Michael Lehman
Chairperson
Committee on Ways and Means
__________________
Executive Communications
State of Wisconsin
Office of the Governor
Madison
To the Honorable, the Assembly:
The following bills, originating in the Assembly, have been approved, signed and deposited in the office of the Secretary of State:
Bill Number Act Number Date Approved
571287
April 25, 1996
550288
April 25, 1996
591 (partial veto)289April 25, 1996
495
290April 25, 1996
528291
April 25, 1996
585296
April 29, 1996
Respectfully submitted,
Tommy G. Thompson
Governor
__________________
Governor's Veto Message
April 26, 1996
To the Honorable Members of the Assembly:
I have approved
Assembly Bill 591 as
1995 Act 289 and have deposited it in the Office of the Secretary of State. I have exercised the partial veto in a number of areas.
I am very pleased to sign the country's most significant piece of welfare reform legislation. Through a series of waivers and pilot programs, beginning with Learnfare in 1987, we have established the basic premise that for those who can work, only work should pay, and that everybody should work to the extent of their abilities. Welfare should be used as a temporary last resort, and should provide incentives to promote individuals' efforts to attain self sufficiency. It should provide only as much service as an individual asks for and its fairness should be measured by comparison to working families who are supporting their families without public assistance. This set of principles has been one of the keystones of this administration. It culminates with the signing of this bill.
Several years ago, as a result of those waivers and pilot programs, we had established a foundation which resulted in significant consensus between the executive and legislative branches on the need to move forward to meaningful, comprehensive restructuring of the welfare system. It remained only to determine the design of that reform. AB 591, Wisconsin Works or W-2, is that design. It is the result of many months of concentrated work by both of these branches of government, and I have every confidence that it will change and improve both the lives of those who must rely on some support from their government and the communities in which they live.
Working together to implement the provisions of AB 591, we can change our state forever to one where those who are able to work do so, and where those who are not are given the incentives and supports they need to enable them to do so. We will be a state where all citizens are educated and trained to work and expected to do so, where communities work together to provide temporary help to those who need it, and where the government of the state acts to enable persons to work, instead of simply providing cash to individuals who are not working.
WISCONSIN WORKS PROVISIONS
A1091
The Wisconsin Works (W-2) initiative that I proposed in September 1995 is enacted in this legislation. It responds to the directive in
1993 Wisconsin Act 99 to replace the current welfare system by January 1, 1999. That replacement system, as embodied in this legislation, will have the following characteristics for clients:
• For those who cannot immediately enter the workforce, provide 3 levels of employment support:
- Trial jobs, for which a subsidy is provided to employers for a limited time, to meet the needs of those without a work history;
- Community Service jobs, for those who need to practice the work habits and skills necessary to be hired by a private business; and
- W-2 Transition jobs, for those not yet able to perform self-sustaining work, where they can participate in activities consistent with their abilities.
• Provide health care, delivered through managed care providers, to all families with low incomes and low assets who do not have coverage provided by their employers. All families will pay a portion of their health care premium based on income.
• Provide child care for all eligible families with low income and low assets who need it to work. All families will pay a portion of their child care costs based on income.
• Provide educational or training opportunities for those who are in Community Service or W-2 Transition employment, to enable them to increase their earning potential.
• Provide other services that a client needs such as transportation, job access loans and the services of a financial and employment planner for every client who needs assistance in developing a plan for self-sufficiency.
• Assure that child support payments go to whom they belong - working custodial parents and their children.
To underline that W-2 is intended to help people become self-sufficient, not substitute for self-sufficiency, participation in the employment components will be limited to 60 months overall, with some exceptions, and will be limited to shorter periods for each component. To insure that clients receive the assistance they need, W-2 agency contracts will be performance-based, so funds will be channeled to the agencies that are the most successful in placing and keeping people in private sector employment.
Not only does this legislation provide supports to people differently than in the past, it also provides those supports through a different delivery system. The new system is intended to strengthen the ties between people and their communities by creating more support for the needed services at the local level, and to integrate employment programs at the state level. To achieve this the W-2 legislation includes the creation of:
• Local Community Steering Committees, made of up community leaders to oversee the creation of job opportunities; and
• Children's Services Networks, to provide a link from families to a comprehensive array of services such as food and clothing centers, transportation and housing.
