a

GAO

United States Government Accountability Office

This report was amended on July 21, 2006, to reflect a correction 

to the Wisconsin data in table 11 on page 26. The amended 

version corrects page 26 and makes corresponding adjustments 

to Wisconsin data in tables, as appropriate, throughout the 

report.

Report to the Chairman, Committee on 

Finance, U.S. Senate

March 2006 WELFARE REFORM

Better Information 

Needed to Understand 

Trends in States’ Uses 

of the TANF Block 

Grant

GAO-06-414
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2006

WELFARE REFORM

Better Information Needed to Understand 

Trends in States’ Uses of the TANF Block 

Grant 

Highlights of GAO-06-414, a report to the 

Chairman, Committee on Finance, U.S. 

Senate 

Under the Temporary Assistance

for Needy Families (TANF) block 

grant created as part of the 1996

welfare reforms, states have the 

authority to make key decisions 

about how to allocate federal and 

state funds to assist low-income

families. States also make key

decisions, through their budget 

processes, about federal and state 

funds associated with other

programs providing assistance for 

the low-income population. 

States’ increased flexibility under

TANF as well as the budgetary 

stresses they experienced after a 

recession draw attention to the

fiscal partnership between the 

federal government and states. To

update GAO’s previous work, this

report examines (1) changes in the 

overall level of welfare-related 

spending; (2) changes in spending

priorities for welfare-related 

nonhealth services; and (3) the 

contribution of TANF funds to

states’ spending for welfare-related

services. GAO reviewed spending

in nine states for state fiscal years

1995, 2000, and 2004 and focused 

on spending for working-age adults 

and children, excluding the elderly,

long-term and institutional care. 

What GAO Recommends

Congress may wish to obtain 

additional information on the 

number of persons served by TANF

and how funds are used to meet 

welfare reform goals to improve its 

access to useful information for 

oversight and policy-making

purposes.

GAO found that spending for low-income people for health and nonhealth 

services in nine states generally increased in real terms from 1995 to 2000

and from 2000 to 2004. Health spending, excluding spending for the elderly, 

outpaced nonhealth spending over the decade and now consumes an even 

greater share of total spending for low-income people, mirroring a 

nationwide expansion in health care costs. Spending increases were 

substantially supported by both federal and state funds in the health and 

nonhealth areas in each time period, reflecting the important federal-state 

partnership supporting these low-income programs. Overall, spending 

increases reflected changes in eligible populations and needs, increasing 

costs, as well as policy changes. 

While nonhealth spending increased in real terms, spending priorities shifted 

away from cash assistance to other forms of aid, particularly work supports, 

in keeping with welfare reform goals. The largest increases for noncash 

services occurred from 1995 to 2000, with smaller increases from 2000 to 

2004, when some state officials cited challenges in maintaining services. By 

2004, states used federal and state TANF funds to support a broad range of 

services, in contrast to 1995 when spending priorities focused more on cash 

assistance. However, reporting and oversight mechanisms have not kept 

pace with the evolving role of TANF funds in state budgets, leaving 

information gaps at the national level related to numbers served and how 

states use funds to meet welfare reform goals, hampering oversight. Any 

efforts to address these gaps should strike an appropriate balance between 

flexibility for state grantees and accountability for federal funds and goals. 

Welfare-Related Nonhealth and Health Spending in Nine States since 1995 

Notes: Includes federal, state, and local spending captured in our survey of expenditures about 

which states make key budgetary decisions. Excludes spending for long-term care, institutional 

care, and the elderly. 

www.gao.gov/cgi-bin/getrpt?GAO-06-414.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David D. Bellis

at (415) 904-2272 or Stanley J. Czerwinski at 

(202) 512-6520. 
Page i GAO-06-414 Welfare Reform

Contents

Letter 1

Results in Brief 3

Background 5

Spending on Low-Income Programs Increased over the Decade 8

Spending Priorities Shifted Away from Cash Assistance 16

TANF and MOE Funds Played an Expanding and Flexible Role 

across State Budgets, but Accountability Remains a Challenge 28

Conclusion 39

Matter for Congressional Consideration 39

Agency Comments 40

Appendixes

Appendix I: Objectives, Scope, and Methodology 42

Appendix II: Federal and State AFDC, TANF, and MOE Spending as a 

Share of Total Welfare-Related Nonhealth Spending 47

Appendix III: Total Welfare-Related Health and Nonhealth Spending from 

Federal and State Sources 48

Appendix IV: Welfare-Related Nonhealth Spending by Spending 

Category 52

Appendix V: Survey Instrument 55

Appendix VI: Comments from the Department of Health and Human 

Services 65

Appendix VII: GAO Contacts and Staff Acknowledgments 68

Tables Table 1: Percentage Change in Real Spending for Welfare-Related 

Health Care 10

Table 2: Welfare-Related Health Spending as a Share of Total 

Welfare-Related Spending 12

Table 3: Percentage Change in Real Spending for Welfare-Related 

Nonhealth Services 13

Table 4: Federal Share of Welfare-Related Health Spending over 

Time 15

Table 5: Federal Share of Welfare-Related Nonhealth Spending over 

Time 16

Table 6: Percentage Change in Real Spending for Cash 

Assistance 20
Contents

Page ii GAO-06-414 Welfare Reform

Table 7: Percentage Change in Real Spending for Noncash 

Assistance 21

Table 8: Percentage Change in Real Spending for Employment 

Services and Training 22

Table 9: Percentage Change in Real Spending for Work and Other 

Supports 23

Table 10: Percentage Change in Real Spending for Child Care or 

Child Development 25

Table 11: Percentage Change in Real Spending for Aid for the 

At-Risk 26

Table 12: Percentage Change in Real Spending for Child Welfare 27

Table 13: Total Welfare-Related Health Spending 48

Table 14: Total Welfare-Related Nonhealth Spending 48

Table 15: Welfare-Related Health Spending from Federal and State 

Sources 49

Table 16: Welfare-Related Nonhealth Spending from Federal and 

State Sources 49

Table 17: Percentage Change in Welfare-Related Health Spending 

from Federal and State Sources 50

Table 18: Percentage Change in Welfare-Related Nonhealth 

Spending from Federal and State Sources 51

Table 19: Total Cash Assistance Spending 52

Table 20: Total Employment Services and Training Spending 52

Table 21: Total Work and Other Supports Spending 53

Table 22: Total Aid for the At-Risk Spending 53

Table 23: Total Noncash Assistance Spending 54

Figures Figure 1: Welfare-Related Spending Categories Used in Our 

Analysis 3

Figure 2: Changes in Poverty Rates in Nine States from 1995 to 2000 

and from 2000 to 2004 8

Figure 3: Total Welfare-Related Nonhealth and Health Spending in 

Real Dollars since 1995 9

Figure 4: Share of Federal and State Spending (Combined) for 

Welfare-Related Nonhealth Services by Category over 

Time (Based on Real Spending) 18

Figure 5: Percentage Change in TANF and MOE Spending for 

Noncash Aid and Services (Percentage Change in Real 

Spending from 1995 to 2004) 29

Figure 6: Share of Federal TANF and State MOE Spending for 

Welfare-Related Nonhealth Services by Category over 

Time (Based on Real Spending) 32
Contents

Page iii GAO-06-414 Welfare Reform

Figure 7: TANF Balances as a Percentage of Total TANF Funds 

Available by State in Federal Fiscal Years 2000 and 

2004 33

Figure 8: Welfare-Related Spending Categories Used in Our 

Analysis 44

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Page 1 GAO-06-414 Welfare Reform

United States Government Accountability Office

Washington, D.C. 20548

A

March 3, 2006 Letr

The Honorable Charles E. Grassley

Chairman

Committee on Finance

United States Senate

Dear Mr. Chairman:

In 1996, the federal government made sweeping changes to national 

welfare policy, significantly altering the federal-state partnership in 

assisting low-income families as well as setting new goals for states to help 

parents become independent of government assistance. A decade has 

passed since then, during which strong economic growth faded into a short 

recession and many states faced a period of significant budgetary stress. 

This warrants attention to how the 1996 changes have evolved over time. 

These changes, enacted through the Temporary Assistance for Needy 

Families (TANF) block grant, gave states authority to make key decisions 

about how to allocate federal and state funds to assist low-income families. 

Since states implemented welfare reforms, they have spent almost 

$200 billion in federal and state TANF funds on their programs. TANF 

spending is but a portion of the billions of federal and state dollars that 

flow through state budgets for a variety of programs for low-income 

working-age adults and children. These welfare-related programs and 

services include ongoing cash assistance, employment services and 

training, work and other supports, aid for the at-risk, and health services. 

To provide information on how this welfare-related spending has evolved 

over the decade since reform and particularly after the national recession 

in 2001, this report responds to your request that we examine (1) changes 

in the overall level of welfare-related spending for nonhealth and health 

services in the periods before and after the recession and over the decade; 

(2) changes in spending priorities for nonhealth services over these same 

periods; and (3) the contribution of TANF funds to states’ spending for 

welfare-related services.
Page 2 GAO-06-414 Welfare Reform

To address these questions, we collected state spending data and 

conducted site visits in nine states examined in our earlier reports1

 that 

represent a diverse set of characteristics, including geographic region, 

population size, and experiences with welfare initiatives. These states are 

California, Colorado, Louisiana, Maryland, Michigan, New York, Oregon, 

Texas, and Wisconsin.2

 Together, these states represented about 50 percent 

of all federal TANF spending nationwide in 2004. In each of these states, 

we collected budget data and program information for three points in time 

based on state fiscal years: for 1995 before the passage of federal welfare 

reform legislation; for 2000; and for 2004, the most recent year for which 

data were available. We focused on spending for working-age adults and 

children and excluded spending for the elderly, long-term care, and 

institutional care. We classified spending into five key areas: cash 

assistance, employment services and training, work and other supports, aid 

for the at-risk, and health care. We also spoke with budget and program 

officials in these states and at the Department of Health and Human 

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

Our study includes federal, state, and local spending associated with a 

broad array of programs, including Medicaid, TANF, housing assistance, 

and child care and welfare programs for which states make key budgetary 

decisions. (See fig. 1.) We also focused specifically on federal TANF funds 

and state funds—referred to as maintenance of effort (MOE) funds—that 

states must spend at a specified level under law to receive their federal 

TANF funds. We excluded federal program spending about which states do 

not make key budget decisions, such as food stamp benefits, the Earned 

Income Tax Credit (EIC), and others; as a result, our data do not capture all 

federal spending for low-income individuals. We adjusted spending data 

for each of our three study years to 2004 dollars in order to make the 

spending more comparable over time. While information on real spending 

levels is important, additional data on the extent to which eligible 

individuals targeted by these programs are being served—information not 

routinely available—would be needed to draw conclusions about how 

service needs are being met at these spending levels. 

1

See GAO, Welfare Reform: Challenges in Maintaining a Federal-State Fiscal Partnership, 

GAO-01-828 (Washington, D.C.: Aug. 10, 2001), and Welfare Reform: Early Fiscal Effects of 

the TANF Block Grant, GAO/AIMD-98-137 (Washington, D.C.: Aug. 18, 1998).

2

Although Connecticut was part of our 2001 report, it is not included in this update because 

state spending data and supporting documentation were not adequate for completing the 

analysis (which was modified from the approach used in the 2001 report). 
Page 3 GAO-06-414 Welfare Reform

Figure 1: Welfare-Related Spending Categories Used in Our Analysis

We conducted our work from October 2004 through February 2006 in 

accordance with generally accepted government auditing standards. 

Results in Brief Over the decade, state spending from both federal and state sources 

increased for welfare-related health and nonhealth services in the nine 

Source: GAO.

Nonhealth

Category 5:

Health care 

This category includes health care spending for low-income families and low-income 

nonelderly adults. This category generally excludes all long-term and institutional care 

spending.

Category 4:

Aid for the at-risk

This category includes child welfare, juvenile justice, substance abuse prevention and 

treatment programs, services for those with developmental disabilities, and services for those 

with mental illness.

Category 3:

Work and other supports

This category includes child care, transportation and wage subsidies, state 

refundable earned income tax credits (EICs), food assistance, emergency and 

housing 

assistance, 

states’ 

supplemental 

SSI payments, 

pre-K programs

for low-income 

children, and 

family formation 

and pregnancy 

prevention 

programs.

Category 2:

Employment services and training

This category includes work preparation, employment 

services, training and education, and onetime payments.

Category 1:

Cash assistance

This category includes federal and 

state funded ongoing cash payments.
Page 4 GAO-06-414 Welfare Reform

states. Health spending, excluding that for the elderly, increased in all of 

these states in both periods (1995 to 2000 and 2000 to 2004), reflecting 

upward trends in health spending nationwide, and, according to state 

officials, increasing caseloads and costs for delivering health services. 

Because health spending outpaced nonhealth spending since 1995, health 

spending consumed an increasing portion of spending for welfare-related 

populations in each of the nine states by the end of the decade. Nonhealth 

spending also increased—in six states during the first time period and in all 

nine states in the second time period—due to changes in eligible 

populations and needs as well as federal and state policy changes. 

Spending increases were substantially supported by both federal and state 

funds in the health and nonhealth areas in each time period, demonstrating 

the important federal-state partnership supporting these low-income 

programs. For nonhealth programs, the federal share of spending appeared 

to change with economic conditions, while it remained fairly constant for 

health programs.

