.

Lerman, Robert. 1995. I ncreasing theemployment and earnings of welfarerecipients. in Welfare reform: Ananalysis of the issues. cd. 1. Sawhill.Washington, DC: Urban Institute.

Moffit, Robert. 1992. Incentive effectsof the U.S. welfare system: A review.Journal of Economic Li terature. 30(March): 1-61.

Nightingale, Demetra Smith. 1994.Welfare reform: Historical contextand current issues. in The workalternative: Welfare reform and therealities of the job market. eds. D.Nightingale, and R. Haveman.Washington, DC: The Urban

Institute Press.Nyitray,Joe. 1996. Welfare reform

agreement. Congressional QuarterlyHouse Action Reports. 30 July: 1-14.

O'Neill.june. 1993. Can work andtraining programs reform welfare?Journal of Labor Research 14 3 :265-

81.Pavetti, LaDonna. 1995. Who is

affected by time limits? in Welfarereform: An analysis of the issues. cd.1. Sawhill. Washington, DC: UrbanInstitute.

Peterson, George E. 1995. A block grantapproach to welfare reform. in Wet/em:reform: All analysis if the issues. eel. 1.Sawhill. Washington, DC: UrbanInstitute.

Rosen, Harvey S. 1995. Publicfi71allce.

76

Chicago: Richard D. Irwin, Inc.Sawhill, Isabel. 1995. Welfare reform: An

analysis ~fthe issues. Washington,DC: Urban Institute.

Weaver, R. Kent and VVilliamT.Dickens, eds, 1995. Looking before weleap: Social science and welfare reform.Washington, DC: BrookingsInstitution.

Weaver, R. Kent. 1995. The politics of

The Georgetown Publ ic Pol icy Review, 2 1 (Fall 1996)

welfare reform. in Looking /;~fore weleap: Social science and uxlfare eeform.cds. K. Weaver and W. Dickens.Washington, DC: BrookingsT nstitution.

Zedlewski, Sheila and Isabel V. Sawhill.1995, Assessing the PersonalResponsibility Act, in Welfarerejorm:An analvsts of the issues. cd. I. Sawhill.Washington, DC: Urban Institute.

£0 Gt1Eric N. Mader is a Master's candidate in the Graduate Public Policy Program at

Georgetown University. Mader uiorks at the District of Columbia Financial Rcsponsibii-i<y and Management Assistance Authori<v, uiberc he specializes in the hudge/my andmanagement practices ~fthe District's Department ofHuman Services. He holds aBachelor's in Sociology from Oberlin College and a Master's ill Sociology from theUni-ocrsit» of Massachusetts at rlmbers: witb afocus in urban and communttv sociology.

Book Reviews

Reclaiming Prosperity: _/j BlueprintforEconomic Reform. Edited by ToddSchafer and' Jeff Faux. Eco·nomicPolicy Institute, 1996. 348p.

The challenge for advocates of progres-sive economic policies is how to imple-ment individual reforms in a decidedlyunfavorable political environment.Programs that would require substan-tial spending, additional Federal struc-tures, or more extensive governmentregulation of business seem unlikelywith a Republican majority in Con-gress and a reflexively centrist "NewDemocrat" administration. The Eco-nomic Policy Institute (EPI) attemptsto swim against this tide by framing acoherent set of alternative economicstrategies in Reclaiming Prosperity: ABlueprint for Economic Reform,

Editors Todd Schafer and JeffFaux have coordinated the efforts ofeconomic writers with EPI, academia,and government to offer suggestionson new policies affecting the nation'smacroeconomy, workplaces, financialmarkets, trade relations, and fiscaldecisions. Though individual chaptersstand on their own, they are linkedthematically by detailed section intro-ductions. The editors explicitly sharea focus on wage-earners' incomes,skepticism of unregulated markets,and optimism about the efficacy ofFederal economic policy.

