The Center's work on 'Federal Policies' Issues


TANF at 18: A Weakened Role and Not a Model for Safety Net Reform

August 22, 2014 at 10:08 am

Eighteen years ago today, President Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 — commonly known as “welfare reform.”  A key component was its creation of the Temporary Assistance for Needy Families (TANF) block grant to replace Aid to Families with Dependent Children (AFDC).

Since then, TANF has played a shrinking role as a safety net for poor families (see chart), serving a small share of poor families and lifting many fewer families out of “deep poverty” (with incomes below half the poverty line) than AFDC did, as we explain and illustrate in our revised chart book.

A close look at TANF’s track record makes it clear that the program needs retooling to ensure that a strong safety net and sufficient employment assistance is available when people need them most.

Yet some policymakers claim that welfare reform was such an extraordinary success that we should use it as a model for reforming other safety net programs.  But the facts don’t make that case.  For example, in TANF’s 18-year history, never-married mothers with a high school education or less made substantial gains in employment in only the first four years — largely due to the roaring economy of the late 1990s — and those gains have almost entirely eroded in the subsequent 14.  It is wishful thinking to assume that we could see the same employment gains we saw in TANF’s early years in today’s sluggish labor market.

The safety net (other than TANF) plays an extremely important role in reducing poverty and deep poverty in this country — a role that should be maintained.  The evidence from TANF suggests that applying TANF-like reforms to other safety net programs would likely cause more families to join the ranks of the deeply poor and cause some who are already deeply poor to become even poorer.

TANF reform is long overdue.  We should fix its problems before embarking on reforms that will repeat its failures.

Click here for the full chart book.

Ryan Roundup: What You Need to Know About Chairman Ryan’s Poverty Proposal

July 25, 2014 at 4:42 pm

We’ve compiled CBPP’s analyses and blog posts on House Budget Committee Chairman Paul Ryan’s new poverty proposal.  We’ll update this roundup as we issue additional analyses.

