TANF Reauthorization: Side-by-Side Comparison of Current Law, S. 667, and H.R. 240 (TANF Provisions)
Released: 2005-09-26T00:00:00

Introduction

The 109th Congress is considering legislation to reauthorize the block grant of TemporaryAssistance for Needy Families (TANF) for five years. The 108th Congress and its predecessor, the107th Congress, both inconclusively debated a long-term authorization for TANF and relatedprograms. The program has received 11 short-term extensions since the original funding authorityfor TANF expired on September 30, 2002. The latest extension ( P.L. 109-68 ) funds the programthrough December 31, 2005.

The Senate Finance Committee has reported an original bill, S. 667 ( S.Rept.109-51 ). H.R. 240 , introduced by House Republican leaders and making its waythrough House committees of jurisdiction, is similar to bills that passed the House in 2002 and 2003. That bill was approved by the House Ways and Means Committee's Subcommittee on HumanResources on March 15, and awaits full committee action, as well as consideration by othercommittees that have jurisdictions over parts of the bill. (1)

Summary of the Similarities and Differences Between the Two Bills

S. 667 and H.R. 240 have many similarities, with both extendingbasic TANF funding at current levels through FY2010 and incorporating President Bush's proposalto provide categorical "marriage promotion" grants. Both bills also raise TANF work participationstandards, though the two differ in terms of how much more work would be required and whatactivities count toward the participation standards. This report provides a comparison of the TANFprovisions of S. 667 and H.R. 240. It does not address non-TANF provisionsof both bills, such as revisions to the Child Care and Development Fund, Child SupportEnforcement, Abstinence Education, and transitional Medicaid. One of the key differences betweenS. 667 and H.R. 240 is the level of funding for child care. S. 667would add $6 billion over five years to current levels of mandatory child care funding. H.R.240 would add $1 billion over five years above current levels of mandatory child carefunding.

TANF Funding Provisions

S. 667 and H.R. 240 have very similar funding provisions, althoughthey do differ in some details. The major difference in the funding provision between the two billsis that S. 667 would completely revamp the TANF contingency (recession) funds, whileH.R. 240 would make relatively minor revisions to the fund.

Basic Funding. The 1996 welfare reform law( P.L. 104-193 ) entitled states to a basic TANF block grant equal to peak expenditures in the pre-1996welfare programs during the FY1992 to FY1995 period. It also established a maintenance of effort (MOE) requirement that states continue to spend at least 75% (80% if a state failed TANF workparticipation requirements) of what they spent in these programs in FY1994. Cash welfare caseloadswere at their peak in the mid-1990s; both the basic TANF grant and the MOE are legislatively fixed: they did not change when cash welfare caseloads declined in the mid- and late-1990s, nor did theyincrease when caseloads in some states increased during the recent economic slump. Neither thebasic TANF block grant nor the MOE have been adjusted for inflation.

Both S. 667 and H.R. 240 would continue both the basic blockgrant and the MOE at their current funding levels (without inflation or caseload adjustment) throughFY2010.

Supplemental Grants. During the considerationof legislation that led to the 1996 welfare law, fixed funding based on historical expenditures wasthought to disadvantage two groups of states: (1) those that experience relatively high populationgrowth; and (2) those that had historically low grant levels relative to poverty in the state. Therefore,additional funding in the form of supplemental grants was provided to states that met criteria of highpopulation growth and/or low historic grants per poor person. Supplemental grants have beenprovided to 17 states: Alabama, Alaska, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho,Louisiana, Mississippi, Montana, New Mexico, Nevada, North Carolina, Tennessee, Texas, andUtah.

Currently, supplemental grants total $319 million per year. Both S. 667 and H.R. 240 would continue supplemental grants for the same 17 states at the current funding level through FY2009 (unlike other grants, which expire in FY2010).