The overall nonhealth spending increases during the decade mask 

substantial changes that occurred in the types of spending. By 2004, the 

nonhealth portion of state spending for low-income people looked 

substantially different than it did in 1995. Cash assistance spending fell by 

at least 50 percent in the nine states over the decade, driven by falling 

caseloads. In general, noncash spending—for employment services and 

training, work and other supports, and aid for the at-risk combined—

increased significantly from 1995 to 2000, then increased more slowly from 

2000 to 2004. Several factors played a role in these increases, including an 

increased emphasis on supporting working families in their efforts to avoid 

the welfare rolls, increased demand for child welfare and other services, 

and increased costs in areas such as mental health. Officials in some states 

said that they faced challenges in maintaining the services and programs 

that expanded from 1995 to 2000, as spending then slowed in the following 

time period. 

The combination of a substantial decline in cash assistance caseloads, 

increased state flexibility under TANF rules, and states’ implementation of 

their new welfare programs resulted in a changing role for TANF and MOE 

dollars across state budgets. Since welfare reform, states have increasingly 

spent TANF and MOE funds for aid and services outside of traditional cash 

assistance payments, as allowed under TANF. We found that the states 

used these TANF and MOE funds to support a wide range of state priorities, 

such as child care and development, including prekindergarten; child 

welfare services; mental health and substance abuse treatment; and 
Page 5 GAO-06-414 Welfare Reform

refundable state EIC; among others. This shift was curtailed somewhat 

from 2000 to 2004, when cash assistance caseloads and related spending 

increased in several states, associated with a contraction of spending for 

other forms of aid and services. Still, by 2004, in seven of the nine states 

cash assistance spending accounted for less than 40 percent of total TANF 

and MOE spending. However, TANF reporting and oversight mechanisms 

at the federal level have not kept pace with the evolving uses of TANF 

funds. As a result, little information exists on the numbers served by TANF 

funds and limited information is available nationwide on how funds are 

used to meet welfare reform goals. 

To address these information gaps, Congress should direct the Secretary of 

HHS, in consultation with states, to identify and assess cost-effective 

options for obtaining additional information on the numbers served by 

TANF and how funds are used to meet welfare reform goals. These options 

should take into account the need to strike an appropriate balance between 

flexibility for state grantees and accountability for federal funds and goals. 

Background The TANF block grant was created by the Personal Responsibility and 

Work Opportunity Reconciliation Act of 1996 (PRWORA),3

 and changed the 

federal role in financing welfare programs in states. PRWORA ended 

families’ entitlement to cash assistance by replacing the Aid to Families 

with Dependent Children (AFDC) program—essentially a federal-state 

matching grant—with the TANF block grant, a $16.5 billion per year fixed 

federal funding stream to states. PRWORA coupled the block grant with an 

MOE provision, which 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 allotments.4

 This helped to ensure 

that states remained strong fiscal partners. PRWORA provided states 

greater flexibility and responsibility for administering and implementing 

their welfare programs. Importantly, with the fixed federal funding stream, 

3

Pub. L. No. 104-193, 110 Stat. 2105, August 22, 1996.

4

States’ MOE requirements are based on their own spending in federal fiscal year 1994 on 

AFDC, Job Opportunities and Basic Skills Training (JOBS); Emergency Assistance (EA); and 

AFDC-related child care programs: AFDC/JOBS child care program, Transitional Child Care, 

and At-Risk Child Care programs. A state that does not meet the act’s work participation 

rates must maintain at least 80 percent MOE. A state that meets its work participation rate 

must maintain at least 75 percent of its MOE. For more information, see GAO/AIMD-98-137.
Page 6 GAO-06-414 Welfare Reform

states must assume the fiscal risks in the event of a recession or increased 

program costs.

In addition to increased flexibility and the new fiscal structure, PRWORA 

charged HHS with oversight of states’ TANF programs and gave HHS new 

responsibilities for tracking state performance. PRWORA also set federal 

requirements that states must impose on many families receiving cash or 

other ongoing assistance, including time limits and work requirements for 

adults. At the same time, the law restricts HHS’s authority to regulate 

states’ programs and reduced the number of federal employees involved in 

the program. 

TANF and MOE spending is one component of federal, state, and local 

spending on a range of programs aimed at serving low-income and needy 

populations, which in this report we will refer to as welfare-related 

spending. In state fiscal year (SFY) 2004, among the nine states in our 

study, TANF and MOE spending represented from 12 to 28 percent of all 

federal, state, and local spending flowing through the state budgets for 

welfare-related services outside of the health spending captured in our 

survey. (See app. II.) Outside of TANF and MOE, welfare-related spending 

provides a wide range of services and comes from a variety of federal, 

state, and local sources. Transportation subsidies, rental assistance, child 

care subsidies, heating and energy assistance, and low-income tax 

preferences, among others, can all serve low-income and needy 

populations and are funded through multiple federal agencies, such as the 

Department of Housing and Urban Development, HHS, and the Department 

of Transportation, as well as by state and local governments. 

In 2001, we examined welfare-related spending in 10 selected states before 

and after the passage of welfare reform, from SFY 1995 to SFY 2000.5

 We 

reported that after welfare reform, since both the amount of flexible 

federal TANF funds and required MOE remain fixed regardless of the 

number of people served with these funds, and since cash assistance 

caseloads declined dramatically since the mid-1990s, states had additional 

budgetary resources available for use toward a variety of welfare-related 

purposes and spending. From SFY 1995 to SFY 2000, while total spending 

levels for all welfare-related services generally increased, states began 

using these additional budgetary resources to enhance spending for 

noncash services, such as training, education, and a range of other welfare5

GAO-01-828.
Page 7 GAO-06-414 Welfare Reform

related spending—an allowable practice under TANF. As state TANF 

programs and welfare-related spending evolved after welfare reform, the 

nation’s welfare system now looks quite different than it did under AFDC.

Our previous findings focused on a period of sustained economic growth 

and increasing tax collections in states. From 1995 to 2000, state 

government tax collections grew in inflation-adjusted terms, and 

unemployment and poverty rates were generally falling, although there was 

some variation among the nine states we studied. Overall, these 

circumstances suggest that states were generally faced with declining 

spending demands from low-income populations and increasing fiscal 

resources to meet those demands. In 2001, however, the nation 

experienced a recession from March through November, and a contrasting 

set of economic and fiscal circumstances developed. A period of rising 

unemployment and declining state tax collections ensued. In seven of the 

nine states, poverty rates that fell from 1995 to 2000 increased from 2000 to 

2004, as shown in figure 2. These shifts suggest that, in general, states were 

faced with an increased demand for services aimed at low-income 

populations at a time when fewer fiscal resources were available to meet 

these demands after the recession. 
Page 8 GAO-06-414 Welfare Reform

Figure 2: Changes in Poverty Rates in Nine States from 1995 to 2000 and from 2000 to 2004

Notes: The poverty rate for 1995 and 2000 is a 3-year centered average, that is, the poverty rate for 

1995 is the simple average of the poverty rates of 1994, 1995, and 1996, and the poverty rate for 2000 

is the average of those for 1999, 2000, and 2001. However, the poverty rate for 2004 is a 2-year 

average of 2003 and 2004, the latest available year. The change in the poverty rate is the difference of 

these averages from 1995 to 2000 and from 2000 to 2004.

Spending on LowIncome Programs 

Increased over the 

Decade

According to data provided by the states, total welfare-related spending 

rose over the decade in each of the nine states. Health spending 

accelerated as the decade progressed, increasing faster over the decade 

than nonhealth spending, which varied somewhat by state and period. 

Health and nonhealth spending from both federal and state sources 

increased over the decade, a reflection of the strong fiscal partnership 

between the federal government and states in supporting low-income 

individuals. However, while the federal share of health care spending 

remained fairly consistent over the decade, the federal share of nonhealth 

spending varied over time.

-5

-4

-3

-2

-1

0

1

2

3

4

5

Percentage change

Source: GAO analysis of U.S. Census Bureau data.

1995 to 2000

2000 to 2004

Md. Mich. N.Y. Oreg. Tex. Wis.

State 

Calif. Colo. La.
Page 9 GAO-06-414 Welfare Reform

Total Spending for WelfareRelated Services Increased 

over the Decade 

In the nine states, spending for low-income people for health and nonhealth 

services increased over the decade since welfare reform. These spending 

levels, shown in figure 3 for each of the three points in time we examined, 

include federal and state funds that flowed through state budgets for 

programs targeting low-income and at-risk individuals. The figure excludes 

spending for the elderly, for those in institutions, and for long-term care. 

Figure 3: Total Welfare-Related Nonhealth and Health Spending in Real Dollars since 1995 

Note: Includes federal, state, and local spending captured in our survey of expenditures about which 

states make key budgetary decisions. Excludes spending for long-term care, institutional care, and the 

elderly.

2004 dollars in billions

Source: GAO survey and analysis of state spending data.

Health

Nonhealth

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

0

5

10

15

20

25

30

35

40

45

Md. Mich. N.Y. Oreg. Tex. Wis.

State 

Calif. Colo. La.
Page 10 GAO-06-414 Welfare Reform

Health Spending Grew 

Faster Than Nonhealth 

Spending 

In general, health spending accelerated over the decade. The median 

growth rate increased from 11 percent in the first period (from 1995 to 

2000) to 40 percent in the second period (2000 to 2004), as shown in table 1. 

Colorado and Oregon were exceptions, with larger increases during the 

strong economy of the late 1990s. States often cited increases in eligible 

populations and rising pharmaceutical and service delivery costs as the 

primary reasons for the rapid spending growth in this area. 

Table 1: Percentage Change in Real Spending for Welfare-Related Health Care

Source: GAO survey and analysis of state spending data.

Note: Includes federal, state, and local spending captured in our survey. Excludes spending for longterm care, institutional care, and the elderly. 

The health spending we examined in this report included state spending 

from federal and state sources for any health care program for working age 

adults and children, excluding long-term and institutional care. While this 

spending included such services as public health initiatives—outreach, 

prevention, diagnosis, care, and children’s vaccines, most funds were spent 

on the State Children’s Health Insurance Program (SCHIP) and the 

Medicaid program. Medicaid is a complex program that serves many 

different low-income populations. Nationwide, children and their families 

constitute 75 percent of those served but only account for 30 percent of 

expenditures, while those with disabilities represent 16 percent of 

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 2 38 41

Colorado 129 32 202

Louisiana 8 48 61

Maryland 8 45 58

Michigan 3 32 36

New York 11 40 55

Oregon 123 22 173

Texas 52 62 147

Wisconsin 15 59 83

Median 11 40 61

Maximum 129 62 202

Minimum 2 22 36
Page 11 GAO-06-414 Welfare Reform

beneficiaries and 45 percent of expenditures.6 Between 1995 and 1997, the 

number of able-bodied adults and children on Medicaid fell, which may be 

due in part to changes in the relationship between TANF and Medicaid 

triggered by the 1996 welfare legislation.7

 At the same time, states were 

starting to enroll low-income children in SCHIP, a new federal-state 

partnership created by Congress in 1997. It extends health insurance to 

low-income children whose families earn too much to be eligible for 

Medicaid but are unable to obtain insurance another way, either through an 

employer or outright purchase of private insurance. Nationwide, 

enrollments in Medicaid and SCHIP generally increased from 2000 to 2004.8

 

Even so, not all low-income individuals are eligible for Medicaid or SCHIP, 

and some of those who are eligible are not enrolled for a variety of reasons, 

including lack of information about the program or choosing not to enroll.9

 

Because health spending grew faster than nonhealth spending since 1995, it 

now consumes a greater share of welfare-related spending in the state 

budgets we examined, as shown in table 2. In eight of our nine states, 

health care accounted for at least 45 percent of welfare-related spending 

for low-income programs from federal and state sources by 2004. This 

mirrors a nationwide trend of rising health costs, raising concerns about 

growing government expenses for health programs. 

6

The elderly make up the remainder of the Medicaid caseload and expenditures, but they are 

excluded from this study.

7

For more information see GAO, Medicaid Enrollment: Amid Declines, State Efforts to 

Ensure Coverage After Welfare Reform Vary, GAO/HEHS-99-163 (Washington, D.C.: 

Sept. 10, 1999).

8

For more information see Elicia J. Herz, Congressional Research Service, Coverage of the 

TANF Population Under Medicaid and SCHIP, RS22035 (Washington, D.C.: Jan. 27, 2005).

9

For more information, see GAO, Means-Tested Programs: Information on Program 

Access Can Be an Important Management Tool, GAO-05-221 (Washington, D.C.: Mar. 11, 

2005).
Page 12 GAO-06-414 Welfare Reform

Table 2: Welfare-Related Health Spending as a Share of Total Welfare-Related 

Spending 

Source: GAO survey and analysis of state spending data.

Note: Includes federal, state, and local spending captured in our survey. Excludes spending for longterm care, institutional care, and the elderly.

Spending for a Broad Range 

of Nonhealth Services 

Increased

Nonhealth spending also generally increased after 1995, although at a 

slower rate and with more variation among the states and time periods, as 

shown in table 3. Nonhealth spending includes the following categories: 

cash assistance, employment services and training, work and other 

supports, and aid for the at-risk. Spending in these combined categories 

occurs through a wide variety of federal and state programs that can serve 

low-income and needy populations. While we found that spending 

increased overall when looking at all these programs combined, some 

differences emerged when compared with health spending. Since 1995, 

median nonhealth spending increased 17 percent, in contrast to the 61 

percent median growth rate for health. 

Percentages based on real 2004 dollars

SFY

State 1995 2000 2004

California 32 31 34

Colorado 48 61 67

Louisiana 64 68 74

Maryland 47 49 53

Michigan 40 40 45

New York 51 54 59

Oregon 41 58 62

Texas 54 60 70

Wisconsin 54 56 64

Median 48 56 62

Maximum 64 68 74

Minimum 32 31 34
Page 13 GAO-06-414 Welfare Reform

Table 3: Percentage Change in Real Spending for Welfare-Related Nonhealth 

Services

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. The nonhealth category 

reflects total spending from the following previously defined GAO categories: cash assistance, 

employment services and training, work and other supports, and aid for at-risk. See app. I for a further 

explanation of these categories.