Even with warning about thesepredispositions, the extent to whichsome of these articles contradict con-ventional wisdom can be startling:Robert Eisner challenges the naturalrate of unemployment "dogma," Dean

Baker argues there is no Social Securitycrisis, Edith Rasell stands by the single-payer health care system, and RobertScott lambastes the last sixteen yearsof US trade policy after 1980 as an"abject failure" and advocates greaterusc of quotas and tariffs. Like mostother chapters in this volume, thesedo not offer thorough analyses. Theyprovide only CurSOlYsupporting evid-ence or consideration of other inter-pretations. Their short length alsomakes it difficult to include projectionsof market behavior or secondary effects.However, as a collection of positionpapers, Reclaiming Prosperity combinesbrevity, clarity, and topicality. Thisemphasis is well-suited for a special-ized audience-policy analysts whoarc conversant with a wide range ofeconomic issues, yet don't have thetime to wade into a lot of detail anddon't expect to find all the answersat once. It is a useful approach forprovoking thoughtful discussion,though readers with specialized ex-pertise will have some qualms.

Nevertheless, while ReclaimingProsperity makes a point of challengingconventional wisdom, it fails to tacklesome of its own assumptions. A casein point is the oft-cited decline in realwages since 1973. Though used assupporting evidence in the "WorkingAmerica" section, Scott's article, andelsewhere, it is not treated as a phe-nomenon in its own right with broadcauses and effects. The stable expan-sion of the 1950s and 1960s is usedas a benchmark for contemporaryconditions without much consider-ation of that period's unique charac-

The Georgetown Pub! ic Po! icy Review. 2 1 (F~!I1 1996). 77 -X4. Copyright 19%

teristics. Similarly, contributors' pro-posals for shifting the economy'strajectory from a "low-wages path" toa "high-wage" alternative focus on thelabor side of the equation, with littlemention of the future high-wage em-ployers. Teixeira's concluding chap-ter, "Political Realities," admits thatmany of the proposed reforms willbe impossible until public opinion,particularly among white working-class voters, is more amenable to broadFederal action. Teixeira concludesthat this will require shifting the blame,fairly or not, from "big government"to "corporations and politicians thatdon't care about living standards" (332).

The strongest element of ReclaimingProsperity is its examination of "blindspots" in current policies and assump-tions. Schafer makes a compelling casefor finding a new way of financingpublic investment, though the defini-tions and extent of such investmentwould still be hotly debated. JeromeLevinson's arguments for greater em-phasis on international labor standardsin trade negotiations could be a win-ning domestic political issue, thoughdiplomatic niceties are not discussed.In an intriguing chapter on urban re-vitalization, Elliot Sclar takes a criticallook at the impact of the implicit taxand infrastructure subsidies that favorsuburban growth. Yet even these chap-ters serve better as opening argumentsthan convincing displays of evidence.

For those skeptical or wary ofcurrent trends in US economic policy,Reclaiming Prosperity provides a menuof options to inspire discussion. Evenif you don't agree with some of theconclusions, you will come away fromthis book with a better understandingof the issues and concerns they raise.However, just as these policy analystscarefully evaluate the US economy'sexisting problems, they should givetheir sweeping proposals for reform

The Ceorgetown Public Policy Review, 2: 1 (Fall 19%)

the same treatment.

Douglas Pitkin is all cualuations analystwitb tbe US Trade and Development

Agency, and a Master's candidate at tbeGeorgetown Public Policy Program

£0 01

Democracy's Discontent: AmericaIn Search of a Public Philosophy. ByMichael J. Sandel. Harvard U niversi tyPress, 1996. 471 p.

In 1982, Michael Sandel publishedLiberalism and the Limits ifJustice, abook that has come to be recognizedas an important critique of the indi-vidualism that defines American poli-tical culture. Fourteen years later, heoffers Democracy's Discontent whichexpands his critique of individualismand adumbrates alternatives. The bookturns out to be worth the wait.

Ncar the beginning, Sandel suggestswhy this work should interest studentsof public policy. Our political life andthus public policy is defined by thelanguage of rights and obligations,citizenship and freedom, and democ-racy and law. We live some theory allthe time in politics and policymaking.What theory do we live now?

Sandel argues that a variant of lib-eral political theory has come to dom-inate American politics. This theoryavers that the state should be neutraltoward conceptions of the good lifeheld by its citizens. Partisans of neu-trality conceive people as free andindependent selves capable of choice,not least in questions of ends or val-ues. This freedom of choice requiresprotection, above all against the will ofthe majority; the state exists in largepart to protect individual rights. Sincethe state cannot endorse any way oflife, politics becomes procedural, a wayof working out differences without

Bo()k Reviews

imposing a substantive view of thegood life. Taken together, the ideas ofneutrality, the independent self, anda preference for procedures constitutethe public philosophy of what Sandelcalls the procedural republic or to usea more concrete term, American gov-ernment today.

