Background on TANF
Temporary Assistance for Needy Families (TANF) is a block-grant program from The Personal Responsibility and Work Opportunity Reconciliation Act of 1996. It is designed to be part of the national safety net, providing block grants to states, territories, and tribes for services, benefits, and administrative costs.
TANF replaced Aid to Families with Dependents (AFDC) in 1996, removing entitlement from the program with the stated purpose of overcoming “welfare dependency” and increasing independence.
Stated objectives of the TANF Program include:
- Provide support for low-income families for care of children in their homes
- Limit welfare dependence by promoting employment and marriage
- Strengthen the formation of stable two-parent families
- Decrease the amount of out-of-wedlock pregnancies
Use of funds to meet these broad objectives varies greatly among states, which have large discretion over the distribution of funds and how to implement their programs. Key uses of funds include income assistance, childcare assistance, job training, transportation assistance, and other services. In order to continue receipt of funds, states must demonstrate a Maintenance of Effort (MOE) Requirement, in which they are obligated to spend 75 to 80 percent of the amount they spent prior to the 1996 reform.
Although state programming varies greatly, a restriction that most states follow the five-year time limit for families to receive TANF assistance. However, states are permitted to legislate shorter terms or provide limited extensions. During the five-year time period, adults must demonstrate that they are engaged in work-related activities, such as job preparedness, job search or direct employment. Additionally, federal law requires that documented immigrants must wait up to five years to apply for TANF benefits.
In the first few years after Welfare Reform, TANF caseloads dropped, the percent of employed single mothers rose, and child poverty decreased during a time of national economic growth. However, after an economic lull in 2001, employment among single mothers declined, while childhood poverty rose. During this time, welfare rolls continued to decline. Studies have shown that prior to the 1996 Welfare Reform, AFDC covered up to 80 percent of eligible families, a figure that dropped to 40 percent in 2005. A focus on welfare-roll reduction—instead of poverty reduction—may have contributed to this drop, as states limited their share of TANF recipients.
Many families left welfare rolls with a successful transition to employment, especially in the late 1990s. However, many families have not had this experience, especially during the “jobless recovery” and during the recent recession. It is estimated that 87 percent of the caseload reduction between 1995 and 2005 was due to eligible families not receiving TANF funds, as opposed to the much smaller percentage of families that rose above income eligibility.
The causes for such a high percentage of income eligible nonparticipating families vary greatly. Families are deflected from the cumbersome application process altogether, whereas others may reach the five-year limit or choose not to apply in order to save TANF for a period of greater need. Others are sanctioned off of the program for various reasons, which may include incompliance with work requirements. In many cases, incompliance or the decision not to apply may be due to barriers to employment that families encounter, such as domestic violence, disability, substance abuse, care of infants, educational limitations and others. Roughly 11 percent of these eligible families have experienced being “disconnected,” off of welfare and unemployed, and living off of very low incomes. Thus, the share of families receiving cash assistance was historically low in 2007, and within this figure, over half accounted for child-only recipients. Specifically, the percentage of poor children receiving TANF cash assistance in 2007 was 24percent, whereas in 1997, the figure was 55 percent.
The work-first aspect of the legislation has also proved challenging, as many state programs direct individuals into low-wage or part-time positions with limited option for advancement. The limited income from these positions disallows employees from independently rising out of poverty. These positions were also among the greatest hit when employers began to cut back on employees in 2008 and 2009.
TANF was reauthorized in 2005 under the Deficit Reduction Act, after a series of short-term extensions following its scheduled 2002 reauthorization date. Modifications were made to the program, but these improvements did not adequately prepare TANF for the economic recession. Throughout the recent recession, the share of TANF recipients rose only slightly, especially in comparison to other government assistance programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps). The objectives of TANF to increase job participation proved challenging as unemployment continued to rise and job availability for such individuals declined.
In addition to implementation roadblocks, the TANF Block Grant has not been adjusted for inflation from its $16.57 billion allotment in 1996. This has caused the program to depreciate in value by 26percent. As of 2008, only one state provided adequate assistance to bring yearly family income above the federal poverty level. Most states have increased their average TANF benefit, but the additional funds have not kept up with inflation.
The TANF Emergency Contingency Fund
A two billion dollar contingency fund included in the 1996 legislation was used little until the recent recession. Additionally, in response to the economic downturn, Congress passed the American Recovery and Reinvestment Act of 2009, which included passage of the Emergency Contingency Fund for TANF. Under this provision, the federal government will reimburse states for 80 percent of expenditures above their annual block grants for basic assistance, non-recurrent short-term payments, and subsidized employment. This is a temporary provision for 2009 and 2010, capped at total expenditures of five billion dollars.
The Emergency Fund has proved useful in several states for job creation through its subsidized employment program, as well as through the extra cash flow that families have under basic cash assistance to invest in the local economy. As of March 25, 2010, 26 states applied for and received funds, mainly for wages, with a goal to create over 120,000 jobs by September. However, the Emergency Fund is scheduled to expire on September 30, which has caused many states to be hesitant