Human Services Provisions of the American Recovery and Reinvestment Act
Released: 2009-02-23T00:00:00

Introduction

The federal government provides grants-in-aid to states and local governments to provide a range of benefits and human services programs to disadvantaged families and persons. Most such human services are administered, and often designed, at the state and local level. States and localities also often contribute spending from their own funds for these programs. Some human services are provided by community or nonprofit organizations.

The current recession is straining the budgets of state and local governments, putting pressure on many jurisdictions to cut spending or raise taxes. The recession also might increase the demand for services for programs designed to alleviate economic hardship.

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 , H.R. 1 ) includes provisions to temporarily increase funding for several human services programs. Some of the funding is directed to help finance increases in payments through the states to households and families. Some of the additional funds provided offer fiscal relief to the states for a portion of the costs of certain programs. Additional funding increases would go to localities, community organizations, and faith-based organizations that provide human services.

This report discusses provisions of the ARRA for selected human services programs. The selected programs generally are those that provide benefits and services to families with children, though some programs (e.g., the Community Services Block Grant) provide services to other families as well. All of the programs discussed in this report are administered by the Department of Health and Human Services (HHS). This report does not address proposals related to the Supplemental Nutrition Assistance Program (SNAP, the program formerly known as Food Stamps), nor does it discuss the Medicaid proposals in the bill.

The ARRA changes spending for some mandatory programs (e.g. Temporary Assistance for Needy Families and the Title IV-E programs of the Social Security Act), as well as providing additional, supplemental appropriations for other programs. The term "additional funding" is used to denote appropriations above those in the regular appropriations for the program. At this point, FY2009 regular appropriations are contained in the FY2009 continuing resolution ( P.L. 110-329 ).

The first part of the report provides a summary of each grant or program's purpose, current funding, and the proposed changes in the enacted version of the ARRA. It concludes with a table that provides a detailed comparison of current law, the House-passed version of the ARRA, the Senate-passed version of the ARRA, and the final, enacted version of the ARRA. Proposed funding increases for Low Income Home Energy Assistance ($1 billion in the House version of ARRA) and the Social Services Block Grant ($400 million in the Senate version of ARRA) were not a part of the final bill, but are shown in the table.

TANF4

The TANF block grant is best known as a funding source for cash welfare programs that provide assistance to needy families with children. However, TANF also funds a wide range of benefits and services for disadvantaged families with children, as well as activities to further the goals of reducing out-of-wedlock pregnancies and promoting the formation and maintenance of two-parent families.

TANF Funding

The bulk of TANF federal funding is in a basic block grant that totals $16.5 billion per year. Also part of the TANF financial system is state spending, statutorily set at a minimum of $10.4 billion per year. Both the basic block grant and the state spending requirement (known as the maintenance of effort, or MOE requirement) have been fixed since Fiscal Year (FY) 1997 without any adjustments. Most TANF grants are funded through FY2010 through amounts pre-appropriated in the Deficit Reduction Act of 2005 ( P.L. 109-173 ).

In addition, TANF has a $319 million supplemental grant for 17 states based on historically low federal grants per poor person or high population growth. Under pre-ARRA law, supplemental grants would have expired at the end of FY2009.

Finally, TANF has a contingency fund for states that meet criteria of economic need. The 1996 welfare law, which created TANF, appropriated $2 billion for the contingency fund. At the beginning of FY2009, about $1.3 billion remained in the contingency fund. Each state's annual contingency fund grants are capped at 20% of their basic state family assistance grant.

Changes to TANF in ARRA

TANF Emergency Fund

The ARRA retains the current TANF contingency fund and adds a new, temporary "emergency contingency fund," that provides extra funding to states in FY2009 and FY2010. States receive extra federal grants to cover 80% of increased recession-related costs in those two years. Recession-related costs are defined as increased basic assistance (for states with increased basic assistance caseloads), non-recurrent short-term benefits, or subsidized employment expenditures. Each state's extra grants would be capped. A state's cumulative, combined funding from both the TANF contingency fund and the temporary emergency fund is limited to 50% of its annual basic TANF block grant for the two years. The ARRA provides an appropriation of $5 billion for the emergency fund.

