Report to Congressional Requesters

United States General Accounting Office

GAO

September 2001 WELFARE REFORM

More Research

Needed on TANF

Family Caps and

Other Policies for

Reducing Out-ofWedlock Births

GAO-01-924
Page i GAO-01-924 State TANF Family Cap Policies

Letter 1

Results in Brief 2

Background 4

Many States Have Policies That Cap Cash Benefits, but Some

Provide Other Supports to Capped-Benefit Families 7

In an Average Month in 2000, About 108,000 Families Received an

Estimated 20 Percent Less in Cash Assistance Due to the Cap 13

Existing Studies Cannot Be Used to Cite Conclusive Evidence

About the Impact of the Family Cap on Out-of-Wedlock Births 20

HHS’ Research Focuses on Employment Goal of TANF, With

Limited Information Available on Goal of Reducing Out-OfWedlock Pregnancies 22

Conclusion 24

Recommendations to the Secretary of Health and Human Services 25

Agency Comments 26

Appendix I Scope and Methodology 29

Appendix II Studies on Family Cap Effect 33

Appendix III Comments from the Department of Health and Human

Services 36

Appendix IV GAO Contacts and Staff Acknowledgments 39

Bibliography 40

Related GAO Products 41

Contents
Page ii GAO-01-924 State TANF Family Cap Policies

Tables

Table 1: Average Monthly Number of Families Whose Benefits

Were Capped as a Percentage of the State’s TANF

Population in 2000 15

Table 2: Number of Capped-Benefit Families by Family Size and

State in an Average Month in 2000 16

Table 3: Estimated Effect on TANF Cash Benefits for a CappedBenefit Family in an Average Month, by State 18

Table 4: HHS Research Funding for Fiscal Year 2000 23

Table 5: Estimated Cash Benefit Not Received by a Capped-Benefit

Family in an Average Month, by State 30

Table 6: Studies on Family Cap Effect on Births, Abortions, and/or

Family Planning Outcomes 33

Table 7: Studies on Family Cap Effect on TANF Caseloads 35

Figures

Figure 1: Types of Family Cap Policies by State, 2000 9

Figure 2: Exemptions to the Family Cap, 2000 11

Abbreviations

AFDC Aid to Families With Dependent Children

HHS Department of Health and Human Services

PRWORA Personal Responsibility and Work Opportunity

Reconciliation Act of 1996

TANF Temporary Assistance for Needy Families
Page 1 GAO-01-924 State TANF Family Cap Policies

September 11, 2001

The Honorable Donald M. Payne

The Honorable Charles B. Rangel

The Honorable Christopher H. Smith

House of Representatives

The Personal Responsibility and Work Opportunity Reconciliation Act of

1996 (PRWORA) made sweeping changes to national welfare policy,

repealing the Aid to Families with Dependent Children (AFDC) program

and creating the block grant Temporary Assistance for Needy Families

(TANF) program. Under TANF, states receive up to $16.5 billion in federal

funds each year through fiscal year 2002. States have increased flexibility

to design and implement programs to achieve the TANF goals, including

reducing the dependence of needy families on government aid, and

preventing and reducing the incidence of out-of-wedlock pregnancies.

During discussions on welfare reform, the proportion of births that were

out-of-wedlock in the United States began to decline after rising for over

half a century. The potential negative consequences of out-of-wedlock

births are numerous, including increasing the probability of dependence

on welfare and also increasing the amount of time on assistance once

enrolled.

In an effort to reduce the incidence of out-of-wedlock pregnancies among

welfare recipients, some states have imposed family caps on welfare

benefits. One factor that determines the amount of cash benefits a family

receives is the family’s size—larger families receive more benefits. In

states with a family cap policy, however, no additional cash benefits are

provided when the birth of a child increases the size of the family. To

provide you with information on family cap policies and their effects, you

requested that we (1) identify the states that have family caps as a part of

their TANF programs and describe how the caps are implemented; (2)

determine the number of families whose benefits have been affected by

the family cap and estimate the amount by which the family cap has

altered a family’s cash benefits; and (3) using existing studies, determine

what is known about the effect of the family cap on out-of-wedlock births,

abortions, and poverty. In conducting this work, we also reviewed HHS’

research agenda to assess whether it supported the TANF goal of

preventing and reducing out-of-wedlock pregnancies.

To identify states with family caps on TANF benefits, we obtained a list of

such states from the Regional Directors of the Department of Health and

Human Services (HHS), which oversees TANF at the federal level, and

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-924 State TANF Family Cap Policies

then conducted a phone survey with these states to discern how they

implemented the family cap. To determine the impact of the family cap on

benefits, we gathered data from TANF data specialists in these states. To

assess the impact of the family cap on out-of-wedlock births, we identified

and reviewed studies that examined family caps. In our review, we

assessed the extent to which each study provided evidence for an effect of

the family cap on out-of-wedlock births and other outcomes. In addition,

we spoke with and collected information from HHS officials on the

Department’s TANF-related research efforts. We conducted our work from

July 2000 through September 2001, in accordance with generally accepted

government auditing standards. (See app. I for a more detailed discussion

of our scope and methodology.)

Twenty-three states, representing approximately one-half of the nation’s

TANF caseload, have implemented some variation of a family cap,

breaking the traditional link between a family’s size and the amount of its

monthly welfare check.1

 Generally, these states implemented family cap

policies as part of their welfare reforms designed to reduce out-of-wedlock

births and to encourage self-sufficiency. Key features of family cap

policies differ from state to state. For example, 19 states provide no cash

benefit increase—called a full family cap—when a mother on welfare gives

birth and two states allow a partial increase in benefits, called a partial

family cap. In addition, two states have a flat grant benefit structure that

acts as an implicit family cap because cash benefit amounts are not

adjusted due to family size or the birth of an additional child. In

implementing the family cap, the states have fairly similar policies for

exempting some families from caps on benefit amounts. For example,

most family cap states make exemptions to the cap in the case of children

born as the result of sexual assault, rape, or incest. In addition, 4 of the 23

states have adopted income support policies designed specifically for

capped-benefit families, such as vouchers for the purchase of goods for

the newborn child.

During an average month in 2000, 20 of the 23 family cap states reported

that about 108,000 families received less in cash benefits than they would

have in the absence of state-imposed family cap policies. Overall, in an

average month, about 9 percent of TANF families in these states had their

benefits affected by the family cap. The actual differences between a

family’s TANF benefits before and after having its benefits subject to the

 1

 We gathered information about the 50 states and the District of Columbia.

Results in Brief
Page 3 GAO-01-924 State TANF Family Cap Policies

cap are affected by several factors, including earnings and receipt of child

support. Therefore, states were not able to report the precise effect of the

family cap on TANF benefits. However, we estimated that these TANF

families were generally receiving about 20 percent less in cash assistance

each month because of the family cap – ranging from $20 less in Wyoming

to $121 less in California.2

 In addition, on average, states reported that 12

percent of capped-benefit families had additional children after their

TANF benefits were affected by the family cap. Therefore, in the case of

these particular families, the cash assistance not received is likely to be

greater than the estimated 20 percent.

Due to limitations of the existing research, we cannot conclude that family

cap policies reduce the incidence of out-of-wedlock births, affect the

number of abortions, or change the size of the TANF caseload. While we

identified five studies that assessed the effectiveness of the family cap in

reducing the incidence of out-of-wedlock births, these studies generally

were not able to overcome the inherent difficulties involved in evaluating

the family cap policy, and thus do not provide clear and convincing

evidence of the family cap’s effectiveness. One of these difficulties is that

several major policy and program changes took place simultaneously

under state and federal welfare reforms, making it difficult to determine

the extent to which any one specific policy or program change—the family

cap, in this instance—made a difference. Another major difficulty involves

controlling adequately for broader social and cultural changes that may

also affect women’s childbearing decisions. Methodological limitations in

the studies we reviewed on the effect of the family cap on abortion rates

and caseload size also do not allow us to draw conclusions. We did not

identify any studies that evaluated the impact of the family cap on poverty.

While HHS’ research efforts cover a broad range of issues, most of these

efforts have focused on TANF’s goal of reducing welfare dependence

through employment with much less emphasis on the goal of reducing outof-wedlock pregnancies. As a result, while HHS has recently taken steps to

improve information and research related to this key TANF goal, we are

recommending that the Secretary of HHS review its research agenda and

take steps to identify, encourage, and support additional studies, where

deemed appropriate, that would increase the availability of information on

how best to prevent and reduce out-of-wedlock pregnancies. We are also

 2

 Many states have policies related to the treatment of earnings or child support payments

or alternative forms of assistance that could offset to some extent the financial impact of

the family cap. However, these policies would not affect most families whose benefits

were subject to the family cap.
Page 4 GAO-01-924 State TANF Family Cap Policies

recommending that the Secretary submit HHS’ research agenda, with

estimated resource needs, to the Congress to provide it with useful

information as it considers the reauthorization of the TANF legislation,

which expires at the end of fiscal year 2002.

