GAO 

United States Government Accountability Office

Testimony 

Before the Subcommittee on Income 

Security and Family Support, Committee 

on Ways and Means, House of 

Representatives

TEMPORARY ASSISTANCE 

FOR NEEDY FAMILIES 

Implications of Changes in 

Participation Rates 

Statement of Kay E. Brown, Director 

Education, Workforce, and Income Security 

For Release on Delivery 

Expected at 10:00 a.m. EST 

Thursday, March 11, 2010 

GAO-10-495T 
Page 1 GAO-10-495T 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to have the opportunity to participate in today’s discussion of 

the role of the Temporary Assistance for Needy Families (TANF) program 

in providing assistance to low-income families. My remarks to you are 

based on our report, released today, entitled Temporary Assistance for 

Needy Families: Fewer Eligible Families Have Received Cash Assistance 

Since the 1990s, and the Recession’s Impact on Caseloads Varies by 

State.

1

 As you know, as a result of sweeping changes made to federal 

welfare policy in 1996 with the creation of TANF, welfare changed from a 

program entitling eligible families to monthly cash payments under Aid to 

Families with Dependent Children (AFDC) to a capped block grant that 

emphasized employment and work supports for most adult participants 

who receive such assistance. With the creation of TANF, the number of 

families who received cash assistance fell significantly, from 4.8 million 

families on average each month in 1995—just prior to the creation of 

TANF—to 1.7 million in 2008. During this time frame, poverty among all 

children initially fell, from about 21 percent in 1995 to about 16 percent in 

2000, and then rose thereafter to 19 percent in 2008. Most families 

receiving cash assistance are single mothers with children, and children in 

such families have historically experienced high rates of poverty. 

Furthermore, the recession, which began in late 2007 and deepened 

nationally in 2008, put additional pressures on families living in poverty, 

especially families with children, who are particularly vulnerable. 

Under the TANF block grant program, created by the Personal 

Responsibility and Work Opportunity Reconciliation Act of 1996 

(PRWORA), states receive federal funds to design and operate their own 

welfare programs within federal guidelines. The Department of Health and 

Human Services (HHS) administers the TANF program, which provides 

states with up to about $16.5 billion each year in TANF block grant funds, 

and each state must contribute a specified level of its own funds to qualify 

for the grant. In addition, under TANF, states must involve a minimum 

percentage of their adult TANF cash assistance recipients in work 

activities for a required number of hours each week. They must also 

restrict most families to a lifetime limit of 60 months of federally funded 

TANF cash assistance. Within certain limitations, states set their own 

 

1

GAO, Temporary Assistance for Needy Families: Fewer Eligible Families Have Received 

Cash Assistance Since the 1990s, and the Recession’s Impact on Caseloads Varies by 

State, GAO-10-164 (Washington, D.C.: Feb. 23, 2010). 

 TANF Cash Assistance 
eligibility limits and benefit levels for cash recipients. States also impose 

financial consequences, or sanctions, on families that do not comply with 

TANF work or other requirements, and many states have also 

implemented programs or strategies intended to divert families from cash 

assistance. To help states in an economic downturn, PRWORA created a 

TANF contingency fund of up to $2 billion, and most recently, the 

American Recovery and Reinvestment Act of 2009 made an additional $5 

billion available to states for fiscal years 2009 and 2010 through a new 

Emergency Contingency Fund. 

In light of these issues, my remarks today—based on our February 2010 

report—will focus on the following issues: (1) the factors that have 

contributed to the decline in the number of families receiving TANF cash 

assistance since the 1990s; (2) the characteristics of participating and 

nonparticipating eligible families; (3) the impact of higher participation in 

TANF cash assistance on child poverty; and, more recently, (4) the 

changes states are experiencing in caseloads and TANF-related spending 

in the current recession. 

To develop our findings for this report, we used multiple methodologies. 

These included using microsimulation analyses conducted for us by the 

Urban Institute using a model known as TRIM3; analyzing relevant federal 

laws and regulations; and reviewing relevant research on the factors 

affecting the decline in the number of cash recipient families.2

 When we 

conducted our work, 2005 was the most recent year of publicly available 

TRIM3 data. We also interviewed TANF officials in 21 selected states; 

analyzed federal data on cash assistance caseloads and spending; and 

interviewed researchers, federal officials at HHS, and other experts. We 

assessed the data we received from TRIM3 and from state agencies for 

data reliability and concluded that the data were sufficiently reliable for 

the purposes of our report. 