In
1995 Wisconsin Act 27, the Department of Industry, Labor and Human Relations (DILHR), the department responsible for other state-level job programs was given responsibility for the current welfare program and, therefore, for its replacement. DILHR, to be renamed the Department of Industry, Labor and Job Development (DILJD), will integrate the W-2 program into its Partnership for Full Employment system. As a result of these programs coming together, W-2 will be able to offer its clients the advantages of "one stop shopping" in areas where the W-2 agency and the Job Center are co-located. It will therefore make the established network between employers and job seekers more accessible to W-2 clients.
W-2 means the end of the automatic welfare check. This comprehensive replacement will demand more of participants, but in the long run it will provide independence and a future. The process of developing this legislation has involved citizens and professionals all over the state. Without that help this dramatic break with the past could not have occurred.
Partial Vetoes
We now face the equally difficult task of implementing W-2. While I am very pleased that AB 591 passed with bipartisan support, I am using the partial veto in a number of areas. I have done so primarily to remove some of the more onerous and unnecessary rule making requirements or to provide increased flexibility for the operation of the program. Both of these are necessary to ensure its success.
W-2 Implementation Date
Section 84 [as it relates to the W-2 program implementation date] specifies that if a federal waiver is granted or legislation passed, DILJD shall implement W-2 statewide no sooner than July 1, 1996 and no later than September 1, 1997. I am exercising the partial veto in this section to remove the specific date in September by which W-2 must be implemented statewide because the department needs one additional implementation month. The original timetable was constructed last summer and assumed passage by fall or early winter.
State as a Provider of Last Resort
Section 85 [as it relates to the state as the provider of last resort] specifies that if no acceptable provider in a geographical area is selected under the competitive or noncompetitive processes outlined in the bill, DILJD shall administer the W-2 program directly for that geographical area. I am exercising the partial veto in this section to strike the word "directly" because DILJD needs more flexibility in this situation to either subcontract the administration of the W-2 program or operate the program itself.
A1092
W-2 Contract Requirements
Section 85 [as it relates to requirements for the W-2 agency contracts] requires the department to award the W-2 contracts at least six months before statewide implementation. It also specifies that the W-2 contract may only be terminated by the mutual consent of both parties. I am exercising the partial veto in this section to remove both the six month requirement and the restriction on when a W-2 contract may be terminated because the department will need additional flexibility in the implementation of W-2, which will be a challenging and difficult task. The department may need to adjust timeframes as statewide implementation draws closer. I do recognize, however, that the W-2 agencies must be given sufficient time to prepare, especially in those geographical areas where the county has elected to not participate in W-2. I am, therefore, directing the department to come as close as possible to the six month timeframe, reporting to me if this goal is not achievable. In addition, I am partially vetoing the language regarding the need to have the mutual consent of both parties to terminate a contract to allow the department to terminate the contract of a non-performer.
Rulemaking
Sections 85 [as it relates to rulemaking for W-2 contract components], 88, 94 [as it relates to rulemaking regarding refusal to pay certain child care providers], 95 and 99g all require DILJD to promulgate rules for certain W-2 program components. I am exercising the partial veto in these sections to remove the rulemaking requirement. First, I do not believe that it was necessary to put this much programmatic and operational detail either into the statutes or to require the development of administrative rules on almost every component in W-2. The legislature understandably wants to maintain oversight over this program because it is new and radically different than the current welfare system. However, in order for the department to be able to successfully implement W-2 in the timeframe outlined in AB591, it needs a certain amount of flexibility. The department must focus on the development of federal waivers, the W-2 request for proposals and other critical steps in the transition from AFDC to W-2. Having to promulgate rules for so many parts of W-2 will only consume valuable staff resources that are needed elsewhere. The Legislature will be very involved in the W-2 implementation through upcoming s.
13.10 requests, the 1997-99 biennial budget and, more than likely, follow-up legislation. It is not prudent to impede the department's ability to implement W-2 by requiring it to promulgate rules on matters that can be done either in the W-2 contracts or as part of the administrative handbook and policy clarification memos to the W-2 agencies.
Requirements on Employers
Section 85 [as it relates to requirements for written contracts with trial job employer] specifies that the W-2 agency must enter into a written contract with each trial job employer. The contract terms shall include the hourly wage at which the trial job participant is to be paid, which may not be less than minimum wage. I am exercising the partial veto in this section because it is not necessary to include the requirement to have a written contract in the statutes. Without statutory language directing this, written contracts are already used in the on-the-job (OJT) training programs and will also be used in the W-2 program.
