Mr. CHABOT. Thank you, Mr. Frank. I appreciate that. Any Members on the Republican side that would like to make an opening statement? If not, we will go to the introduction of the witnesses. I would like to apologize for the heat in this room. I know some of you probably figure the Federal Government has run out of money. That is not true. We still got a little bit left. We are trying to get the air conditioning working in here, but unfortunately, it is very hot, we apologize for that. We will now introduce the witnesses and then go to their testimony.

Our first witness this morning is Dr. Amy Sherman. Dr. Sherman is a senior fellow in the Welfare Policy Center of the Hudson Institute. Dr. Sherman is the author of The Growing Impact of Charitable Choice, the first major national study of the charitable choice provisions of the 1996 welfare reform law. She is also the author of Restorers of Hope: Reaching the Poor in Your Community With Church Based Ministries That Work, and a booklet entitled Establishing a Church Based Welfare-to-Work Mentoring Ministry, a Practical How To Guide. Along with her research working at the Hudson institute Dr. Sherman serves as the urban ministry advisor at Trinity Presbyterian Church in Charlottesville, Virginia.

Our next witness will be Reverend Donna Lawrence Jones of the Cookman United Methodist Church in north Philadelphia, an urban church where more than 95 percent of its members live within walking distance. Reverend Jones gives hope to those within her intimate community by helping to run a welfare-to-work program for women called Transitional Journey Ministry.

Our third witness is from my home town of Cincinnati where he has done tremendous work serving and inspiring those in need. He is Charles Clingman, executive director of Jireh Development Corporation, an initiative of Christ Emanuel Christian fellowship and Bishop Michael E. Dantley that builds houses for people with low to median incomes. Mr. Clingman has also helped serve thousands as part of the Exodus Program, which teaches people how to hold down a job, manage a budget and become self-sufficient.

The Exodus Program is comprised of 21 employees representing seven different churches in the Cincinnati area. I have known Mr. Clingman for many years going back to my days in the Cincinnati city council. I am pleased that the Committee will have an opportunity to learn more about some of the cutting edge programs he is working on to assist people in our community.

Our fourth and final witness is Reverend J. Brent Walker, executive director of the Baptist Joint Committee on Public Affairs. Reverend Walker is also an adjunct professor of law at the Georgetown University Law Center.

Mr. CHABOT. Thank you for being here this afternoon. And I would ask that each of you please try to summarize your testimony in 5 minutes or less. And without objection, your witness statement will be made part of the permanent hearing record.

We will keep the record open for 10 days in case any of the panel members would like to supplement their testimony, or in case any of the Members of the Subcommittee would like to enter a statement into the record.

And you will note that there are two sets of lights up there, and essentially the red light means—the yellow light will tell you you

have 1 minute to wrap up, and then when the red light comes on, we appreciate that you would wrap up as quickly as possible because that means the 5 minutes is up. We again want to thank all the witnesses for coming and we will start with Dr. Sherman.

STATEMENT OF AMY SHERMAN, SENIOR FELLOW, WELFARE POLICY CENTER, HUDSON INSTITUTE

Ms. SHERMAN. Thank you for the opportunity to comment on the implementation of existing charitable choice programs. My remarks are based on analysis from a nine-State study of charitable choice implementation as well as additional research I have conducted in the past few years.

Charitable choice aims to create a level playing field between secular and religious social service providers competing for public funding. And it was designed in part to facilitate increased collaboration between government and faith-based organizations without compromising the religious character of the service providers or abridging the civil liberties of clients. Based on my study of charitable choice implementation in the nine States, I concluded that charitable choice is, in fact, accomplishing those aims.

First, it has made church-state collaboration plausible to public officials and religious leaders. It has served as a sort of green light to public officials who now feel more comfortable reaching out to the faith community because Washington has given its blessing to such cooperation.

Second, interviews with faith and government representatives working collaboratively indicated that religious groups accepting public funding are not having to sell their souls, and their clients civil rights are being respected. The study uncovered almost no examples of faith-based organizations that felt their religious expression had been squelched in their collaborative relationship with government. And out of the thousands of service recipients engaged in programs offered by faith-based groups collaborating with government, interviewees reported only two complaints by clients who felt uncomfortable with the religious organization from which they received help.

And in both cases in accordance with the charitable choice guidelines the client simply opted out of the faith based program and enrolled in a similar program operated by a secular provider.

Third, charitable choice is indeed stimulating new partnerships. Over half of the faith-based organizations receiving government funding in these nine States had had no previous history of collaborating with government. And thus we see the traditional social service network as being broadened with the inclusion of new players. Moreover, and importantly, these new players are doing new things, that is, in their collaboration with government, some churches and faith-based organizations are offering to low income citizens services that they had not previously offered. The bottom line in terms of the news from the front lines about implementation is simply this: so far, so good.