Sandel offers two broad criticismsof these ideas. First, the state cannotultimately remain neutral among con-ceptions of the good life; the mostfamous attempt to do so, the majorityopinion in Roe v. Wade, tailed by im-plicitly assuming when life begins.Second, Sandel believes that the liberalconception of the self does not do jus-tice to our identities which are con-stituted by our social roles.

Certainly the idea of neutralitymarks contemporary America, butSandel may have overstated his case.Consider, for example, the recent his-tory of welfare policy, i.e., the AFDCprogram. Two decades ago, some ar-gued that welfare should be providedwithout work or other requirements.Now policymakers, along with vir-tually everyone else, believe welfareshould be tied to work. The idea ofwelfare reform endorses a conceptionof the good life centered on work andself-reliance.

Ultimately we are also citizens of arepublic. Sandel believes a vitalalternative to liberalism can be foundin the "civic republican" tradition ofthe United States. This tradition arguesthat liberty depends on self-govern-ment which in turn depends on citi-zens acknowledging the obligationsincumbent on them. Citizenship re-quires an orientation toward the com-mon good, the ability to see beyondone's private ends to a larger whole.Such civic virtue requires cultivationthrough practices (family, neighbor-hood, religion, trade unions, reformmovements, and local government)

7')

that educate people and instill a senseof citizenship. Yet, Sandel argues,American individualism makes suchobligations and the idea of citizenshipsuspect, unwanted and unchosen en-cumbrances dependent on thick def-initions of the self. In short, Americanindividualism weakens the foundationof self-government.

Sandel believes that civic republi-canism and a sense of the commongood require a politics writ small. Oneway out of our current malaise is arenewed federalism that respects localcommunities. Neither political party,however, truly supports state and localgovernance. The Democrats distrustinsular local majorities from whomthey expect only injustice and op-pression. The Republicans argue fordevolution and a free market of indi-vidualistic choice though the latter canonly undermine any sense of citizen-ship. Moreover, the nation-state itselfis rapidly giving way to a global eco-nomy and culture. In the end, Sandelargues that we need to develop bothlocal and global identities, the lattersustained paradoxically by dispersingsovereignty.

I found the last part of the bookdisappointing. Sandel does not showhow citizenship and community canprosper in a global economy markedby free trade and rapid capital flows.1- Ic does not identity a viable, cont-emporary political force supporting arenewed civic republicanism. Attimes, I almost felt that Sandel hadretrieved a valuable political alterna-tive for the United States only toconclude that the past is past and thatcivic republicanism cannot be renewedas we enter the next century.

Such are the minor flaws in a majorwork. Democracy's Discontent should beread by everyone interested in thefuture of American political life. Manywill find, as 1 did, that Sandel offers a

so

profound critique of Americanindividualism and an intriguingalternative in our civic republican his-tory. It would be too churlish to com-plain that he does not set f()rth a con-crete program to reclaim our rcpubli-em tradition and overcome our liberalmalaise. The future, after all, belongsnot to political theorists but tocitizens.

John Samples is a professor ofpoliticalthe07Y in the Georgetown Public Policy

Program and is the Director of theGeoroctouin University Press.

The New Information Infrastructure:Stratcgiesfor US Policy. Edited byWilliam] Drake. Twentieth CenturyFund Press, 1995. 448p.

The telecommunications industry hasbeen subjected to massive change inthe last year. The passage of the T clc-communications Act of 1996, and theongoing negotiations at the WorldTrade Organization to liberalizeglobal telecommunication markets,signifY steps in a slow transformationfrom protected monopoly to compcti-rive global industry. Because this re-structuring is taking place, policy-makers have shown an increasinginterest in the trillion dollar sectorthat is expected to playa pivotal rolein the Information Age. Both regula-tors and academics are attempting toguide this transformation towards thepublic's benefit-an effort documentedin The New In/ormation Infrastructure.