Extensions of the 60 Month Lifetime Limit
Section 86 specifies that the W-2 agency may extend the 60 month overall time limit on participation, if warranted by unusual circumstances, only in 12-month increments. In addition, DILJD must approve each extension. I believe that the W-2 agencies should work intensively with each client who needs to receive an extension of the 60 month time limit. To be able to provide only as much service as needed, their cases should be extended only as needed, not in 12-month increments. These extensions should be determined by the W-2 agency, in accordance with rules promulgated by the department, as the W-2 agencies are the most familiar with the client's case history. I do not believe it is necessary that the department review each and every case, but it will retain the right to review any case in any geographical area. I am therefore exercising my partial veto of this section to remove the specific 12-month increment and the requirement that the department review each extension of the 60 month time limit.
Exemption from Work Requirements for Mothers with Young Children
Section 89 specifies the benefit levels for each of the W-2 employment positions. It also specifies that an eligible custodial parent of a child who is 12 weeks or younger is exempt from the work requirement and may receive a monthly grant of $555. This section further specifies that this time period is not counted towards the 60 month time limit in certain circumstances. If the child is born not more than 10 months after the date that the participant first became eligible for either Aid to Families with Dependent Children (AFDC) or W-2, the 60 month "clock" stops for up to 12 weeks. For all other cases except in two situations, the clock does not stop. These two situations are 1) if the baby is the result of sexual assault or 2) if the mother has not participated in AFDC or a W-2 employment position for at least six months and the child was born during that period. I do not believe it is appropriate to stop the clock in the second circumstance. I am therefore exercising the partial veto in this section in order to stop the 60 month clock only when the child was born less than 10 months after the person was first determined eligible for AFDC or a W-2 employment position or if the child was conceived as a result of sexual assault. I believe that this eliminates any incentive for a woman to have an additional child while participating in AFDC or W-2, and at the same time does not punish people who are just coming on to the system or who were victims of sexual assault.
Section 89 also uses the word "tolling" to describe the counting of time under the 60 month time limit. Technically, tolling is defined to mean "to suspend". I am therefore exercising the partial veto because the use of the word "tolling" is incorrect. The partial veto in this section will make the bill technically correct and consistent with legislative intent.
Noncustodial Parents and Employment Positions
A1093
Section 96 specifies what assistance a noncustodial parent is eligible to receive under W-2. The W-2 agency may provide job search assistance and case management designed to enable an eligible noncustodial parent to obtain and retain work. In addition, AB591 would allow a noncustodial parent to participate in an employment position if he or she and the custodial parent meet the financial eligibility criteria, if the custodial parent is not a W-2 employment position participant and if the noncustodial parent is subject to a child support order. I am exercising the partial veto in this section to restrict access to W-2 employment positions to custodial parents. Expanding access to W-2 employment positions for noncustodial parents will increase the cost of W-2. It will also potentially conflict with the Children First program because under these provisions a noncustodial parent only has to be
subject to a child support order, not necessarily making full and timely payments. A person could be in arrears on their child support order and access a paid employment position under W-2 rather than participating in unpaid community work experience as required under Children First.
Eligibility Criteria
Section 86 [as it relates to the participation of more than one individual of a Wisconsin Works group in an employment position] provides that an individual is not eligible for a Wisconsin Works employment position if another individual in the same Wisconsin Works group is participating in an employment position at the time of the determination of eligibility. I am exercising the partial veto in this section because the policy on this issue needs to be very clear. It is our intent that only one adult in a W-2 group may participate in a trial job, community service job or W-2 transition job at any given time. The partial veto removes the reference to the time of eligibility determination. I am, at the same time, directing the department to review this policy and to determine if it creates a disincentive to marriage and to make recommendations, if it is found to do so.
Child Care Eligibility and Co-payment Schedules
Sections 56, 56c, 56d, 56f, 56g, 94 [as it relates to the child care co-payment schedule] and 279 [as it relates to child care eligibility and co-payment schedules] place the new child care eligibility and co-payment schedules in the statutes. The Legislature maintained an overall eligibility for child care assistance of 165% of the federal poverty line, but made the co-payment schedule more generous than originally proposed. In addition, rather than being effective upon passage of the bill, the new co-payment schedule and income limits for current low income child care recipients would be phased in during FY97. I support the changes made by the Legislature in this area. Having access to affordable child care is a critical element for people leaving the welfare system. The Legislature recognized this and reallocated funds from other W-2 components in response. In addition, while the phase-in of the new eligibility and co-payment schedule for the current low income child care recipients will be administratively complex, I understand and support the idea that these changes should be made gradually in order to allow people to make other satisfactory arrangements. While I support these modifications, I do not believe that it is necessary or desirable to have this level of detail specifically laid out in the statutes. Historically, co-payment schedules have not been included in the statutes and I see no reason to change that precedent. In addition, the 14 day passive review process that was established to allow the Joint Committee on Finance (JCF) to unilaterally modify statutes is not an appropriate role for this committee. I am therefore vetoing these provisions and I am directing the Department of Health and Family Services (DHFS) and DILJD to administratively establish the same child care co-payment schedules and the same phase-in process for current low income child care recipients as in AB591.