  • Blog Post: Why the Ryan Plan Should Worry Those Concerned About the Affordable Housing Crisis, Part 2
    August 5, 2014
    House Budget Committee Chairman Paul Ryan’s proposal to consolidate 11 safety net and related programs, including the four largest federal rental assistance programs, into a single block grant to states risks significant funding cuts to housing assistance that helps 4.7 million low-income families.  The combination of those cuts, and the possible elimination under Ryan’s plan of program rules that ensure housing stability and affordable rents, could undercut rental assistance programs’ effectiveness and put substantial numbers of vulnerable families at risk for homelessness.
  • Blog Post: Why the Ryan Plan Should Worry Those Who Are Concerned About the Affordable Housing Crisis, Part 1
    July 31, 2014
    A centerpiece of House Budget Committee Chairman Paul Ryan’s poverty plan is the proposal to consolidate 11 safety net programs — including four housing assistance programs — into a single, flexible block grant to states.  Among its downsides, this proposal threatens to lead to reductions in funding that provides housing assistance to millions of low-income families and individuals.
  • Blog Post: What Difference Would Ryan’s EITC Expansion Make for Childless Workers?
    July 29, 2014
    We’ve explained that House Budget Committee Chairman Paul Ryan’s proposed expansion of the Earned Income Tax Credit (EITC) for childless adults, including non-custodial parents, would encourage work and reduce poverty.  Our interactive chart allows you to compare the EITC that childless workers at different income levels would earn under current law and under the Ryan expansion, which mirrors a proposal from President Obama.
  • Blog Post: Ryan’s “Opportunity Grant” Would Likely Force Cuts in Food and Housing Assistance
    July 29, 2014
    House Budget Committee Chairman Paul Ryan maintains that consolidating 11 safety-net and related programs into a single “Opportunity Grant” would give states the flexibility to provide specialized services to low-income people.  But providing these additional services would require cutting assistance funded through the Opportunity Grant to other needy people.  And because SNAP (formerly food stamps) and housing assistance together make up more than 80 percent of the Opportunity Grant, the cuts would almost certainly reduce families’ access to these programs, which are effective at reducing poverty — particularly deep poverty.
  • Blog Post: History Suggests Ryan Block Grant Would Be Susceptible to Cuts
    July 28, 2014
    Ryan says that the block grant would maintain the same overall funding as the current programs.  But even if one thought that current-law funding levels were adequate, they likely wouldn’t be sustained over time under the Ryan proposal:  history shows that block grants that consolidate a number of programs or may be used for a wide array of purposes typically shrink — often very substantially — over time.
  • Blog Post:  Why Ryan’s Proposed Work Requirements Are Cause for Concern
    July 25, 2014
    House Budget Committee Chairman Paul Ryan’s new poverty plan predictably showcases the 1996 welfare law, which replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF), as a model for reforming other safety net programs.  For example, states would have to impose work requirements on all recipients of assistance funded through the “Opportunity Grant” — the block grant that would replace 11 safety net and related programs — who are not classified as unable to work.  We have four key concerns about this proposal.
  • Blog Post:  Dean: SNAP Is a Successful, Influential Component of the Safety Net
    July 25, 2014
    SNAP is not only one of the most efficient and effective safety net programs, but it’s also helping improve other programs, CBPP’s Stacy Dean told a House Agriculture subcommittee.
  • Commentary:  Ryan “Opportunity Grant” Proposal Would Likely Increase Poverty and Shrink Resources for Poverty Programs Over Time
    July 24, 2014
    A centerpiece of House Budget Committee Chairman Paul Ryan’s new poverty plan would consolidate 11 safety-net and related programs — from food stamps to housing vouchers, child care, and the Community Development Block Grant (CDBG) — into a single block grant to states.  This new “Opportunity Grant” would operate initially in an unspecified number of states.  While some other elements of the Ryan poverty plan deserve serious consideration, such as those relating to the Earned Income Tax Credit and criminal justice reform, his “Opportunity Grant” would likely increase poverty and hardship, and is therefore ill-advised, for several reasons.
  • Blog Post:  Ryan Adds Momentum to Expanding EITC for Childless Workers
    July 24, 2014
    House Budget Committee Chairman Paul Ryan highlighted the Earned Income Tax Credit as one of the most effective anti-poverty programs and joined growing bipartisan calls to expand it for childless adults (including non-custodial parents), the lone group that the federal tax system taxes into poverty.  We applaud this step, though we encourage him to reconsider some of his proposals to offset the cost — which would hit vulnerable families — and his opposition to a much-needed increase in the minimum wage.
  • Blog Post:  Ryan’s Rhetoric Doesn’t Match His Proposal’s Reality
    July 24, 2014
    House Budget Committee Chairman Paul Ryan left the impression that his proposed Opportunity Grant will allow low-income individuals to get income assistance as well as help they may need to go to school, get off drugs, and succeed in the workplace.  That picture, however, doesn’t reflect the reality of his proposal.

We also issued several pieces ahead of Chairman Ryan’s announcement of his proposal:

  • Analysis:  Deep Poverty Among Children Worsened in Welfare Law’s First Decade
    July 23, 2014
    Since the mid-1990s, when policymakers made major changes in the public assistance system, the proportion of children living in poverty has declined, but the harshest extremes of child poverty have increased.  After correcting for the well-known underreporting of safety net benefits in the Census data, we estimate that the share of children in deep poverty — with family income below half of the poverty line — rose from 2.1 percent to 3.0 percent between 1995 and 2005.  The number of children in deep poverty climbed from 1.5 million to 2.2 million.Blog Post:  Fewer Poor Children Under Welfare Law, But More Very Poor Children
  • Blog Post: CLASP: State Experiences Show Safety Net Programs Don’t Need Massive Overhaul to Work Better
    July 23, 2014
    Olivia Golden of the Center for Law and Social Policy (CLASP) took a closer look at the experiences of six states to debunk common myths about the delivery of safety net programs. . . . Golden explained that the experiences of the six states involved in the Work Support Strategies (WSS) initiative — a project coordinated by CBPP, CLASP, and the Urban Institute that is designing, testing, and implementing more effective, streamlined, and integrated approaches to delivering key supports for low-income working families — offer lessons for how to improve safety net programs.
  • Blog Post:  Why the 1996 Welfare Law Is Not a Model for Other Safety Net Programs
    July 22, 2014
    House Budget Committee Chairman Paul Ryan’s upcoming poverty plan will likely showcase the 1996 welfare law, which replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF) — a block grant with fixed federal funding but broad state flexibility — as a model for reforming other safety net programs.  A careful examination of the record, however, indicates that the 1996 law’s results were mixed and that if the goal is to reduce poverty, especially among the most disadvantaged families and children, there are serious downsides to embracing the 1996 law as a model.
  • Commentary:  Policymakers Often Overstate Marginal Tax Rates — and Understate Trade-Offs In Reducing Them
    July 22, 2014
    Some Washington policymakers are increasingly focused on whether government benefits for low- and moderate-income people create disincentives to work — in particular, when these benefits phase down as the earnings of beneficiaries rise.That phase-down rate is often called the “marginal tax rate” because it resembles a tax — benefits fall as earnings rise.  The relationship between marginal tax rates and disincentives to work is an important issue, one worthy of serious debate.  Some policymakers, however, often overstate the size of marginal tax rates and their impacts on work, and understate the trade-offs in trying to lower these rates.Blog Post:  Understanding Marginal Tax Rates and Government Benefits

Ryan’s Rhetoric Doesn’t Match His Proposal’s Reality

July 24, 2014 at 4:55 pm

House Budget Committee Chairman Paul Ryan left the impression today that his proposed Opportunity Grant will allow low-income individuals to get income assistance as well as help they may need to go to school, get off drugs, and succeed in the workplace.  That picture, however, doesn’t reflect the reality of his proposal.

Chairman Ryan spoke eloquently this morning about “Andrea,” a single mother who needs income assistance in the near term, help finding a job, assistance so she can go to college, and help paying for child care for her two young children while she works and attends school so she can reach her dream of becoming a teacher and climb into the middle class.  He implied that his Opportunity Grant would deliver the package of supports she needs to succeed.

In fact, under Chairman Ryan’s plan, neither Andrea nor anyone else would be guaranteed any assistance.  This means that Andrea could apply for services and be told that she cannot get any help.  Chairman Ryan doesn’t acknowledge that scenario.

To be sure, many kinds of assistance already are limited so that not everyone who’s eligible for assistance gets it — with one important exception.  Today, all eligible poor households can get help to buy groceries through SNAP (formerly food stamps), a form of income assistance that not only helps those households put food on the table but can free up resources so that families — not caseworkers — can decide how to direct their limited incomes.  Chairman Ryan’s plan would no longer guarantee that basic safety net.

And, nothing in Chairman Ryan’s proposal would make it more likely that families in Andrea’s situation would receive that full package of supports unless other needy individuals and families receive significantly less help.  Indeed, states already have flexibility to use Temporary Assistance for Needy Families (TANF, which provides basic income assistance to poor families with children) to put together precisely this package of benefits.  But TANF’s flexibility does not trump its limited resources, and that’s why many single mothers like Andrea can’t get the help they need to make ends meet, find work, go to school, and ensure that their children are safe and well cared for while they juggle work and school.

Today, just 25 of every 100 poor families receive TANF assistance, only 1 in 7 low-income children who qualify for help paying for child care receives it; and just 1 in 4 low-income households that qualify for help paying for housing get it.

Also of note, the service provider structure that Ryan envisions almost surely would require more staff and, thus, would generate higher administrative costs, leaving less funding for assistance and services.

In short, the only way that Chairman Ryan’s plan can provide more assistance, targeted or not, to families like Andrea’s is if some poor households receive significantly less help, with cuts likely coming in help to pay for food and housing — the two largest programs that Ryan would consolidate under the Opportunity Grant.

The case of “Steven,” whom Ryan also highlights, makes the point as well.  A single 19-year-old non-custodial father, Steven is jobless and needs help to get off drugs.  Ryan’s proposal indicates that the Opportunity Grant would help him get drug treatment, move him into transitional housing (a form of subsidized housing), and get him help with attending parenting classes, finding work, and pursuing further education.