Contingency Funds. The fixed basic grant underTANF also led to concerns of inadequate funding during economic downturns. TANF includes acontingency fund, which is designed to provide extra matching grants to states that meet criteria ofeconomic need (based on unemployment rates and food stamp caseloads) and have stateexpenditures in excess of their FY1994 level.

The two bills differ substantially in their revisions to the TANF contingency fund. H.R. 240 would continue the fund on existing rules, with some relatively minormodifications: allowing some additional state spending to count toward meeting the FY1994funding level threshold and modifications to increase grants for states that qualify for funds for onlypart of the year.

S. 667 fully revamps the contingency fund. It would eliminate the requirementthat states increase expenditures from their own funds above the regular TANF MOE level andeliminate the matching requirements. Instead, it requires that unspent TANF balances be below acertain threshold to qualify for contingency funds. S. 667 would base contingency grantson a portion of the estimated cost of increased cash assistance caseloads. It also would revise thecriteria of economic need for a state.

Uses of Grants and Program Requirements. Federal TANF grants and MOE funds can be used for a wide range of benefits, services, andactivities to assist low-income families with children and to further TANF goals of reducingout-of-wedlock births and promoting two-parent families. TANF grants can also be transferred toother block grant programs: up to 30% of the grant can be transferred to the Child Care andDevelopment Fund (CCDF) and to the Social Services Block Grant. The limit on transfers to SSBGalone is set at 4.25% (though annual appropriations have restored the SSBG transfer limit to itsoriginal limit of 10% set in the 1996 welfare law). Within the overall 30% limit, federal TANFfunds may also be used as the state match for federal reverse commuter grants if the program benefitswelfare families.

Both bills would set the SSBG transfer limit permanently at 10%. H.R. 240 would raise the overall transfer limit to 50%; S. 667 would retain the current 30%transfer limit.

Both bills include provisions to ease some rules regarding use of TANF funds. Both S. 667 and H.R. 240 would:

Allow states to use carryover TANF funds for any TANF benefit and service. Current law restricts the use of carryover funds for the provision of"assistance."

Narrow the definition of "assistance" to exclude all child care andtransportation aid. TANF funds spent on assistance trigger certain program requirements, such aswork requirements, time limits, assignment of child support payments, and data reportingrequirements. Under current regulations, child care and transportation aid for nonworking familiesis counted as assistance and triggers these requirements. The bills would eliminate such aid fromthe definition of "assistance," freeing from these requirements nonworking families that receive onlychild care or transportation aid.

Work Requirements

Both S. 667 and H.R. 240 incorporate the Bush Administration's"universal engagement" proposal, which requires states to develop a self-sufficiency plan for allTANF adult recipients to monitor progress toward that plan. H.R. 240 also requires statesto end benefits ("full family sanction") for families that fail to comply with work participation rules.

Both S. 667 and H.R. 240 would substantially revise TANF workparticipation standards. Both bills would raise work participation standards that states must meetfrom the current law's standard of 50% to 70%, raise the required hours of working to receive fullcredit and provide partial credit for participating families that do not meet the full credit standard,and revise the list of activities that recipients may participate in for states to receive credit towardTANF standards. However, the bills differ in how they do these three things.

Participation Standards. Current law requiresstates to have a specified percentage of their families with an adult recipient (or minor head ofhousehold) participating in creditable work activities. The current participation standard is 50%. States are subject to an additional participation rate standard for two-parent families, currently 90%. The participation rate standards may be reduced for caseload reductions (not attributable to policychanges) that occurred before enactment of welfare reform (FY1995). This "caseload reductioncredit" has had a large effect on participation standards, reducing the standard considerably from itsstatutory rate. In FY2003, the standard was reduced to 0% for 20 states.

Both S. 667 and H.R. 240 raise the work participation standard forall families to 70% by FY2010, and eliminate the separate standard for two-parent families. Bothbills also change the credits that reduce these standards from their statutory rate (i.e., reduce the 70%standard to a lower rate), but they do so in different ways. H.R. 240 retains, but revises,the current law caseload reduction credit so that caseload change is measured from a more recentyear (rather than the pre-welfare reform caseload level of 1995). Ultimately, caseload reductionwould be measured based on the most recent four years. The House bill also includes a provisionto give an additional credit to states that achieved a caseload reduction of 60% or more from FY1995to FY2001.