Regulation of Child Care Providers
Sections 27 and 74 relate to the regulation of child care providers. Section 27 directs DHFS to maintain the current levels of child care regulatory standards for licensed group centers, licensed family day care, Level I and Level II certified providers. Section 74 places current administrative rules regarding training requirements for Level I certified family day care providers in the statutes. To date, this department has effectively regulated child care providers either through administrative rules and/or guidelines. I am vetoing section 27 and exercising the partial veto in section 74 to remove the specific training requirement because it is not necessary to have these provisions specifically included in the statutes.
Health Care Co-payment Schedules
Section 93 [as it relates to the health care co-payment schedule] establishes in the statutes the monthly premium schedule that an individual who qualifies for the Wisconsin Works health plan will pay. As with child care, having access to affordable health care is a critical element for people leaving the welfare system. AB591 assumes that everyone should contribute to the cost of their health care. The co-payment or cost-sharing premium schedule included in AB591 is very reasonable. Again, however, I do not believe that it is necessary or desirable to have this level of specificity laid out in the statutes. Historically, co-payment schedules have not been included in the statutes and I see no reason to change that precedent. In addition, the 14 day passive review process that was established to allow JCF to unilaterally modify statutes is not an appropriate role for this committee. I am therefore vetoing these provisions and am directing DHFS to administratively establish the same health care premium cost-sharing schedule as in AB591.
Health Care Eligibility Determinations
Section 93 [as it relates to eligibility determination] specifies that the W-2 agency shall make the eligibility determination within two working days and that DHFS or the provider shall issue the health plan membership care to an individual within three working days. I am exercising the partial veto in this section because these timelines are too prescriptive. It is certainly this administration's intent that a person's application and membership card be processed as quickly as possible. However, these rigid timelines do not allow flexibility to address unforeseen circumstance that could cause a delay. In addition, these issues can be addressed through contracting.
Asset Test for Pregnant Women and Children
A1094
Section 93 [ as it relates to the asset criteria] specifies the income and asset criteria that a Wisconsin Works group must meet in order to be eligible for the W-2 health care plan. AB591 applies a different asset test to pregnant women and children up to age 12 than to the rest of the W-2 health care plan participants. For this group of people, the W-2 agencies shall exclude all of the resources specified under
42 USC 1382b (a), which is the section of the federal code that enumerates the asset test for the federal Supplemental Security Income (SSI) program. However, the motion made by JCF was to model the asset test after the spousal impoverishment asset test, which is broader than SSI. Even if the spousal impoverishment asset test had been referenced, I believe that it would be confusing and administratively difficult to apply two different asset tests to, in some cases, the same family. I am exercising the partial veto to apply the same asset test to all W-2 health care plan participants.
Health Care Spenddown
Section 93 [as it relates to medically needy individuals] specifies that nonpregnant adults and children ages 12 to 18 years old, who meet the other requirements of the W-2 health care plan, but have income in excess of 165% of the federal poverty level can qualify for the W-2 health care plan if they spend down to 165% of poverty. This group would remain subject to the employer-offered health care rules in AB591. In addition, this section specifies that pregnant women and children under 6 years old with excess income may also spend down to 165% of poverty, but children ages 6 to 12 would have to spend down to 100% of poverty. Neither of these two groups would be subject to the employer-offered health care rules.
Under current law, nonpregnant adults are not eligible under the spenddown program. Children ages 6 to 18 have to spend down to 133.33% of the AFDC grant size, which for a family of three is roughly 65% of poverty. Under the W-2 bill, as it was originally submitted, spenddown was eliminated for all groups. While I understand the Legislature's desire to extend a health care safety net to as many people as possible, especially pregnant women and children, the provisions of AB591 will increase the costs of the W-2 program and go beyond current law eligibility. I am therefore exercising a partial veto of this section to limit spenddown to pregnant women and children up to 12.
