TANF at 15, Part II:  How Have States Spent Their TANF Dollars?

August 24, 2011 at 4:21 pm

Under the 1996 welfare law, which replaced AFDC with the TANF block grant, states receive fixed federal funding each year in exchange for greater flexibility in using that funding.  Unlike AFDC, therefore, federal TANF funding does not decrease in good economic times when cash assistance caseloads fall or rise in hard economic times when cash assistance caseloads increase.   Given the dramatic decline in cash assistance caseloads I described in Monday’s post, today we look briefly at TANF funding over time and how states have spent their TANF dollars.

The TANF block grant’s value has declined by almost 30 percent over the last 15 years.

Because the $16.6 billion annual federal TANF block grant was never adjusted for inflation, it has lost significant value over time.  States receive 28 percent less in real (inflation-adjusted) dollars than they did in 1997, a year when the unemployment rate averaged just 4.9 percent.

State minimum required contributions to TANF have declined even more.  To receive their full TANF block grant, states only have to spend on TANF purposes 80 percent of the amount they spent on AFDC and related programs in 1995, and that “maintenance of effort” requirement isn’t adjusted for inflation, either.

TANF spending on cash assistance has declined dramatically.

As TANF cash assistance caseloads have dropped, so has the amount of TANF spending used for this purpose.  Federal and state TANF spending on basic assistance declined from $13.9 billion in 1997 to $9.3 billion in 2009, the most recent year available.

States have shifted their TANF funds to pay for a broad range of services, including some that Congress did not envision when it created the block grant.

The declines in the TANF caseload, combined with broad state flexibility in the use of federal and state TANF funds, freed up substantial resources that states have used to fund other services.   In 2009, states used just 28 percent of TANF funds to provide basic assistance, compared to 71 percent in 1997.

In TANF’s early years, states used some of the freed-up funds for services directly related to welfare reform, such as increased child care assistance for recipients participating in work activities and low-income working families.  As more funds were freed up, however, states increasingly used TANF funds to cover the costs of services that the TANF statute allows but that Congress did not anticipate, such as child welfare services.

The need for basic assistance has increased sharply during the recent economic downturn.  But states generally have not moved back the federal and state TANF funds they shifted to other areas of their budgets.  Instead, facing fiscal constraints, states have been reducing funding for basic assistance, as well as work activities and child care assistance.

All four posts in the series:

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More About LaDonna Pavetti

LaDonna Pavetti

Dr. LaDonna Pavetti is the Vice President for Family Income Support Division at the Center on Budget and Policy Priorities.

Full bio | Blog Archive | Research archive at CBPP.org

3 Comments Add Yours ↓

Comments are listed in reverse chronological order.

  1. Lea #

    With all the programs that need to be cut at the federal level, I am surprised that I have not heard anything about the Temporary Assistance For Needy Families program (TANF) {Welfare}. TANF is up for reauthorization in September (2011) and current plans are to simply extended this wasteful program for an additional year and thus put off the hard decisions until a later date.

    Unfortunately the way TANF is currently designed, it does not hold parents accountable for improving their lives and moving toward employment. While there is a “Work Participation Rate” (WPR) that States must meet, it is meaningless. For those who are meeting the hours that are required, many are “warehoused” in work experience and other activities and are never expected to find an actual paying job

    TANF must be reformed to hold states (and ultimately parents) accountable. Base the programs success not only on the percentage of those clients who are participating, but more importantly on the number of clients who find an actual paying job and are able to move off welfare and become self supporting.

    • 2

      As we note in our post, funding for TANF has not been increased for 15 years. Although we believe there are ways in which TANF could be improved, it provides assistance to very vulnerable families who have nowhere else to turn for support. It also funds child care for working families, among other things. Your assessment that TANF does not hold parents accountable for improving their lives and moving toward employment is not an accurate assessment of TANF programs across the country. TANF recipients are required to participate in work activities almost immediately upon receipt of assistance. In almost every state, those who do not comply with the requirements are no longer eligible to receive assistance. Nationally, very few recipients are placed in work experience programs. When those programs are used it is almost always because individuals are unsuccessful at finding paid employment. It is unrealistic to expect that with a national unemployment rate of 9 percent that every person looking for a job will find one. As you will see in our post that will appear later today, we agree with you that the work participation rate is a flawed measure of success and that states should be able to propose other measures of success such as employment and earnings.

    • Sarah #

      The other thing about TANF (vs. the old welfare system) is that its benefits are chronologically limited. I am not entirely sure but I believe that it’s a nationally-imposed limit proposed by the original welfare reform legislation, and you can only receive TANF benefits for a total of 60 months (5 years) over your entire lifetime. Most recipients are well aware of the ticking clock that is their benefit period, and many families do try to take advantage of the educational and training programs that are offered to advance their lives because they know it’s their ONE shot – the government gives no other.
      But you can’t ignore our currently huge unemployment rate. Or the fact that this puts a downward pressure on the labor market and wages – and so the “most unemployable” people at the moment are either professionals who were either working in higher-paying (corporate) jobs that have been outsourced or eliminated, or those at the bottom of the rung with little to no education or job experience. During high levels of employment, even those “bottom-rung applicants” have a better chance of finding some sort of employment because the market needs the LABOR. Those chances are gone in a down economy.

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