In ending the AFDC program and establishing TANF block grants to states,

PRWORA built upon and expanded state-level reforms and significantly

changed welfare policy for low-income families with children. The

legislation ended the legal entitlement to cash assistance for eligible needy

families with children and focused on helping needy families move toward

economic independence. As specified in PRWORA, the goals of TANF are

• providing assistance to needy families so that children may be cared for in

their own homes or in the homes of relatives;

• ending the dependence of needy parents on government benefits by

promoting job preparation, work and marriage;

• preventing and reducing the incidence of out-of-wedlock pregnancies; and

• encouraging the formation and maintenance of two-parent families.

PRWORA places a 5-year time limit (or less at state option) on federal cash

assistance for most families—and requires states to impose federally

established work and other program requirements on most adults

receiving aid. Otherwise, the Act gives states broad flexibility to establish

their own eligibility rules and the types of services provided. In fiscal year

2000, total TANF expenditures equaled almost $23.6 billion, more than half

in federal dollars.3

 About 5.8 million recipients received TANF cash

assistance in September of that year.

In addition to establishing a key TANF goal related to reducing out-ofwedlock pregnancies, the Congress, through PRWORA, established a

“Bonus to Reward Decrease in Illegitimacy Ratio” so that HHS could

reward states that showed the greatest reduction in out-of-wedlock births

while decreasing their abortion rates. States win this bonus based on these

reductions for the general population, not just the welfare population. In

each of fiscal years 1999 through 2002, up to $100 million is available to

 3

 PRWORA includes a “maintenance of effort” provision that requires states to maintain a

significant portion of their own historic financial commitment to their welfare programs as

a condition of receiving their full TANF grant. States may use their own funds to provide

cash assistance to families who reach the 5-year federal time limit.

Background

PRWORA Emphasizes

Reducing the Incidence of

Out-of-Wedlock

Childbearing
Page 5 GAO-01-924 State TANF Family Cap Policies

the five states that achieve the largest reductions.4 HHS also requires

states to set goals to reduce out-of-wedlock pregnancies. Each state has to

submit a TANF plan that includes the state’s strategy for preventing and

reducing the incidence of out-of-wedlock pregnancies. This plan must also

include an explanation of how the state intends to establish numerical

goals for reducing out-of-wedlock births.5

 PRWORA also authorized the

National Strategy to Prevent Teen Pregnancy and the Abstinence

Education Grant Program to help meet the TANF goal of reducing out-ofwedlock births. PRWORA authorized federal expenditures of $50 million

annually, beginning in fiscal year 1998, to support state efforts promoting

abstinence education.6

PRWORA’s emphasis on reducing out-of-wedlock childbearing, among

other goals, results from congressional concerns about the negative

consequences of out-of-wedlock births on the mother, the child, and the

family. The percentage of out-of-wedlock births among the total

population7

 has increased dramatically, from 3.8 percent in 1940 to 32.6

percent in 1994, although from 1994 to 1999 it remained around 33 percent.

While there are still questions about the extent of the consequences of outof-wedlock childbearing, research shows that children born out of

wedlock are much more likely to be poor and receive welfare than

children born to married parents. More specifically, among children living

with single mothers, children born outside of wedlock are 1.7 times more

likely to be poor than are those born to married parents.8

 In addition,

research shows that women aged 17 and under who give birth outside of

 4

 The first round of bonuses was awarded in 1999 to Alabama, California, the District of

Columbia, Massachusetts and Michigan. The second year’s bonuses were awarded to

Alabama, Arizona, the District of Columbia, Illinois and Michigan. Among recipients in

2000, decreases in births to unmarried mothers ranged from 4.13 percent in the District of

Columbia to 0.022 percent in Illinois.

5

 HHS does not have the authority to approve or disapprove a state’s TANF plan. HHS only

determines whether the plan is complete and then the state may receive TANF funds. The

statute does not set forth criteria for determining the completeness of a plan nor steps HHS

should take if it determines a state’s plan is incomplete nor how HHS should respond to an

incomplete plan.

6

 The Abstinence Education Grant Program is funded under Section 510 of Title V of the

Social Security Act.

7

 Data on the percent of out-of-wedlock births among welfare recipients are not available

over time.

8

 Ariel Halpern, Poverty among Children Born Outside of Marriage: Preliminary

Findings from the National Survey of America’s Families (Washington, D.C.: Urban

Institute, 1999).
Page 6 GAO-01-924 State TANF Family Cap Policies

marriage are more likely to go on public assistance and spend more years

on assistance once enrolled. For example, over three-quarters of all

unmarried teenage mothers began receiving cash benefits from the AFDC

program within five years of the birth of their first child.9

The potential link between welfare receipt and non-marital childbearing

has been of interest to policymakers and researchers for several years,

particularly as the number of never-married mothers receiving welfare has

increased, both in absolute numbers and as a percentage of all families on

welfare. Studies have been conducted to understand what role, if any, the

amount of welfare benefits plays in a woman’s decision to have a child.

The results of studies examining the effects of various welfare benefit

amounts on fertility and marriage have been mixed. A recent summary of

this research found that a slight majority of studies have concluded that

receiving welfare has led to a decrease in marriage and an increase in

childbearing.10

In the early to mid-1990s, before federal welfare reform, some states

responded to concerns about links between welfare and childbearing by

seeking waivers from federal AFDC rules to implement their own policies

to eliminate increased cash welfare grants for families who have additional

children while on welfare. This “capping” of cash grants became known as

the family cap.11 During the 2 years of debate over how to reform welfare

and address the issue of rising rates of out-of-wedlock births, one version

of the welfare legislation contained a family cap. PRWORA, the final

welfare reform legislation passed in 1996, emphasized decreasing out-ofwedlock birth rates but remained silent on the family cap, leaving

implementation decisions regarding family cap policy to the states.

 9

 G. Adams and R.C. Williams, Sources of Support for Adolescent Mothers (Washington,

D.C.: Congressional Budget Office, 1990). See Richard Wertheimer and Kristin Moore,

Childbearing by Teens: Links to Welfare Reform (Washington, D.C.: Urban Institute, n.d.).

10 Welfare Reform Research: What Have We Learned Since the Family Support Act of 1988

(Washington D.C.: Congressional Research Service, 2000). See Robert Moffitt, “The Effect

of Welfare on Marriage and Fertility,” Welfare, the Family, and Reproductive Behavior:

Research Perspectives (Washington, D.C.: National Academy Press, 1998).

11 While the family cap can apply to single-parent and two-parent families’ cash benefits

and covers births to married parents, it typically relates to an out-of-wedlock birth because

a majority of the families on welfare are single mother families.
Page 7 GAO-01-924 State TANF Family Cap Policies

Although PRWORA devolved considerable authority to the states to design

and implement their own welfare programs, HHS retains some program

oversight and research responsibilities. Generally, the law narrowed HHS’

regulatory authority, as compared to its authority under AFDC. For

example, PRWORA specifically limits HHS from regulating the conduct of

states, except as expressly provided in the law. HHS is responsible for

administering statutory penalties for states’ noncompliance with the law,

and for developing and administering the high performance bonuses and

Bonus to Reward Decrease in Illegitimacy Ratio established in PRWORA

to reward states that achieve certain goals of the law. In addition, HHS is

responsible and receives funding for conducting research on the benefits,

effects, and costs of state TANF programs and for disseminating

information among states and localities. This research role differs from the

one HHS played in the past, when a state wishing to experiment with any

departure from federal AFDC rules had to request a waiver from HHS, and

HHS had to ensure that the waiver request included plans for a rigorous

evaluation of the state’s experiment. In fact, some of the effectiveness

studies of the family cap that we reviewed in this report were conducted

as required evaluations of policies implemented under waiver of AFDC

rules. Because of the increased flexibility states have under TANF, states

no longer need to apply for waivers from federal rules.

Twenty-three states, representing about half of the nation’s TANF

caseload, have implemented a family cap policy, with most of these states

providing no cash increase when a mother on welfare gives birth. States

implement the family cap in one of three ways: a full family cap on

benefits, a partial family cap on benefits, or a flat grant that applies to all

TANF families. States implemented the family cap policy to reduce out-ofwedlock births and encourage self-sufficiency, with 15 states

implementing the family cap policy under a waiver to the AFDC program

and eight states implementing the policy after welfare reform. Most states

with a family cap policy exempt families from the cap if special

circumstances exist. For example, children born as the result of sexual

assault, rape, or incest are exempt from the family cap in 18 states. Several

states have additional support policies designed specifically for cappedbenefit families, such as vouchers for food and diapers in lieu of the cash

benefit increase they would have received without the family cap policy.

PRWORA Specifies a

Research Role for HHS in

the New Devolved Welfare

System

Many States Have

Policies That Cap

Cash Benefits, but

Some Provide Other

Supports to CappedBenefit Families
Page 8 GAO-01-924 State TANF Family Cap Policies

Twenty-three states, covering approximately 52 percent of the TANF

caseload nationwide, have adopted the family cap policy in some form. As

Figure 1 shows, 19 states employ a full family cap. In these states a

family’s cash grant is not increased by any amount with the birth of an

additional child.12 For example, in Arizona, if a family of two receiving a

monthly maximum grant of $275 per month had an additional child, their

cash benefit would be capped at this amount.13 The family would not

receive the $72 increase in benefits, which would have otherwise raised

their grant amount to $347—the maximum grant for three person families.