Let me comment now on a few specific topics of interest to the hearing. In terms of the actual scope of contracting with regard to the nine-State study, I uncovered 84 examples of financial collaboration, crafted since 1996, and the total dollar amount of those con

tracts was about $7.5 million. Wisconsin, California, Texas and Michigan were the most active States.

In addition to those activities in the nine States, I have uncovered examples of charitable choice collaboration in seven additional States: Arkansas, Indiana, Maryland, North Carolina, Ohio, Washington, and West Virginia, and the total amount of contracting with faith-based groups for those States equaled approximately $60.7 million.

Most of these contracts are underwritten with funds from the TANF block grant or from the Department of Labor's welfare-towork program.

In terms of the types of services offered by far in the nine-State study, mentoring and job training efforts were the most popular programs being funded through these new contracts. Third, we could ask "Well, what difference really is charitable choice making? Are faith-based groups doing services that they might have done otherwise anyway with private funding?"

In terms of this, what we can note from the nine-State study is that there were 71 contracts that government had written with faith-based groups that have not had a previous history of accepting government funding. And out of those 71 contracts, 13 were to underwrite a new service that the faith-based organization had not previously offered. Three were with faith-based groups who, as a result of their contracting, were able to offer an expansion of old service.

And finally, in terms of lessons learned on the ground, I think we can cite two very obvious ones. One is that there exists a tremendous need to educate public officials about charitable choice. And that officials need to be held accountable to actually comply with charitable choice.

The other lessons are a little less obvious. One is simply to recognize that direct financial collaboration between government and faith groups is just one means of cooperation. The study uncovered many examples of fruitful nonfinancial collaboration. Another is to note that perhaps the best mechanism of collaboration reported by the interviewees was that of indirect financial contracting, wherein the government would write a contract with a strategic intermediary organization which then turned around and wrote subcontracts with smaller individual faith-based organizations and congregations.

Another lesson from the study was that we uncovered no examples of a client being unable to exercise his or her right of receiving services from an alternative secular provider. Now, hypothetically, in the future this could be a problem, but it has not to date presented itself as a problem.

And then finally, it seems that charitable choice contracting is not for everyone. Some faith-based organizations lack the administrative capacity. Others don't wish to pursue government funding out of certain theological convictions. But the data does suggest so far that for many other faith-based organizations, collaborating with government may indeed be a fruitful strategy that strengthens their ability to lovingly assist vulnerable citizens to achieve their highest potential.

Mr. CHABOT. Thank you very much, Dr. Sherman.

[The prepared statement of Amy Sherman follows:]

PREPARED STATEMENT OF AMY L. SHERMAN

GENERAL COMMENTS

Thank you for this opportunity to comment on the implementation of existing Charitable Choice programs. My remarks are based on observations and analysis from the research I have been conducting on this subject for the past four years. First, I will make some general comments based on my study of charitable choice implementation in nine states (CA, IL, MA, MI, MS, NY, TX, VA, and WI) and then offer some specific comments on several topics of interest to this subcommittee.

Charitable Choice aims to create a level playing field between secular and religious service providers competing for public funding and was designed in part to facilitate increased government-faith collaboration without compromising the religious character of the service providers or abridging the civil liberties of clients. Based on my study of charitable choice implementation in the nine states, I concluded that charitable choice is accomplishing those aims:

First, it has made church-state collaboration plausible to public officials and religious leaders. Charitable choice has served as a “green light" to public officials who now feel more comfortable reaching out to the faith sector because "Washington has given its blessing" to such collaboration. Meanwhile, religious leaders who mistakenly believed that the principle of separation of church and state made financial collaboration improper have discovered within charitable choice a formal approval of such collaboration.

Second, interviews with faith and government representatives working collaboratively indicated that religious groups accepting government funding are not having to sell their souls, and clients' civil rights are being respected. The study uncovered almost no examples of faith-based organizations (FBOs) that felt their religious expression had been "squelched" in their collaborative relationship with government. Also, out of the thousands of service recipients engaged in programs offered by FBOs collaborating with government, interviewees reported only two complaints by clients who felt uncomfortable with the religious organization from which they received help. In both cases-in accordance with the charitable choice guidelinesthe clients simply opted out of the faith-based program and enrolled in a similar program operated by a secular provider.

Third, Charitable Choice is stimulating new partnerships. Over half of the FBOs currently receiving government funding to underwrite new initiatives to serve the poor in the nine states I examined had no previous history of government contracting. Thus, the traditional social services network is being broadened with the inclusion of "new players." Moreover, and importantly, these new players are doing new things. That is, in their collaboration with government, churches and FBOs are offering low-income citizens services they had not previously offered. In most instances, these religious groups have shifted from merely providing commodities to the poor (e.g., used clothing or free groceries) to working with struggling individuals intensively, face-to-face, through mentoring and job training programs.

The bottom line, in terms of the news from the frontlines of the implementation of charitable choice is simply this: so far, so good.