Learnfare Sanction Amount
Section 143m specifies that a dependent child in a Wisconsin work group who fails to meet the school attendance requirement under the Learnfare program is subject to a monthly sanction of $50. The sanction amount for the current Learnfare program is determined by the department by rule. I am exercising the partial veto of this section in order to remove the $50 from the statutes because I believe that the department should have additional flexibility in the Learnfare program. I am directing the department to continue to determine the amount of the monthly sanction by rule.
Transportation
Section 275 (4m) (b) requires DILJD to identify significant local and regional employment opportunities and identify the residential locations of current and potential W-2 participants. In addition, no later than September 30, 1996, DILJD shall submit, with assistance from the Department of Transportation (DOT), a report to JCF that recommends options that the W-2 agencies could take to facilitate the transportation of W-2 participants to the employment opportunities. The report may not recommend options that would have an adverse impact on existing public transportation systems. I am exercising the partial veto in this section to remove the date that the report must be submitted and to remove the restriction on what options the report can present. First, submitting the report by September 30, 1996 will make the information less current than it might otherwise be for W-2. I am therefore directing the two departments to submit the report no later than the date by which the department must implement W-2 statewide. Second, I do not believe that the report's options should be limited. It is possible that DOT, DILJD and local communities may develop creative transportation solutions that work outside of the public transportation network.
Advanced Earned Income Tax Credit
Sections 21b, 21c, 219m, 225b, 225d, 225f, 225h, 225j, 225L, 225n and 278 (3g) and (3h) provide a mechanism for an advanced payment of the state earned income tax credit (EITC), if both an employee and employer choose to participate. Employers could reduce the amount owed for individual income tax withholding or, if that is insufficient, from unemployment compensation contributions that are due. DILJD would be required to promptly transfer an equal amount from the general fund to the unemployment trust fund, if unemployment compensation is used. Based on the experience of the federal advanced EITC, where only 1% of the eligible population elect to receive it, participation in the voluntary state advanced payment option is likely to be very low. On the other hand, the cost to the state is likely to be high, both in terms of administration and payments to persons eventually found to be ineligible for the EITC. I am vetoing these provisions because benefits are likely to go to only a few EITC recipients, while the cost to the state is relatively high. I am directing the department to require, as part of the W-2 contract, the financial and employment planners of the W-2 agencies to help W-2 participants sign up for the federal advanced earned income tax credit program. If participation in the federal program increases significantly, I believe it would be appropriate to revisit the idea of an advanced payment program for the state EITC.
Retroactive Benefits for Decisions Overturned
A1095
Section 92 allows an individual to petition a W-2 agency for a review of certain actions. In addition, the department is required to review a W-2 decision regarding the determination of initial eligibility, if requested to do so by either the W-2 agency or the individual. If the department reverses a decision on initial eligibility the individual will receive benefits retroactive to the date of the original decision to deny benefits. The benefits would be computed as if the person had complied with all the requirements of the W-2 employment position into which they most likely would have been placed. I am exercising the partial veto of this section to eliminate the requirement that a person receive retroactive benefits if the department reverses the W-2 agency decision. It would be very difficult to implement this provision. Assessment of where the person most likely would have been placed is likely to lead to additional disputes between the applicant and the W-2 agency. For example, a person may have been able to be placed in an unsubsidized job. In this situation, it is unclear what retroactive benefit amount the person should receive. At the same time, it may be appropriate for a person to receive some level of compensation if the denial is overturned. I am directing the department to determine the best way to accomplish this goal and to report back to me and Legislature.
Report on Homelessness
Section 84 [as it relates to homelessness] requires DILJD to maintain a record detailing statistics on the homelessness of W-2 participants. I am exercising the partial veto of this section to remove this reporting requirement. I do not believe that this requirement was carefully constructed. It is unclear when or for how long this information should be collected. It will not shed any light on the W-2 program if this information is collected as people come into the W-2 office. If the intent was to see if the W-2 program had an impact on homelessness, it is more helpful to look at information from homeless shelters and transitional housing programs. Data are already being collected and compiled on the people using these services by the Department of Administration's Division on Housing. This Division will be able to compile information on the W-2 population as it is implemented.
Emergency Assistance Program
Section 83e continues the current AFDC Emergency Assistance program after W-2 is implemented with one modification. In addition, DILJD would be required to submit a report to the Legislature within 12 months of the implementation of W-2 on the interaction of the this program with the W-2 program. I am exercising the partial veto in this section to remove the reporting requirement as it is administratively burdensome to the department. I am, however, maintaining the emergency assistance program beyond the start of the W-2 program in order to continue to provide assistance to needy families with dependent children in the cases of fire, flood, natural disaster, homelessness or energy crisis.