Two states have a family cap that is implemented as a partial increase in

cash benefits with the birth of an additional child.14 For example, one state

with the partial family cap increases by 50 percent the cash benefits the

family would have received without the family cap for only the first child

born to a family after they enrolled in assistance; the benefit cap becomes

a full family cap for any subsequent children born into the family. Two

other states use a flat grant to provide cash benefits to families. This policy

creates an implicit benefit cap because cash benefits are the same for all

families on assistance regardless of family size or the birth of an additional

child. For example, in Wisconsin families receive either $628 or $673 per

month. Their benefit amount depends on the work program component to

which they have been assigned, rather than on family size.15

 12 Wyoming has a tiered benefit schedule for all TANF recipients. The tiered schedule

consists of identical maximum grants for three- and four-person families, and five- and sixperson families. Therefore, families whose benefits are subject to the family cap will not

receive an increase in cash benefits if they are a three-person or five-person family who has

an additional child.

13 The amounts represented here are based on the fiscal year 2000 maximum allowable

benefit, which assumes no counted income. The actual benefit amount granted to families

is dependent on factors such as earnings and child support, among other things.

14 Florida imposes a partial family cap on benefits after the birth of the first child while on

assistance. The partial benefit increase is equal to 50 percent of what the family would have

received had the family cap not been implemented. Any subsequent children trigger a full

family cap. Connecticut has a partial family cap that increases a family’s benefit by $50 for

each additional child, which is less than the increase the family would have received with

the birth of an additional child if their benefits were not subject to the family cap policy.

15 Wisconsin assesses a TANF recipient’s capacity to perform work and assigns each

recipient to one of four different work components of the Wisconsin Works “employment

ladder”: W-2 Transition, Community Service Jobs, Trial Jobs, Unsubsidized Employment.

Families enrolled in the W-2 Transition component receive a benefit of $628 per month.

Families enrolled in the Community Service Jobs component receive a benefit of $673 per

month. Families enrolled in the remaining two components do not receive cash assistance.

Almost Half of the States

Have Some Type of Family

Cap Policy; Goals of the

Family Cap Policy Include

Reducing Out-of-Wedlock

Births and Increasing SelfSufficiency
Page 9 GAO-01-924 State TANF Family Cap Policies

Figure 1: Types of Family Cap Policies by State, 2000

Source: GAO’s Survey and HHS data.
Page 10 GAO-01-924 State TANF Family Cap Policies

States implemented the family cap policies before and after federal

welfare reform, often with the goals of decreasing out-of-wedlock births

and encouraging self-sufficiency. For example, one state implemented the

family cap based on the goal of encouraging parents to plan for security

and assume responsibility for their children. The family cap policy

developed out of state-based initiatives, starting with New Jersey in 1992.

Fifteen states implemented the family cap as a waiver to the AFDC

program. Eight states implemented the family cap policy following the

passage of PRWORA as a part of their TANF state plans.

In their policies, all states with a full or partial family cap include

exemptions to the family cap for families in specific circumstances.16 Most

states have the same exemptions, as shown in figure 2. For example, to

account for a pregnancy that occurred before the family started receiving

assistance, 20 states exempt families with children born less than 10

months after the family’s initial receipt of benefits. In addition, states

commonly exempt children not living with their biological parents. This

exemption typically occurs when the custody of the child is legally

transferred or the parent is deceased, incarcerated or incapacitated. Most

states exempt families who leave assistance for a specified period of time,

give birth to a child, and return to the rolls, that is, they become pregnant

“between spells.” Some state officials we spoke with expressed concern

about this exemption because of the potential that families are

circumventing the family cap on benefits by leaving assistance and

reapplying once a new child is born.

Six states have other exemptions to the family cap. For example, one state

exempts children conceived as a result of the failure of certain

contraceptive methods. Another state exempts children born with

substantial physical or mental disabilities.

 16 States with a flat grant system do not offer exemptions since there is no alternative

benefit structure from which a family can be exempt.

Most States’ Policies

Include Exemptions to the

Family Cap
Page 11 GAO-01-924 State TANF Family Cap Policies

Figure 2: Exemptions to the Family Cap, 2000

Note: Wisconsin and Idaho are not included in this figure because TANF benefits in flat grant states

are not affected by family size and therefore would not be able to be subject to these types of

exemptions.

a

Fourteen states require verification of sexual assault, rape, or incest from a professional (i.e. doctor

or police officer) or from a relative or friend.

Source: GAO Survey.

All 23 states with the family cap policy have procedures in place to enroll

eligible children in the Medicaid and food stamps programs even when

their families’ benefits have been capped. Many states’ documents—

including policy manuals, codes of regulations, personal responsibility

agreements that clients must sign, and TANF program brochures—explain

to families and caseworkers the availability of these services to newborn

children. In addition to written notification, one state told us they have an

outreach worker who is responsible for checking the Medicaid eligibility

of all children whose families are receiving TANF. All states told us that

when the birth of a child is reported to the TANF caseworker, there are

procedures in place to enroll the child in Medicaid and food stamps. One

state official expressed concern, however, that families whose benefits

might be affected by the family cap may not report a birth to a TANF

caseworker, making it less likely that the family would enroll the child in

other support services.

Children From CappedBenefit Families Still

Eligible for Other

Assistance Programs
Page 12 GAO-01-924 State TANF Family Cap Policies

Some states have tailored other welfare-related policies for families with

capped benefits. Almost all states in the nation have policies that ignore a

portion of a family’s earned income when determining the family’s

eligibility for benefits and the amount of benefits they will receive. These

policies increase the amount of cash income for the households with a

working adult. Three of the states with a family cap policy ignore an even

larger portion of a family’s income after the family’s benefits are capped.

In addition, some states make exceptions to their child support policies

for capped-benefit families. Typically, states keep any child support

collected on behalf of TANF families in order to reimburse the government

for its welfare costs.17 Four states provide a portion, or the entire amount,

of any child support collected for a capped-benefit family to the family

instead of retaining it as they do for non-capped families.18

Four states with a family cap on benefits give families vouchers equal to

the traditional cash benefit increase they would have received in the

absence of a cap. These vouchers can be used to purchase basic goods and

services for the newborn child, such as diapers and formula, from

participating vendors, although data on the extent to which families used

these vouchers were not readily available. Conditions under which states

provide the vouchers vary. For example, one state placed a time limit of

three years on the voucher, while another state provides a voucher only if

the family requests one each month. Another state provides alternative

resources by offering a cash payment to a third party in the amount of the

incremental increase that would have been paid on behalf of the child to

purchase goods or services for the newborn child. The third party can be a

non-profit organization offering such goods and services, a family member

not included in the assistance unit, or a caseworker not directly connected

to the family receiving the benefit.

 17 PRWORA requires that families receiving TANF assign their right to any child support

collected on their behalf to the government to reimburse it for its welfare costs. These

retained child support payments are shared with the federal government. PRWORA does

not prohibit states from using their own state maintenance of effort funds to provide an

amount equal to the child support received directly to the families while still paying the

federal government its required share. Nationwide, 19 states pass on some child support to

its TANF families.

18 A U.S. District Court in Indiana ruled unconstitutional Indiana’s requirement that

children subject to the cap assign their child support payments to the state. Also, North

Dakota recently passed legislation to begin implementing the child support pass-through

for capped-benefit families.

Additional Resources Are

Available to CappedBenefit Families in Some

States
Page 13 GAO-01-924 State TANF Family Cap Policies

During an average month in 2000, about 108,000 families received less in

cash assistance than they would have if their benefits had not been

capped.19 Capped-benefit families represented about 9 percent of the

average monthly TANF caseload in the 20 states that provided us data. The

proportion of the monthly caseload of families whose benefits were

affected by the cap varied from 1 to 20 percent across these states. The

actual effect of the family cap on cash benefits is difficult to determine

because cash benefit levels are influenced by other factors, including

family earnings and child support. We estimated, however, that in an

average month, families whose benefits were affected by the cap due to

the birth of an additional child received about 20 percent less than they

would have received in the absence of a cap; we based this estimation on

two person families that had an additional child while on welfare.20

Additional data show that 12 percent of families had more children after

their TANF benefits were already affected by the family cap. The

percentage increase in benefits not received by these particular families is

likely to be greater than our estimate of 20 percent. Finally, families with

capped benefits receive more in food stamps than families of a

comparable size whose benefits are not capped.

Based on responses of 20 states with family cap policies, about 108,000

families receiving TANF had their benefits affected by the family cap, in an

average month during 2000. This number represented about 9 percent of

the total number of TANF families in these 20 states, and is a minimum

number of families who may have been affected during 2000.21 Table 1

shows the number of families whose benefits were affected by the family

cap in an average month by state and the percentage of all TANF families

whose benefits were affected by the family cap in each state. The

 19 Twenty of the 23 family cap states provided these data. Wisconsin and Idaho, the two

states with a flat grant policy, and Wyoming, which has a tiered-benefit policy, were not

able to provide the data needed to determine the numbers of families who experienced a

birth but did not receive an increase in TANF benefit amount.

20 This is a weighted calculation across family cap states that could provide us with

information on three-person capped-benefit families. Because not every family cap state

could provide us with this information, the calculation is based on data from 16 states.