These are all needed services, and limited funding keeps many people, particularly adults not living with children and who have the same needs as Steven, from obtaining that help.  But the Opportunity Grant structure would not provide additional resources (and as my colleague Robert Greenstein points out, could well provide fewer resources), so the only way to provide this richer set of supports for Steven is to cut the help that other families receive.

Chairman Ryan skirts this fundamental math.  Consolidating funding streams into a single “opportunity” grant allows him to say that individuals like Andrea and Steven will get a better-targeted suite of supports without saying which families will get less help and how that will affect them.

2009 Recovery Act Kept Millions out of Poverty

February 18, 2014 at 3:06 pm

The Washington Post points out that the 2009 Recovery Act, signed five years ago yesterday, accomplished much more than its critics acknowledge.  When it comes to using the safety net to keep people out of poverty, for example, the Recovery Act was probably the most effective piece of legislation since the 1935 Social Security Act, as our 2011 analysis explained.

Six Recovery Act provisions — three new or expanded tax credits, two expansions of unemployment insurance, and a SNAP (food stamp) benefit expansion — kept 6.9 million Americans out of poverty in 2010.  This estimate uses an alternative poverty measure based on National Academy of Sciences recommendations (a forerunner to the Supplemental Poverty Measure that the federal government now regularly reports) that considers the effect of government benefit programs and tax credits as well as cash income.

As the graph shows:

  • Expansions in the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 1.6 million people out of poverty.
  • The Making Work Pay tax credit, which expired at the end of 2010, kept another 1.5 million people out of poverty.
  • Expansions in unemployment insurance benefits kept 3.4 million people out of poverty.
  • Expansions in SNAP benefits kept 1 million people out of poverty.

These figures total more than 6.9 million in part because some people were kept above the poverty line by more than one program.  The 6.9 million total, though, counts each person only once.

And, as the graph shows, existing (pre-2009) policies to promote family income also kept millions of Americans out of poverty in 2010.

Moreover, these are just the initial effects of government assistance on recipient households.  They don’t show the ripple effect across the economy as government assistance allowed struggling consumers to continue to buy goods and services, despite the crippling recession, contributing to economic growth.

To be sure, these figures don’t mean that government assistance staved off all, or even most, recession-related hardship.  But they show that government assistance kept millions of Americans above the poverty line during the worst economic downturn since the Great Depression.  That’s no small accomplishment.

New Evidence That Subsidized Jobs Programs Work

September 9, 2013 at 3:31 pm

Thirty-nine states and the District of Columbia used $1.3 billion from the TANF (Temporary Assistance for Needy Families) Emergency Fund to place more than 260,000 low-income adults and youth in temporary jobs in the private and public sectors during the Great Recession.  Now, from the Economic Mobility Corporation (EMC), there’s new evidence that these subsidized jobs programs did what they were supposed to do:  help disadvantaged individuals during hard economic times to boost their incomes and improve their chances of finding unsubsidized jobs when the subsidized jobs ended.

The EMC study shows that these programs helped businesses as well as job-seekers weather the worst of the recession.  It found:

  • Participation in subsidized employment programs led to significant increases in employment and earnings. Participants in four of the five programs covered by the study were much more likely to have an unsubsidized job in the year after working in a subsidized job than in the year before joining the program.  The findings from Florida are especially noteworthy because researchers could compare participants with applicants who were eligible for the program but didn’t receive a subsidized job.  There, participants earned an average of $4,000 more in the year after the program than in the year before it, compared to a $1,500 increase for people in the comparison group.
  • The programs were especially effective for the long-term unemployed. In Mississippi and Florida, average annual earnings of the long-term unemployed rose by about $7,000 after participating; in Los Angeles and Wisconsin, they rose by about $4,000.  In all four sites, earnings rose much more among the long-term unemployed than among people who had been unemployed for shorter periods.
  • Employers reported hiring more workers than they would have otherwise and workers with less experience than their usual hires. Two-thirds of the employers interviewed for the study said that they created new positions for subsidized workers.  Over half said they hired people with less work experience than their usual hires. 