S. 667 retains the current caseload reduction credit for FY2006 and FY2007,but beginning in FY2008 would replace the caseload reduction credit with a credit for employedwelfare leavers. The bill would also cap all credits against the participation standard, so that theminimum effective standard would be 10% in FY2006, 20% in FY2007, 30% in FY2008, 40% inFY2009, and 50% in FY2010. There is no such minimum effective standard in H.R. 240 .

Hours Standards. Current law requires that afamily be considered participating only if it participates for a minimum number of hours per weekin a month. Under current law, 20 hours is required for single parents with a pre-school child (underthe age of 6), and 30 hours is required for other families. Higher hours are set for the purposes ofthe two-parent work participation rate.

Both S. 667 and H.R. 240 raise the hours standards. H.R.240 incorporates a 40-hour workweek standard for full credit, but would also provide"partial" credit for families with at least 24 hours of participation. No special lower-hour standardwould be provided for single parents with preschoolers.

S. 667 also raises the hours standard for full credit, but to a lesser extent thanproposed in the House-passed bill. Single parents with a pre-school child would be given full creditfor participation at 24 hours per week, and other single-parent families would be given full credit at34 hours per week. Partial credit for single parent families would be provided at 20 hours per week. Higher hours requirements would apply to two-parent families.

Creditable Activities. Current law lists 12activities that may be counted toward TANF work participation standards. The bulk of countableparticipation is in a subset of "core" activities focused on work, time-limited job search (countablefor six weeks in a fiscal year, 12 weeks if criteria of economic need are met), time-limited vocationaleducational training (12 months in a lifetime), and community service and work experience. Inmeeting the general 30-hour-per-week standard, hours in educational activities are countable onlyfor families who are also participating in at least 20 hours per week of "core" activities. Post-secondary education, other than that considered "vocational educational training," does notcount toward current law federal TANF work participation standards.

H.R. 240 and S. 667 differ significantly on the types of activitiescountable as core activities toward the participation standards. H.R. 240 narrows the listof core activities by eliminating job search and vocational education. Instead, the bill would givestates almost total discretion to define activities that would be countable for three months in a24-month period (four months to complete training), but once those months are exhausted, the onlyactivities that would count toward the work participation standards are work, on-the-job training,community service, or work experience. Moreover, since job search and vocational education wouldbe countable as sole or primary activities only during the three (or four) months that the state wouldhave discretion, any weeks of participation in job search reduce the number of weeks that vocationaleducation counts toward the participation standards.

On the other hand, S. 667 retains the current law list of core activities. It tooprovides states additional discretion by permitting states to count an expanded list of activities forthree months in a 24-month period (longer for rehabilitative activities). However, this additionaldiscretion is provided in addition to, rather than instead of, six weeks of job search and 12 monthsof vocational educational training, which are retained as "core" activities.

Both H.R. 240 and S. 667 would give states additional discretionin defining activities countable once a family has met the "core" work requirement (generally, 24hours per week in core activities). H.R. 240 would allow states to define activities forfamilies with at least 24 hours in core activities; S. 667 would allow states to count anexpanded set of activities for single-parent families with at least 24 hours per week in core activities.

S. 667 includes some additional options for counting participation in activitiestoward TANF work standards. It would allow states to have up to 10% of their caseload enrolledin a special program of two- or four-year undergraduate education or vocational educational training. This program is modeled after the "Parents as Scholars" program that has operated in Maine usingTANF MOE funds. It also allows for participation in rehabilitative activities for disabled persons(including treatment of drug and alcohol abuse) if they combine rehabilitation with at least 10 hoursof "core" activities and if the state develops a collaborative relationship between agencies andentities providing rehabilitative services and the state TANF agency. Additionally, S. 667allows caring for a disabled family member to count as a work activity under certain circumstances.