Because nonhealth spending includes so many different federal and state 

programs and services, it is difficult to clearly identify factors that explain 

spending changes overall. However, our previous work and our 

discussions with state officials show that the spending outcomes reflect a 

multitude of factors, including changes in the numbers and needs of 

eligible populations and in federal and state policy and fiscal situations. We 

provide more information on the factors affecting spending changes in this 

area in the next section. 

After Welfare Reform, State 

Spending for Low-Income 

Programs Generally 

Increased from Both 

Federal and State Sources 

Federal and state governments are important fiscal partners when it comes 

to providing many types of assistance to low-income and at-risk 

individuals. Our analysis of state expenditures showed that the spending 

increases evident since 1995 were substantially supported by both federal 

and state funds in the health and nonhealth areas in both time periods. 

(For more details on federal and state spending, see app. III.) The state 

contribution is noteworthy particularly during the second time period 

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 11 17 30

Colorado 38 2 40

Louisiana -12 15 2

Maryland 2 23 25

Michigan -1 8 7

New York -1 14 13

Oregon 12 4 17

Texas 17 5 22

Wisconsin 3 14 17

Median 3 14 17

Maximum 38 23 40

Minimum -12 2 2
Page 14 GAO-06-414 Welfare Reform

when states experienced declining revenues. States generally are required 

to balance their operating budgets, and may need to raise revenues or 

reduce spending to do so. At the same time, many of the key federal 

programs for low-income individuals are structured in a way to help ensure 

that states maintain their financial commitment to these programs in order 

to receive continued federal support. 

In the health area, federal and state funds spent on health services grew at 

roughly the same rate over the decade, resulting in a fairly stable split in 

federal and state shares of spending over time. As shown in table 4, in 

2004, the median federal share of health spending totaled 58 percent, which 

would correspond to a state share of 42 percent. The higher federal shares 

in some states, such as Louisiana, may be explained in part by the greater 

role the federal government plays in funding Medicaid costs in states with 

lower per capita incomes. At the same time, because the health spending 

data include services other than Medicaid, the federal share will not 

correspond directly to the share under Medicaid.10 

10One of the design features of the Medicaid program is the nature of the cost-sharing 

arrangement between states and the federal government. The federal share is guided by a 

matching rate related to the per capita income for each state. 
Page 15 GAO-06-414 Welfare Reform

Table 4: Federal Share of Welfare-Related Health Spending over Time

Source: GAO survey and analysis of state spending data.

Note: Excludes spending for long-term care, institutional care, and the elderly.

In the nonhealth spending area, we also found spending increases generally 

supported by both federal and state funds, although the federal share 

showed more variation over the two time periods for nonhealth than for 

health spending. As shown in table 5, the median federal share fell in 2000 

(from 50 percent to 44 percent), possibly as states responded to higher 

state revenues during the late 1990s. In 2004, the median federal share rose 

to 49 percent, possibly as a reflection of the tighter fiscal conditions states 

faced in this time period. In addition, the federal share of nonhealth 

spending grew more consistent among the states over the decade. The 

federal share ranged from 33 to 73 percent in 1995, tightening to range from 

43 to 61 percent by 2004. 

Percentages based on real 2004 dollars

SFY

State 1995 2000 2004

California 49 49 52

Colorado 53 50 53

Louisiana 73 70 75

Maryland 49 49 54

Michigan 56 54 58

New York 42 50 49

Oregon 62 61 64

Texas 63 62 61

Wisconsin 57 58 60

Median 56 54 58

Maximum 73 70 75

Minimum 42 49 49
Page 16 GAO-06-414 Welfare Reform

Table 5: Federal Share of Welfare-Related Nonhealth Spending over Time

Source: GAO survey and analysis of state spending data.

Note: Excludes spending for long-term care, institutional care, and the elderly.

It is important to highlight the distinction between the health and 

nonhealth areas again when discussing the federal and state shares of 

spending. In contrast to the health area where much of federal and state 

financial participation is guided by federal Medicaid statute and 

regulations, nonhealth spending—comprising numerous federal and state 

programs—is guided by an array of different laws and rules about federal 

and state financial participation. Specifically, supports for low-income 

people vary in terms of whether they are funded with federal funds, statelocal funds, or a combination. While several key funding sources, such as 

the TANF block grant, foster care, food stamp administrative costs, and 

others require state matching and MOE provisions, others do not. In these 

cases, funding decisions are left entirely up to states. 

Spending Priorities 

Shifted Away from 

Cash Assistance

The overall increases in spending for nonhealth services in the nine states 

mask some substantial shifts over the decade in how states spent federal 

and state funds for low-income people. Two trends emerged. First, 

spending shifted away from cash assistance programs toward other types 

of aid and services (excluding health). Second, this expansion in noncash 

spending was strongest from 1995 to 2000, and spending increased 

Percentages based on real 2004 dollars

SFY

State 1995 2000 2004

California 46 44 44

Colorado 50 39 49

Louisiana 73 52 58

Maryland 42 42 45

Michigan 53 51 54

New York 33 38 43

Oregon 61 60 61

Texas 51 56 58

Wisconsin 39 43 46

Median 50 44 49

Maximum 73 60 61

Minimum 33 38 43
Page 17 GAO-06-414 Welfare Reform

further—but more slowly—from 2000 to 2004. Spending for work and 

other supports, particularly child care and development, was a key growth 

area in several states, reflecting state efforts to support welfare reforms 

that focused on employment. Spending on the various nonhealth services 

varied among the states, reflecting to some extent different state spending 

priorities. In general, states reported that increases in these areas were 

driven by policy changes to welfare and other social programs, increased 

program costs and demand, and increases in federal grants. 

Spending Priorities for LowIncome Programs Changed 

Significantly from 1995 to 

2004

By 2004, the nonhealth portion of state spending (from federal and state 

sources) for low-income services looked substantially different than it did 

in 1995. In all of the nine states, the total portfolio of nonhealth services 

shifted away from cash assistance toward other programs, as 

demonstrated in figure 4. For example, in New York, 33 percent of total 

nonhealth spending was devoted to cash assistance in 1995, compared with 

13 percent in 2004. Other shifts among the noncash assistance categories 

varied by state and period, reflecting differing spending priorities. For 

example, work and other supports increased from 39 percent to 58 percent 

of the welfare-related budget in Wisconsin over the decade, while in 

Louisiana, the same category declined from 37 percent to 31 percent.
Page 18 GAO-06-414 Welfare Reform

Figure 4: Share of Federal and State Spending (Combined) for Welfare-Related Nonhealth Services by Category over Time 

(Based on Real Spending) 

Notes: Each bar represents 100 percent of all welfare-related state spending—from federal and state 

sources—for nonhealth services captured in our survey in each state for each year. Bars may not total 

to 100 percent due to rounding.

2

2

18 34

8

7 27 51

27 47

23 51

16

11 29

21 57

24 42

5 39 28

34

16 26 41

14

5

11

16

9

6 38 47

9 29 49

22 46

22 36

32 55

9 31 52

30

28 65

7 60 28

13 31 48

37 53

1 40 53

8

51

37 29

35 47

36 43

36 44

50

58 29

39

Cash assistance

Employment services and training 

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

California

State Year Cash assistance Noncash assistance

Percentage

Colorado

Louisiana

Maryland

Michigan

New York

Oregon

Texas

Wisconsin

Source: GAO survey and analysis of state spending data.

43 5

18

15

25

5

19

9

17

23

26 8

28

17

7

5

7

5

9

9

13

33 8

8

8

26

5

5

7

6

Work and other supports

Aid for the at-risk

60 40 20 0 20 40 60 80 100

5

6

5

3
Page 19 GAO-06-414 Welfare Reform

Figure 4 also shows the relative size of the nonhealth categories. 

Employment services and training remained the smallest category in most 

of these states over the decade. Although cash assistance began the 

decade as a larger category in many states, by 2004 it was generally the 

second smallest category. Over the decade, work and other supports grew 

to become the second largest category in most states, and aid for the at-risk 

generally remained or became the largest category. The aid to the at-risk 

category includes spending for child welfare, juvenile justice, mental 

health, and other related services. 

Cash Assistance Spending 

Declined Significantly, 

Largely from 1995 to 2000

Cash assistance spending declined dramatically from 1995 to 2000 in all 

case study states and varied from 2000 to 2004, as shown in table 6. 

Although some states increased spending after 2000, all nine states 

experienced at least a 50 percent decline in cash assistance spending over 

the decade. In all of the states, a dramatic decrease in cash assistance 

caseloads led to the decline in spending in this area, particularly from 1995 

to 2000.11 

11We asked each state to provide cash assistance spending and caseload data for any income 

support programs available in the state. TANF-funded cash assistance is only available to 

families with children. While some states reported all cases to us, including those that are 

100 percent state funded, some states did not. This does not affect the overall trends we 

identified.
Page 20 GAO-06-414 Welfare Reform

Table 6: Percentage Change in Real Spending for Cash Assistance

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the cash assistance category.

In our previous work, we found that several factors have been cited to 

explain the large reductions in cash assistance caseloads. These include 

changes in welfare programs; the strong economy of the late 1990s; and 

other policy changes, such as expansions of the federal EIC and increased 

federal spending for child care subsidies.12 One state attributed the more 

recent caseload increases to the economy. Many state officials also noted 

changes in the characteristics of those who remained on the welfare rolls. 

They told us that after the shift to a work-first approach, the caseloads 

stabilized as the most employable recipients transitioned into the 

workforce. They said that the remaining cash assistance recipients tend to 

have multiple barriers to employment and require a wider and costlier 

range of services to enable them to be self-sufficient. 

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California -54 1 -53

Colorado -71 26 -64

Louisiana -59 -2 -60

Maryland -69 7 -66

Michigan -70 13 -66

New York -32 -35 -55

Oregon -62 3 -61

Texas -53 -20 -62

Wisconsin -80 56 -69

Median -62 3 -62

Maximum -32 56 -53

Minimum -80 -35 -69

12For more information, see GAO, Welfare Reform: More Information Needed to Assess 

Promising Strategies to Increase Parents’ Incomes, GAO-06-108 (Washington, D.C.: Dec. 2, 

2005).
Page 21 GAO-06-414 Welfare Reform

Other Nonhealth Spending 

Increased Rapidly until 

2000, Then Growth 

Generally Slowed

In general, spending for other noncash categories combined (employment 

services and training, work and other supports, and aid for the at-risk) 

increased significantly after welfare reform, but slowed from 2000 to 2004 

in most of these states, as shown in table 7. While most states increased 

spending after 2000, some states cited challenges in maintaining their initial 

rate of growth as their fiscal situations tightened. In contrast to cash 

assistance spending, which declined sharply during the first period, 

noncash expenditures rose dramatically in the first period and generally 

continued to rise during the second period, but at a slower rate. 

Table 7: Percentage Change in Real Spending for Noncash Assistance

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. Noncash assistance 

spending reflects total spending from the following previously defined GAO categories: employment 

services and training, work and other supports, and aid for at-risk. See app. I for a further explanation 

of these categories.

Changes in Spending for 

Employment Services and 

Training Varied

State spending patterns for training and education varied, although one 

trend related to welfare reform was evident. As shown in table 8, six states 

expanded employment services and training spending after 1995, in part to 

meet the increased employment focus of their TANF programs. Then five 

of these states cut this spending back as state revenues declined after 2000. 

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 60 21 94

Colorado 73 0 74

Louisiana -1 17 16

Maryland 17 24 45

Michigan 22 7 31

New York 14 29 47

Oregon 38 5 44

Texas 31 7 40

Wisconsin 36 11 52

Median 31 11 45

Maximum 73 29 94

Minimum -1 0 16
Page 22 GAO-06-414 Welfare Reform

For example, as cash assistance caseloads declined in Wisconsin from 1995 

to 2000, it more than doubled spending for employment services and 

training. However, as cash assistance caseloads increased after 2000, 

spending for employment services and training was reduced 44 percent. 

Even so, spending for employment services and training ended more than 

30 percent higher at decade end than at its beginning. In addition, in 

California, a large amount of TANF funds were moved into the training and 

education area from 1995 to 2000, but some of these funds were removed 

after 2000. In contrast, two states reduced their training and education 

spending during the period immediately following welfare reform, but 

expanded this spending after 2000. 

Table 8: Percentage Change in Real Spending for Employment Services and 

Training

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the employment services and training category.

a

Colorado state officials said that this large increase was due in part to data reporting issues 

associated with the transition from the Job Training Partnership Act employment and training programs 

to those of the Workforce Investment Act. As a result, this number overstates the increase in actual 

spending for employment services and training.

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 74 -6 64

Colorado 0 173a 172

Louisiana -35 35 -13

Maryland 43 -59 -42

Michigan 41 -34 -7

New York -6 31 23

Oregon 28 -26 -5

Texas 3 18 21

Wisconsin 138 -44 34

Median 28 -6 21

Maximum 138 173 172

Minimum -35 -59 -42
Page 23 GAO-06-414 Welfare Reform

Increases in Spending for Work 

and Other Supports Reflect State 

Welfare Reform Goals

Over the decade, state spending generally increased by a higher percentage 

for work and other supports than for any other nonhealth category. In 

most case study states, this was the second largest nonhealth category in 

2004. In each period, most of these states increased spending in this area, 

although the median increase was much smaller after 2000, as shown in 

table 9. These expansions are consistent with our previous work, which 

found that many states expanded the availability of supports that promote 

employment and economic independence for low-income families.13

Table 9: Percentage Change in Real Spending for Work and Other Supports

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the work and other supports category.