  • Most participating employers reported multiple benefits from the program. These included expanding their workforces, serving more customers, and improving their productivity.     

We’ve called the TANF Emergency Fund, which expired three years ago, a “win-win-win” because of its benefits for unemployed people, businesses, and communities.  This new study provides hard evidence of the program’s accomplishments.  It’s not too late to build on that success.

This year, at least five states — Nebraska, Colorado, California, Minnesota, and Rhode Island —expanded state funding or provided new funding for subsidized employment for TANF recipients or other disadvantaged individuals.

Congress should follow their lead.  One place to start would be to redesign the TANF Contingency Fund as an employment fund that states could use to provide subsidized jobs or otherwise invest in evidence-based employment programs that significantly increase the job prospects of people receiving or eligible for TANF.  That would help redirect scarce resources to states with the greatest need for jobs and help create jobs for those whom the tepid recovery has left behind.

Immigration Bill’s “Back Taxes” Amendment Much Harder to Implement than Senator Hatch Suggests

June 14, 2013 at 2:50 pm

As our new report explains, some senators are proposing amendments to the immigration bill that would make its long and difficult path to citizenship far more difficult — in some cases undermining the fundamental goal of enabling undocumented workers to legalize their status.

One such proposal, from Senators Orrin Hatch (R-UT) and Marco Rubio (R-FL), would require immigrants seeking legal status to prove they have paid all of their taxes since they entered the country before adjusting to a legal status.

On the Senate floor Wednesday, Senator Hatch claimed that the IRS is well-positioned to determine such individuals’ tax liability, even when workers lack earnings and tax records:

The IRS is well experienced at estimating the tax liabilities for people who, for whatever reason, lack the records that normally support a tax return. . . .  Using bank records, credit card statements, housing records, and other evidence of an individual’s lifestyle, the IRS is able to construct returns and estimate tax liabilities for nonfilers who are U.S. citizens and resident aliens.  The same process can be used for immigrants looking to certify they no longer owe any Federal taxes.  That is not a tough thing to do…

But the IRS does not routinely try to use such records to guesstimate people’s incomes.  These are extreme methods, which it resorts to in only a very small number of cases each year.

Senator Hatch is essentially arguing that it would be workable — and a good use of taxpayer money — to require the IRS to conduct extensive field audits of very large numbers of undocumented immigrants seeking legal status.

The audits would be very complicated in many cases; many of these workers’ past employers will be difficult to locate, will not have records for cash transactions made years ago, and (for obvious reasons) may be reluctant to cooperate.  Moreover, many of these immigrants likely will not have bank records or credit cards, will have moved many times, and will have been working in the United States for many years or even decades, so reconstructing their records for this entire period could prove extremely difficult.

The IRS’s experience in estimating a family’s income based on its “lifestyle” is largely restricted to a very small number of generally high-income people and small businesses where there is a large disconnect between their reported income and the person’s lifestyle or the business’s spending and the IRS has reason to believe large-scale tax evasion may have occurred.  The IRS has never used this method for large numbers of low-income workers.

Given that an estimated 11 million people are eligible to legalize under the bill, the increased workload for the IRS would be tremendous.  Of the 187 million individual and business tax returns filed in 2011, the IRS examined just 1.7 million — fewer than 1 percent.  Moreover, over 70 percent of these audits were conducted by mail (where information is requested and provided by mail) and were not the complex, intensive audits that Senator Hatch envisions.

Based on the total cost of current IRS enforcement efforts and the number of returns examined each year, each field examination would clearly cost thousands of dollars.  This means that the cost of conducting vast numbers of complicated audits, as Senator Hatch evidently envisions, would run into the billions.

Senator Hatch has not proposed any new funding for the IRS to conduct such audits or indicated that large numbers of new IRS staff would be hired.  If the IRS tried to implement his proposal, it would have to divert a very large portion of its total enforcement resources, probably for a number of years, from enforcement activities that yield a much higher return for the Treasury to auditing millions of legalizing workers, most of whom have modest incomes.