Editor Wi'lliam Drakc' has com-piled the expertise of diverse academicand government policymakcrs toanalyze the telecommunication ind-ustry's future course. Whilc a fcwcontributors are significantly involvedin government or business, most are

The Georgetown Public Policy Review, 2: 1 (Fall 1<)%)

academics outside the actual decision-making process. The book's widefocus covers regulatory and tech-nological developments and their eff-ect on the social and economic well-being of the developed and developingworld,

While The New InformationInfrastructure presents a wealth of de-tail, it has many problems that preventit from being a primer on telecommu-nications policy. The primary diff-iculty with any book on this fast-changing industry lies in the problemof timeliness. Within the last year,accelerating domestic and inter;a-tionallibcralization efforts have cloud-cd business forecasts. By attempting toride the line between being a source ofrelevant information and an over-arching social commcntary, it doesneither satisfactorily. Outdatedsections on the National InformationInfrastructure (NIl) and te1ecom re-form legislation fail to provide a correctsense of the speed of the telecomindustry. The recent Bell Atlantic!NYNEX, and SouthWestern BelliPacTc1 mergers, and MCI Metroventures prove that the business ischanging before our eyes. SignifIcantweekly developments force tc1ccomprofessionals to use specialized pagingand news services to keep up, Con-sequently, The New Information Infra-structure cannot provide the up-to-date information and analysis neededto understand the industry.

The New Information Infrastructurealso has a difficult time deciding whataudience it wants to appeal to. Thestyle varies between academic, historic,and economic perspectives. Initially,the text is geared towards casual ob-servers, it then leaps to advanced dis-cussion of economic concepts such asthe "Ramsey Rule." The economicdiscussions coupled with overwroughtanalysis of FCC policymaking and

Book Reviews

other telecom entities make the book'space too intense for casual readers, yetindustry experts will be eqully unful-filled.

The layout of The New InformationInfrastructure is cramped and dense.This "information overload" seems tobe a result of the editors trying toinclude an overly diverse selection oftopics ranging from computer privacyand regulatory processes to develop-ment of the NIl and global trade ne-gotiations. The sheer amount ofmaterial can leave the reader feelingoverwhelmed and lost in an area ofpublic policy already well known forits complexity.

This amalgamation of difficultiescreates the most final vexing problemfor this work: lack of a central messagedue to the disjointed collection ofarticles. Also, while most chapters aredetailed in their specific areas, overallcoherence is hindered by the presenta-tion of vague policy summaries andcolorful, but imprecise, academic dis-cussions on subjects such as "informa-tion slums in the global village." Thecontinued development of the com-puter, and media industries all playarole in the Information Age, and thisbook fails to look adequately at theirinfluence. On the whole, The NewInformation Infrastructure is headed intoo many dire'ctions at once. Confin-ing the discussion to one area of tele-communications policy, such asdomestic, international, or theregulatory process would dramati-cally improve clarity and purpose.

Logan Kleier is a researchanalyst at NorthAtlantic Research, a consulting firm

focusing on international telccommuntca-tions policy and domestic regulatOJYprocess,

and a Master's candidate at theGeorgetown Public Policy Program.

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81

The Key to the Asian Miracle. ByEdgardo Campos and Hilton L. Root.The Brookings Institution, 1996.198p.

Since 1965, eight countries in EastAsia have achieved remarkable levelsof economic development: Japan,Taiwan, Singapore, Hong Kong,Malaysia, Indonesia, Thailand, andthe Republic of Korea. With higherreal per capita GDP growth than anyother region in the world, as well as asubstantial reduction in income in-equality, these countries arc collec-tively known as the High PerformingAsian Economics (BPAEs). TheHP AEs' extraordinary progress hasignited debate on how developingcountries can best achieve economicgrowth. International financialinstitutions, including the WorldBank, assert that growth is attainablethrough democratization and stra-tegies based on neoclassical economicprinciples. However, the BPAEs havenot followed this approach. Theirrelatively closed political systems haveprompted speculation that author-itarianism is beneficial to growth. Inaddition, BPAEs support a highdegree of state involvement in themarket and various forms of economicprotectionism.

In a comprehensive 1993 studytitled The East Asian Miracle, theWorld Bank concluded that theHPAEs gained success by following agrowth strategy based on neoclassicalmacroeconomic tenets. This reportwas controversial because it pointed tocounterintuitive results; although theHP AEs achieved high levels of growthwhile their governments interferedwith market mechanisms, their growthis attributable to "free market" stra-tegies.