Marriage Promotion Grants and Family Formation Issues

Current law allows states to use TANF funds for any activity "reasonably calculated" toachieve a TANF purpose. One of the statutory purposes of TANF is to end dependency of needyparents on government benefits, and one of the stated means to end such dependency is "marriage." Another of the statutory purposes of TANF is to promote the formation and maintenance oftwo-parent families. "Promoting marriage" is a currently allowable use of TANF funds.

Both S. 667 and H.R. 240 would carve out special "marriagepromotion grants" from existing TANF funding. Both bills include $100 million in competitivelyawarded matching funds for states, territories, and tribes for marriage promotion activities. The billswould allow states to use other federal TANF funds or state funds as the match for these newmarriage promotion grants.

Both bills also would provide an additional $100 million for research and demonstrations. H.R. 240 would require that these funds be used "primarily" for marriage promotion; S. 667 would require that 80% of these funds be used for marriage promotion.

Marriage promotion activities listed in both bills are: public advertising campaigns on thevalue of marriage and skills needed to increase marital stability and health; education in high schoolson the value of marriage; marriage education and marriage and relationship skills programs fornonmarried parents or expectant parents; pre-marital education on marriage for engaged couples;marriage enhancement and marriage skills training for married couples; divorce education programs;and marriage mentoring programs. Programs to reduce the disincentives to marriage in need-basedprograms could be funded from these grants only if offered in conjunction with other marriageactivities.

Although the two bills provide similar funding for "marriage promotion" activities, theydiffer significantly in the details of their provisions authorizing these grants. S. 667 has additional language requiring that organizations familiar with domestic violence issues beconsulted in developing marriage promotion projects and language to clarify that marriage promotionactivities are to be voluntary. S. 667 also prohibits states from sanctioning recipients whodo not participate in marriage promotion activities.

Other TANF Provisions

Both S. 667 and H.R. 240 would make additional amendments toTANF provisions regarding state plans, data reporting, tribal TANF programs, and other provisionsof TANF law. These provisions are included in the detailed bill comparison table shown below. Among the other TANF provisions addressed in the reauthorization bills:

H.R. 240 (as amended by the House Ways and MeansSubcommittee on Human Resources) would require states to conduct drug tests on applicants andrecipients of TANF assistance if the state believes the individual has recently used drugs. Positivedrug tests would lead to a required sanction of the family's benefit, potentially ending benefits to thefamily for up to three years.

S. 667 includes authorizations for additional special-purpose(categorical) grants other than marriage promotion grants that would be added to the TANF blockgrant. These grants include those to allow states to operate programs to purchase cars; transitionaljobs/business link grants for model employment and training programs for TANF recipients withbarriers; grants for organizations that create "self-sustaining" social services (e.g., GoodwillIndustries); and domestic violence grants.

S. 667 allows states to provide assistance for teen parents notliving with an adult for up to 60 days, to provide a period for the teen to come into compliance withthe current law requirement to live at home or in an adult-supervised setting.

S. 667 includes several provisions relating to tribal welfareprograms, including a $5 million per year increase in funding for tribal work programs, an $80million (over five years) grant for tribes for activities that aim to increase their capacity to operateTANF programs, and tribal eligibility for TANF contingency and bonus funds. H.R. 240 funds tribal TANF programs and work program at current levels through FY2010 and makestribal organizations eligible for TANF bonuses.

Detailed Comparison of TANF Provisions of S. 667 and H.R. 240

Table 1 provides a detailed comparison of the TANF provisions of S. 667 and H.R. 240 . The table provides references to current law provisions in the Social SecurityAct (SSA). It also denotes the section number in each of the bills in which the provision is found.

Table 1.Comparison of Current Law with S. 667 and H.R. 240 (TANFProvisions)