# II. Expenditures and Balances

States have broad flexibility to spend Federal TANF funds on various
benefits and services for families, but are required to spend a
considerable amount of their own funds on the same or similar activities
(called Maintenance of Effort or MOE). Combined State expenditures of
Federal TANF and State TANF MOE funds totaled \$25.4 billion in FY 2002,
a slight decrease (-\$111 million) from the previous year. Since
activities sponsored through these sources are similar, and often
involve co-mingling of State and Federal funds, it is helpful to
consider Federal TANF expenditures within the context of States' overall
spending on TANF-related activities. Table A provides an overview of FY
2002 expenditures and balances.

**Table A**

**Expenditures and Balances**

+----------------------------+---+---------+---+----+------+------------+
| ## Total TA                |   |         |   |    |      |            |
| NF Expenditures in FY 2002 |   |         |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
|                            |   |         |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Beginning of Year          |   | \       |   |    |      |            |
| Carryover                  |   | $6,352, |   |    |      |            |
|                            |   | 673,180 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| FY 2002 New Federal Grants |   | \$      |   |    |      |            |
|                            |   | 17,004, |   |    |      |            |
|                            |   | 190,260 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Total Federal Funds        |   | \$      |   |    |      |            |
| Available                  |   | 23,356, |   |    |      |            |
|                            |   | 863,440 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Federal Funds Transferred  |   | 1,926,  |   |    |      |            |
| to CCDF                    |   | 299,277 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Federal Funds Transferred  |   | 1,031,  |   |    |      |            |
| to SSBG                    |   | 375,598 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Net Federal Funds          |   | \$      |   |    |      |            |
| Available for TANF         |   | 20,399, |   |    |      |            |
|                            |   | 188,565 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
|                            |   |         |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Total Federal Expenditures |   | 14,587, |   |    |      |            |
|                            |   | 709,021 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Federal Unliquidated       |   | 3,133,  |   |    |      |            |
| Obligations                |   | 163,514 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Federal Unobligated        |   | 2,678,  |   |    |      |            |
| Balance                    |   | 316,026 |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
|                            |   | **      |   | *  |      | **Total    |
|                            |   | Federal |   | *S |      | [Expendi   |
|                            |   | [Expend |   | ta |      | tures]{.un |
|                            |   | itures] |   | te |      | derline}** |
|                            |   | {.under |   | P  |      |            |
|                            |   | line}** |   | ro |      |            |
|                            |   |         |   | gr |      |            |
|                            |   |         |   | am |      |            |
|                            |   |         |   | [E |      |            |
|                            |   |         |   | xp |      |            |
|                            |   |         |   | en |      |            |
|                            |   |         |   | di |      |            |
|                            |   |         |   | tu |      |            |
|                            |   |         |   | re |      |            |
|                            |   |         |   | s] |      |            |
|                            |   |         |   | {. |      |            |
|                            |   |         |   | un |      |            |
|                            |   |         |   | de |      |            |
|                            |   |         |   | rl |      |            |
|                            |   |         |   | in |      |            |
|                            |   |         |   | e} |      |            |
|                            |   |         |   | ** |      |            |
+----------------------------+---+---------+---+----+------+------------+
| **[Assistance              |   |         |   |    |      |            |
| E                          |   |         |   |    |      |            |
| xpenditures]{.underline}** |   |         |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Basic Cash Assistance      |   | \       |   | \  |      | \$9,4      |
|                            |   | $4,554, |   | $4 |      | 08,233,518 |
|                            |   | 262,318 |   | ,8 |      |            |
|                            |   |         |   | 53 |      |            |
|                            |   |         |   | ,9 |      |            |
|                            |   |         |   | 71 |      |            |
|                            |   |         |   | ,2 |      |            |
|                            |   |         |   | 00 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Child Care                 |   | 75,     |   | 3  |      | 4          |
|                            |   | 029,752 |   | 43 |      | 18,748,837 |
|                            |   |         |   | ,7 |      |            |
|                            |   |         |   | 19 |      |            |
|                            |   |         |   | ,0 |      |            |
|                            |   |         |   | 85 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Transportation & Other     |   | 171,    |   | 2  |      | 3          |
| Support Services           |   | 312,209 |   | 01 |      | 72,456,286 |
|                            |   |         |   | ,1 |      |            |
|                            |   |         |   | 44 |      |            |
|                            |   |         |   | ,0 |      |            |
|                            |   |         |   | 77 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Assistance Under Prior Law |   | 1,022,  |   | \- |      | 1,0        |
|                            |   | 435,536 |   |    |      | 22,435,536 |
+----------------------------+---+---------+---+----+------+------------+
| **Total Assistance**       |   | **5     |   | *  |      | **11,221   |
|                            |   | ,823,03 |   | *5 |      | ,874,177** |