21 The total number of families receiving TANF who were affected by family cap policies

during an entire year may be larger. Over the course of a year, some capped-benefit

families may leave the TANF rolls while other TANF families may enter into capped-benefit

status. While monthly data shows how many families were affected in an average month of

fiscal year 2000, it does not provide a total of all the families who, when receiving TANF,

had their benefits affected by a cap. We were not able to obtain this information from all of

the states.

In an Average Month

in 2000, About 108,000

Families Received an

Estimated 20 Percent

Less in Cash

Assistance Due to the

Cap

About 108,000 Families

Had Their Cash Benefits

Capped in an Average

Month
Page 14 GAO-01-924 State TANF Family Cap Policies

percentage affected by the family cap varies among the states, ranging

from about 1 percent in South Carolina and Tennessee to 20 percent in

Illinois. These variations could be caused by differences in state’ various

exemption policies and practices, or whether states have their own timelimits for cash assistance. Variations could also be due to differences in

when states implemented the family cap. For example, because California

only recently implemented a family cap policy, the number of TANF

families with benefits affected by the cap is likely to increase, according to

California state officials.22

 22 For information on the estimated impact of the family cap in California, see Michael

Wiseman, Welfare’s Children, Discussion Paper no. 1212-00 (Madison, Wis.: Institute for

Research on Poverty, 2000).
Page 15 GAO-01-924 State TANF Family Cap Policies

Table 1: Average Monthly Number of Families Whose Benefits Were Capped as a

Percentage of the State’s TANF Population in 2000

Family cap states

Average monthly

number of cappedbenefit families

Capped-benefit families as a

percentage of the state’s total

TANF families, in an average

month

Based on 20 states 107,554 8.9

 Arizona 662 1.9

 Arkansas 451 4.0

 California 53,417 9.5

 Connecticut 1,741 6.4

 Delaware 382 7.8

 Florida 1,581 2.3

 Georgia 3,949 7.5

 Idaho a a

 Illinois 17,137 19.6

 Indiana 5,054 13.8

 Maryland 848 3.2

 Massachusetts 6,410 14.6

 Mississippi 1,551 10.4

 Nebraska 485 4.6

 New Jersey 7,265 14.1

 North Carolina 3,675 7.6

 North Dakota 130 4.5

 Oklahoma 373 2.4

 South Carolina 164 1.0

 Tennessee 317 .6

 Virginia 1,962 6.0

 Wisconsin a a

 Wyoming a a

a

 Not available.

Source: GAO 2001 Survey and GAO analysis.

In general, families that have had their benefits capped are larger than

families whose benefits were not limited by the cap.23 Three or four person

families make up about two-thirds of families whose benefits are affected

by a cap. Such families might consist, for example, of a parent with two or

 23 Using state reported data, we calculated that the weighted average size of families

subject to the cap was 3.8 persons, compared with 2.9 persons for all TANF families in

these states. These averages are based on responses from 16 states with respect to the

family size of capped-benefit families and responses from 17 states with respect to the

family size of all TANF families.
Page 16 GAO-01-924 State TANF Family Cap Policies

three children, one of whom does not receive TANF benefits because of

the cap. Families with five members or more make up a little over onequarter of families whose benefits are affected by a cap. Two person

families and one person families (child-only cases) make up the remaining

families whose benefits are affected by a cap. Table 2 below gives family

size information for capped-benefit families by state.

Table 2: Number of Capped-Benefit Families by Family Size and State in an Average Month in 2000

Family cap states Family sizea

1-2-person 3-person 4-person 5-person

6- or

more person

All family cap states 10,850 33,951 29,201 14,511 12,372

 Arizonab d d dd d

 Arkansas 219 118 63 44 7

 California 8,507 15,695 14,823 6,855 7,537

 Connecticutb d d dd d

 Delaware 43 141 102 51 45

 Florida 0 772 508 211 90

 Georgiab d d dd d

 Idaho d d dd d

 Illinois 0 6,169 5,312 3,085 2,571

 Indiana 65 1,916 1,646 1,427c d

 Maryland 75 334 236 110 93

 Massachusetts 943 2,657 1,950 494 366

 Mississippi 258 527 415 207 144

 Nebraska 151 143 101 41 49

 New Jersey 111 3,002 2,154 1,114 884

 North Carolina 435 1,570 1,023 413 234

 North Dakota 6 53 36 18 17

 Oklahoma 22 121 102 65 63

 South Carolina 11 62 52 23 16

 Tennesseeb d d dd d

 Virginia 4 671 678 353 256

 Wisconsin d d dd d

 Wyoming d d dd d

a

Family size includes only members of the TANF assistance unit.

b

 Arizona, Connecticut, Georgia, and Tennessee did not have caseload information by family size.

c

 Indiana officials did not report the number of six person or more families. Instead, they reported the

number of families with five or more persons. This number is included under the five person column.

d

 Not available.

Source: GAO 2001 Survey.
Page 17 GAO-01-924 State TANF Family Cap Policies

We estimated that in a given month, the amount of cash assistance

received by families whose benefits had been capped was, on average,

about 20 percent less than it would have been in the absence of a cap. We

estimated the cap’s effect on benefits because states were unable to report

the actual amount by which families’ benefits changed as a result of the

cap. Several factors, including family earnings and other resources, such

as receipt of child support, influence the amount of cash benefits a family

receives. Our estimate represented an average dollar amount of

approximately $100 per month24—representing a range from $20 in

Wyoming to $121 in California. These estimates may somewhat overstate

the amount by which families benefits are affected because the estimates

are based upon the maximum cash benefit a TANF family is eligible to

receive, which is generally greater than the average amount of cash

assistance families actually receive. Overall, the average level of cash

assistance for three person families whose benefits were affected by the

family cap was $39425 per month in federal fiscal year 2000. Depending on

the state and based on maximum benefit levels, we estimated that families

received between six percent (in Wyoming) to 26 percent (in Illinois) less

in cash assistance due to the family cap. Table 3 shows our calculations of

the amount not received by three person capped-benefit families across

family cap states. For more information, see table 5 in appendix I.

 24 These estimates are weighted averages based on data from the 16 family cap states that

could provide us caseload information for three person families. The weighted average is

greater than a non-weighted average because states with larger numbers of capped-benefit

families, such as California and Illinois, have larger monthly TANF grant amounts than

other states. See table 3 for estimates for each family cap state.

25 This average is weighted by the family cap caseload across the 14 family cap states that

provided average benefit level and caseload information for three-person capped-benefit

families.

Capped-Benefit Families

Received an Estimated 20

Percent Less in Cash

Benefits
Page 18 GAO-01-924 State TANF Family Cap Policies

Table 3: Estimated Effect on TANF Cash Benefits for a Capped-Benefit Family in an

Average Month, by State

Based on a 2-person family that has an additional child on welfare (federal fiscal

year 2000)

States with family cap policiesa

Estimate of percentage of TANF cash

benefit not received under the family

cap when additional child born to parent

Weighted average/dollar difference

across statesb

20 ($100)b

 Arizona 21 ($72)

 Arkansas 21 ($42)

 California 19 ($121)

 Connecticut 11c($73)

 Delaware 20 ($68)

 Florida 10d($31)

 Georgia 16 ($45)

 Illinois 26 ($99)

 Indiana 20 ($59)

 Maryland 21 ($89)

 Massachusetts 16 ($102)

 Mississippi 14 ($24)

 Nebraska 20 ($71)

 New Jersey 24 ($102)

 North Carolina 13 ($36)

 North Dakota 21 ($94)

 Oklahoma 23 ($67)

 South Carolina 21 ($42)

 Tennessee 23 ($43)

 Virginia 17($66)

 Wyoming 6 ($20)

Note: Based on maximum monthly benefit information. These data are based on the differences in

benefits provided for a three person family (most typically, a mother and two children) as compared

with a two person family (a mother with one child), if each family were receiving the maximum

allowable benefit. For data on maximum monthly benefits and the actual average monthly benefit for

capped-benefit families, see table 5 in app. I.

a

 Wisconsin and Idaho are not included in this table because cash benefits in these states are not

affected by family size or the birth of additional children.

b

 These figures are weighted by state family cap caseloads for three person families. Only 16 states

could provide us with these caseload figures to compute the weighted average and dollar amount

across states.

c

 Connecticut offers a partial increase ($50) in cash benefits to families that have an additional child

while on assistance. Due to this partial increase, we compared the maximum benefit for a three

person family with a partial benefit cap to the maximum benefit for a three person non-capped family.

d

 Florida offers a partial increase (50 percent) in cash benefits to the first born child while a family is

on assistance. Any subsequent children trigger a full family cap. Due to this partial increase, we

compared the maximum benefit for a three person family with a partial benefit cap to the maximum

benefit for a three person non-capped family.
Page 19 GAO-01-924 State TANF Family Cap Policies

Source: Craig W. Abbey, Welfare Reform: Financial Eligibility Rules and Cash Assistance Amounts

Under TANF (Washington, D.C.: Congressional Research Service, 2000), and GAO analysis.