Louisiana was the only state to experience a substantial spending decline in 

this category from 1995 to 2000. Louisiana increased spending for two 

areas in this category, including child care and development, as discussed 

below. However, these increases were more than offset by other spending 

areas that decreased, including administrative costs for food stamps, 

13See GAO, Supports for Low-Income Families: States Serve a Broad Range of Families 

Through a Complex and Changing System, GAO-04-256 (Washington, D.C.: Jan. 26, 2004).

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 69 18 99

Colorado 143 -6 129

Louisiana -31 24 -14

Maryland 38 24 71

Michigan 5 10 15

New York -1 47 46

Oregon 64 15 88

Texas 59 4 66

Wisconsin 32 32 74

Median 38 18 71

Maximum 143 47 129

Minimum -31 -6 -14
Page 24 GAO-06-414 Welfare Reform

associated with declining food stamp caseloads in the state.14 After 2000, 

spending for work and other supports increased as Louisiana invested 

TANF funds in additional programs, particularly prekindergarten. In 

contrast, Colorado increased spending on refundable tax credits for 

working families during the robust economic growth of the 1995-2000 

period, but decreased spending slightly from 2000 to 2004. 

The child care and development area was the main driver of spending 

changes in this category in many of these states, with high rates of growth 

as shown in table 10. In five states, more than half of all growth in the 

category was due to increased spending for child care and development. 

Several states reported that child care continued to be in demand, even as 

TANF caseloads fell, because many working parents relied on subsidized 

child care to help them keep their jobs. While most spending in this area is 

focused on child care subsidy programs, some states also increased 

spending for prekindergarten and other child development programs. As 

part of the 1996 welfare reform, the federal government increased funding 

to states through the Child Care and Development Fund (CCDF) to 

subsidize child care assistance for low-income families who were working 

or preparing for work through education and training, with a special 

emphasis on families working their way off welfare. In addition to CCDF, 

funds allocated by the nine states for child care or development included 

TANF, MOE, and other funds. Table 10 shows that substantial investments 

of these funds for child care and development accompanied welfare 

reforms in the first period and continued, in almost all of these states at a 

slower rate of increase, in the second period.15 

14Declining food stamp caseloads during this time period were not unique to Louisiana. For 

more information, see GAO, Food Stamp Program: Various Factors Have Led to Declining 

Participation, GAO/RCED-99-185 (Washington, D.C.: July 2, 1999), and Food Stamp 

Program: Steps Have Been Taken to Increase Participation of Working Families, but 

Better Tracking of Efforts is Needed, GAO-04-346 (Washington, D.C.: Mar. 5, 2004).

15For more information on recent changes in federal and state child care subsidy programs, 

see GAO, Child Care: Additional Information Is Needed on Working Families Receiving 

Subsidies, GAO-05-667 (Washington, D.C.: June 25, 2005), and Child Care: Recent State 

Policy Changes Affecting the Availability of Assistance for Low-Income Families, GAO03-588 (Washington, D.C.: May 5, 2003).
Page 25 GAO-06-414 Welfare Reform

Table 10: Percentage Change in Real Spending for Child Care or Child Development

Source: GAO survey and analysis of state spending data.

Note: Includes federal, state, and local spending (from CCDF, TANF, and other sources) captured in 

our survey for child care or child development programs for low-income individuals, including 

prekindergarten and state spending for Head Start. 

Other areas of expansion included some entitlement or federal grant 

programs, such as tax credits, housing, or food assistance. Four states 

(Colorado, Maryland, New York, and Wisconsin) began or expanded state 

EIC programs to complement the federal EIC program, which offers work 

incentives in the form of a tax credit based on income.16 Food assistance 

spending increased in most states due to increased administrative costs 

related to expanding food stamp benefit rolls, although the benefit costs 

are not reflected here. Two states told us they had engaged in publicity 

campaigns to encourage eligible recipients to sign up for federally funded 

programs such as food stamps or EIC.

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 215 19 275

Colorado 112 10 133

Louisiana 178 12 212

Maryland 33 5 39

Michigan 4 6 10

New York 124 41 216

Oregon 32 8 44

Texas 71 19 104

Wisconsin 219 48 373

Median 112 12 133

Maximum 219 48 373

Minimum 4 5 10

16Our study includes the refundable portion of state EICs. A refundable tax credit provides a 

payment to those eligible applicants when the amount of the credit is greater than the 

taxpayer’s tax liability. Federal EICs were not included because they do not flow through 

the state budget.
Page 26 GAO-06-414 Welfare Reform

Aid for the At-Risk Spending 

Increased Steadily and Remains 

the Largest Nonhealth Category

Spending on aid for the at-risk, generally the largest nonhealth category, 

increased over the decade, although growth slowed considerably in most 

states after 2000, as shown in table 11. This category includes spending for 

child welfare, mental health, developmental disabilities, juvenile justice, 

substance abuse prevention and treatment, and related spending. Among 

these, the largest areas of spending were child welfare, mental health, and 

developmental disabilities. Officials in several states told us that there 

were increases in the costs of providing services for these three areas, as 

well as increased demand for child welfare and other services. However, 

several states had growth rates under 10 percent after 2000, because of 

decreases in spending areas such as juvenile justice, substance abuse, and 

developmental disabilities.

Table 11: Percentage Change in Real Spending for Aid for the At-Risk

Source: GAO survey and analysis of state spending data.

Note: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the aid for the at-risk category.

Child welfare spending increased considerably in most of the nine states 

over the decade, primarily from 1995 to 2000, as shown in table 12. This 

includes spending for key federal/state partnership programs such as foster 

care, adoption assistance, and other child welfare services. Nationwide, 

child welfare systems investigate abuse and neglect, provide placements to 

children outside their homes, and deliver services to help keep families 

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 54 27 95

Colorado 44 1 46

Louisiana 57 9 71

Maryland 7 33 42

Michigan 33 13 50

New York 27 20 53

Oregon 26 3 30

Texas 23 5 30

Wisconsin 25 -2 23

Median 27 9 46

Maximum 57 33 95

Minimum 7 -2 23
Page 27 GAO-06-414 Welfare Reform

together.17 TANF and MOE funds played an important role in four states, 

which increased TANF-related spending until it accounted for 19 to 32 

percent of child welfare spending by 2004. 

Table 12: Percentage Change in Real Spending for Child Welfare

Source: GAO survey and analysis of state spending data.

Note: Includes federal, state, and local spending captured in our survey for adoption assistance, foster 

care, and independent living programs; on any program intended to prevent out-of-home placements, 

promote reunification of families, or provide a safe environment for children; and on programs that 

focus on prevention of child abuse and neglect.

17For more information on the nation’s child welfare system, see GAO, Child Welfare: 

Improved Federal Oversight Could Assist States in Overcoming Key Challenges, GAO-04-

418T (Washington, D.C.: Jan. 28, 2004).

Based on real 2004 dollars

SFY

State 1995-2000 2000-2004 1995-2004

California 44 22 75

Colorado 50 5 57

Louisiana 23 0 23

Maryland 35 17 59

Michigan 52 40 112

New York 14 13 29

Oregon -17 18 -1

Texas 21 19 44

Wisconsin 118 -1 116

Median 35 17 57

Maximum 118 40 116

Minimum -17 -1 -1
Page 28 GAO-06-414 Welfare Reform

TANF and MOE Funds 

Played an Expanding 

and Flexible Role 

across State Budgets, 

but Accountability 

Remains a Challenge

The combination of a substantial decline in traditional cash assistance 

caseloads, new flexibilities under PRWORA, and states’ implementation of 

their welfare reforms resulted in a changing role for TANF and MOE dollars 

across state budgets. The change from the previous welfare program—

with its open-ended federal funding that matched state expenditures for 

monthly cash assistance—to the federal TANF block grant—with fixed 

federal funding and a specified level of state spending—gave states broader 

discretion over the types of services and activities to fund toward welfare 

reform goals. This change also gave states broader discretion over the 

amount of federal TANF and state MOE funds to spend in a given year, 

subject to minimum levels required under the MOE provisions. Under this 

new fiscal framework, the landscape of spending for traditional welfare 

funds changed substantially since welfare reform. TANF and MOE dollars 

played an increasing role in state budgets outside of traditional cash 

assistance payments, for programs to encourage work, help former welfare 

recipients keep their jobs, and provide services to needy families that did 

not necessarily ever receive welfare payments. However, with this shift, 

gaps arose in the information gathered at the federal level to ensure state 

accountability. Existing oversight mechanisms focus on cash assistance, 

which no longer accounts for the majority of TANF and MOE spending. As 

a result, there is little information on the numbers of people served by 

TANF-funded programs, meaning there is no real measure of workload or 

of how services supported by TANF and MOE funds meet the goals of 

welfare reform.

Flexible TANF Funds Serve 

a Broad Population in 

Various Ways 

Since welfare reform, states have increasingly spent TANF and MOE funds 

for aid and services outside of traditional cash assistance payments. 

Before welfare reform each of our study states spent some federal and 

state AFDC-related funds in spending categories other than cash 

assistance.18 However, by 2004, most of the states had significantly 

increased their use of TANF and MOE funds in these noncash categories 

compared with the level of spending in 1995, as shown in figure 5. 

18While the major focus of the AFDC program was monthly cash assistance, states could 

spend some federal and state AFDC-related funds on work preparation, child care, 

emergency assistance payments, and some child welfare-related activities. These program 

components are related to spending in the noncash categories in our analysis—employment 

services and training, work and other supports, and aid for the at-risk. However, states may 

not use TANF-related funds to pay for most medical services, which restricts their ability to 

supplement Medicaid spending.
Page 29 GAO-06-414 Welfare Reform

Figure 5: Percentage Change in TANF and MOE Spending for Noncash Aid and 

Services (Percentage Change in Real Spending from 1995 to 2004)

Note: This compares 1995 federal and state AFDC-related funds spent in the noncash categories—

employment services and training, work and other supports, and aid for the at-risk—with the amount of 

federal TANF and state MOE spending in these same categories in 2004. These data will not directly 

correspond to amounts reported by states to HHS because of differences in fiscal years and our study 

methodology. 

The TANF block grant played a critical role in this shift in spending 

priorities. Under the block grant structure, states’ fixed annual TANF 

allotments did not change as cash assistance caseloads fell. In addition, 

states still had to meet maintenance of effort requirements by spending at 

least 75 percent of the amount they had spent in the past when caseloads 

were much higher. States faced choices about how to use these funds, 

including whether to leave some amount of their annual grant in reserve at 

the U.S. Treasury to help them meet any future increases in welfare costs. 

TANF funds not spent by states accumulate as balances in the U.S. 

Treasury. 

New Welfare Environment 

Emerges after Federal and State 

Reforms

Our previous work showed that several trends emerged in this new welfare 

environment. First, many states increased their efforts to engage more 

welfare families in work or work-related activities in keeping with key 

TANF program requirements. More specifically, to avoid financial 

penalties, states were to meet specified work participation rates by 

0

50

100

150

200

250

300

350

400

450

500

CA CO LA MD MI NY OR TX WI

Percentage change

Source: GAO survey and analysis of state spending data.

Md. Mich. N.Y. Oreg. Tex. Wis.

State 

Calif. Colo. La.

5

145

272

45

85

67

236

164

474
Page 30 GAO-06-414 Welfare Reform

engaging parents receiving cash assistance in work-related activities. 

States generally met these rates, in part because of adjustments made in 

the target rates due to the drop in caseloads and other provisions that 

allowed states to serve some families without work requirements.19 In 

strengthening their welfare-to-work programs, states emphasized the 

importance of work to TANF recipients and paid more attention to case 

management services, child care and transportation assistance, and other 

services to help individuals, including those who faced some barriers to 

employment, become job ready.20 

Second, many states took steps to help parents who had left the welfare 

rolls for employment, often by continuing to provide child care assistance, 

sometimes using TANF funds to supplement other federal funds used for 

child care subsidies for low-income parents. Our work has shown that 

many former welfare recipients work in low-wage jobs with limited 

benefits and that continued assistance, such as child care subsidies, can 

help them maintain their jobs. 

Third, states also used TANF and MOE funds to provide a range of services 

to families that had not previously received cash welfare payments. These 

services can include onetime payments to families in need, such as for rent 

payments that might help keep them off the welfare rolls. Some states 

increased efforts to promote healthy marriages and two-parent families. 

All of these uses of TANF and MOE funds are generally considered in 

keeping with the broad goals established in the legislation. As specified by 

law, the purpose of TANF is to

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

their own homes or in the homes of relatives;

19In August 2005, we recommended that HHS take steps to help improve the quality and 

comparability of the work participation rate data to improve this measure’s usefulness in 

assessing states’ performance. See GAO, Welfare Reform: HHS Should Exercise Oversight 

to Help Ensure TANF Work Participation Is Measured Consistently across States, GAO-05-

821 (Washington, D.C.: Aug. 19, 2005).

20Some of the costs of such welfare-to-work programs are included in the employment 

services and training category and in the cash assistance category (for payments to TANF 

recipients; costs of caseworkers; and job placements, for example), while other costs, such 

as child care assistance paid for with TANF and MOE funds, are included in the work and 

other supports category. The states may vary in how they classify some of the costs of 

operating welfare-to-work programs. 
Page 31 GAO-06-414 Welfare Reform

• end the dependence of needy families on government benefits by 

promoting job preparation, work, and marriage; 

• prevent and reduce the incidence of out-of-wedlock pregnancies; and

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

Spending Priorities Shift as 

Policies and Programs Change 

This shift to aid and services other than cash assistance is mirrored in our 

analysis of states’ spending patterns for TANF and MOE funds. Figure 6 

shows the percentage of TANF and MOE funds (combined) that each state 

spent in each spending category in 1995, 2000, and 2004. (This figure only 

includes TANF and MOE spending, in contrast to figure 4, which showed 

the percentage of total federal and state low-income spending that each 

state spent in each category.) For example, figure 6 shows that California 

spent more than 90 percent of its federal and state AFDC-related funds on 

cash assistance in 1995 compared with 68 percent of its federal and state 

TANF-related funds in 2004. As the share of funds devoted to cash 

assistance declined in that state, the portion devoted to employment 

services and training, in particular, increased. In seven of the nine states, 

by 2004, cash assistance spending accounted for 40 percent or less of total 

TANF and MOE. States varied in how their TANF and MOE funds were 

distributed among the noncash categories.
Page 32 GAO-06-414 Welfare Reform

Figure 6: Share of Federal TANF and State MOE Spending for Welfare-Related Nonhealth Services by Category over Time (Based 

on Real Spending) 

Notes: Each bar represents 100 percent of the TANF and MOE spending for nonhealth services 

captured in our survey in each state for each year. Bars may not total to 100 percent due to rounding. 