|                            |   | 9,815** |   | ,3 |      |            |
|                            |   |         |   | 98 |      |            |
|                            |   |         |   | ,8 |      |            |
|                            |   |         |   | 34 |      |            |
|                            |   |         |   | ,3 |      |            |
|                            |   |         |   | 62 |      |            |
|                            |   |         |   | ** |      |            |
+----------------------------+---+---------+---+----+------+------------+
| **[Non-Assistance          |   |         |   |    |      |            |
| E                          |   |         |   |    |      |            |
| xpenditures]{.underline}** |   |         |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Child Care                 |   | 1,496,  |   | 1  |      | 3,0        |
|                            |   | 951,451 |   | ,5 |      | 85,509,541 |
|                            |   |         |   | 88 |      |            |
|                            |   |         |   | ,5 |      |            |
|                            |   |         |   | 58 |      |            |
|                            |   |         |   | ,0 |      |            |
|                            |   |         |   | 90 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Transportation & Other     |   | 167,    |   | 43 |      | 2          |
| Support Services           |   | 971,783 |   | ,5 |      | 11,553,999 |
|                            |   |         |   | 82 |      |            |
|                            |   |         |   | ,2 |      |            |
|                            |   |         |   | 16 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Work Related Activities    |   | 2,120,  |   | 6  |      | 2,7        |
|                            |   | 692,902 |   | 06 |      | 26,866,731 |
|                            |   |         |   | ,1 |      |            |
|                            |   |         |   | 73 |      |            |
|                            |   |         |   | ,8 |      |            |
|                            |   |         |   | 29 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Individual Development     |   | 7,      |   | 5  |      | 7,688,216  |
| Accounts                   |   | 186,410 |   | 01 |      |            |
|                            |   |         |   | ,8 |      |            |
|                            |   |         |   | 06 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Refundable Earned Income   |   | 87,     |   | 4  |      | 5          |
| Credits                    |   | 015,335 |   | 86 |      | 74,001,531 |
|                            |   |         |   | ,9 |      |            |
|                            |   |         |   | 86 |      |            |
|                            |   |         |   | ,1 |      |            |
|                            |   |         |   | 96 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Other Refundable Tax       |   | 56,     |   | 1  |      | 1          |
| Credits                    |   | 000,000 |   | 35 |      | 91,499,735 |
|                            |   |         |   | ,4 |      |            |
|                            |   |         |   | 99 |      |            |
|                            |   |         |   | ,7 |      |            |
|                            |   |         |   | 35 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Non-Recurrent Short Term   |   | 143,    |   | 94 |      | 2          |
| Benefits                   |   | 479,567 |   | ,2 |      | 37,750,089 |
|                            |   |         |   | 70 |      |            |
|                            |   |         |   | ,5 |      |            |
|                            |   |         |   | 22 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Non-Assistance Under Prior |   | 768,    |   | \- |      | 7          |
| Law                        |   | 881,717 |   |    |      | 68,881,717 |
+----------------------------+---+---------+---+----+------+------------+
| Administration & Systems   |   | 1,633,  |   | 9  |      | 2,6        |
|                            |   | 421,671 |   | 83 |      | 16,876,211 |
|                            |   |         |   | ,4 |      |            |
|                            |   |         |   | 54 |      |            |
|                            |   |         |   | ,5 |      |            |
|                            |   |         |   | 40 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| Other Non-Assistance       |   | 2,283,  |   | 1  |      | 3,7        |
|                            |   | 068,370 |   | ,4 |      | 71,880,596 |
|                            |   |         |   | 88 |      |            |
|                            |   |         |   | ,8 |      |            |
|                            |   |         |   | 12 |      |            |
|                            |   |         |   | ,2 |      |            |
|                            |   |         |   | 26 |      |            |
+----------------------------+---+---------+---+----+------+------------+
| **Total Non-Assistance**   |   | **8     |   | *  |      | **14,192   |
|                            |   | ,764,66 |   | *5 |      | ,508,366** |
|                            |   | 9,206** |   | ,4 |      |            |
|                            |   |         |   | 27 |      |            |
|                            |   |         |   | ,8 |      |            |
|                            |   |         |   | 39 |      |            |
|                            |   |         |   | ,1 |      |            |
|                            |   |         |   | 60 |      |            |
|                            |   |         |   | ** |      |            |
+----------------------------+---+---------+---+----+------+------------+
|                            |   |         |   |    |      |            |
+----------------------------+---+---------+---+----+------+------------+
| **[Total                   |   | **\$    |   | ** |      | **\$25,414 |
| E                          |   | 14      |   | \$ |      | ,382,543** |
| xpenditures]{.underline}** |   | ,587,70 |   | 10 |      |            |
|                            |   | 9,021** |   | ,8 |      |            |
|                            |   |         |   | 26 |      |            |
|                            |   |         |   | ,6 |      |            |
|                            |   |         |   | 73 |      |            |
|                            |   |         |   | ,5 |      |            |
|                            |   |         |   | 22 |      |            |
|                            |   |         |   | ** |      |            |
+----------------------------+---+---------+---+----+------+------------+