While we were able to estimate how the family cap affects the monthly

cash benefit amount for a family, the family’s income may be affected in

other ways. Consequently, the cap’s total effect on household income is

difficult to determine. To some extent, the family cap’s financial impact is

offset by an increase in food stamp benefits. Because food stamp benefit

calculations take into account unearned income (i.e., TANF cash

assistance) and family size, capped-benefit families would receive more in

monthly food stamp benefits than they would if they were not capped.26 In

addition, a capped-benefit family may receive more child support or retain

more of its earnings than it would without the cap, due to the state level

policies specific to capped-benefit families discussed previously. However,

because the majority of TANF families do not engage in work activities or

receive child support, the effect of the cap on their income is unlikely to

be offset by the benefits these policies offer.

While the majority of families receiving TANF have not had additional

children after their benefits were limited by the cap, about 12 percent of

capped-benefit families did. These families had more than one child whose

benefits were affected by the cap.27 For these families, the estimated cash

increase not received is likely to be greater than our average estimate of 20

percent. For example, because of the family cap, a TANF recipient who

gives birth to two additional children while on TANF would receive from

21 percent in North Carolina to 38 percent in Oklahoma less in cash

assistance.28 As states have varying cash benefit amounts, the actual dollar

amount that would not have been received ranges from $48 a month in

Mississippi to $241 in California.

 26 For example, in Arkansas in fiscal year 2000, a capped-benefit family of a mother with

two children would receive a smaller combined monthly amount in TANF and food stamps

than a similar non-capped family ($448 compared with $478). This total includes less in

TANF than the non-capped family ($162 compared with $204) but more in food stamps

($286 compared with $274). For more information, see Shirene Hansotia and Carmen

Solomon-Fears, Welfare Reform: Family Caps in the Temporary Assistance for Needy

Families Program (Washington, D.C.: Congressional Research Service, July 1998).

27 Thirteen states provided us with information concerning the number of families who had

additional children after their benefits were limited by the cap.

28 As with our other estimations, this estimation is based on maximum benefit information

for each state and excluded flat grant states, partial family cap states, and Wyoming, as

Wyoming has a tiered benefit schedule. We estimated the difference in cash benefits for a

two-person family that had two additional children while receiving public assistance.

Twelve Percent of TANF

Families Had Additional

Children After Their

Benefits Were Affected by

the Cap
Page 20 GAO-01-924 State TANF Family Cap Policies

Due to limitations of the existing research, we cannot conclude that family

cap policies reduce the incidence of out-of-wedlock births, affect the

number of abortions, or change the size of the TANF caseload. There are

several major difficulties in obtaining conclusive evidence on the family

cap. These include appropriately measuring the number of out-of-wedlock

births and separating the impact of the family cap from the impact of other

major policy and program changes that took place simultaneously and

from the impact of broader social, cultural, or economic changes. We

identified five studies that examined the relationship between the family

cap and the incidence of out-of-wedlock births. Due to their

methodological limitations, none of these studies can be used to cite

conclusive evidence about the effect of the family cap on out-of-wedlock

births.29 The studies we reviewed that examined the relationship between

the family cap, abortions, and caseloads also had limitations that

precluded conclusions about the effect of the family cap. (See a

description of the studies and their limitations in app. II).

One of the major difficulties in studying the effect of the family cap is that

major welfare policy changes at the state and federal levels have occurred

over the past decade. These changes make it difficult to distinguish the

effect of the family cap (or any other welfare policy) from the effect of

other reforms, or from the impact of major changes in messages being sent

to welfare recipients about self-sufficiency through welfare reform. For

example, PRWORA placed more emphasis on work requirements to

encourage recipients to be self-sufficient and also allowed states to have

more flexibility in implementing policies such as family caps, which also

encourage self-sufficiency through the goal of reducing out-of-wedlock

births. In such cases, it would be difficult to separate the combined effects

of the various policies into the individual effects of each on the number of

out-of-wedlock births.

Another major difficulty with studying the effects of family caps on the

number of out-of-wedlock births is separating the family caps’ effect from

societal changes occurring between 1991 and 1997. Specifically, the birth

rate among teens declined and the birth rate for second children declined

among women ages 15 to 24. The period in which these declining birth

rates occurred overlapped with the period in which family caps were

implemented. Since this overall decline began before any family caps were

 29 Three studies looked at the impact of the family cap on births in their welfare population,

but since the majority of welfare recipients are single mothers, we discuss births under

these family cap studies as out-of-wedlock births.

Existing Studies

Cannot Be Used to

Cite Conclusive

Evidence About the

Impact of the Family

Cap on Out-ofWedlock Births

Multiple Difficulties in

Assessing the Effect of the

Family Cap
Page 21 GAO-01-924 State TANF Family Cap Policies

in effect, we can safely assume that this trend began independent of family

cap implementation. Therefore, it is difficult to disentangle the true effect

that the family cap policies may have had on declining birth rates from the

effect of these national declines.30

Another barrier to understanding the effects of the family cap is the

limited availability of needed information from national data sets for

studying specific welfare policies relating to out-of-wedlock births. HHS

only recently began collecting data on out-of-wedlock births for welfare

recipients. This data will be helpful for analyzing state-level effects of

particular welfare policies, such as the family cap.

None of the five studies we reviewed was conducted in a way that would

permit us to draw firm conclusions about the effect of the family cap on

childbearing. Four of the studies we reviewed could not isolate the effect

of the family cap from the effects of other welfare reform policies and had

other shortcomings. For example, in one study, the participants did not

understand whether their benefits were affected by the family cap. The

fifth study was more successful at isolating the effects of the family caps,

but had other limitations.31

While this fifth study was strongest in terms of the methods it used to

examine the effects of the family cap, it was limited by the way it

measured the occurrence of non-marital births. This study’s strengths

included controlling for the effects of other factors—broader social and

economic changes, differences across states over time, and other welfare

reforms implemented at, or around, the same time as the family cap.

However, this study evaluated the effect of the family cap by using a ratio

of non-marital births to all births (marital and non-marital). Using this

ratio is problematic because even if the number of non-marital births

remained constant, the ratio could still decrease or increase because of

changes in the number of marital births. For example, the ratio would

decrease if marital births increased and non-marital births remained

 30 While some of the studies in this review attempted to control for unmeasured, underlying

phenomena such as this generally declining birthrate by entering variables for the effect of

time, the control mechanisms used may not have been adequate due to the similarity of

how time and the family cap itself were measured.

31 See Ann Horvath-Rose and H. Elizabeth Peters, “Welfare Wiavers and Nonmairital

Childbearing,” For Better and For Worse: Welfare Reform and the Well-Being of Children

and Families (New York: Russell Sage, forthcoming 2001).

Studies Do Not Provide

Conclusive Evidence on

the Effect of the Family

Cap
Page 22 GAO-01-924 State TANF Family Cap Policies

constant. Because of this limitation, the study cannot conclusively show

the effect of the family cap on the number of non-marital births.32

As was the case with studies examining non-marital births, other studies

we reviewed were not conducted in a way that would permit us to draw

firm conclusions about the effect of the family caps on abortions, family

planning, or the TANF caseload. The studies we reviewed had various

limitations. The most common were limitations involving the inadequate

measurement of family caps and the inability to isolate the effect of the

family cap from other concurrent welfare reforms. We did not identify any

studies that evaluated the impact of the family cap on poverty.

While HHS’ research efforts cover a broad range of issues, including some

related to reducing out-of-wedlock pregnancies, most of the studies have

focused on TANF’s employment-related goal. Since the enactment of

PROWRA, HHS has used its research authority and resources to encourage

and support evaluations of various welfare program approaches and

features. As described in its Third Annual Report to the Congress on the

TANF program, August 2000, HHS’ research agenda has two main goals:

(1) to increase the probability of success of welfare reform by providing

timely, reliable data to inform policy and program design, especially at the

state and local level where decision making has devolved; and (2) to

inform the nation of policies chosen and their effects on children, families,

communities and social well-being. Within this research agenda, as shown

in table 4, in fiscal year 2000, HHS spent about $26 million on research and

technical assistance projects.33 These projects include studies on the

relative effectiveness of various approaches to moving welfare recipients

into employment, the well-being of children of parents enrolled in welfareto-work programs, and the effectiveness of job retention strategies for

welfare recipients who become employed.

 32 The authors stated that their results also show that time variables which capture

unmeasured aspects, such as social and economic factors, play larger roles in out-ofwedlock childbearing than do welfare policies, such as the family cap.

33 Included in this total is $7 million in policy research funding earmarked to study the

outcomes of welfare reform.

HHS’ Research

Focuses on

Employment Goal of

TANF, With Limited

Information Available

on Goal of Reducing

Out-Of-Wedlock

Pregnancies
Page 23 GAO-01-924 State TANF Family Cap Policies

Table 4: HHS Research Funding for Fiscal Year 2000

Research Area Description

Total Amount

Funded

TANF- Welfare Reform

(General)

Continuation of demonstrations states began under waivers, evaluation of child wellbeing and special populations under welfare reform, caseload dynamics and other

topical issues. Includes grants to states and localities to enhance studies of welfarerelated outcomes, household behavior and use of services.

