Due to dramatic drops in caseloads, states have left a significant amount of their TANF block grants unspent. The unspent funds are generally TANF funds, because states are allowed to carry forward their TANF funds into future years. On the other hand, states are required to spend their minimum level of MOE each year, or face significant financial penalties. Under the welfare law, states have several options to pay for benefits to TANF-eligible families. States can mix and match state and federal funds in several different ways depending on how they might wish to deal with various restrictions associated with federal TANF funds, including time limits, child support reporting requirements and household work requirements.
States can also use segregated state funds.
States also have the option of creating separate state programs that count toward MOE but do not subject participating families to any of the above requirements. Since then states and advocates have been waiting for final regulaitons from HHS, which would clarify what states could do with their funds. These regulations could be released at any time in the next several months. The Rainy Day Fund Option Under TANF, states have the option of creating rainy day funds. These are unspent TANF funds that a state has chosen to accumulate.