State Program Expenditures include both State MOE and Separate State
Program (SSP) expenditures. Source: TANF Financial Report

States received Federal TANF grants totaling \$17 billion nationally in
FY 2002, which included each State's base TANF grant, and additional
Federal bonuses and supplemental grants. States may reserve unspent
Federal funds for use in future fiscal years, although carried-over
funds can only be spent on assistance payments to families. Over \$2.5
billion was available for obligation in FY 2002 from prior years Federal
TANF funding. In addition, States had \$3.8 billion in Federal TANF
funds that they had obligated at the end of the previous year, but which
would not be liquidated (spent) until FY 2002, giving States a total of
approximately \$6.4 billion in Federal TANF cash on hand at the
beginning of FY 2002. As of the end of FY 2002, about \$2.7 billion
remained unobligated and an additional \$3.1 billion of unobligated
funds remained unliquidated, leaving about \$5.8 billion in Federal TANF
cash on hand at the year's end. Table B shows beginning and end of year
Federal TANF balances for each State.

States may transfer up to 30 percent of their annual Federal TANF grant
into the Child Care and Development Fund (CCDF) or Social Services Block
Grant (SSBG) program. Of this 30 percent, States are limited to
transferring no more than 10 percent to the SSBG program. In FY 2002,
States transferred \$1.9 billion into CCDF (11 percent) and \$1.0
billion (6 percent) into SSBG from their 2002 Federal award,
approximately the same as they did the prior year.

Total spending and transfers of Federal TANF dollars was \$17.5 billion
in FY 2002. The additional MOE funding States are required to spend must
equal at least 80 percent of their pre-TANF (1994) State expenditures
(or 75 percent if they meet Federal work participation requirements) on
similar programs, and totaled \$10.8 billion in FY 2002, \$1.7 billion
of which was spent on TANF-allowable costs of Separate State Programs
(SSP). States need only report MOE spending that is sufficient to meet
their MOE obligation and because of this reported MOE expenditures
understate the actual amount of State spending on TANF-related
activities that have been claimed. Many States, for example, operate
refundable State tax credit programs for low-income working families
that would qualify as MOE, but States often claim only a portion of
these expenditures as MOE.