We conducted our work from November 2008 to February 2010 in 

accordance with all sections of GAO’s Quality Assurance Framework that 

are relevant to our objectives. The framework requires that we plan and 

perform the engagement to obtain sufficient and appropriate evidence to 

 

2

TRIM3 is maintained and developed at the Urban Institute under primary funding from 

HHS, Office of the Assistant Secretary for Planning and Evaluation. Using TRIM3 for these 

analyses required our input on assumptions and/or interpretations about economic 

behavior and the rules governing federal programs. Therefore, the conclusions presented in 

this testimony are attributable only to GAO. 

Page 2 GAO-10-495T TANF Cash Assistance
meet our stated objectives and to discuss any limitations in our work. We 

believe that the information and data obtained, and the analysis 

conducted, provide a reasonable basis for any findings and conclusions in 

this product.3

Because our report is now released, my written remarks today will be brief 

and very summarized. 

Factors Contributing to the 

Decline in the Number of 

Poor Families Receiving 

Cash Assistance 

First, with regard to the decline in the number of poor families receiving 

cash assistance from 1995 to 2005, we found that the changes reflect 

declines on two fronts—both in the number of eligible families and in the 

number of eligible families who participated in the program. The strong 

economy of the 1990s, TANF’s focus on work, and other factors such as 

increases in the minimum wage and the Earned Income Tax Credit 

contributed to increased family incomes, which in turn led to a decline in 

the number of families eligible for TANF cash assistance. We also found 

that changes to eligibility rules, such as restrictions on immigrants and the 

60-month time limit, had a small impact on the number of eligible families. 

In total, about 420,000 fewer families were eligible for cash assistance in 

2005 than were eligible in 1995, according to HHS data. However, most of 

the decline in the cash assistance caseload—about 87 percent—resulted 

from fewer eligible families participating in the program. In 1995, about 84 

percent of eligible families participated, but over the decade, participation 

in cash assistance fell dramatically, to about 40 percent of eligible families 

in 2005.4

 Correspondingly, the number of families who were eligible but 

not participating rose substantially in this time period to about 3.14 million 

in 2005. (See fig. 1.) 

 

3

For more detailed information on our methodology, see appendix I of our report 

(GAO-10-164). 

4

This analysis of the share of eligible and participating families is based on trend data for an 

average month by calendar year in HHS’s Indicators of Welfare Dependence: Annual 

Report to Congress, 2008 (Washington, D.C.: 2008), which uses TRIM3 to model estimates 

of the TANF participation rate. In reporting participants, the data includes families 

receiving cash assistance through both TANF and separate state programs (SSP) using 

state MOE funds. TRIM3 does not model certain aspects of program eligibility, such as 

sanctions from a family’s failure to comply with work rules or child support rules. It also 

does not model state diversion strategies such as the use of one-time, non-recurring 

benefits, or families’ behavioral responses to TANF program rules, such as staying off 

TANF to conserve eligibility for time-limited assistance. 

Page 3 GAO-10-495T TANF Cash Assistance
Figure 1: Families Estimated as Eligible for and Participating in These Cash 

Assistance Programs, Monthly Average, by Calendar Year, 1995 through 2005 

Number of families

0

1

2

3

4

5

6 mil.

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

890,000

Eligible, 3.14 mil.

but not participating

Eligible for AFDC or TANF Cash Assistance Programs

Participating in AFDC or TANF Cash Assistance Programs

Source: GAO analysis of data from HHS's Indicators of Welfare Dependence, based on the TRIM3 model.

According to our research, the decline in participation reflected, among 

other things, families’ responses to changes in state welfare programs, 

including mandatory work activities, declining cash benefit levels, and 

time limits as well as state diversion strategies and sanctions for noncompliance with work and other program requirements. According to a 

research synthesis conducted for HHS, mandated work activities may have 

caused declines in the caseload, as families chose not to apply rather than 

be expected to fulfill the requirement to work. Other families may have 

found it difficult to apply for or continue to participate in the program, 

especially those with poor mental or physical health or other 

characteristics that make employment difficult, as we noted in previous 

work.5

 A decline in average cash benefits may have contributed to the 

decline in participation. Average cash benefits under 2005 TANF rules 

were 17 percent lower than they were under 1995 AFDC rules, according 

to our TRIM3 estimates, as cash benefit levels in many states have not 

been updated or kept pace with inflation. Research also suggests that, in 

 

5

GAO, Welfare Reform: Moving Hard-to-Employ Recipients into the Workforce, 

GAO-01-368 (Washington, D. C: Mar. 15, 2001). 