With The Key to the Asian Miracle,Jose Edgardo Campos and Hilton L.

82

Root present an alternative thesis.Campos, an economist at the WorldBank who co-authored The East AsianMiracle, and Root, an economic his-torian at the Hoover Institution, focuson one aspect of East Asia's strategy.Specifically, they argue that theBPAEs' adoption of "shared growth"policies propelled regional develop-ment. By choosing policies whichcredibly conveyed that everyone, notjust the ruling elites, would benefitfrom economic growth, leaders fostereda climate of political stability. In turn,political stability encouraged the highlevels of investment needed to driveand sustain growth.

Campos and Root argue that theadoption of "shared growth" policieswas the causal link in the BPAEs'economic growth. These wealth-sharing policies included land reformand rural development, investment ineducation and infrastructure, andsupport of small and medium-sizedbusinesses. Furthermore, they assertthat leaders in the BPAEs consciouslychose to adopt such policies as agrowth strategy. The Chinese Com-munist takeover in 1949 is cited as aprimary motivator for these decisions.With the threat of Communistinsurgency seemingly imminent, theadoption of wealth-sharing mecha-nisms served to prevent internal strifeand protect the HPAE leadership'spolitical legitimacy.

The authors open by describing thecharacteristics of growth in East Asiaand the pervasive threat ofCommu-nism in the region. They also discussthe key components of regionalgrowth, broadly categorized as wealth-sharing mechanisms and public-private sector coordination. Eachcountry's experience is describedsystematically, and the historicalcontext is valuable because it recog-nizes that country (or region-specific)

The Georgetown Public Policy Review, 2:1 (Fall 19%)

characteristics influence the choiceand efficacy of economic growthstrategies. The Key to the Asian Miracleis well-organized and incorporatesprior research on East Asian develop-ment, including the 1993 World Bankreport and Robert Wade's Governingthe Market.

Though the central thesis andsupporting logic are reasonable, que-stions remain. A discussion of whetherwealth-sharing policies fostered eco-nomic growth, as well as political sta-bility, is excluded. This omissionweakens the argument that wealth-sharing policies were the mostimportant component of the BPAEs'growth. Further, it is unclear whygovernments with authoritarianhistories would adopt wealth-sharingmechanisms in the face of politicalinstability rather than increase thedegree of repression to ensure control.Though the geopolitical threat ofCommunist insurgency was undoubt-edly influential, it is not completelyconvincing that it motivated all ofthese leaders to adopt parallel andpolitically risky strategies f()r long-term growth. Finally, the argument ispresented as if the leaders of theHPAEs knew that wealth-sharingstrategies would work. In reality, noother country in modern economichistory has developed in this manner.To be fair, the World Bank report iswritten in the same manner. Bothleave the reader feeling that theremust be more to the story.

Nonetheless, The Key to the AsianMiracle contributes to the body ofeconomic development literature,particularly because it provides per-spective on the historical factors thatmotivated the BPAEs. It is a valuablestep in exploring the political com-plexities of the region's economicgrowth, and it will undoubtedly pro-vide direction for further research into

Book Reviews

the nature of East Asian development.

Sumona Guha is a Master's candidate atthe Georgetown Public Policy Program,specializing in International Political

Economy.

Partners in Public Service: Govern-ntent-Nonprofit Relations in theModern Welfare State. By Lester M.Salamon. The John Hopkins Univer-sity Press, 1995.31 Op.

In Partners in Public Service: Gouern-ment-Nonprofit Relations in theModern Welfare State, Lester Salamoncollects two decades worth of speeches,papers, and studies which illustratethe codependency and historicalbonds between the not-for-profit(e.g., the independent, third, orvoluntary) sector and government.Salamon, currently the director of theInstitute for Policy Studies at johnsHopkins University, has long been anauthority in the field of not-for-profitsector research. His extensive researchand insights should not be ignored,especially because they cover an eco-nomic sector responsible for sevenpercent of GDP, with faster growthrates than either government orbusiness.