$9,236,081

TANF – Employment

Interventions and Issues

National evaluations of sites testing interventions related to employment retention and

advancement, employment interventions for rural TANF recipients and the hard-toemploy, and welfare to work strategies. Also includes evaluations of earnings

reporting, research on low-skill/low-wage workers’ characteristics and employment

patterns, and other employment issues for low-income families.

6,850,065

Strengthening Families Projects related to strengthening family relations including research on effects of

welfare reform on fragile families and family formation, low-income family well-being

and coping mechanisms. Also includes projects on fathers, abstinence education and

reducing domestic violence.

1,712,249

Child Care National study of Low-Income Child Care, research on strategies for providing, and the

economics of, high quality child care and other projects. 2,259,071

Synthesis Studies,

Dissemination and

Technical Assistance

Includes syntheses of evaluations of welfare reform impacts, welfare outcomes grants,

state TANF policies, research on interventions being tested, and data on low-income

families’ economic well-being. Also includes annual welfare reform evaluation

conference, other dissemination activities and technical assistance to states.

3,482,261

Data Analysis Includes analyses of existing data sets across a variety of topics. 559,662

Methodology Studies Includes support for existing surveys and databases, feasibility studies, development

of new questions and uses of data, and administration of specific questions of interest.

Also includes funding for poverty centers.

1,515,254

Total FY 2000 $25,614,643

Note: Includes research under the Office of Planning, Research and Evaluation in the Administration

for Children and Families (ACF), which oversee TANF. The dollars include funding authorized under

Section 1110 of the Social Security Act, as amended. Also includes research conducted by HHS’

Assistant Secretary for Planning and Evaluation (ASPE) with funds primarily from the Secretary’s

Policy Research account.

Source: Department of Health and Human Services.

Although most of the studies and research focus on employment-related

issues, HHS does support some research related to the TANF goal of

reducing out-of-wedlock pregnancies. For example, some of the

evaluations begun under waivers as well as a few studies of families who

have left welfare have gathered some information relating to the family

cap and out-of-wedlock pregnancies among welfare recipients. In addition,

HHS has been involved with a significant initiative aimed at reducing

teenage pregnancy34, has funded research projects related to helping young

 34 For more information on research related to teen pregnancy, see Douglas Kirby,

Emerging Answers: Research Findings on Programs to Reduce Teen Pregnancy

(Washington, D.C.: The National Campaign to Prevent Teen Pregnancy, 2001).
Page 24 GAO-01-924 State TANF Family Cap Policies

adults avoid premature sexual activity and unintended pregnancies, and

has just recently begun a project involving interventions for unwed

parents at the time of their child’s birth. HHS is also involved in a major

on-going evaluation of abstinence education programs designed to

strengthen the research base and public knowledge about promoting

abstinence among youth and the benefits of various approaches.

Moreover, in fiscal year 2000, HHS has taken steps to increase the

availability of information related to out-of-wedlock childbearing activities

by requiring states to include information on their strategies for reducing

out-of-wedlock pregnancies in their TANF annual reports. HHS also

requires states to report data on the incidence of out-of-wedlock births

among the TANF caseload. This new information may help HHS, states,

and researchers share information on promising approaches to reducing

out-of-wedlock pregnancies and contribute to a state’s ability to qualify for

the Bonus to Reward Decrease in Illegitimacy Ratio.

Even with the research under way and the steps HHS has recently taken,

additional efforts may prove useful in, for example, improving data

availability, conducting implementation studies, and striving to improve

effectiveness studies. In our recently completed comprehensive review of

the data available to assess states’ progress in meeting TANF’s goals, we

found limited information regarding the goal of reducing out-of-wedlock

pregnancies, particularly in comparison to the more widely available

information related to helping welfare parents reduce their dependence on

welfare through job preparation and employment.35 In some ways this is

not surprising, given that states have focused their efforts on helping

welfare recipients find employment and become economically

independent. One expert said that states have focused their efforts on

employment because much more is known about effective strategies for

moving welfare recipients into work than is known about strategies for

reducing births. Another expert believes that states have focused more on

employment goals because more consensus exists about the role of

government in helping welfare recipients become employed than about its

role in influencing people’s childbearing decisions. HHS could play an

important role in encouraging and supporting additional research in this

area to support states’ efforts in meeting TANF goals.

In the new and evolving welfare environment created by PRWORA, states

have tremendous flexibility to design and implement strategies to meet

 35 See Welfare Reform: Data Available to Assess TANF’s Progress (GAO-01-298, Feb. 2001).

Conclusion
Page 25 GAO-01-924 State TANF Family Cap Policies

four key TANF goals: providing assistance to needy families; ending

dependence on government aid through job preparation, employment, and

marriage; preventing and reducing out-of-wedlock pregnancies; and

promoting two-parent families. States have moved ahead with strategies

designed to move welfare recipients into employment, an area where

much research exists providing useful information about what works best

and for whom. While states have been much less active in implementing

strategies to reduce out-of-wedlock pregnancies, the use of family cap

policies does show interest among states in meeting this congressionallyestablished goal. Yet, policymakers and program administrators have

limited information available to help in understanding the effectiveness of

the family cap or to aid in devising and implementing other strategies that

may prove effective in reducing out-of-wedlock births. While overcoming

the inherent difficulties in assessing the effectiveness of family cap

policies and other approaches in the new welfare environment may be

challenging, taking steps to improve data availability, conduct

implementation studies, and improve effectiveness studies would be

useful. State, local, and federal program administrators and policymakers

would be well served by a stronger research base upon which to draw

information on a range of effective strategies for reducing out-of-wedlock

pregnancies.

Even though the new welfare system is highly decentralized, PRWORA

explicitly charged HHS with conducting research on state TANF programs,

and HHS has played an important role in identifying and disseminating

information on effective strategies for meeting welfare reform goals, with

a particular focus on TANF’s employment-related goal. HHS also has

supported some research that addresses effective strategies for

accomplishing the goal of reducing out-of-wedlock pregnancies. In

addition, HHS has taken steps to ensure that more data will be available

from states on births to welfare recipients and on strategies that states

have implemented to reduce out-of-wedlock pregnancies. Still, if HHS

strengthened its efforts in this area and improved the research base, it

could enhance states’ efforts to address this TANF goal. Moreover, if HHS

submits information on its research agenda and efforts with estimated

resource needs to the Congress, the Congress will have useful information

to use as it considers TANF reauthorization and related research needs.

We recommend that the Secretary of HHS review its research agenda and,

if appropriate, take steps to identify, encourage, and support additional

studies that would increase the availability of information on how best to

prevent and reduce out-of-wedlock pregnancies and more fully support the

goals of TANF. This additional work could include improving the

availability of data to support studies, working with states to identify and

Recommendations to

the Secretary of

Health and Human

Services
Page 26 GAO-01-924 State TANF Family Cap Policies

disseminate information on relevant promising practices, and supporting

rigorous evaluation studies. Having additional research in this area would

provide important information to administrators and policymakers and

support the Congress’ efforts to reward states for strategies that succeed

in reducing out-of-wedlock births.

We also recommend that HHS provide its research agenda, with estimated

resource needs, to the Congress for its use as it considers TANF

reauthorization, including decisions about the role of HHS in conducting

research and the resources HHS needs to fulfill that role. This will help to

ensure that the key research and technical assistance needs of this $16.5

billion federal program are met.

We provided HHS with an opportunity to comment on the report. HHS

agreed with our conclusion that available research does not address the

effect of family cap policies and said that the report addressed an

important topic. A copy of HHS’ response is in appendix III. We also

incorporated technical comments we received from HHS where

appropriate.

Regarding our recommendation about the need for more research on

effective strategies for reducing out-of-wedlock births, HHS agreed that

more research is needed, but noted that additional detail in the report on

the methodological limitations of existing research would be helpful for

understanding the significance of the existing studies and for individuals

thinking about additional research. We believe the level of discussion on

limitations in the report, including the appendix, is sufficient to address

the focus of this report—what conclusions can be drawn about the

effectiveness of the family cap from existing research--and to point to

ways to improve studies on the family cap. Regarding our second

recommendation that HHS provide its research agenda to the Congress for

its use as it considers TANF reauthorization, HHS noted that it already has

in place several mechanisms for keeping the Congress informed about its

welfare research activities. These include annual reports to the Congress

on its study of the outcomes of welfare reform with brief descriptions of

welfare outcomes projects planned for funding each year, a chapter

describing its research agenda in the annual TANF report to the Congress,

and briefings to interested congressional staff upon request. We are aware

of these information sources and believe they provide important

information to the Congress. However, we continue to believe that it

would be useful for HHS to provide its research agenda to the key

authorizing committees for the TANF program, with estimated resource

Agency Comments
Page 27 GAO-01-924 State TANF Family Cap Policies

needs, in a form designed specifically to aid the Congress in TANF

reauthorization would serve a useful purpose.