Page 4 GAO-10-495T TANF Cash Assistance
response to lifetime limits on the amount of time a family can receive cash 

assistance, eligible families may hold off on applying for cash assistance 

and “bank” their time, a practice that could contribute to the decline in 

families’ use of cash assistance. In addition, fewer families may have 

applied or completed applications for TANF cash assistance because of 

state policies and practices for diverting applicants from cash assistance; 

nearly all states have at least one type of diversion strategy, such as the 

use of one-time nonrecurring benefits instead of monthly cash assistance. 

Finally, some studies and researchers noted that full sanctions for families’ 

noncompliance—those that cut off all benefits for a period of time—are 

associated with declines in the number of families receiving cash 

assistance, although more research is needed to validate this association. 

While there is a general consensus that these factors played a role in 

contributing to the decline in the number of families receiving cash 

assistance, there is not agreement on the relative weight of each factor, 

according to researchers and other experts we interviewed. 

Characteristics of 

Nonparticipating Eligible 

Families Compared with 

TANF Families 

In examining the characteristics of eligible nonparticipants and TANF 

participants, we found that eligible families not participating in TANF had 

higher annual incomes on average than TANF participants in 2005, but that 

a small but distinct subgroup of non-participants had lower incomes than 

TANF participants.6

 While all families who were eligible to receive TANF 

cash assistance in 2005 had low incomes, eligible families who did not 

participate in TANF in any month in 2005 generally worked more and had 

relatively higher incomes and higher education levels than TANF families 

and were less likely to receive other public supports. However, a subgroup 

of families who were eligible but did not participate in TANF (732,000 

families in 2005) did not work or receive Supplemental Security Income 

(SSI) benefits—a cash assistance program for low-income people with 

disabilities. This subgroup of more disadvantaged nonparticipants 

accounted for 11 percent of all families who were eligible for TANF cash 

assistance in 2005, according to our TRIM3 analysis. They had incomes 

lower than those of families participating in TANF—a median of $7,020 

compared to $9,606—and a smaller portion of this subgroup received 

benefits from the Supplemental Nutrition Assistance Program (SNAP) and 

subsidized housing. (See fig. 2.) 

 

6

The TRIM3 estimates in this analysis are based on annual data. In comparing the 

characteristics of cash recipients and eligible nonrecipients, differences are statistically 

significant at the 95 percent confidence level unless otherwise noted. 

Page 5 GAO-10-495T TANF Cash Assistance
Figure 2: Estimated Eligible Nonparticipating Families as a Share of Total Eligible 

Families in 2005, Annual Basis 

Participating in TANF

Not participating in TANF, not employed,

and not receiving SSI

Not participating in TANF, but employed

or receiving SSI

40%

2.7 million 49%

3.2 million

11%

732,000

Source: GAO analysis of TRIM3 microsimulation model data.

Impact of Participation on 

Child Poverty 

With regard to child poverty, we found that if the percent of eligible 

families participating in TANF in 2005 was 84 percent—the rate of 

participation in AFDC in 1995—rather than about 40 percent, an estimated 

3.3 million families would gain TANF benefits and experience an increase 

in their net income. According to our TRIM3 analysis, this higher 

participation would have resulted in 800,000 fewer children in extreme 

poverty—defined as those with incomes below half the federal poverty 

threshold.7

 However, some families would remain in extreme poverty even 

with TANF benefits, such as those with no earned income or with low 

earned incomes who receive the maximum cash benefit in their state. 

Higher participation also would not significantly change the number of 

children in poverty overall. This is partly because many children in poverty 

 

7

Poverty is measured in the United States using the federal poverty threshold, which is 

calculated annually by the U.S. Census Bureau. Persons or families having income below 

this threshold amount are, for statistical purposes, considered to be living in poverty. The 

poverty threshold varies by family size and composition but does not vary by geographic 

location. Extreme or deep poverty is defined as income below 50 percent of the federal 

poverty threshold for a given family. Poverty is also measured through the poverty 

guidelines, which are published annually by HHS and are used by some federal programs in 

determining the income eligibility of individuals and families for need-based assistance. 

