Heidi Hart knows firsthand about the “benefit cliffs” that loom when people are suddenly transitioned off public safety net programs. She experienced the hardships of welfare as a child and later when she left a program that helped her earn her college degree.

“The day I was no longer eligible for welfare was one of the happiest days of my life,” said Hart, a Portland lawyer. “But financially, my first job out of college was equivalent to being on welfare. We were just getting by.”

As a single parent, Heidi Hart received public assistance, participated in the Parents as Scholars program and made it through law school. Now, she is a successful attorney with Richardson, Whitman Large. Gregory Rec/Staff Photographer

While Hart dove off the benefits cliff and improved her life, Maine lawmakers are proposing to replace the cliff with a gentle slope.

A bill proposed by Democrats and a pending bill from the LePage administration would ease inherent disincentives built into the public assistance system when people earn too much money to qualify for the federally and state-funded program Temporary Assistance for Needy Families, or TANF. Under the current system, a family of three that earns $1 more than $12,276 per year loses $174 per month in TANF benefits, penalizing people who work more. TANF benefits start at $485 per month for those without income, gradually declining to $174 before being eliminated.

In that situation, getting a second job, a few more hours at work or a modest raise would result in a financial loss. Similar benefit cliffs occur when people lose child care subsidies or federal housing vouchers.

Rep. Drew Gattine, D-Westbrook, said his bill reduces the TANF benefit cliffs by gradually cutting payments for families above the cutoff. That way, there’s no disincentive to earning more money.

“There’s this dilemma that people face all the time. It’s like a penalty for working,” Gattine said.

The bill would allow people who earn more than the cutoff to still keep a portion of their TANF benefits, based on a formula. There’s not yet an estimate on how much it would cost to implement, but Gattine said because fewer people are on TANF – as a result of the state imposing a 60-month time limit, and other reasons – there should be enough funds in the system to pay for his bill.

Gattine said he’s hopeful that fixing the cliff is an area of common ground with the LePage administration.

‘OPPORTUNITY TO DO REAL REFORM’

“I think this is something we can agree on. This is an opportunity to do real reform. I’m optimistic,” Gattine said.

David Sorensen, a spokesman for the Maine Department of Health and Human Services, said details of the administration’s bill were not yet available, but that it will be centered on work requirements.

“Any bill the department supports or proposes will be focused on promoting, incentivizing, and rewarding work. Our focus is on ensuring that welfare programs have a strong employment focus and time limits to ensure that the benefits are a temporary hand up and designed to help people achieve independence,” Sorensen said in a statement. “We are developing a bill that changes benefit formulas not for all recipients, but to support those who choose to meet work requirements, in order to reduce the effect of the welfare cliff.”

Many public safety net programs in Maine, including TANF, are funded by an annual $40 million federal block grant, which is matched by an additional $40 million in state funds.

Gov. Paul LePage has made welfare reform a top priority, but some of the proposals have come under fire from Democrats.

Hart, the Portland lawyer, said she grew up in a single-parent household, and when her mother would start a job, they would sometimes suddenly lose their benefits, such as food stamps and the precursor to TANF, making the family worse off. So her mother would sometimes have to quit her job so the family could keep its benefits, Hart said.

Hart, 38, said she became a mother herself at 16 but aspired to attend college, so after high school she enrolled in the Parents as Scholars Program, which allowed her to maintain TANF benefits – worth $312 per month at the time – while attending the University of Southern Maine. The program also allowed her to earn money from a work-study job that didn’t count as income, so her TANF checks wouldn’t decline. She received a Pell grant, but paid for most of her education through student loans. She also received child care subsidies and food stamps.

“There’s no way I would have made it without that program,” said Hart, who graduated with a degree in media studies.

Hart said her first job out of college – in 2001, as a social worker – paid her $23,000 a year, but all of her public-safety-net benefits disappeared, including Parents as Scholars, the child care subsidy and food stamps.

“I only had enough money for the basics,” Hart said. So a few years later she went to the University of Maine School of Law in Portland, took out more student loans, and was able to land a good job as an attorney at the Portland law firm of Richardson, Whitman, Large and Badger when she graduated in 2007.

