MOE Loophole Used by States to Avoid Paying Welfare Under Inspection

Author: Dawn Lee
Published: May 30, 2012 at 4:26 pm

Maintenance of Effort (MOE) is a product of the 1996 reforms, where welfare can only be provided to those who show that they are trying in earnest to find a job to support themselves. The concept is a pretty decent one, but not when states are using a MOE loophole to avoid paying that welfare in the first place.

“Excess MOE” are welfare-type activities that don’t directly provide financial assistance to those who actually need welfare nor do they help welfare recipients find their own source of livelihood. Excess MOE can be claimed for virtually anything, including third-party expenditures that can be written off as a welfare-type activity.

This means that states can waive paying welfare responsibilities even when they don’t provide actual welfare services and help people find fruitful employment.

And the problem is not just limited to one state or two. A testimony by Grant Collins, senior VP of ResCare Workforce Services and former deputy director of the Office of Family Assistance, shows some pretty disturbing statistics. In 2004, only one state reportedly spent more than 100% of its required MOE level. The number of states that did so ballooned to 23 in 2009 – five years after Congress reauthorized TANF while tightening work requirements.

But those states might no longer be able take advantage of excess MOE to skip out on their welfare requirements if things go as planned.

The House Ways and Means Subcommittee on Human Resources is looking long and hard at this regulatory loophole. If this particular subcommittee gets rid of the loophole, then states can no longer claim to be helping people find work when they are in fact doing nothing of the sort.

And it is important that this loophole be closed ASAP. The reason why Americans all over the country accepted the 1996 reforms in the first place was that it guaranteed welfare recipients would find jobs. This excess MOE loophole kills that rationale, which is why it must be excised in the soonest possible time.

Photo credit: janinsanfran


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Article Author: Dawn Lee

Dawn is a single mother of one from Atlanta, GA. When she isn't changing diapers, she is moonlighting as a freelance writer where she puts her writing skills into something she's passionate about.

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