To the extent that states did not report to us TANF funding spent through the Social Services Block 

Grant and CCDF, as allowed under law, it is not included in these data. 

Cash assistance

Employment services and training

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

1995

2000

2004

California

State Year Cash assistance Noncash assistance

Percentage

Colorado

Louisiana

Maryland

Michigan

New York

Oregon

Texas

Wisconsin

Source: GAO survey and analysis of state spending data.

92 3

2

5

67 17

16 9 7

9 6

68

56 20 22

24

82 17

62 33 5

75 13 9

70

82 756

87 11 2

1

0

73 10 14

42 13

20

26 18

37

30 15

30 13

34 10 30 26

37 13 27 22

68 4

14 14

24 4

54 20 23

51 18 21 11

86 11

38 10 49 3

30 24 38 8

35 33 16 15

31 50 16

Work and other supports

Aid for the at-risk

100 80 60 40 20 0 20 40 60 80 100

2 43 31

2

0

3

3

3

1

0

3

35 22

2

10 35

24 31

42

53 3

0

0
Page 33 GAO-06-414 Welfare Reform

This shift to noncash assistance was curtailed somewhat from 2000 to 2004, 

when cash assistance caseloads and related spending increased in several 

of the states, associated with a contraction of spending for other forms of 

aid and services, as shown in figure 6. During this period, state officials 

generally had to make different choices about what services and programs 

they could support with TANF and MOE funds to ensure they had enough 

funds to support the core cash assistance program. Some state officials 

told us that they drew down their TANF balances or reserves to help them 

maintain service levels. Regarding these TANF balances, most of the nine 

states followed a pattern of initially building up their TANF balances and 

then drawing them down in the 2000-2004 time period to help them 

maintain services, as shown in figure 7. 

Figure 7: TANF Balances as a Percentage of Total TANF Funds Available by State in Federal Fiscal Years 2000 and 2004

Note: These data represent the total amount of unspent TANF funds (including unliquidated and 

unobligated funds) as a percentage of the total TANF funds available to the state (the state’s annual 

grant amount plus any unexpended grant amounts carried over from previous years).

0

10

20

30

40

50

60

70

Percentage

Source: GAO analysis of HHS data.

2000

2004

Md. Mich. N.Y. Oreg. Tex. Wis.

State 

Calif. Colo. La.
Page 34 GAO-06-414 Welfare Reform

Over the decade, we found that the states used their federal and state 

TANF-related funds throughout their budgets for low-income individuals, 

supporting a wide range of state priorities, such as refundable state EICs 

for the working poor, prekindergarten, child welfare services, mental 

health, and substance abuse services, among others. While some of this 

spending, such as that for child care assistance, relates directly to helping 

cash assistance recipients leave and stay off the welfare rolls, other 

spending is directed to a broader population and set of state needs. The 

flexibility afforded states under TANF allows them to use these funds 

toward their state priorities. Some examples include the following: 

• Oregon—home to a large refugee resettlement population—spent TANF 

funds on cash benefits and other refugee services. Oregon also spent 

TANF and MOE funds on emergency assistance for survivors of 

domestic abuse. 

• New York and Wisconsin use federal TANF or state MOE funds for 

refundable tax credits. New York has increased the extent to which it 

counts state spending for the refundable portion of its EIC and 

dependent care tax credit to help it meet its MOE requirement. 

Wisconsin has used federal TANF funds to finance the refundable 

portion of its state EIC that previously had been financed with state 

funds, as we reported in our earlier report on these states’ use of funds.21 

• Michigan uses TANF funds for emergency homeless shelters and 

programs for runaways. TANF funds are also used for individual 

development accounts, which provide funds to eligible families to match 

their own funds to encourage them to save for educational purposes.

• According to state officials, Texas used MOE funds for prekindergarten 

for low-income children with low English proficiency. Texas also used 

TANF funds for an employment retention and advancement program for 

working people.

• California counts state funds used for the California Food Assistance 

Program toward its MOE requirement and uses TANF funds for juvenile 

probation services and fraud prevention incentive grants to counties.

21GAO-01-828.
Page 35 GAO-06-414 Welfare Reform

• Maryland spent TANF funds through the state Department of Education 

for the Children At Risk program. According to the Governor’s Budget, 

this program provides services for pregnant and parenting teenagers 

and provides funds to reduce the number of students who drop out of 

school each year, prevent youth suicides, reduce the incidence of child 

alcohol and drug abuse, and reduce AIDS among students.

• According to state officials, Louisiana, after initially building up a large 

TANF balance, took steps from 2002 to 2004 to spend down these funds, 

in some cases through short-term initiatives to be supported only until 

funding ran out. Some of these spending initiatives included 

prekindergarten, which state officials noted is a priority of the governor; 

funds to address teen pregnancy; and support for child welfare 

advocates. 

Much Remains Unknown 

about How States Use TANF 

Funds to Address Federal 

Welfare Reform Goals 

While current mechanisms in place at the federal level to hold states 

accountable for their use of federal TANF and state MOE funds provide 

useful information, these reporting mechanisms still leave significant gaps 

that hamper oversight. The new federal welfare program goals and fiscal 

structure established in 1996 entailed substantial changes in federal 

oversight and reporting mechanisms. At the federal level, HHS is 

responsible for oversight of the TANF block grant, and states provide 

several types of information for oversight purposes. Key oversight and 

reporting mechanisms are

• expenditure reports on the amount and type of federal and state MOE 

spending;

• plans that each state must file with HHS to outline its TANF programs 

and goals, among other things, for reducing out-of-wedlock pregnancies; 

• annual reports that each state must file with HHS to supplement its state 

plan information;

• aggregate caseload and individual reporting on demographic and 

economic circumstances and work activities of individuals receiving 

TANF cash assistance;

• single audit reports conducted as part of governmentwide audits of 

federal aid to nonfederal entities;
Page 36 GAO-06-414 Welfare Reform

• performance bonuses related to measures of job entry, job retention, 

and wage growth for TANF recipients and also for reducing out-ofwedlock births; and 

• financial penalties in 14 specified areas, including failure to meet the 

state MOE requirement and the minimum work participation rates.

In addition, HHS funding supports a range of research activities that 

provide additional information on TANF recipients and other low-income 

populations. 

These reporting mechanisms and information sources generally provide 

useful information on states’ use of TANF and MOE funds, although key 

information gaps remain. One such gap exists because the key measure of 

the number of people served through the block grant remains focused on 

families receiving TANF assistance, defined in TANF regulations as 

benefits designed to meet a family’s ongoing basic needs, which most 

typically occurs through receipt of monthly cash assistance.22 This 

measure does not provide a complete picture of the number of people 

receiving other forms of aid or services funded with TANF and MOE funds. 

In 2002, we estimated that in the 25 states we studied, at least 46 percent 

more families than are counted in the TANF caseload are provided aid or 

services with TANF and MOE dollars.23 In addition, we reported in June 

2005 that the lack of information on the numbers of children and families 

receiving child care subsidies funded by TANF and the types of care 

received leads to an incomplete picture of the federal role in providing 

child care subsidies to low-income parents.24 We already said in that report 

that Congress may wish to require HHS to find cost-effective ways to 

address this specific gap to provide additional information of value to 

22TANF regulations state that the term “assistance” includes cash, payments, vouchers, and 

other forms of benefits designed to meet a family’s ongoing basic needs, such as for food, 

clothing, shelter, and other items. It excludes other forms of aid, including supportive 

services such as child care and transportation provided to employed families and refundable 

EICs. 

23See GAO, 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.: Apr. 10, 2002).

24See GAO, Child Care: Additional Information Is Needed on Working Families Receiving 

Subsidies, GAO-05-667 (Washington, D.C.: June 29, 2005). 
Page 37 GAO-06-414 Welfare Reform

policymakers and program managers in ensuring the efficiency, 

effectiveness, and accountability of federal supports for child care. 

Additional information on the full range of people served by TANF and 

MOE funds is essential for a better understanding of the true workload of 

the grant. Caseload or workload information is important for oversight and 

policy-making purposes, particularly those related to the amount of and 

needs associated with the block grant. For example, as the cash assistance 

caseload declined by more than half nationwide, it raised questions as to 

whether adjustments were needed to the block grant funding levels. At the 

same time, because the amount of the block grant has not been adjusted for 

inflation since its creation in 1996, concerns have been raised about its 

declining value and the possible impact on meeting needs. Better 

information could inform these discussions. 

While having more information on the numbers served is important, it is 

also critical to make a distinction between those receiving cash assistance 

and other types of assistance, because different program requirements 

apply to families in different situations. More specifically, under TANF, 

families receiving ongoing cash assistance are generally subject to work 

requirements, time limits, and other requirements, in part to emphasize the 

transitional nature of assistance and to help ensure that recipients take 

steps to prepare for work. Those receiving other forms of aid outside of a 

state’s TANF program through a separate state program, such as working 

parents receiving child care subsidies, are not subject to requirements such 

as time limits on aid. 

Another information gap relates to what services are funded and how those 

services fit into a strategy or approach for meeting TANF goals. This would 

include information about intended target populations and the strategy or 

approach for using the funds to further welfare reform goals. For example, 

additional information on the extent to which TANF and MOE funds were 

used to support work requirements for cash assistance recipients is 

important to understanding the costs of supporting a state’s core TANF 

program. It is also important to have additional information to better 

understand the costs involved in providing aid to those transitioning off of 

welfare and to a more general population, such as for prekindergarten 

services or to supplement a state’s refundable EIC program. Such 

information would be useful to congressional policymakers in considering 

changes to TANF work requirements and implications for the provisions of 

other services, a key issue in TANF reauthorization deliberations. 
Page 38 GAO-06-414 Welfare Reform

In creating the TANF block grant, Congress emphasized the importance of 

state flexibility, and to that end, the legislation restricted HHS regulatory 

authority over the states except to the extent expressly provided in the law. 

Regarding collecting additional information about services beyond cash 

assistance, while HHS has acknowledged the value of having additional 

information, it has said that it will not collect this information without 

legislative changes directing it to do so. 

In any effort to get more information or to increase or revise program and 

fiscal reporting requirements, important considerations should be taken 

into account. In our report on the current undercounting of those served 

by TANF, some state officials raised concerns about the possibility of 

additional TANF reporting requirements being imposed on states to collect 

information on families not included in the TANF caseload. These concerns 

included that (1) states lack the information systems needed to fulfill 

additional requirements, (2) fulfilling additional requirements will increase 

administrative costs, (3) additional data collection requirements could 

deter states and service providers from offering services because they 

would not want the administrative burden associated with them, and 

(4) requiring all service recipients to provide personal identifying 

information for every service may deter some people from accessing 

services because of the stigma associated with welfare. While many of 

these concerns are legitimate, they do not necessarily outweigh the 

importance of getting needed information for oversight and policy making 

and can be considered in addressing any changes. In addition, there may 

be a variety of ways to get needed information, some more cost-effective 

than others, including relying on existing data sources or special studies. 

Moreover, opportunities may exist to streamline or eliminate some 

reporting requirements to make way for more relevant ones, as determined 

by Congress, HHS, and the states. In the past, Congress has included in 

legislation a requirement that HHS cooperate with states—key 

stakeholders in welfare reform—in considering aspects of monitoring state 

programs and performance. HHS has worked with state and human 

services professional organizations to discuss and receive input on 

information requirements and performance standards in the past. 

National-level data show that the trend away from cash assistance 

spending has occurred nationwide. States are using substantial portions of 

their block grants and MOE funds as large, flexible funding streams to meet 

their priorities in many areas of their budgets for low-income families, yet 

much remains unknown at the national level about how these federal TANF 

and state MOE funds are used to meet the overall goals of welfare reform. 
Page 39 GAO-06-414 Welfare Reform

Conclusion Ten years after Congress passed sweeping welfare reforms, much has 

changed in how federal and state dollars support programs for low-income 

and at-risk individuals. Some trends raise issues for the future. Overall, 

spending is up, but state budgets for low-income individuals are 

increasingly dominated by health care spending. To the extent that this 

trend continues or becomes more pronounced, it warrants attention as to 

its effect on state spending to meet other needs of low-income individuals. 

Another key trend was the shift in nonhealth spending priorities away from 

cash assistance to greater emphasis on supporting low-income individuals’ 

work efforts. However, the greatest increases came right after welfare 

reform during the strong economy, while some contraction in spending was 

apparent in the latter period. This raises questions about the sustainability 

of this shift. 

In addition, in the new welfare environment, too much remains unknown 

about how TANF block grant funds are spent to meet welfare goals. A 

natural tension exists with block grants that is not easily addressed. A key 

challenge is to strike an appropriate balance between flexibility for states 

and accountability for federal goals. This is particularly important given 

the large dollar amount of the TANF block grant—over $16 billion in 

federal funds annually. With the current accountability and reporting 

structure for TANF, the information gaps hamper decision makers in 

making informed choices about how best to spend federal funds to assist 

vulnerable populations cost effectively. At the same time, consideration 

needs to be given to collecting needed information in a way that minimizes 

reporting burden and acknowledges the importance of flexibility in 

addressing state and local needs.

