Generosity as 'Welfare Magnet' Is Debated : Aid: Officials fear that cuts in one locale will send families in search of better benefits elsewhere. The result could be a 'race to the bottom' among states.

By BARBARA VOBEJDA

Oct. 1, 1995 12 AM PT

WASHINGTON POST

MINNEAPOLIS — It was word of Minnesota’s generosity that made Allena Volante pack up her 6-year-old daughter and leave suburban Dallas last summer. She said she believed that she would find here what she could not in Texas: social programs that could ease her life as a struggling single mother.

“I didn’t want to come,” she said, “because it’s too cold.”

But her sister, a Minnesota resident, told her that Volante could qualify for state medical assistance here.

“Medical was the biggest reason I came,” she said, describing how her asthma would send her to the emergency room and leave her with a $3,000 bill she could not begin to pay.

Although she was working as a data-entry clerk in Texas, she could not get insurance through her employer and “it wasn’t worth the hassle” to apply for Medicaid because she did not believe that she would qualify. In fact, eligibility standards for Medicaid are more generous in Minnesota than Texas and Minnesota also offers a separate public assistance program to pay medical bills for those in need.

Studies show that families like Volante’s, who move solely in pursuit of higher welfare benefits, make up a small fraction of the thousands of newcomers to Minneapolis each year. But that handful is driving a contentious debate over whether the state, with its unstinting package of social programs, has become a “welfare magnet” for the poor from states with lower benefits or tougher eligibility requirements.

That question, which has echoed for years through Minnesota politics, is resounding into a national debate, with the Senate resuming consideration of legislation that would allow states much greater freedom to design their own welfare programs.

Many researchers argue that under the pending bills, the disparities among state welfare benefits will increase dramatically, and that could encourage more welfare families to uproot themselves in search of bigger checks.

That could put pressure on lawmakers, worried that their states may become welfare magnets, to cut benefits. And that, many argue, could set off a desperate competition among the states.

“States don’t want to be the ones stuck with all the poor welfare mothers,” said University of Michigan demographer William Frey. Although Frey said he does not believe that many people move today for welfare benefits alone, he cautioned that could change under the proposed bills.

Frey and other experts say even if the number who actually move for this reason remains relatively small, that will be less important than the fear of becoming a magnet. “What I think is a myth could get to be accepted, and that will drive policy,” he said.

Like other predictions of how states will behave under a dramatic federal welfare overhaul, this scenario is hotly contested. Everyone agrees that much would change if the Republican legislation becomes law, ending the longstanding system under which eligible poor are guaranteed benefits and the federal government automatically matches state spending on welfare and Medicaid costs.

But supporters of the GOP legislation say that replacing the federal role with “block grants”--lump-sum payments to the states--will not trigger a rapid “race to the bottom” among states.

“Each state has a history with the program . . . part and parcel of the state’s culture in dealing with at-risk families,” said Gerald Whitburn, secretary of the Massachusetts Executive Office of Health and Human Services. “My instinct is that they won’t be turned upside down overnight under any circumstances.”

Nevertheless, some states are already looking for ways to avoid drawing the out-of-state poor. Wisconsin and California received permission from the federal government to pay newcomers who apply for welfare in certain counties at the level of benefits they would have received in their previous state. The California program was struck down by a federal appeals court on grounds that it was unconstitutional.

Minnesota, where a similar statewide law was struck down in federal court last year, is preparing to request a federal waiver to institute such a program on a limited basis. In Hennepin County, which includes Minneapolis, some welfare families who have come from out of state are offered a free bus ticket if they want to leave, county officials said.

“There is a growing political recognition that an import policy is not acceptable,” said Minnesota Gov. Arne Carlson.

That fear has prompted Hennepin County to look carefully at its welfare caseload. A 1993 study found that about 40% of welfare applicants had moved to the county within the previous year, most from out of state. Of those, this and other studies concluded, about 7% may have moved because of higher welfare benefits, a figure derived by surveying new applicants and studying migration data.

In Minnesota, the maximum grant for a parent and two children was $532 a month under Aid to Families with Dependent Children, the nation’s basic cash welfare program. That compared with $367 in Illinois, the source of many of Minneapolis’ newcomers. But welfare officials point out that families in states with low payments receive more in federal food stamps than those in high-benefit states, narrowing the gap.

Even those who come seeking higher benefits often cite a mixture of reasons for choosing Minnesota. Volante said her prime reason for moving was to get medical coverage, but she also had a sister here to live with and a niece to baby-sit Volante’s daughter, Jaquita.

Within a week of her move, Volante had found a job as an inspector at a manufacturing plant, where she said she earns $9.50 an hour. But she said she isn’t eligible for health coverage through her employer for a year and even then the premiums for herself and her daughter would be prohibitive--$260 a month.

So Volante, who has never married and receives no child support from Jaquita’s father, is applying for Medicaid or, failing that, the state’s medical assistance program for the working poor.