In 2012, the IRS conducted 31,700 field audits of corporations, leading to a total of $20 billion in recommended additional tax assessments — an average of more than $600,000 per review.  When both individual and business field audits are considered, the average tax assessment is close to $60,000.  Diverting IRS resources away from these high-return audits to try to reconstruct earnings records from modest-earning immigrants almost surely would result in a net loss of revenues to the Treasury, not the gain that Senator Hatch suggests.

More realistically, the IRS would never be able to conduct the required audits, so the process of legalizing undocumented workers would grind to a halt for many — leaving the basic goal of the legislation in tatters.  Undocumented workers would remain undocumented and the Treasury would collect less in taxes going forward than if these workers were allowed to come out of the shadows.

Purchasing Power of TANF Benefits Fell Further in 2012

March 28, 2013 at 1:36 pm

Cash assistance for the nation’s poorest families with children fell again in purchasing power in 2012, we detail in our annual update of state benefit levels under the Temporary Assistance for Needy Families (TANF) program.  Most states left their benefit levels unchanged last year, so benefits continued to erode by inflation.

In 37 states, and after adjusting for inflation, benefits are now at least 20 percent below their levels of 1996 — the year policymakers created TANF.

For all states, as of July 1, 2012, benefits for a family of three with no other cash income were below half of the federal poverty line, measured as a share of the Department of Health and Human Services poverty guidelines for 2012 (see map).  Benefits were below 30 percent of the poverty line in the majority of states.

On the other hand, no states cut benefit levels in 2012, and a few took the opportunity to increase the benefit level or to follow through on past commitments to modestly raise benefits or adjust them for inflation.  TANF benefits increased, in nominal dollars, in New York, Ohio, South Dakota, Texas, and Wyoming.

TANF provides a safety net to relatively few poor families:  in 2011, just 27 families received TANF benefits for every 100 poor families, down from 68 families receiving TANF for every 100 in poverty in 1996.  But for the families that participate in the program, it often is their only source of support and without it, they would have no cash income to meet their basic needs.

It’s time for states to halt the erosion of TANF benefits and slowly regain some of the purchasing power that they’ve lost over the past 16 years.

Click here to read the full paper.

TANF Provided a Weak Safety Net During and After Recession

March 4, 2013 at 2:13 pm

Temporary Assistance for Needy Families (TANF), which provides basic assistance to families with little or no income, responded only modestly to the severe recession that began in December 2007, exposing its inadequacy as a safety net, as we explain in a new paper.

We found that:

  • Nationally, the TANF caseload rose only modestly during the downturn and began to decline while need remained high. The caseload did not begin to grow until seven months after the recession started, and it rose only 16 percent before peaking in December 2010 (see chart).  In contrast, the number of unemployed individuals rose 88 percent over this period.  Over the course of 2011, the caseload fell 5 percentage points from that peak, while the unemployment rate remained at or above 8.5 percent throughout the year.

  • Changes in states’ caseloads varied widely. Forty-five states’ caseloads grew between December 2007 and December 2009 but by widely differing amounts, ranging from 2 to 48 percent; in more than half of these states, the increase was 14 percent or less.  After the recovery began, caseloads continued to grow in some states but fell sharply in others.  Between December 2009 and December 2011, 21 states’ caseloads rose from 2 to 56 percent; in 30 states, caseloads fell from 1 to 56 percent.  From December 2007 to December 2011, caseload changes ranged from Oregon’s 81 percent increase to Arizona’s 54 percent decline.
  • Variations in unemployment do not fully explain the variation in state caseload changes. There is no overlap between the ten states with the largest percentage increases in the number of unemployed workers and the ten states with the largest percentage increases in TANF caseloads.  The three states with the largest TANF caseload increases — Oregon, Colorado, and Illinois — ranked 28, 14, and 30, respectively, in the percentage increase in the number of unemployed.  Meanwhile, the three states with the largest TANF caseload decreases — Arizona, Indiana, and Rhode Island — ranked 5, 16, and 23, respectively, in the increase in unemployed workers.
  • In most states, TANF provides a weaker safety net now than it did before the recession. The number of families with children served by TANF for every 100 such families living in poverty fell in 35 states between 2006-2007 and 2010-2011, while it rose in just five states.
  • State actions had a significant impact on TANF caseloads. In response to budget pressures, several states cut TANF benefit levels, shortened or tightened time limits, or made other cutbacks during the recession, contributing to substantial caseload declines.