HHS also expressed concern that readers might get an unnecessarily

narrow view of the strategies available to address the goal of reducing outof-wedlock pregnancies because the report focuses solely on family cap

policies and research. As HHS noted, the TANF goal of preventing and

reducing out-of-wedlock pregnancies addresses the overall population, not

just welfare families, and only a modest portion of out-of-wedlock births is

attributable to the welfare population. Yet, family cap policies focus by

definition on welfare families. We agree that this is an important point and

that other strategies can address the goal of reducing out-of-wedlock

pregnancies, such as the National Campaign to Prevent Teen Pregnancy,

which we mentioned in the report. While a comprehensive review of the

research related to strategies to reduce out-of-wedlock pregnancies was

not the focus of this report, we did look beyond research on the family cap

to assess whether HHS’ welfare-related research agenda supported the

broad goal of preventing and reducing out-of-wedlock pregnancies and

concluded that more research on strategies for addressing this goal,

including those beyond the family cap, could play an important role in

encouraging states efforts in this area. As suggested by HHS, we added a

reference to the recently completed review of evaluation research related

to reducing teen pregnancy.

We also provided the draft report to two experts on welfare research, who

agreed with our findings and overall conclusions. They also provided

technical comments that we incorporated as appropriate.

As agreed with your offices, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days after its

issue date. At that time, we will send copies of this report to the

Honorable Max Baucus, Chairman, and the Honorable Charles Grassley,

Ranking Minority Member, Senate Committee on Finance; the Honorable

Bill Thomas, Chairman, House Committee on Ways and Means; the

Honorable Wally Herger, Chairman, and Honorable Benjamin Cardin,

Ranking Minority Member, Subcommittee on Human Resources, House

Committee on Ways and Means; the Honorable Tommy Thompson,

Secretary of Health and Human Services; appropriate congressional

committees; and other interested parties. We will also make copies

available upon request.
Page 28 GAO-01-924 State TANF Family Cap Policies

If you have any questions about this report, please contact me on (202)

512-7215. Other GAO contacts and staff acknowledgments are listed in

appendix IV.

Cynthia M. Fagnoni, Managing Director

Education, Workforce, and Income Security Issues
Appendix I: Scope and Methodology

Page 29 GAO-01-924 State TANF Family Cap Policies

This appendix provides more detail on how we (1) assessed the number of

families whose benefits were affected by the family cap in an average

month and the amount of cash benefits not received by capped-benefit

families and (2) identified studies on the impact of the family cap and

analyzed the content of those studies. We conducted our work between

July 2000 and September 2001, in accordance with generally accepted

government auditing standards.

To determine the number of families whose benefits were affected by the

family cap in an average month, we requested federal fiscal year 2000 data

from TANF programs in all states with family cap policies. Twenty states

provided us with the information that was used to determine the average

monthly number of families in 2000 whose benefits were affected by the

family cap in these states. Not all states were able to give us this

information by family size. We requested the same caseload data for all

TANF families in the family cap states.

In order to estimate the monthly amount of cash assistance capped-benefit

families did not receive due to the family cap, we used information

provided by the Congressional Research Service. We estimated how much

less families would receive because of the family cap policy by calculating

the difference between the maximum benefit for two and three person

families. (See table 5.)

To determine the average monthly cash benefit for three person cappedbenefit families, we asked states for the average monthly cash benefit level

for families affected by the cap by family size. We then weighted this

average number for three person families by the three person family cap

caseload in each state. Not all states were able to provide benefit levels for

families affected by the cap, nor were all states able to provide

information by family size.

Appendix I: Scope and Methodology

Assessing the Number of

Capped-Benefit Families in

an Average Month and the

Amount of Cash Benefits

Not Received by CappedBenefit Families
Appendix I: Scope and Methodology

Page 30 GAO-01-924 State TANF Family Cap Policies

Table 5: Estimated Cash Benefit Not Received by a Capped-Benefit Family in an Average Month, by State

Based on a 2- person family that has an additional child on welfare (FY 2000)

Family cap statesa

Maximum monthly

benefit for 2-

person families

Maximum monthly

benefit for 3-person

families

Estimate of cash benefit

not received with

additional child

Average monthly cash

benefit for 3-person

capped-benefit families

Weighted figuresb 20%b ($100) $394b

 Arizona 275 347 21% ($72) c

 Arkansas 162 204 21% ($42) 147

 California 505 626 19% ($121) 467

 Connecticut 563 636 11%d ($73) 425

 Delaware 270 338 20% ($68) c

 Florida 272 303 10%e ($31) 272

 Georgia 235 280 16% ($45) c

 Illinois 278 377 26% ($99) c

 Indiana 229 288 20% ($59) 156

 Maryland 328 417 21% ($89) 279

 Massachusetts 535 637 16% ($102) 488

 Mississippi 146 170 14% ($24) 138

 Nebraska 293 364 20% ($71) 283

 New Jersey 322 424 24% ($102) 329

 North Carolina 236 272 13% ($36) 228

 North Dakota 363 457 21% ($94) 332

 Oklahoma 225 292 23% ($67) 208

 South Carolina 162 204 21% ($42) 147

 Tennessee 142 185 23% ($43) c

 Virginia 323 389 17% ($66) 216

 Wyoming 320 340 6% ($20) c

Note: Based on maximum monthly benefit information. These numbers represent the change in

benefits from two person to three person families—also the difference between a three person

capped-family and a three person non-capped family –if a family were to receive an increase in the

maximum allowable benefit. We include data on the actual average monthly benefit for reference, as

most families do not receive the maximum benefit.

a

 Wisconsin and Idaho are not included in this table because in these states cash benefits are not

affected by family size or the birth of an additional child.

b

 These figures are weighted by state family cap caseloads for three person families. Not all states

could provide us with three person capped-benefit caseloads or average cash benefits for three

person capped-benefit families. Therefore, the weighted average not received is based on data from

16 states and the weighted average benefit is based on data from 14 states.

c

 Not available.

d

 Connecticut offers a partial increase ($50) in cash benefits to families that have an additional child

while on assistance. Due to this partial increase, we listed the maximum benefit for a three person

capped benefit family under the maximum two person family benefit column.

e

 Florida offers a partial increase (50%) in cash benefits to the first child born while a family is on

assistance. Any subsequent children trigger a full family cap. Due to this partial increase, we listed

the maximum benefit for a three person capped benefit family under the maximum two person family

benefit column.
Appendix I: Scope and Methodology

Page 31 GAO-01-924 State TANF Family Cap Policies

Source: Craig W. Abbey, Welfare Reform: Financial Eligibility Rules and Cash Assistance Amounts

Under TANF (Washington, D.C.: Congressional Research Service, 2000), GAO 2001 Survey, and

GAO analysis.

Many states were able to give us estimates based on the twelve months of

state TANF data from federal fiscal year 2000, however some were only

able to give us data for state fiscal year 2000. Most states collected data on

the universe or population to respond to our request, while a few states

used a sampling methodology.

We collected, reviewed, and analyzed information from available

published and unpublished research on the effect of the family cap. To

identify the literature, we followed three procedures:

1. interviewing experts to find out what studies were completed or in the

process of being completed on the impact of the family cap;

2. conducting library and internet searches; and

3. reviewing bibliographies of studies that focused on family cap issues.

Our final list consisted of nine studies, as listed in the bibliography, which

evaluated the impact of the family cap on the incidence of out of wedlockbirths and abortions and the impact on TANF caseloads. We were unable

to identify any studies evaluating the effect of the family cap on poverty.

For the studies in our review, we recorded the quantitative results,

summarized the methodologies used, and summarized the authors’

conclusions about the effect of the family cap. We used social science

research principles to assess the methodological adequacy of these

studies, and to assess the degree to which the study was able to isolate the

effect of the family cap from other, concurrent welfare reform initiatives.

At least two social scientists or statisticians with specialized training in

evaluation research methodology reviewed each study. Conclusions in this

report are based on our assessment of the evidence presented in these

studies.

We sent the list of research articles and summaries of our reviews of the

studies to several experts who have conducted, or been involved in

summarizing, extensive research in the field of welfare reform to confirm

the comprehensiveness of our list of articles and the thoroughness of our

reviews. We also conducted a second search in June 2001 to ensure that

no new research articles or reviews had been published since our original

search. We identified one new article on the effect of the family cap and

Identifying Family Cap

Evaluations and Reviewing

the Studies
Appendix I: Scope and Methodology

Page 32 GAO-01-924 State TANF Family Cap Policies

other variables on child maltreatment.1 We did not have adequate time to

incorporate an analysis of this study into our final report.

 1

 See Christina Paxson and Jane Waldfogel, “Welfare Reforms, Family Resources, and Child

Maltreatment,” The Incentives of Government Programs and the Well-Being of Families,

eds. Bruce Meyer and Greg Duncan, prepared for the Joint Poverty Center Conference on

Incentive Effects of Tax and Transfer Policies (Washington, D.C.: Dec. 7-8, 2000).
Appendix II: Studies on Family Cap Effect

Page 33 GAO-01-924 State TANF Family Cap Policies

Table 6: Studies on Family Cap Effect on Births, Abortions, and/or Family Planning Outcomes

Findings Limitations

Does the

study isolate

the impact

of the family

cap?

Degree to

which the study

provides

evidence for an

effect of the

family cap

Camasso, Michael J. and others. A Final Report on the Impact of New Jersey’s Family Development Program: ExperimentalControl Group Analysis. October 1998.