Divided into five sections, Partnersin Public Ser·vice recounts the historicalprecedents for the continuous, and in-creasingly integral, link betweenAmerican government and the not-for-profit sector. Beside the obviouslink through the tax code, many not-for-profit organizations receive gov-ernment aid through grant programsor contract services.

Salamon contends that the non-profit sector has continuously provideda vital avenue for implementing gov-ernment policies. The evolution of the

grant-in-aid programs over the pastfifty years has shifted many generalmanagement responsibilities frompublic agencies to a different type of"Third Party Government" that reliesupon the not-for-profit sector. Ac-cording to Salamon, current theorieshave become antiquated in a newreality dependent upon non-govern-mental agency activities. A new app-roach to public management must bederived for the country to move for-ward on a variety of policy dilemmas.

In considering theoretical reasonsfor the development of government-charity relationships, Salamon outlinessome long-established explanationsfor the existence of the not-for-profitsector. However, his two main hy-potheses are at times diametricallyopposed: one holds that the nonprofitsector fills the gaps where the govern-ment falls short, the other arbrues thatgovernment performs the duties thatthe not-for-profit sector cannot deliverdue to limitations of size and scope.Despite their contrasts, these theoriesare presented in a very clear andconcise manner, leading readers toview the relationship from verydifferent vantage points.

The first hypothesis-the "marketfailure theory"-whilc inherentlysound, does not explain the existenceof voluntary associations and organi-zations that predated formal US gov-ernment. It also stops short of explain-ing exactly how nonprofits fill thisgap. The more convincing secondtheory states that government formedas a result of the failure of voluntaryorganizations to fill the public needsor perform some tasks as well as gov-ernment. Specifically, the governmentcan raise funds through direct taxation,and hence help support the publicactivities oflocal charities and non-profit organizations. Salamon is prob-ably correct in trying to move the

84

theory of the not-for-profit sector intothe direction of the "voluntary failure"concept. The book's second sectionsupports Salamon's two theoriesthrough various case studies, and qual-itative and quantitative analysis de-rived from an extensive study offederal funding tocities and other lo-calities during the mid-1980s. Con-sidered together, the first two sectionsprovide the core information forunderstanding the relationshipbetween government and the not-for-profit sector.

Parts three and four focus on theeffects of various policy agendas forthe vitality of the not-for-profit sector.Salamon devotes particular attentionto the impact of the ReaganAdministration's drastic tax cuts anddecreased funding levels, as well as therelationship between charitablecontributions and federal tax policy.All of the issues relate to the analysisof the newer role of the nonprofitorganization in implementing federalprograms and services. In the finalsection, Salamon explains the growingimportance of governmental-nonprofit initiatives in developingcountries by citing several attempts toreplicate the success of the USnonprofit sector.

While Partners in Public Service isdescriptive, certain shortcomings-relatively dated information and a lackof analysis for certain importantsubscctors-causc it to fall short ofreaching its potential. Thoughpublished in 1995, Salamon reliesheavily upon data gathered by hisstudies during the mid-1980s. As aresult, the sector's evolution through

The Georgetown Public Policy Review, 2:1 (Fall 1996)

the early 1990s is treated inadequately,and the book becomes more of ahistory than a contemporary diagno-sis. Furthermore, by emphasizing thehuman services subsector, Partners inPublic Seruice provides only limitedinsight into health, educational, andreligious organizations. This isunfortunate because, in 1992, not-for-profit health services alone hadexpenditures more than four timesthat of social and legal services.Salamon virtually ignores the religioussector, which constitutes approximately40 percent of all not-for-profitentities.

Altogether the book is an impor-tant addition to the growing researchon a relationship which advocates andresearchers alike claim is threatened byrecent public policy decisions.Salamon does an admirable job atkeeping partisanship out of the pages,but occasionally certain leanings can beread between the lines.

Even with its shortcomings,Partners in Public Seroicc addressesimportant questions on issues ofservice delivery by not-for-profits,and the theoretical reasoning for theirexistence. Salamon provides uniqueinsights unavailable in the existingliterature making it a necessity forthose who want to understand thenonprofit sector's important role in thepreservation of civic values and civilsociety.

Aaron]. Heffi'on is the Assistant Directorof Research at Independent Sector. He

received his Masters from the GeorgetownPub/ic Policy Program ill 1996.

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