Our paper on which this post is based is the second in a series on changes in TANF caseloads since the start of the economic downturn.  Click here to read the paper in full, here to read the state-by-state fact sheets, and here to read the first paper in the series.

5 Ways TANF Work Requirements Could Better Promote Work

February 28, 2013 at 4:02 pm

A congressional hearing this morning examined the Administration’s policy of giving states waivers to test new ways to help recipients of Temporary Assistance for Needy Families (TANF) move from welfare to work.  Unfortunately, this focus on waivers takes policymakers’ attention away from what really needs to happen:  improvements in the program’s complex and rigid work requirements, which can force states to design their TANF programs in ways that compromise the goal of connecting recipients to work.

In fact, one of the biggest limitations of the work participation rate — the key measure by which the federal government judges states’ TANF programs — is that states don’t need to move TANF recipients into actual paid work to meet the rate.  TANF is likely the only federal or state employment program in which getting participants into paid employment is not a key measure of success.

Many states say that, with more flexibility, they could operate more effective work programs.  As we explain in a new paper, policymakers have several options to give states more flexibility while strengthening the work provisions and making them more effective.

  1. Give states the option to be accountable for employment outcomes (i.e., jobs) instead of the work rate. Policymakers could empower the federal Department of Health and Human Services (HHS) to authorize a limited number of demonstration projects that would give states that option.  Such a demonstration project would give states the flexibility to design work requirements that better reflect the needs of their TANF caseload and take account of local labor market needs.
  2. Simplify the work requirements and reduce paperwork burdens. States spend lots of time tracking what activities can count toward the work rate and how many weeks or months individuals have already participated — as well as verifying every hour of participation.  They could better spend the time focused on improving employment outcomes.  Simplification efforts could include streamlining countable activities by easing complex limits on when certain activities can count, and allowing participation in more education activities to count.
  3. Focus states’ incentives on improving actual employment placements. Currently, a state gets no more recognition for preparing and placing a recipient in employment than for excluding a family from its caseload and giving it no employment help.  States should get credit for successful employment outcomes, not for failing to serve needy families and children.  Possible steps include:  eliminating or limiting the credit that states get for simply reducing their caseloads; providing an employment credit in lieu of the caseload reduction credit; or allowing a state to count people who have left TANF for employment toward the work rate for a period of time.
  4. Redesign the work measures to support engagement of all recipients in activities that will prepare them for work. Policymakers could:  allow a wider range of activities, including those addressing serious barriers to employment, to count (separate from the job search/job readiness category, which has severe restrictions); lift certain limits on when particular activities, like vocational education or job search, can count; and allow partial credit for recipients who are engaged in activities for less than the required 20 or 30 hours per week.
  5. Require greater investments in work activities. Policymakers should require states to spend a specified share of their TANF resources on activities designed to prepare recipients for work.  In addition, states that do not meet applicable performance measures should be required to invest additional funds in work-related activities.  The current penalty structure withdraws federal funds from state TANF programs, further shrinking state resources to meet families’ employment needs.  Rather than pay a fiscal penalty, a state that fails to meet performance measures should be required to increase the share of its state and federal TANF spending that goes to work-related activities for families receiving assistance.

Building a Better TANF Program

February 8, 2013 at 3:16 pm

LaDonna Pavetti, the Center’s Vice President for Family Income Support Programs, spoke yesterday at an event hosted by the Center for American Progress to assess the Temporary Assistance for Needy Families (TANF) program — what it’s accomplished, where it’s falling short, and how policymakers could strengthen it.

She explained that:

  • TANF provides an important safety net for unemployed or underemployed families.  But it reaches few families in need, and it provides minimal cash assistance to the families it does reach (see chart).

