San Francisco’s Response to Welfare Reform Combines New Strategies, Initiatives, Ordinances

January 24, 2000

In October 1996, following the passage of the federal welfare reform legislation, San Francisco Mayor Willie Brown formed a Welfare Reform Task Force to develop recommendations on how the City could best assist families affected by the new law. The 120 community representatives and 60 City staff representatives comprising this Task Force reflected the numerous, diverse constituencies for which San Francisco is so well known.

The Task Force’s 200-plus-page report, issued in May 1997, expressed the group’s serious concerns with welfare reform and contained an urgent appeal for a safety net for those facing a loss of support. It also contained an agenda for labor market changes needed to improve the economic prospects of the City’s lowest income residents. This report became the blueprint for San Francisco’s comprehensive response to welfare reform, elements of which include the following:

Refocused Community Development

Based on public hearings held concurrent with the meetings of the Welfare Reform Task Force, the Mayor’s Office of Community Development determined that both government and community organizations “must fundamentally change the way we are doing business in order to achieve tangible and meaningful community outcomes.” New community development principles in support of workforce development were adopted – e.g., “support integrated and comprehensive community services....strengthen opportunities for employment” – and in 1998, the Office invited organizations submitting proposals for Community Development Block Grant funding to begin redesigning their programs and practices consistent with these principles.

In 1999, the Office’s request for proposals continued the emphasis on workforce development and broadened the definition of eligible activities to include “those that contribute to comprehensively preparing economically disadvantaged individuals for employment, and/or supporting individuals and/or their family members in making a successful transition to employment.” This signaled that community organizations could begin applying their CDBG funds to problems as diverse as domestic violence, child and youth mental health, child care and housing in an integrated manner that supported families moving toward economic self-sufficiency.

Consolidated, Performance-Based Contracting

The scope of the cooperative working relationships among the City’s departments and agencies is seen in the blending of nearly all employment and training funds in a single fund administered by the Private Industry Council. The City’s memorandum of understanding with the PIC encompasses funds from the California Work Opportunity and Responsibility to Kids (CalWORKs) program which replaced the State’s previous welfare program, federal Welfare-to-Work grants, the Job Training Partnership Act, and the City’s general fund.

Most of the funds expended through the PIC are tied to performance benchmarks. A fixed contract fee is paid in increments to service providers when a participant is enrolled in training, completes training, is placed in a job paying at least $6.50 per hour, remains in employment for 90 days, and remains in employment for 180 days.

Community Jobs Initiative

CalWORKs requires that, if they are not working after the initial 18- to 24-month period of eligibility, participants receiving assistance must be engaged in community service. Concerned that this community service not take place in a punitive, workfare-style program, the City created a pilot project, the Community Jobs Initiative, in which the Department of Human Services contracts with three nonprofit organizations to place welfare recipients in transitional employment with government or nonprofit agencies. With the PIC serving as the employer of record and handling all payroll functions, the various funding streams involved, including CalWORKs cash benefits, are converted into regular pay at the State minimum wage. This enables participants to take advantage of the Earned Income Tax Credit, which further supplements their income.

The Community Jobs Initiative started in January 1999 and by July there were 50 participants. It will build to 200 participants and, if successful at this level, will serve as the chief means of meeting the CalWORKs community service requirement.

First Source Hiring Ordinance

Enacted in 1998, the First Source Hiring Ordinance was designed to help the City better anticipate training needs and enhance job access for those frequently not reached through traditional hiring efforts, including persons eligible for services under JTPA and those at risk of relying on or returning to public assistance.

An employer becomes subject to the new ordinance when he or she enters into a contract with the City for $350,000 or more in construction or $200,000 or more in services. The first source hiring agreement between the City and affected employers sets low income hiring and retention goals for entry level positions and establishes an “exclusivity period” during which economically disadvantaged individuals are given first access to these positions. The length of the exclusivity period, negotiated with each agreement, cannot exceed 10 days. If it is determined that an entry level position has been improperly withheld from the first source hiring process, a financial penalty must be paid by the employer.

A First Source Hiring Administration was established by the City to oversee implementation of the ordinance; core members include the Mayor’s Directors of Community Development, Economic Development and Human Services, the President of the PIC, and representatives of other City departments and government agencies.

Mayor Brown has noted that “San Francisco’s coordinated, comprehensive and humane approach to welfare reform has made a difference in the lives of hundreds of families. We are proud that we have been able to build community consensus and provide true exits from welfare and poverty.”

Additional information on San Francisco’s response to welfare reform is available from Pamela David at (415) 252-3100. Case studies of community development initiatives following welfare reform in San Francisco and three other cities are available from the National Community Development Association at www.ndcaonline.org/cdti

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