The poverty guidelines are a simplified version of the Census poverty thresholds. 

Page 6 GAO-10-495T TANF Cash Assistance
are not poor enough to be eligible for TANF—since the majority of states 

set TANF eligibility standards at less than half of the federal poverty 

guidelines—and also TANF cash benefits are typically too low to raise the 

incomes of participating families above the federal poverty threshold. 

Changes in State Caseload 

and TANF-Related 

Spending in the Current 

Recession 

In terms of more recent TANF trends, the number of families receiving 

TANF cash assistance increased in 12 of the 21 states we reviewed 

between June 2008 and June 2009, although the recession’s impact on cash 

assistance caseloads varied widely by state, according to state-provided 

data. For instance, over this time period, the number of families receiving 

TANF cash assistance increased by 22 percent in Nevada and decreased by 

9 percent in Texas. (See fig. 3.) 

Figure 3: Percent Change in the Number of Families Receiving TANF Cash 

Assistance, by State, June 2008 through June 2009 

Sources: GAO analysis of state-provided data, U.S. National Atlas (map).

WV VA

SC

AL

AR

MO

IN

WI

MN

NE

ID

MT

WY

OR

UT

NM

SD

ND

KS

OK TN

KY

LA

ME

LA

WA

+18%

NV

+22%

CA

+12%

AZ

+7%

NC

+10%

FL

+14%

CO

+15%

IA

+7% IL

+2%

OH

+17%

TX

-9%

MS

-1%

GA

-3%

PA

+1%

NH

+38%

MA

-3%

MI

-3%

NJ

-3%

NY

-1%

Not surveyed

■ RI

-10%

■ D.C.

+19%

-20% +10% -10% 0 +20%

Decrease in caseload Increase in caseload

Page 7 GAO-10-495T TANF Cash Assistance
We found no clear association between the change in the number of 

families receiving cash assistance in a state and its unemployment rate in 

this time frame, although the impact of expiring extensions of 

unemployment insurance (UI) on state caseloads is hard to predict. For 

example, although Illinois, Florida, Georgia, and the District of Columbia 

all had similar unemployment rates of between 10 and 11 percent in June 

2009, cash assistance caseloads rose to varying degrees in three of these 

states while falling in Georgia. (See table 1.) Unemployment is one of 

many factors—including the state’s eligibility and asset limits, the state’s 

application process, and other state-specific program characteristics—that 

may affect a state’s caseload. Officials from eight states believed that the 

number of families receiving cash assistance in their states had not 

increased, or had not increased as much as might have been expected, 

because families were still collecting UI benefits. If jobs are still not 

available when UI benefits end, these families may turn to TANF for cash 

assistance. However, two experts we interviewed said that many TANFeligible single mothers would not likely meet state criteria for UI receipt. 

Table 1: Cash Assistance Caseload Changes and Unemployment Information in 

Selected States, June 2008 through June 2009 

 

Percent change in 

caseload, June 

2008 to June 2009

Unemployment 

rate June 2009 

Change in 

unemployment rate 

June 2008 to June 2009

Arizona 7.25 8.7 3.2

California 11.51 11.6 4.5

Colorado 33.29 7.6 2.8

District of Columbia 8.44 10.9 4.1

Florida 14.25 10.7 4.7

Georgia -2.50 10.1 4.0

Illinois 3.82 10.3 3.7

Iowa 6.65 6.2 2.1

Massachusetts -1.91 8.6 3.5

Michigan -1.71 15.2 7.1

Mississippi -0.83 9.1 2.2

Nevada 21.66 11.9 5.5

New Hampshire 23.39 6.8 3.1

New Jersey -2.61 9.2 4.0

New York -0.28 8.7 3.4

North Carolina 9.96 11.0 4.9

Ohio 16.54 11.1 4.7

Page 8 GAO-10-495T TANF Cash Assistance
 

Percent change in 

caseload, June 

2008 to June 2009

Unemployment 

rate June 2009 

Change in 

unemployment rate 

June 2008 to June 2009

Pennsylvania 0.68 8.4 3.1

Rhode Island -21.27 12.4 4.7

Texas -8.51 7.5 2.7

Washington 17.76 9.2 4.0

Source: GAO analysis of state-provided data and data from U.S. Bureau of Labor Statistics. 

Note: In addition to TANF block grant funds, caseload data here include two kinds of cash assistance 

provided by states—funds that count towards state contributions that are required to qualify for the 

TANF grant and funds that states provided through solely state-funded programs. 