  • TANF agencies spend more now than before the 1996 welfare reform law to support work, but there is a mismatch between TANF recipients’ employment assistance needs, labor market realities, and the design of most states’ work programs.
  • The TANF Work Participation Rate — a measure of TANF recipients’ work activity — hinders, rather than encourages, states’ efforts to help TANF recipients find better jobs that will last.
  • The lessons of the TANF Emergency Fund — $5 billion provided through the 2009 Recovery Act to help families through the recession — should not be forgotten.  The subsidized jobs programs that states operated were a bright spot during a time of significant need.
  • The TANF block grant is worth 30 percent less now than when TANF was created and the diminishing resources are increasingly used to fill state budget holes at the expense of the most vulnerable families.

Click here for the video of the full event and here for our chart book that takes a closer look at TANF’s successes and failures.

Most Poor Children Live in Households with Major Hardships

November 20, 2012 at 12:40 pm

With Thanksgiving right around the corner, this is an appropriate time to look at some new figures on hardship.  New CBPP analysis of monthly Census data finds that more than half (58 percent) of poor children last year lived in households that faced one or more of the following:

  • difficulty affording adequate food (what the Agriculture Department terms “low food security”),
  • overcrowded living conditions (more than one person per room),
  • falling behind on rent or mortgage, or
  • having gas or power service cut off due to inability to pay bills.

That 58 percent is three times the 17 percent rate for households with incomes at or above twice the poverty line, as the graph shows.

Many of these poor children live in working households.  Two-thirds of the poor children lived in households where at least one person was working at the time of this survey, and these working-poor households experienced hardships at about the same rate (59 percent) as poor families with children overall.

The food security data cover only part of 2011.  Agriculture Department data for the year as a whole show that 45 percent of all poor households with children had difficulty affording adequate food at some point in 2011.

Fortunately, government assistance makes a big difference in fighting poverty and hardship.

The Census Bureau reported earlier this month that government assistance programs kept millions of Americans out of poverty in 2011, under a new measure (the Supplemental Poverty Measure) that takes both cash and non-cash income into account.  CBPP analysis finds that nearly twice as many people would count as poor in 2011 if one left out the income they received from assistance programs.

In addition, six recession-fighting initiatives enacted in 2009 and 2010, including expansions in the Earned Income Tax Credit and Child Tax Credit, kept nearly 7 million people out of poverty in 2010.  Unfortunately, those initiatives are expiring, many states have cut programs that help low-income families, and some budget-cutters in Congress are targeting such programs for further cuts.

TANF Block Grant Is Not a Model for Other Programs

October 11, 2012 at 1:31 pm

An op-ed in today’s Wall Street Journal sings the praises of the Temporary Assistance for Needy Families (TANF) block grant, claiming it shows that block-granting Medicaid would enable states to operate better programs for less money.  The facts show otherwise:  TANF provides a significantly weaker safety net than the program it replaced, and states have used their flexibility under the block grant not to strengthen TANF but instead to shift funds elsewhere in their budgets.

    TANF Weakening as a Safety Net For Poor Families

  • TANF helps many fewer poor families than in 1996. In 1996, for every 100 families with children living in poverty, TANF provided cash aid to 68 families.  By 2010, this figure had plummeted to 27.  This weakening of the safety net is a key reason why the number of children in families living on $2 per person per day — one World Bank definition of poverty for developing nations — doubled between 1996 and 2011, from 1.4 million to 2.8 million.
  • States have used TANF funds to pay for a broad range of services, including some that Congress didn’t envision when it created the block grant. In 2011, states spent just 29 percent of their TANF block grant to provide basic assistance to poor families, down from 70 percent in 1997.  States used their flexibility to shift TANF funds to cover a broad range of services, including some that they had paid for with state funds or would have paid for with state funds if TANF funds were not available.
  • States did not respond to higher need during hard economic times. The Great Recession provided the ultimate test of whether states could do a better job than the federal government of providing a safety net for poor families.  They failed.  While the number of unemployed Americans doubled during the downturn, the number of TANF recipients rose by just 13 percent and caseloads in 22 states rose little or not at all.  When the need for cash assistance rose during the recession, states responded by scaling back their TANF programs to save money — shortening and otherwise tightening time limits and further cutting already low benefit levels, leaving the poorest families poorer.