![](media/image1.png){width="5.618055555555555in"
height="8.99236111111111in"}

## Expenditures

State expenditure trends are broken down into six general spending
categories: cash assistance, work activities, transportation and work
supports, child care, administration and systems costs, and expenditures
for other benefits and services.

Spending patterns have shifted dramatically since TANF was enacted,
reflecting the decline in welfare caseloads and increased spending on
supportive non-cash services. Figure A compares State spending of
Federal TANF and State MOE funds during FY 1997 - TANF's first year -
with FY 2001 and FY 2002 in the six major categories. Even within the
past year, State spending patterns have continued to shift away from
cash aid, with increasing proportions of expenditures being made on
child care, work and other services.

![](media/image2.png){width="5.370138888888889in" height="5.1in"}

### Cash Assistance

States spent \$10.4 billion, or 41 percent, of their total Federal TANF
and State MOE funds in FY 2002 on cash assistance. This represents a
decrease of \$0.7 billion, or six percent, when compared to the \$11.1
billion, or 43.6 percent of expenditures, spent on cash assistance
during FY 2001.

These amounts include both \$9.4 billion in basic TANF cash assistance
for families and \$1.0 billion in aid payments for others that were
permitted under the prior law AFDC program (for children involved in
foster care or the juvenile justice system) and allowed to continue
under TANF. Considered separately, basic TANF cash assistance dropped by
three percent, or \$0.8 billion, from FY 2001, while assistance under
prior law remained essentially constant. Basic cash assistance includes
ongoing benefits directed at basic needs (e.g., food, clothing, shelter,
utilities, household goods, personal care items, and general incidental
expenses), as well as supportive services for families that are not
employed.

### Work Activities

States spent \$2.7 billion in combined funds, or 10.7 percent of total
expenditures, on work activities in FY 2002, which includes work
subsidies, education and training, and other job readiness activities
such as employment counseling, job development, and job placement
information and referral services. This spending was the same as in FY
2001.

### Transportation and Work Supports

Spending on transportation benefits (such as allowances, bus tokens, car
payments, auto insurance reimbursement, and van services) for working or
otherwise participating families totaled \$584 million in FY 2002, or
2.3 percent of all spending. This spending was \$74 million less than in
FY 2001, an 11 percent decline. Such services are provided to recipients
and non-recipients to enable them to work or participate in other
activities, such as education, or training, or for respite purposes.

### Child Care

Direct Federal TANF and State MOE spending on child care totaled \$3.5
billion, or 13.8 percent of all spending. This was an increase of
approximately \$150 million or 4.3 percent over the prior year. States
reported that about 88 percent of direct Federal TANF and State MOE
funding for child care was for subsidies to working families (i.e.,
non-assistance).

In addition, States transferred \$1.9 billion in Federal TANF funds from
the TANF program into the CCDF, the same level transferred in FY 2001.
Taken together, States continued to spend significant Federal TANF and
State MOE funds on child care. During FY 2002, States spent just over
\$5.4 billion, either directly through the State's TANF program or by
transferring Federal TANF funds to the CCDF Discretionary Fund. It
should be noted that States spent a considerable amount of additional
(non-TANF) funds on child care for low-income working families, many of
whom may have previously been on welfare.

### Administrative and Systems Costs

Administrative and information systems expenditures in FY 2002 totaled
\$2.6 billion, or 10.3 percent, of total expenditures. Of the \$2.6
billion, States claimed \$2.3 billion for administrative costs that fall
within the 15 percent administrative spending cap and \$359 million for
information systems. Combined, these amounts were \$22.5 million less
than in FY 2001.