Finally, to offset higher costs of cash assistance, few states reported 

reducing TANF-related spending on family and/or work supports during 

this time period, but instead used funding sources such as the Emergency 

Contingency Fund that was created by the American Recovery and 

Reinvestment Act of 2009. According to HHS data, as of October 2009, all 

21 surveyed states had applied for funds from the temporary Emergency 

Contingency Fund to respond to rising caseloads and/or to establish or 

expand subsidized employment programs. Since June 2009, state and local 

fiscal conditions have continued to deteriorate, and the effect of the 

changes in the economic climate on TANF cash assistance programs is 

unknown. 

We provided a draft of the report we released today to HHS for its review, 

and a copy of the agency’s written response is in appendix II of the report. 

In its comments, HHS said that the report was informative and the 

department did not disagree with our findings. HHS also provided 

technical comments on the draft report; in response to the comments, we 

made changes where appropriate. 

Mr. Chairman, this concludes my statement. I would be pleased to respond 

to any questions you or other Members of the Subcommittee may have. 

For questions about this statement, please contact Kay E. Brown at (202) 

512-7215 or brownke@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals who made key contributions to this 

statement include Alexander G. Galuten, Kathryn A. Larin, Deborah A. 

Signer, Shana B. Wallace, and Monique B. Williams. 

GAO Contacts and 

Acknowledgments 

Page 9 GAO-10-495T TANF Cash Assistance
Related GAO Products 

Temporary Assistance for Needy Families: Fewer Eligible Families Have 

Received Cash Assistance Since the 1990s, and the Recession’s Impact 

on Caseloads Varies by State. GAO-10-164. Washington, D.C.: February 23, 

2010. 

Poverty in America: Consequences for Individuals and the Economy. 

GAO-07-343T. Washington, D.C.: January 24, 2007. 

Welfare Reform: Better Information Needed to Understand Trends in 

States’ Uses of the TANF Block Grant. GAO-06-414. Washington, D.C.: 

March 3, 2006. 

Welfare Reform: More Information Needed to Assess Promising 

Strategies to Increase Parents’ Incomes. GAO-06-108. Washington, D.C.: 

December 2, 2005. 

Welfare Reform: HHS Should Exercise Oversight to Help Ensure TANF 

Work Participation Is Measured Consistently across States. GAO-05-821. 

Washington, D.C.: August 19, 2005. 

Means-Tested Programs: Information on Program Access Can Be an 

Important Management Tool. GAO-05-221. Washington, D.C.: April 11, 

2005. 

TANF AND SSI: Opportunities Exist to Help People with Impairments 

Become More Self-Sufficient. GAO-04-878. Washington, D.C.: September 

15, 2004. 

Welfare Reform: Information on Changing Labor Market and State 

Fiscal Conditions. GAO-03-977. Washington, D.C.: July 15, 2003. 

Welfare Reform: Former TANF Recipients with Impairments Less Likely 

to Be Employed and More Likely to Receive Federal Supports.

GAO-03-210. Washington, D.C.: December 6, 2002. 

Welfare Reform: Outcomes for TANF Recipients with Impairments. 

GAO-02-884. Washington, D.C.: July 8, 2002. 

Welfare Reform: With TANF Flexibility, States Vary in How They 

Implement Work Requirements and Time Limits. GAO-02-770. 

Washington, D.C.: July 5, 2002. 

Page 10 GAO-10-495T TANF Cash Assistance 
Welfare Reform: States Provide TANF-Funded Work Support Services to 

Many Low-Income Families Who Do Not Receive Cash Assistance. 

GAO-02-615T. Washington, D.C.: April 10, 2002. 

Welfare Reform: States Are Using TANF Flexibility to Adapt Work 

Requirements and Time Limits to Meet State and Local Needs. 

GAO-02-501T. Washington, D.C.: March 7, 2002. 

Welfare Reform: Progress in Meeting Work-Focused TANF Goals. 

GAO-01-522T. Washington, D.C.: March 15, 2001. 

Welfare Reform: Moving Hard-to-Employ Recipients into the Workforce. 

GAO-01-368. Washington, D.C.: March 15, 2001. 

Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is 

Limited. GAO-01-181. Washington, D.C.: December 29, 2000. 

(130998) Page 11 GAO-10-495T TANF Cash Assistance
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