Matter for 

Congressional 

Consideration

To better inform its oversight and decision-making process, Congress 

should consider ways to address two key information gaps for the TANF 

block grant: (1) insufficient information on the numbers served by TANF 

funds and (2) limited information on how funds are used—for example, on 

which target populations and as part of what strategies and approaches—

to meet TANF goals. 

Efforts to obtain more information must take into account how to do so in 

the most cost-effective and least burdensome way. Some options include 

Congress directing the Secretary of HHS to require states to include more 

information in state TANF plans filed with HHS on their strategies and 

approaches for using funds; require states to include more information on 
Page 40 GAO-06-414 Welfare Reform

all aspects of TANF spending in the annual reports they must file with HHS; 

and revise other reporting requirements regarding the uses and recipients 

of TANF-related funds. Congress may wish to require the Secretary to 

consult with key welfare reform stakeholders in assessing and revising 

reporting requirements or information-gathering strategies. 

Agency Comments We provided a draft of this report to HHS for review. In its written 

comments, which appear in appendix VI, HHS agreed that additional 

information on states’ use of TANF funds would be valuable and that 

expanded data collection requirements should be done in a cost-effective 

manner and in consultation with stakeholders. HHS also provided 

technical comments that we incorporated where appropriate.

As agreed with your office, 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 Secretary 

of Health and Human Services, appropriate congressional committees, and 

other interested parties. We will also make copies available to others upon 

request. In addition, the report is available at no charge on GAO’s Web site 

at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

David D. Bellis at (415) 904-2272 or Stanley J. Czerwinski at (202) 512-6520. 

Contact points for our Offices of Congressional Relations and Public 
Page 41 GAO-06-414 Welfare Reform

Affairs may be found on the last page of this report. GAO staff who made 

major contributions to this report are listed in appendix VII.

Sincerely yours,

David D. Bellis

Director

Education, Workforce, and Income Security Issues

Stanley J. Czerwinski

Director

Strategic Issues
Page 42 GAO-06-414 Welfare Reform

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

In order to provide information on welfare-related spending over the 

decade since welfare reform, we designed our study to (1) examine 

changes in the overall level of welfare-related spending for nonhealth and 

health services in the periods before and after the recession in 2001 and 

over the decade since 1995, (2) examine changes in spending priorities for 

nonhealth welfare-related services during the same time periods, and 

(3) review the contribution of Temporary Assistance to Needy Families 

(TANF) funds to states’ spending for welfare-related services. To address 

these objectives, we used a survey instrument to collect state spending 

data from state budget and program officials in nine states examined in our 

prior reports;1

 conducted site visits in these nine states; and reviewed 

information available from prior GAO work, relevant federal agencies, and 

other organizations. The nine states in our study—California, Colorado, 

Louisiana, Maryland, Michigan, New York, Oregon, Texas, and 

Wisconsin2

—represent a diverse set of socioeconomic characteristics, 

geographic regions, population sizes, and experiences with state welfare 

initiatives. For the purposes of this report, we focused on spending for 

working-age adults and children and excluded spending for the elderly, 

long-term care, and institutional care. The term welfare-related refers to 

spending for low-income and at-risk individuals, including TANF-eligible 

and non-TANF eligible individuals. Because our focus was on states’ 

budgetary decisions, we excluded federal program spending about which 

states do not make key budget decisions, such as food stamp benefits, the 

Earned Income Tax Credit, Supplemental Security Income, and other 

programs; as a result, our data do not capture all federal spending for lowincome individuals. 

Welfare-Related 

Spending Survey

To obtain data on welfare-related spending over the decade since welfare 

reform, we asked state budget and program officials from each state’s 

central budget office and relevant state agencies to identify welfare-related 

spending data using the same survey instrument and criteria used in our 

1

GAO, Welfare Reform: Challenges in Maintaining a Federal-State Fiscal Partnership, 

GAO-01-828 (Washington, D.C.: Aug. 10, 2001), and Welfare Reform: Early Fiscal Effects of 

the TANF Block Grant, GAO/AIMD-98-137 (Washington, D.C.: Aug. 18, 1998).

2

Although Connecticut was part of our 2001 report, it is not included in this update because 

state spending data and supporting documentation were not adequate for completing the 

analysis (which was modified from the approach used in the 2001 report). 
Appendix I

Objectives, Scope, and Methodology

Page 43 GAO-06-414 Welfare Reform

prior report.3 (See app. V.) We worked closely with state officials to 

complete the survey during our site visits and through numerous telephone 

and e-mail contacts. Because parts of the survey were completed by 

different state officials, we also provided the states with the data we 

compiled for their review as well as data summaries of our analysis. We 

collected budget data and program information for three points in time 

based on state fiscal years: for 1995 before the passage of federal welfare 

reform legislation; for 2000; and for 2004, the most recent year for which 

data were available. Consistent with our prior methodology, we used the 

survey to take a comprehensive look at state social service program 

budgets by encouraging states to provide spending data on a broad array of 

programs, rather than just those programs that received federal TANF 

funding. Our study includes federal, state, and local spending associated 

with Medicaid, TANF, housing assistance, child care and welfare, and a 

myriad of other programs aimed at needy populations and for which states 

make key budgetary decisions. 

State budget structures differ across states. Some states in our analysis 

used biennial budgets, others used annual budgets. States can place 

employment and training programs primarily in their social services 

departments; other states can place these programs in their economic 

development departments. Some states place responsibility for welfare 

programs with county governments. These differences make comparisons 

of state budgets and spending difficult. In asking states to report spending 

on individual programs, regardless of which state agency oversaw these 

programs, and then aggregating the spending into the same categories for 

each state, we were able to compare state spending trends across all of the 

states. As figure 8 shows, we classified spending data in several key ways, 

including nonhealth spending—cash assistance (Category 1), employment 

services and training (Category 2), work and other supports (Category 3), 

and aid for the at-risk (Category 4)—and health spending (Category 5), 

which we generally separated from nonhealth spending in our analysis. 

3

GAO-01-828. Specifically, we adapted a fiscal survey developed by the Nelson A. 

Rockefeller Institute of Government. See Deborah Ellwood and Donald Boyd, Changes in 

State Spending on Social Services since Implementation of Welfare Reform: A 

Preliminary Report (Albany, N.Y.: Rockefeller Institute, February 2000). 
Appendix I

Objectives, Scope, and Methodology

Page 44 GAO-06-414 Welfare Reform

Figure 8: Welfare-Related Spending Categories Used in Our Analysis

Our first spending category includes state spending for ongoing cash 

assistance payments with federal or state moneys under the Aid for 

Families with Dependent Children (AFDC), TANF, or other state programs. 

This category corresponds most closely with traditional monthly cash 

assistance payments under the AFDC program. Our second spending 

category includes spending for job and training programs that seek to 

Source: GAO.

Nonhealth

Category 5:

Health care 

This category includes health care spending for low-income families and low-income 

nonelderly adults. This category generally excludes all long-term and institutional care 

spending.

Category 4:

Aid for the at-risk

This category includes child welfare, juvenile justice, substance abuse prevention and 

treatment programs, services for those with developmental disabilities, and services for those 

with mental illness.

Category 3:

Work and other supports

This category includes child care, transportation and wage subsidies, state 

refundable earned income tax credits (EICs), food assistance, emergency and 

housing 

assistance, 

states’ 

supplemental 

SSI payments, 

pre-K programs

for low-income 

children, and 

family formation 

and pregnancy 

prevention 

programs.

Category 2:

Employment services and training

This category includes work preparation, employment 

services, training and education, and onetime payments.

Category 1:

Cash assistance

This category includes federal and 

state funded ongoing cash payments.
Appendix I

Objectives, Scope, and Methodology

Page 45 GAO-06-414 Welfare Reform

prepare people for employment. Our third spending category includes 

programs that seek to support low-income people with other forms of aid 

or services, including helping families move from welfare to work or avoid 

welfare altogether. For example, child care subsidies and rental assistance 

payments can help parents remain employed even if they are working in 

low-wage jobs. Our fourth spending category recognizes the range of 

programs that states can use to develop strategies to achieve TANF’s goals. 

These spending areas include child welfare programs, substance abuse 

programs, mental health programs, and programs that help the 

developmentally disabled attain a level of self-sufficiency, and exclude 

spending for any individuals in institutions. While many of these state 

spending areas may not have income standards to determine eligibility, a 

state can claim TANF funds for expenditures in these areas if the state is 

able to certify that participants in these programs meet the eligibility 

requirements set forth in the state’s TANF plan. Our fifth spending 

category includes spending for health services aimed at low-income people 

but excludes spending for the elderly, long-term care, and institutional care. 

Analyzing health care spending helps recognize a state’s true and 

substantial investment in spending to support these low-income and needy 

populations. In general, our spending categories were designed to cover all 

areas of a state’s budget associated with the TANF-eligible population and 

allowable expenses under TANF as well as for other low-income children 

and individuals of working age. 

We analyzed state spending of both federal and state funds on a wide array 

of programs aimed at providing services to the needy and that flowed 

through the state budget. In this analysis, federal spending is not defined 

by the level of a federal grant allocated to a state, but rather by how much 

of the grant the state chooses—or in some cases is required—to spend on a 

particular activity. For this reason we did not consider a number of 100 

percent federally funded programs that do not flow through the state 

budget. For example, the food stamp program is administrated by the state 

and the shared administrative costs are included in the survey, but the 

value of the food stamp coupons disbursed in the fiscal year, borne 100 

percent by the federal government, is not. Likewise, if a state budget action 

prompted local spending in these areas, through incentives like a statelocal match, then local spending was included in our analysis. 

We converted state spending data to real 2004 dollars in order to make our 

spending more comparable over time. 
Appendix I

Objectives, Scope, and Methodology

Page 46 GAO-06-414 Welfare Reform

State Site Visits To obtain program description and recipient eligibility information on the 

spending data we collected, we also spoke with budget and program 

officials in these nine states knowledgeable about state TANF programs, 

Medicaid programs, and other state programs supporting the spending we 

captured in our survey. We also gathered information about the fiscal and 

economic environment in each state since state fiscal year (SFY) 2000, the 

last data year in our prior report, and a period that included a national 

recession in 2001. We worked closely with state officials to complete the 

survey. Once the state program and budget officials identified the program 

spending to include in the survey, we verified through program 

documentation and discussions with these state officials that the program 

descriptions, targeted beneficiaries, and program goals met the survey 

criteria.

Review of Related 

Reports and Data

To obtain information about policy and program developments for welfare 

and other related program spending data collected in our survey, we 

reviewed reports and information readily available from our prior work, 

relevant federal agencies, state governments, and local advocacy groups. 

Reliability of Data 

Obtained from States 

and HHS 

We took several steps to determine the completeness and accuracy of data 

obtained from states. We reviewed related documentation and examined 

the data for obvious omissions and errors and to have reasonable 

assurance that the spending data were comparable over the three years in 

our analysis. We also collected information and audit reports on the 

systems state officials used to provide state spending data. We did not test 

the data systems ourselves. In some cases, state auditors found 

weaknesses with relevant agency data systems or internal controls. 

However, for the purposes of examining aggregate welfare-related 

spending across state budgets, and identifying the purposes of spending 

within these aggregates, we found the survey data we collected to be 

sufficiently reliable for use in this report. 

We determined the completeness and accuracy of data obtained from the 

Department of Health and Human Services (HHS) based on interviews and 

related documentation and determined that the data were sufficiently 

reliable for use in this report. 
Page 47 GAO-06-414 Welfare Reform

Appendix II

Federal and State AFDC, TANF, and MOE 

Spending as a Share of Total Welfare-Related 

Nonhealth Spending ApendxiI

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. The nonhealth category 

reflects total spending from the following previously defined GAO categories: cash assistance, 

employment services and training, work and other supports, and aid for the at-risk. See app. I for a 

further explanation of these categories.

Percentage based on 2004 dollars

SFY

State 1995 2000 2004

California 47 27 23

Colorado 44 22 21

Louisiana 23 14 21

Maryland 22 17 12

Michigan 29 15 15

New York 35 27 23

Oregon 29 29 25

Texas 23 16 18

Wisconsin 32 27 28

Median 29 22 21

Low 22 14 12

High 47 29 28
Page 48 GAO-06-414 Welfare Reform

Appendix III

Total Welfare-Related Health and Nonhealth 

Spending from Federal and State Sources ApendxiI

Table 13: Total Welfare-Related Health Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the health category, which excludes spending for long-term care, institutional care, and 

the elderly.

Table 14: Total Welfare-Related Nonhealth Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. The nonhealth category 

reflects total spending from the following previously defined GAO categories: cash assistance, 

employment services and training, work and other supports, and aid for the at-risk. See app. I for a 

further explanation of these categories.

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $7,676 $7,827 $10,796 2 38 41

Colorado 651 1,493 1,969 129 32 202

Louisiana 1,838 1,989 2,952 8 48 61

Maryland 1929 2,093 3,038 8 45 58

Michigan 3,029 3,113 4,106 3 32 36

New York 15,468 17,217 24,035 11 40 55

Oregon 632 1,411 1,726 123 22 173

Texas 3,930 5,983 9,713 52 62 147

Wisconsin 1,694 1,954 3,100 15 59 83

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $15,970 $17,717 $20,768 11 17 30

Colorado 692 952 967 38 2 40

Louisiana 1,041 920 1,060 -12 15 2

Maryland 2,178 2,218 2,725 2 23 25

Michigan 4,626 4,576 4,930 -1 8 7

New York 14,622 14,413 16,493 -1 14 13

Oregon 892 1,002 1,047 12 4 17

Texas 3,371 3,930 4,122 17 5 22

Wisconsin 1,473 1,523 1,730 3 14 17
Appendix III

Total Welfare-Related Health and Nonhealth 

Spending from Federal and State Sources

Page 49 GAO-06-414 Welfare Reform

Table 15: Welfare-Related Health Spending from Federal and State Sources 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the health category, which excludes spending for long-term care, institutional care, and 

the elderly.