SPECIFIC COMMENTS

Allow me now to comment on several specific topics of interest to this hearing. First, what is the scope of state and local efforts to implement charitable choice in terms of writing contracts with faith-based organizations?

With regard to my study of the nine states, I uncovered 84 examples of financial collaborations crafted since 1996.1 The total dollar amount of these contracts equaled approximately $7,518,667 and through these initiatives approximately 3,000 lower-income citizens were being served.2 (See Table A.) Notably, 57 percent of these collaborations were between government agencies and FBOs that had had no previous history of receiving government funds; thus my earlier comment that charitable choice has indeed brought "new players" into the arena of government-supported social services. WI, CA, TX, and MI were the most active states in fostering

1 That is, financial contracts underwritten by TANF or Welfare to Work funds (as these are regulated by Charitable Choice). The study did not examines FBO contracts written with HUD or other government funds not covered by Charitable Choice.

2 See Table A for more details.

new collaborations with FBOs, and the most common types of social services the FBOs were offering were mentoring and job training.

In addition to activities in these nine states, I have uncovered examples of charitable choice collaborations in seven other states: AR, IN, MD, NC, OH, WA, and WV. The total amount of contracting with FBOs I uncovered for these states equaled $60,669,000. I have not done an exhaustive survey and thus cannot say with certainty whether charitable choice contracting is also occurring in additional states. According to a recent survey of states conducted by the Associated Press, 31 states and the District of Columbia have awarded no government contracts "to religious groups who would have not been eligible" prior to charitable choice.3 Based on the knowledge available, it is reasonable to conclude that roughly two-thirds of states have not pursued new financial contracting opportunities with FBOs under charitable choice. Such a conclusion also fits with what we know about charitable choice compliance by the states. According to the Center for Public Justice's National Charitable Choice Report Card, 37 states and the District of Columbia received a failing grade of "F." This grade indicates that these states have not made the necessary changes in their procurement procedures and contracting language that would bring them into compliance with the charitable choice guidelines.4

Table B provides some data drawn from a variety of news reports concerning additional contracting activities occurring in the nine states and other states. For all the states except MD, NC, and WV, these figures concern the total amount of contracting with FBOs; i.e., they count not only those contracts written with organizations new to formal public collaboration but also those with a history of receiving government funds. As Table B indicates, the total of these contracts comes to $60,669,000.

Thus, I estimate that the total amount of contracts in these 15 states, written both with FBOs new to financial collaboration with government and FBOs with previous government contracts, equals approximately $68,187,667.000.5

However, the figures we are most interested in when we pose the question, “How much charitable choice contracting is actually happening?," are those that tell us about the scope of contracting with FBOs that are new to the arena of formal government collaboration. After all, Charitable Choice proposes to create a level playing field for faith-based providers of social services in the competition for public funding; it is about providing equal access to organizations that desire to preserve their religious identity and character when receiving public dollars. Therefore, in Table C, I have provided an estimate of the total of contracting between government agencies and these "new players" in the nine states of my original study. The grand total of such contracts for these nine states equaled $5,029,755. This means that, of funds undergirding all the financial contracts these nine states wrote with FBOs, approximately 67 percent of the dollars went to FBOs that were not part of the traditionalsome would say "old boys" network' of religiously affiliated social service providers. Finally with regard to the scope of contracting, it should be noted that the vast majority of contracts uncovered in the study were those funded under the TANF (Temporary Assistance to Needy Families) program. The rest were funded under the Department of Labor's Welfare to Work program. I found no instances of contracts with FBOs written under the CSBG (Community Services Block Grant) or SAMHSA (Substance Abuse and Mental Health Services Administration) programs (these are the other two federal funding streams currently regulated by charitable choice).

The second topic of interest concerns the nature of services being provided to the poor through these government-faith collaborations. By far in the nine states studied, mentoring and job training efforts were the most popular programs being funded through contracts with "new" FBOs. From the information available regarding contracting in other states besides those nine, again mentoring and job training services topped the list. That is not to say, however, that these are the only services being offered. Under charitable choice, FBOs are also providing transportation services, life skills training, shelter and counseling for the homeless, and substance abuse recovery programs.

3 "State participation in charitable choice," The Associated Press, Washington Dateline (March 20, 2001). It should be noted, however, that in four of the 31 states, at least one government contract with a faith-based organization under federal funding streams regulated by Charitable Choice have been identified.

4 "Charitable Choice Compliance: A National Report Card," (Annapolis, MD: The Center for Public Justice, 2000).

5 These figures, of course, do not tell us much about the relative amount of faith-based contracting occurring in these states. I.e., there are gaps in our knowledge about the proportion of contracts written with FBOs relative to the total amount of state contracting activity. See appendix A for a brief survey of contracting in WI that attempts to shed light on the relative amount of faith-based contracting there.