### Expenditures for Other Benefits and Services

Approximately \$5.5 billion of combined expenditures were made on a
variety of other non-cash assistance services during FY 2002, including
Individual Development Account programs (\$7.7 million -- an increase of
\$6.8 million), foster care and juvenile justice services allowed under
prior law (\$768.9 million -- an increase of \$104 million), refundable
tax credit programs (\$765.5 million -- an increase of \$94 million),
non-recurrent short term benefits (\$237.8 million -- an increase of
\$9.9 million), pregnancy prevention and two-parent family formation
programs (\$1.0 billion -- an increase of \$623 million), and
miscellaneous other activities (\$2.8 billion -- a decline of \$348
million).

Figure B breaks down the "Other" category, to show how States expended
combined Federal TANF and State MOE funds for the activities during FY
2002.

![](media/image3.png){width="6.183333333333334in" height="4.075in"}

Refundable tax credits include refundable State earned income tax
credits paid to families and State and local tax credits, as well as
expenditures on any other refundable tax credits provided under State or
local law that are consistent with the purposes of TANF.

Non-recurrent short term benefits include expenditures on one-time,
short-term benefits to families in the form of cash, vouchers,
subsidies, or similar forms of payment to deal with a specific crisis
situation or episode of need, or as a diversion activity to help a
family avoid the need for ongoing assistance.

During FY 2002, States spent over \$1.0 billion, more than doubling
their expenditures in FY 2001, on activities designed to either reduce
the incidence of out-of-wedlock pregnancies or encourage paternal
involvement in the lives of their children. Most pregnancy prevention
efforts have focused on teenagers. State approaches to preventing teen
pregnancy can be divided into several categories: education curricula on
sex, abstinence, and relationships; reproductive health services; youth
development programs; media campaigns; efforts to prevent repeat teen
births; and multiple component interventions. State initiatives directed
toward family formation tend to focus on involvement of non-custodial
parents in their children's lives. Other initiatives include parenting
education, family crisis counseling, marriage counseling, mentoring, and
eliminating eligibility criteria that discourage two-parent families
from applying for assistance.

The balance of expenditures (miscellaneous other activities) made by
States include a variety of services, including family preservation
activities, parenting training, substance abuse treatment activities,
domestic violence services, and case management.

## Additional MOE Expenditure Information

Additional detail on State spending on TANF and SSPs is available in the
State MOE expenditure reports. While States continued providing
traditional supportive services to families, like child care and
transportation, many States also used MOE funds in FY 2002 to provide
preventive services to help youth, young children, and families at risk
of either remaining or becoming welfare recipients. Programs for youth
and children include: after-school and stay-in-school programs; teen
pregnancy prevention programs; and community youth grants. These
programs provide services such as tutoring, counseling, job referrals,
and community activities as alternatives to drug abuse, gang activity,
sexual activity, and dropping out of school. Other supportive service
expenditures that promoted family, work and job preparation included
help with utilities, rent or mortgage assistance, primary and secondary
school textbook reimbursement programs for low-income families, tuition
and book fees for post-secondary school or training programs, part-time
student grant programs, and medical services not met by Medicaid/SCHIP
for children in low-income families.

Some States also provided MOE-funded cash assistance programs to
families in certain circumstances. Expenditures for such programs
totaled \$860 million, as shown in Appendix Table 2:6. For example,
these States used SSPs to provide financial assistance to: two-parent
families; families with physical, mental health, substance abuse, or
domestic violence issues; families in which the parent or caretaker is
receiving or has applied for Supplemental Security Income; families in
which the caretaker relative is not the parent; families in which a
parent is attending post-secondary school or in which a minor parent is
a student, and families that have exhausted their Federal time limits. A
few States provided financial assistance to families with legal
immigrants who are not eligible for TANF, and States operating such
programs generally continued to require individuals to participate in
work activities. Separate State programs operated for two-parent
families usually include work activities that mirror those in the
State\'s TANF program. The exceptions usually involved families in which
the parent or relative is temporarily or permanently incapacitated in
some way (e.g., mental health or substance abuse issues, or receipt of
Supplemental Security Income) or families that consist of a non-parent
caretaker relative.