In 2009, she bought her first home in South Portland, the first time she had lived in a house. She had struggled but ultimately prevailed, and it bothers her when people who accept public safety programs are stigmatized.

“It’s frustrating,” said Hart, who is now married and has a 6-year-old girl. “Unless you’ve been there, you don’t know what it takes to make it out. People don’t want to be on welfare.”

BENEFITS SHRINK UNDER LEPAGE

The LePage administration has made welfare reform a top priority – and it was a key issue in the governor’s re-election campaign last year – but Democrats have criticized LePage for focusing more on trimming the ranks of public assistance recipients than making the programs more efficient. The rolls of Medicaid, food stamps and TANF recipients have all been cut under the LePage administration.

Republicans counter that they have worked on being more efficient, putting the programs on a stable financial footing and rooting out fraud and abuse, such as restricting the ability to use public money on alcohol and on out-of-state transactions. Able-bodied food stamp beneficiaries are now required to work or volunteer.

The LePage administration is enforcing a 60-month time limit on receiving TANF benefits, approved in 2012 by the Legislature. Previously, TANF recipients could easily get around the 60-month time limit.

The TANF program has shrunk under LePage from about 14,000 recipients in 2011 to 7,000 in January, according to DHHS.

“We want to support and work with families, rather than adding challenges to them in providing for their families,” said Robyn Merrill, executive director of Maine Equal Justice Partners, referring to Gattine’s benefits cliff bill.

Karin Anderson, a senior director at Goodwill of Northern New England, who oversees programs that connect low-income people with work, said most people do not want to be on welfare, but trying to navigate the myriad rules, incentives and disincentives is difficult. For instance, there’s a potential financial penalty built into TANF when both parents work, that would be eliminated with Gattine’s bill.

“Virtually every client we work with wants to be working and out of the welfare system,” Anderson said. “But you wonder sometimes how (the system) could get to be so seriously screwed up.”

Liz Schott, a senior fellow at the Washington, D.C.-based Center on Budget and Policy Priorities, said former President Bill Clinton’s 1996 welfare reform gave the states too much flexibility to design welfare programs, resulting in too much money being diverted, or simply cut from the system. Clinton’s declaration that welfare should be a “helping hand, not a way of life” has turned out to be not much more than a slogan, Schott said, adding that both political parties in the states are to blame for failing to innovate.

“I would like to see what real reform looks like. What would these programs look like if we really tried to connect people to jobs?” Schott said.

As for the “benefits cliff,” Schott said it’s clear that going over the cliff does harm, but what is less clear is how much, if at all, benefit cliffs influence the behavior of welfare recipients. She said to her knowledge, the behavioral aspects have not been researched.

“It’s a penalty, but we don’t know whether it affects how people make decisions about their lives,” Schott said.

MAINE’S CLIFF LESS STEEP

But compared to some states, Maine’s TANF benefit cliff is much less steep.

For instance, in some states, TANF is fairly generous at the beginning, but then most people are quickly dropped from the system, far ahead of the 60-month time limit. In Missouri, for example, a family of three earning up to $13,400 can qualify for TANF, but after one year can only earn $4,572 and still qualify.

Schott said the cumulative effect of benefit cliffs from various programs, including child care or housing vouchers – such as what happened to Hart when she landed her first job – can also be a hardship for families trying to escape poverty.

The lack of child care subsidies especially, Schott said, is a barrier to work.

Bill Hager, public policy director for the Alliance for Children’s Care, a nonprofit advocacy group, said a federal block grant that helps families with child care subsidies is underutilized and has been cut back in recent years. He said there are disincentives built into the system when families apply for vouchers – which Gattine’s bill attempts to address – as well as a benefit cliff worth hundreds of dollars to families that better themselves and earn more money and no longer qualify for the subsidies.

The bureaucratic problems on the front end of the system – when applying for vouchers – have discouraged families from applying and reduced the number of day care providers willing to accept families with the vouchers, Hager said.

For Hart, she’s glad her family made it out of poverty, but she will always remember where she came from.

“I still get emotional thinking about the first day we got the keys to our house, going in, walking through the rooms and feeling overwhelmed at the moment, knowing what it took to get there,” Hart said.

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