State strategies for welfare reform: The Wisconsin Story (Revised)

The experience of Wisconsin is commonly cited as evidence of the capability of states for reforming welfare. Wisconsin's welfare caseload declined 22.5 percent between December 1986 and December 1994. This paper argues that the decline is primarily associated with restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utiliztion is jeopardized by proposed changes in federal cost-sharing, a substantial state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere. Other states and the federal government should not assume that expanded state discretion will produce comparable gains unless accompanied by major outlays for employment and training programs, reductions in benefits, and tightening of eligibility requirements. The first policy is expensive to taxpayers; the second and third harm recipients.