The experimental group that was exposed to the

Family Development Program (FDP), including the

family cap, had the following outcomes when

compared to the control or comparison group:

• A 9-12 percent lower birth rate for ongoing

and new cases

For ongoing cases:

• No differences for abortion rates

• 10 percent higher use of family planning

services

• 28 percent more sterilizations

For new cases:

• A 14 percent higher abortion rate

• 21 percent higher use of contraception drugs

and devices

• No statistically significant differences in family

planning utilization or sterilization

• Confusion among experimental and

control group members as to whether or

not their benefits were affected by the

family cap (contamination).

• Subject attrition.

No Weak evidence

that caps

decreased the

number of births

and increased

the number of

abortions.

Camasso, Michael J. and others. A Final Report on the Impact of New Jersey’s Family Development Program: Results from

a Pre-Post Analysis of AFDC Case Heads from 1990-1996. July 1998.

Exposure to the Family Development Program,

including the family cap, resulted in a projection of

14,057 fewer births and 1,429 more abortions

among AFDC recipients of childbearing age.

• Statistical modeling choice not

appropriate to the data.

• Pre-post design with no control group.

• Inadequate control variables.

No Weak evidence

that caps

increased the

number of

abortions. No

evidence of an

effect on the

number of births.

Turturro, Carolyn, Brent Benda, and Howard Turney. Arkansas Welfare Waiver Demonstration Project: Final Report, 1997.

There were no statistically significant differences

between families whose benefits were affected by

the family cap policy and those that were not.

• Confusion among experimental and

control group members as to whether or

not their benefits were affected by the cap

(contamination).

• Subject attrition.

Noa

No evidence of

any effect on

births.

Appendix II: Studies on Family Cap Effect
Appendix II: Studies on Family Cap Effect

Page 34 GAO-01-924 State TANF Family Cap Policies

Findings Limitations

Does the

study isolate

the impact

of the family

cap?

Degree to

which the study

provides

evidence for an

effect of the

family cap

Horvath-Rose, Ann and H. Elizabeth Peters. “Welfare Waivers and Nonmarital Childbearing,” For Better and For Worse:

Welfare Reform and the Well-Being of Children and Families. Forthcoming 2001.

The family cap is associated with a 9 percent

decrease in out-of-wedlock births for all teens and

a 12 percent decrease for post-teens. They also

found that changes in variables such as social

stigma and unmeasured aspects of socioeconomic factors used in the analysis play a larger

role than changes in welfare policy.

• The dependent variable is sensitive to

changes in marital births, which may

confound the measurement of effects on

non-marital births.

• It is unclear how the model controls for

the effect of time, yet the study found that

time trends had the largest effect on nonmarital births.

Yes Weak evidence

that the caps

decreased the

number of births.

Mach, Traci. Measuring the Impact of Family Caps on Childbearing Decisions. Cited Mar. 2001.

Having one’s benefits affected by a family cap has

reduced fertility among welfare recipients by 10

percent.

• Possible selection bias because people

were omitted from the sample who may be

systematically different from those who

remained (people who moved from one

year to another are excluded from the

analysis).

• Lack of adequate control variables.

• Use of Current Population Survey data

may result in a small state samples of

welfare recipients.

• Does not address “lead” (“advertising”)

effects.b

No Weak evidence

that caps

decreased the

number of births.

a

The only intervention implemented besides the family cap was increased family planning.

b

“Lead” or “advertising” effects refer to the idea that welfare recipients may hear about, and react to,

potential welfare policy changes that are advertised through popular media but have not yet actually

taken effect.
Appendix II: Studies on Family Cap Effect

Page 35 GAO-01-924 State TANF Family Cap Policies

Table 7: Studies on Family Cap Effect on TANF Caseloads

Findings Limitations

Does the

study isolate

the impact

of the family

cap?

Degree to

which the study

provides

evidence for an

effect of the

family cap

Blank, Rebecca M. What Causes Public Assistance Caseloads to Grow? Cited Oct. 2000.

Significant negative (decrease in caseloads) effect

for the family cap

• Minor issues on the measurement of

family cap.

• Much of the family cap effect occurs

before the cap is actually approved or

implemented.

Noa Weak evidence

that the cap

decreased

caseload size.

Council of Economic Advisers. The Effects of Welfare Policy and the Economic Expansion on Welfare Caseloads: An

Update. 1999.

Significant positive (increase in caseloads) effect

for the family cap

• “Lead” (“advertising”) effects discussed

but conclusions not reported. b

• Questions about measurement of waiver

policies over appropriate time frames

(were states under waivers long enough to

measure effects?)

Noa Weak evidence

that the cap

increased

caseload size.

Moffitt, Robert A. The Effect of Pre-PRWORA Waivers on AFDC Caseloads and Female Earnings, Income and Labor Force

Behavior. 1999.

Significant negative effect for family cap • Models not robust (results from different

analyses are sensitive to changes in

variables included or years of data

included in the data set. E.g., when 1996

data is included, there are no significant

effects, but when 1996 is dropped, there is

an effect).

• “Lead” (“advertising”) effects not

controlled for. b

NoaWeak evidence

that the cap

decreased

caseload size.

Stapleton, David, Gina Livermore and Adam Tucker. Determinants of AFDC Caseload Growth. 1997.

Significant negative effect for family cap on singleparent caseloads, no significant effect on twoparent caseloads, significant increase of average

monthly benefits

• Study produces national estimates of the

effect of the family cap, yet only three of

the 50 states and the District of Columbia

had implemented family caps during the

study time frame.

• Authors felt their measurement of the

family cap was confounded with

measuring administrative changes toward

decreasing caseloads in those 3 states.

Noa

Weak evidence

that the cap

decreased

caseload size

and increased

average monthly

benefits.

a

The authors themselves suggest that separate effects of the various waivers were not correctly

captured by the variables used to measure the family cap.

b

“Lead” or “advertising” effects refer to the idea that welfare recipients may hear about, and react to,

potential welfare policy changes that are advertised through popular media but have not yet actually

taken effect.
Appendix III: Comments from the Department of Health

and Human Services

Page 36 GAO-01-924 State TANF Family Cap Policies

Appendix III: Comments from the

Department of Health and Human Services
Appendix III: Comments from the Department of Health

and Human Services

Page 37 GAO-01-924 State TANF Family Cap Policies
Appendix III: Comments from the Department of Health

and Human Services

Page 38 GAO-01-924 State TANF Family Cap Policies
Appendix IV: GAO Contacts and Staff Acknowledgments

Page 39 GAO-01-924 State TANF Family Cap Policies

Sigurd Nilsen (202) 512-7003

Gale Harris (202) 512-7235

Katrina Ryan (202) 512-3214

In addition to those named above, the following individuals made

important contributions to this report: Sara Schibanoff, Mary Abdella, and

Shannah Wallace. Wendy Ahmed, Doug Sloane, Rudy Chatlos, Laura

Shumay, Jim Wright, and Patrick DiBattista also provided key technical

assistance.

Appendix IV: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Staff

Acknowledgments
Bibliography

Page 40 GAO-01-924 State TANF Family Cap Policies

Blank, Rebecca M. What Causes Public Assistance Caseloads to Grow?

Cambridge, Mass.: National Bureau of Economic Research, December

1997. http://www.nber.org/papers/w6343 (cited Oct. 17, 2000).

Camasso, Michael J. and others. A Final Report on the Impact of New

Jersey’s Family Development Program: Experimental-Control Group

Analysis. Trenton, N.J.: New Jersey Department of Human Services, Oct.

1998.

Camasso, Michael J. and others. A Final Report on the Impact of New

Jersey’s Family Development Program: Results from a Pre-Post Analysis

of AFDC Case Heads from 1990-1996. Trenton, N.J.: New Jersey

Department of Human Services, July 1998.

Council of Economic Advisers. The Effects of Welfare Policy and the

Economic Expansion on Welfare Caseloads: An Update. Washington,

D.C., 1999.

Horvath-Rose, Ann and H. Elizabeth Peters. “Welfare Waivers and

Nonmarital Childbearing,” For Better and For Worse: Welfare Reform

and the Well-Being of Children and Families. Edited by Greg Duncan and

P. Lindsay Chase-Lansdale. New York: Russell Sage, forthcoming 2001.

Mach, Traci. Measuring the Impact of Family Caps on Childbearing

Decisions. Albany, N.Y.: University at Albany-SUNY Working Paper 00-04

(cited Mar. 2001).

Moffitt, Robert A. The Effect of Pre-PRWORA Waivers on AFDC Caseloads

and Female Earnings, Income and Labor Force Behavior. Baltimore, Md.:

Johns Hopkins University, 1999.

Stapleton, David, Gina Livermore and Adam Tucker (The Lewin Group).

Determinants of AFDC Caseload Growth. Washington, D.C.: the

Department of Health and Human Services, the Office of the Assistant

Secretary for Planning and Evaluation, July 1997.

Turturro, Carolyn, Brent Benda, and Howard Turney. Arkansas Welfare

Waiver Demonstration Project: Final Report. Little Rock, Ark.: The

University of Arkansas, 1997.

Bibliography
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Page 41 GAO-01-924 State TANF Family Cap Policies

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Welfare Reform: Progress in Meeting Work-Focused TANF Goals (GAO01-522T, Mar. 15, 2001).

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