Table 16: Welfare-Related Nonhealth Spending from Federal and State Sources 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. The nonhealth category 

reflects total spending from the following previously defined GAO categories: cash assistance, 

employment services and training, work and other supports, and aid for the at-risk. See app. I for a 

further explanation of these categories.

2004 dollars in millions

SFY

1995 2000 2004

State Federal State Federal State Federal State

California $3,774 $3,902 $3,807 $4,020 $5,595 $5,201 

Colorado 347 304 742 750 1,053 916 

Louisiana 1,337 501 1,398 591 2,206 746 

Maryland 941 987 1,033 1,059 1,653 1,385 

Michigan 1,684 1,345 1,682 1,431 2,373 1,734 

New York 6,548 8,920 8,561 8,656 11,828 12,207 

Oregon 392 239 858 553 1,112 614 

Texas 2,487 1,442 3,682 2,302 5,885 3,828 

Wisconsin 968 726 1,126 828 1,858 1,242 

2004 dollars in millions

SFY

1995 2000 2004

State Federal State Federal State Federal State

California $7,297 $8,666 $7,883 $9,834 $9,138 $11,631 

Colorado 346 346 373 580 474 493 

Louisiana 764 277 476 444 611 449 

Maryland 905 1,273 939 1,279 1,220 1,505 

Michigan 2,455 2,171 2,312 2,265 2,674 2,256 

New York 4,776 9,846 5,488 8,926 7,153 9,340 

Oregon 540 352 604 398 634 413 

Texas 1,722 1,649 2,193 1,737 2,393 1,729 

Wisconsin 578 895 660 863 804 926 
Appendix III

Total Welfare-Related Health and Nonhealth 

Spending from Federal and State Sources

Page 50 GAO-06-414 Welfare Reform

Table 17: Percentage Change in Welfare-Related Health Spending from Federal and State Sources 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the health category, which excludes spending for long-term care, institutional care, and 

the elderly.

Based on 2004 dollars

1995-2000 2000-2004 1995-2004

State Federal State Federal State Federal State

California 1 3 47 29 48 33

Colorado 114 147 42 22 203 201

Louisiana 5 18 58 26 65 49

Maryland 10 7 60 31 76 40

Michigan 0 6 41 21 41 29

New York 31 -3 38 41 81 37

Oregon 119 131 30 11 183 156

Texas 48 60 60 66 137 165

Wisconsin 16 14 65 50 92 71

Median 16 14 47 29 81 49

Maximum 119 147 65 66 203 201

Minimum 0 -3 30 11 41 29
Appendix III

Total Welfare-Related Health and Nonhealth 

Spending from Federal and State Sources

Page 51 GAO-06-414 Welfare Reform

Table 18: Percentage Change in Welfare-Related Nonhealth Spending from Federal and State Sources 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. The nonhealth category 

reflects total spending from the following previously defined GAO categories: cash assistance, 

employment services and training, work and other supports, and aid for the at-risk. See app. I for a 

further explanation of these categories.

Based on 2004 dollars

1995-2000 2000-2004 1995-2004

State Federal State Federal State Federal State

California 8 13 16 18 25 34

Colorado 8 67 27 -15 37 42

Louisiana -38 60 28 1 -20 62

Maryland 4 0 30 18 35 18

Michigan -6 4 16 0 9 4

New York 15 -9 30 5 50 -5

Oregon 12 13 5 4 18 17

Texas 27 5 9 0 39 5

Wisconsin 14 -4 22 7 39 4

Median 8 5 22 4 35 17

Maximum 27 67 30 18 50 62

Minimum -38 -9 5 -15 -20 -5
Page 52 GAO-06-414 Welfare Reform

Appendix IV

Welfare-Related Nonhealth Spending by 

Spending Category ApendxiIV

Table 19: Total Cash Assistance Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the cash assistance category.

Table 20: Total Employment Services and Training Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the employment services and training category.

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $6,903 $ 3,174 $ 3,213 -54 1 -53

Colorado 171 49 62 -71 26 -64

Louisiana 195 80 78 -59 -2 -60

Maryland 380 119 128 -69 7 -66

Michigan 1,183 360 406 -70 13 -66

New York 4,887 3,341 2,179 -32 -35 -55

Oregon 230 87 89 -62 3 -61

Texas 574 270 215 -53 -20 -62

Wisconsin 416 82 128 -80 56 -69

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $843 $1,463 $1,381 74 -6 64

Colorado 11 11 31 0 173 172

Louisiana 162 105 142 -35 35 -13

Maryland 109 156 63 43 -59 -42

Michigan 283 400 263 41 -34 -7

New York 1,222 1,149 1,502 -6 31 23

Oregon 71 90 67 28 -26 -5

Texas 527 541 639 3 18 21

Wisconsin 69 165 93 138 -44 34
Appendix IV

Welfare-Related Nonhealth Spending by 

Spending Category

Page 53 GAO-06-414 Welfare Reform

Table 21: Total Work and Other Supports Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the work and other supports category.

Table 22: Total Aid for the At-Risk Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. See app. I for a further 

explanation of the aid for the at-risk category.

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $2,812 $4,765 $5,605 69 18 99

Colorado 158 383 360 143 -6 129

Louisiana 383 265 329 -31 24 -14

Maryland 451 622 773 38 24 71

Michigan 1,365 1,429 1,567 5 10 15

New York 3,246 3,221 4,748 -1 47 46

Oregon 214 351 402 64 15 88

Texas 887 1,412 1,469 59 4 66

Wisconsin 576 760 1,002 32 32 74

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $5,413 $8,314 $10,569 54 27 95

Colorado 352 508 513 44 1 46

Louisiana 300 470 512 57 9 71

Maryland 1,237 1,322 1,761 7 33 42

Michigan 1,794 2,387 2,694 33 13 50

New York 5,268 6,702 8,063 27 20 53

Oregon 377 474 488 26 3 30

Texas 1,383 1,707 1,799 23 5 30

Wisconsin 412 516 507 25 -2 23
Appendix IV

Welfare-Related Nonhealth Spending by 

Spending Category

Page 54 GAO-06-414 Welfare Reform

Table 23: Total Noncash Assistance Spending 

Source: GAO survey and analysis of state spending data.

Notes: Includes federal, state, and local spending captured in our survey. Noncash assistance 

spending reflects total spending from the following previously defined GAO categories: employment 

services and training, work and other supports, and aid for the at-risk. See app. I for a further 

explanation of these categories.

2004 dollars in millions

SFY Percentage change

State 1995 2000 2004 1995-2000 2000-2004 1995-2004

California $9,067 $14,543 $17,555 60 21 94

Colorado 521 902 904 73 0 74

Louisiana 845 840 983 -1 17 16

Maryland 1,797 2,100 2,597 17 24 45

Michigan 3,442 4,216 4,524 22 7 31

New York 9,736 11,072 14,313 14 29 47

Oregon 662 915 957 38 5 44

Texas 2,797 3,660 3,907 31 7 40

Wisconsin 1,057 1,441 1,602 36 11 52
Page 55 GAO-06-414 Welfare Reform

Appendix V

Survey Instrument ApendxiV

State Social Services Spending Survey 

General Instructions 

When completing the survey, please keep the following in mind: 

1. Provide expenditures for two state fiscal years (not the federal fiscal year): 1999-2000 and 

2003-2004. For most states these would be the fiscal years that ended June 30, 2000 and 

June 30, 2004; for Texas they ended August 31, 2000 and August 31, 2004; for New York 

March 31, 2000 and March 31, 2004. Please note that there are four tabs at the bottom of 

the spreadsheet that identify four separate worksheets to be filled out. There are 

instructions for the childcare and healthcare surveys on their spreadsheets. Instructions 

for the social services survey are attached. 

2. Identify all state programs serving social service needs that are targeted towards reducing 

dependence on public assistance. Except where noted, include programs that serve both 

TANF-eligible and non-TANF-eligible clients. 

3. Distribute a copy of the survey to all agencies that oversee these programs. Please explain 

to these agencies what MOE means and what funds should be shown in the MOE column. 

You may wish to refer them to the spending guide at 

http://www.acf.dhhs.gov/programs/ofa/funds2.htm.

4. Include all federal, state and local expenditures that are incorporated in the state budget.

For local expenditures, include local spending of locally raised revenue that is 

incorporated in the state budget, such as a local match. Include expenditures or estimated 

expenditures only (not amounts budgeted or authorized). 

5. Include all expenditures for each program serving social service needs, including but not 

limited to TANF and MOE expenditures. Include all TANF spending; if some TANF 

expenditures do not fit into one of the specific program categories, include them in one of 

the lines labeled “other.” If TANF funds are transferred to SSBG or the CCDF, please place 

them in those columns (if possible, label them separately from other SSBG or CCDF funds 

by inserting a row or a note).

6. Please be careful to count expenditures only once! 

7. Do not include capital expenditures. 

8. Do not include indirect administrative costs or management information systems (MIS) 

expenditures, but do include direct administrative costs such as case management 

expenditures in relevant program line items. If it is impossible to break out these direct 

costs by program, include them in the other lines under the most relevant sub-category. If 

necessary, estimate the percentage of direct costs that apply to the programs eligible for 

our survey. Include the costs of fringe benefits for state personnel. (A rough estimate of 

fringe benefit costs is all that is necessary.)

9. Identify funding streams included in the columns labeled “Other” on a separate worksheet. 

10. For columns labeled “SSBG” (Social Services Block Grant): If state officials cannot isolate 

spending on individual programs, obtain either (1) estimates for these amounts, or (2) 

totals with an explanation of the general areas in which SSBG funds are spent. For TANF 

funds transferred from TANF to SSBG, document them as SSBG expenditures with a note 

on the level attributable to the transfer.

11. Compile and provide copies of all supporting documentation for the data entered in the 

survey, e.g. expenditure reports, annual financial statements. 

12. When possible, identify the caseload and eligibility criteria for each program and provide 

supporting documentation. 
Appendix V

Survey Instrument

Page 56 GAO-06-414 Welfare Reform

Suggested format for data submission: 

For example, Line 2b, Work Preparation, could include expenditures from several programs 

across two or more agencies. Each of these agencies would complete the survey as well as 

provide the supporting documentation. 

Agency 1 

Department of Social Service Federal Expenditures 

I

TANF 

II

SSBG

III

Other

2 Work Preparation and Education 

 b) Work Preparation 

Program W 0 0 18,000 

Program X 250,000 0 2,000 

Agency 2 

Department of Family Employment Federal Expenditures 

I

TANF 

II

SSBG

III

Other

2 Work Preparation and Education 

 b) Work Preparation 

Program Y 650,000 40,000 0 

Program Z 100,00 10,000 0 

The various agencies’ contributions could be compiled and summarized. 

State Summary Totals Federal Expenditures 

I

TANF 

II

SSBG

III

Other

2 Work Preparation and Education 

 b) Work Preparation 1,000,000 50,000 20,000 

Glossary of column headings: 

SSBG: Social Services Block Grant, title XX of the Social Security Act 

TANF: Temporary Assistance for Needy Families 

TANF-MOE: TANF Maintenance of Effort (See your state TANF director or 

http://www.acf.dhhs.gov/programs/ofa/funds2.htm)

Title XIX: Medicaid 

Title XXI: State Children's Health Insurance Program 

CCDF: Child Care Development Fund 

CCDF-MOE: Child Care Development Fund Maintenance of Effort 

CCDF-Match: Child Care Development Fund Matching Funds 
Appendix V

Survey Instrument

Page 57 GAO-06-414 Welfare Reform

State Social Services Spending Survey 

Specific Instructions 

Line 1: Poverty Relief 

Include expenditures in this category on lines 1a-1g below. 

Line 1a: cash assistance. 

Include expenditures on cash payments or vouchers provided to families to meet ongoing, 

basic needs. Do not include child support collections; those will go on line 1b. Any cash 

assistance program that was formerly funded by IV-A (the AFDC program) should be included 

here. (Note: This definition is adapted from the definition of basic assistance in line 5a of the 

ACF-196 Financial Report. See http://www.acf.hhs.gov/programs/ofa/instr196.htm) Cash 

payments made through a general assistance program should go in the “Other State” column. 

Line 1b: child support payments. 

Include all child support collections from non-custodial parents that are passed on to custodial 

parents who are receiving cash assistance through TANF, in excess of $50 per monthly 

payment.

Line 1c: emergency assistance. 

Include all expenditures for emergency assistance, including prevention of eviction, utility cutoff, etc. Document, to the extent possible, how emergency assistance funds are allocated. 

Line 1d: food assistance. 

Include expenditures on programs designed to provide food or nutritional assistance to lowincome people. Do not include any 100% federally funded program such as free or reducedschool breakfast or lunch programs. Include, however, the state and federal expenditures on 

administrative expenses for those programs and any state supplemental programs. 

Line 1e: housing assistance. 

Include expenditures on programs designed to provide housing assistance to low-income 

people, such as vouchers, state low-income housing tax credits, or any other state support for 

low-income housing efforts. 

Line 1f: SSI supplements. 

Include expenditures on state supplementation of the federal Supplemental Security Income 

program. Do not include federal expenditures. 

Line 1g: other. 

Include expenditures on any other programs related to poverty relief that are not included 

above. Describe such programs on an attached sheet. 

Line 2: Work Preparation and Education 

Include expenditures in this category on lines 2a-2c below. 

Line 2a: education and training. 

In this instance, limit spending to TANF-eligible people.
Appendix V

Survey Instrument

Page 58 GAO-06-414 Welfare Reform

Include expenditures on educational activities that prepare the recipients for work. For 

example, include secondary education (including alternative programs); adult education, GED, 

and ESL classes; education directly related to employment; education provided as vocational 

educational training; and post-secondary education. Do not include programs for children 

below high-school age. (Pre-K programs should be included in the childcare Tab, and after 

school programs for at-risk youth should be placed in row 5b or 5c, whichever is most 

appropriate.) (Note: This definition is adapted from the definition of education in line 6a2 of 

the ACF-196 Financial Report.) 

Line 2b: work preparation. 

Include expenditures on programs to prepare low-income people who are not yet working 

with skills to make them employable. Examples include skills development programs, 

community service placements, and Workforce Investment Act programs. Do not include 

expenditures on people who are in the paid workforce. 

Line 2c: other. 

Include expenditures on any other programs related to work preparation and support that are 

not included above. Describe such programs on an attached sheet. 

Line 3: Employment Support 

Include expenditures in this category on lines 3a-3f below. 

Line 3a: post-employment services. 

Include expenditures on programs designed to keep people employed after they have found 

employment. Examples include coaching to ensure that individuals arrive at work on time, 

counseling to address problems that may arise in the workplace, and any other case 

management services for this working population. If known, include spending for on-the-job

training.

Line 3b and 3c: state EITC. 

Include expenditures on state earned income tax credits paid to families. Include state and 

local tax credits that are designed to defray the costs of employment for low-income families. 

On line 3c, do not include foregone state revenues as an expenditure. 

Line 3d: transportation. 

Include the value of transportation benefits (such as allowances, bus tokens, car payments, 

auto insurance reimbursement, and van services) provided to employed families (related 

either to their work or related job retention and advancement activities) and provided as a 

nonrecurring, short-term benefit to non-working families (e.g. during applicant job search). 

(Note: this definition is adapted from the definition of transportation in line 6c of the ACF-196 

Financial Report.) 

Line 3e: wage subsidies. 

Include payments to employers or third parties to help cover the costs of employee wages, 

benefits, supervision, or training. Also include any wage-related tax credits that benefit 

employers.

(Note: This definition is adapted from the definition of work subsidies in line 6a1 of the ACF196 Financial Report.) 
Appendix V

Survey Instrument

Page 59 GAO-06-414 Welfare Reform

Line 3f: other. 

Include expenditures on any other programs related to employment support that are not 

included above. Describe such programs on an attached sheet. 

Line 4: Poverty Prevention 

Include expenditures in this category on lines 4a-4c below. 

Line 4a: diversion payments. 

Include expenditures on nonrecurrent, short-term benefits to families in the form of cash 

payments, vouchers, or similar form of payment to deal with a specific crisis situation or 

episode of need. An example is an emergency rent payment to prevent eviction. 

(Note: this definition is adapted from the definition of diversion payments in line 6g of the 

ACF-196 Financial Report.) 

Line 4b: family formation and pregnancy prevention. 

Include expenditures on programs aimed to keep families together, prevent teen pregnancy 

and prevent single parenthood. Examples of program expenditures are: responsible 

fatherhood initiatives that will improve the capacity of needy fathers to provide financial and 

emotional support for their children; premarital and marriage counseling, and mediation 

services; counseling services or classes that focus on teen pregnancy prevention; media 

campaigns to encourage young people to delay parenting or to encourage fathers to play a 

responsible role in their children's lives; and incentives for single parents to marry or for twoparent families to stay together. 

(Note: this definition is adapted from the section in ACF’s “Helping Families Achieve SelfSufficiency” guide entitled, “Appropriate Uses of Funds/Family Formation and Pregnancy 

Prevention” at http://www.acf.dhhs.gov/programs/ofa/funds2.htm ) 

Line 4c: other. 

Include expenditures on any other programs related to poverty prevention that are not 

included above. Describe such programs on an attached sheet. 

Line 5: Child Protection/Juvenile Justice

Include expenditures in this category on lines 5a-5c below. 

Line 5a: child welfare. 

Include expenditures on adoption assistance, foster care, and independent living programs; on 

any program intended to prevent out-of-home placements, promote reunification of families, 

or provide a safe environment for children; and on programs that focus on prevention of child 

abuse and neglect. Examples of expenditures include using funds for family counseling; 

parent support programs; appropriate supportive services (e.g., referral services, child care, 

transportation, and respite care) to caregiver relatives who can provide a safe place for a 

needy child to live to avoid placement in foster care; and screening families for risk of child 

abuse or neglect and providing case management. (Note: Any cash assistance program that 

was formerly funded by IV-A (AFDC), such as cash assistance to needy caretaker relatives, 

should be included in the “cash assistance” category.) 

Line 5b: juvenile justice programs. 
Appendix V

Survey Instrument

Page 60 GAO-06-414 Welfare Reform

Include expenditures on social services programs for youth who have violated the state 

juvenile code. Do not include institutional spending. 

Line 5c: other. 

Include expenditures on any other programs related to child protection/juvenile justice that 

are not included above. Describe such programs on an attached sheet. 

Line 6: Other 

Include expenditures in this category on lines 6a-6d below. 

Line 6a: substance abuse prevention and treatment. 

Include expenditures on programs aimed to prevent alcohol, drug and tobacco abuse and to 

provide intervention services to individuals with alcohol, drug and/or tobacco dependency in 

their families. Examples of prevention programs are media campaigns, educational programs 

and community-based planning programs. Examples of expenditures on treatment include 

counseling, short-term inpatient treatment facilities, and outpatient medical care. 

Line 6b: developmental disabilities. 

Include expenditures on programs that provide services to individuals with developmental 

disabilities and their families, including outpatient care and public education, but excluding

institutional facilities. 

Line 6c: mental health services. 

Include expenditures on programs that provide prevention and/or intervention services to the 

mentally ill and their families, including community-based treatment facilities, outpatient care 

and public education. Exclude all expenditures provided at/through mental health 

institutions. 

Line 6d: other 

Include expenditures on any other programs that are not included above. Describe such 

programs on an attached sheet. 

Note: Our 2000 survey included a category 6a, provider profits, which has been deleted from this version of 

the survey because there were no responses in that category. 
Appendix V

Survey Instrument

Page 61 GAO-06-414 Welfare Reform

Federal Expenditures State Expenditures Local Expenditures TOTALS

I II III IV VI VII VIII IX

TANF SSBG Other TANF-MOE Other TANF-MOE Other

1 Poverty Relief

a) cash assistance 0

b) child support payments 0

c) emergency assistance 0

d) food assistance 0

e) housing assistance 0

f) SSI supplements 0

g) other (please specify) 0

h) total 000 0 0 0 0 0

2 Work Preparation and Education

a) education and training 0

b) work preparation 0

c) other (please specify) 0

d) total 000 0 0 0 0 0

3 Employment Support

a) post-employment services 0

b) state EITC- non-refundable 0

c) state EITC- refundable 0

d) transportation 0

e) wage subsidies 0

f) other (please specify) 0

g) total 000 0 0 0 0 0

4 Poverty Prevention

a) diverson payments 0

b) family formation/preg. prev. 0

c) other (please specify) 0

d) total 000 0 0 0 0 0

5 Child Protection/Juvenile justice

a) child welfare 0

b) juvenile justice programs 0

c) other (please specify) 0

d) total 000 0 0 0 0 0

6 Other

a) substance abuse prev. & treat. 0

b) developmental disabilities 0

c) mental health services 0

d) other (please specify) 0

e) total 000 0 0 0 0 0

7 TOTALS 000 0 0 0 0 0

Glossary of column headings:

TANF: Temporary Assistance for Needy Families

SSBG: Social Services Block Grant, Title XX of the Social Security Act

TANF-MOE: TANF Maintenance of Effort. See your state TANF director or http://www.acf.dhhs.gov/programs/ofa/funds2.htm

State FY 1999-2000 Social Services Spending Survey 
Appendix V

Survey Instrument

Page 62 GAO-06-414 Welfare Reform

Federal Expenditures State Expenditures Local Expenditures TOTALS

I II III IV VI VII VIII IX

TANF SSBG Other TANF-MOE Other TANF-MOE Other

1 Poverty Relief

a) cash assistance 0

b) child support payments 0

c) emergency assistance 0

d) food assistance 0

e) housing assistance 0

f) SSI supplements 0

g) other (please specify) 0

h) total 000 0 0 0 0 0

2 Work Preparation and Education

a) education and training 0

b) work preparation 0

c) other (please specify) 0

d) total 000 0 0 0 0 0

3 Employment Support

a) post-employment services 0

b) state EITC- non-refundable 0

c) state EITC- refundable 0

d) transportation 0

e) wage subsidies 0

f) other (please specify) 0

g) total 000 0 0 0 0 0

4 Poverty Prevention

a) diverson payments 0

b) family formation/preg. prev. 0

c) other (please specify) 0

d) total 000 0 0 0 0 0

5 Child Protection/Juvenile justice

a) child welfare 0

b) juvenile justice programs 0

c) other (please specify) 0

d) total 000 0 0 0 0 0

6 Other

a) substance abuse prev. & treat. 0

b) developmental disabilities 0

c) mental health services 0

d) other (please specify) 0

e) total 000 0 0 0 0 0

7 TOTALS 000 0 0 0 0 0

Glossary of column headings:

TANF: Temporary Assistance for Needy Families

SSBG: Social Services Block Grant, Title XX of the Social Security Act

TANF-MOE: TANF Maintenance of Effort. See your state TANF director or http://www.acf.dhhs.gov/programs/ofa/funds2.htm

State FY 2003-2004 Social Services Spending Survey 
Appendix V

Survey Instrument

Page 63 GAO-06-414 Welfare Reform

Healthcare Coverage Spending Survey

Federal Expenditures State Expenditures TOTALS

Program Names Title XIX Title XXI Other Title XIX Title XXI Other

 -

 -

 -

-

TOTALS - - - - - - -

Federal Expenditures State Expenditures TOTALS

Program Names Title XIX Title XXI Other Title XIX Title XXI Other

 -

 -

 -

-

TOTALS - - - - - - -

State Fiscal Year 2003-2004 Healthcare Coverage Spending 

State Fiscal Year 1999-2000 Healthcare Coverage Spending 

Instructions for Healthcare Coverage Spending Survey:

Include expenditures on any healthcare program, in-home or out-of-home, aimed at low-income working or non-working people and their children, 

excluding long-term care. Include programs for both the TANF-eligible and non-TANF-eligible population, but exclude all programs for seniors. Identify 

each program in the spaces below and their funding streams. Identify eligibility criteria for these programs, as well as caseloads on an attached sheet.

For Medicaid-funded programs, identify target populations (e.g. "transitional assistance," "expansion population") where possible. State expenditures 

should capture local spending if it flows through the state budget (e.g. a local match).

Glossary of Column Headings

Title XIX: Medicaid

Title XXI: State Children's Health Insurance Program
Appendix V

Survey Instrument

Page 64 GAO-06-414 Welfare Reform

Child Care/Child Development Spending Survey

Federal Expenditures TOTALS

Program Names CCDF Other CCDF-MOE CCDF-Match Other

0

0

0

0

0

0

0

TOTALS 0 0 0 0 00

Federal Expenditures TOTALS

Program Names CCDF Other CCDF-MOE CCDF-Match Other

0

0

0

0

0

0

0

TOTALS 0 0 0 0 00

State Expenditures

State Fiscal Year 2003-2004 Child Care/Child Development Spending

State Fiscal Year 1999-2000 Child Care/Child Development Spending

State Expenditures

Instructions for Child Care/Child Development:

Include expenditures on any child care or child development program, either custodial or educational, in-home or out-of-home, aimed

at low-income working or non-working people, including pre-K programs, after-school programs, vouchers for child care, state 

expenditures on Head Start, and subsidies to child care centers, and child care tax credits (if available). Include programs for both 

TANF-eligible and non-TANF-eligible people. Please identify each child care/child development program in the spaces below and 

identify their funding streams. Please identify eligibility criteria for these programs, as well as caseloads (numbers of children, not 

families, if possible), on an attached sheet.

Glossary of Column Headings

CCDF: Child Care Development Fund

CCDF-MOE: Child Care Development Fund Maintenance of Effort

CCDF-Match: Child Care Development Fund Matching Funds
Page 65 GAO-06-414 Welfare Reform

Appendix VI

Comments from the Department of Health and 

Human Services ApendxiVI
Appendix VI

Comments from the Department of Health 

and Human Services

Page 66 GAO-06-414 Welfare Reform
Appendix VI

Comments from the Department of Health 

and Human Services

Page 67 GAO-06-414 Welfare Reform
Page 68 GAO-06-414 Welfare Reform

Appendix VII

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts David D. Bellis (415) 904-2272 or bellisd@gao.gov

Stanley J. Czerwinski (202) 512-6520 or czerwinskis@gao.gov

Acknowledgments In addition to the contacts named above, Paul Posner, Gale Harris, Tom 

James, Sandra Beattie, Rebecca Hargreaves, Cheri Harrington, Dorian 

Herring, Brittni Milam, and Keith Slade made key contributions to this 

report. In addition, Gregory Dybalski and Jerry Fastrup provided key 

analytical and technical support; Wesley Dunn provided legal support; and 

Katherine Bittinger, Allen Chan, Reid Jones, Tahra Nichols, Rudy Payan, 

John Rose, and Suzanne Sterling-Olivieri assisted with fieldwork in states.

(450358)
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