Supplemental Grants

The ARRA extends the TANF $319 million supplemental grant through the end of FY2010.

TANF Work Participation Requirements: The Caseload Reduction Credit

The ARRA temporarily modifies the caseload reduction credit toward the TANF work participation standards. The caseload reduction credit reduces TANF work participation for caseload reduction that has occurred since FY2005 to the previous fiscal year. If caseloads rise, the credit diminishes, raising the effective (after credit) work participation standard. The ARRA modifies the credit for the FY2009, FY2010, and FY2011 standards, allowing the credit to be based on caseload reduction through FY2007 or FY2008 for those years. Thus, caseload increases occurring in FY2008 through FY2010 will not reduce caseload reduction credits.

TANF Carry-Over Funds

Under pre-ARRA law, states could reserve unspent TANF grants without fiscal year limit for the purpose of providing cash welfare. The ARRA allows states to use unspent TANF grants for any TANF benefit and service.

Child Care and Development Block Grant (CCDBG)5

The Child Care and Development Block Grant (CCDBG) is the primary source of federal funding dedicated solely to child care subsidies for low-income working families (regardless of welfare status). Through the CCDBG, low-income parents receive vouchers or other reimbursement for child care costs to enable them to work or participate in education or training activities. Generally, families must provide a co-payment for child care, but co-pays may be waived under certain circumstances.

CCDBG Funding

Authorization for the Child Care and Development Block Grant (CCDBG) expired in FY2002. However, the discretionary program has continued to receive funding through annual appropriations bills, including $2.062 billion under the current FY2009 continuing resolution ( P.L. 110-329 ). A second child care funding stream, authorized by section 418 of the Social Security Act, includes $2.917 billion annually in pre-appropriated mandatory funds through FY2010. These two funding streams (discretionary and mandatory) are frequently referred to, in concert, as the "Child Care and Development Fund" (CCDF). CCDF and CCDBG are terms that are often used interchangeably.

Discretionary CCDBG funds are allocated among states according to a formula that is based on each state's share of children under age five, the state's share of children receiving free or reduced-price lunches, and state per capita income. Half of 1% of appropriated funds is reserved for the territories, and between 1% and 2% is reserved for payments to Indian tribes and tribal organizations. There is no state match required in order to receive these discretionary funds.

Additional Child Care Funds

The ARRA appropriates an additional $2.0 billion in discretionary funds to the CCDBG. The ARRA specifies that these funds should be used to supplement, not supplant, state funding spent on child care assistance for low-income families. The ARRA also specifies that a sum of approximately $255 million be reserved, out of the total appropriated to CCDBG, for activities designed to: (1) provide comprehensive consumer education to parents and the public; (2) increase parental choice; and (3) improve quality and availability of child care (such as resource and referral services). This sum would augment the amount that states are already required to use for such activities (not less than 4% of the total amount received by each state, per section 658G of the Child Care and Development Block Grant Act). Of the $255 million, nearly $94 million is reserved for activities designed to improve the quality of infant and toddler care.

Child Support Enforcement (CSE)6

The Child Support Enforcement (CSE) program was enacted in 1975 as a federal-state program (Title IV-D of the Social Security Act) to help strengthen families by securing financial support for children from their noncustodial parent on a consistent and continuing basis and by helping some families to remain self-sufficient and off public assistance by providing the requisite CSE services. The CSE program serves both welfare and non-welfare families. All 50 states and four jurisdictions (the District of Columbia, Guam, Puerto Rico, and the Virgin Islands) operate CSE programs. On average, child support constitutes about 17% of family income for households who receive it. Among poor households who receive it, child support constitutes about 30% of family income. In FY2007, the CSE program collected $24.9 billion in child support payments and served nearly 15.8 million child support cases.

CSE Funding

CSE is a matching grant program, with the federal government reimbursing states for a share of the CSE expenditures. In FY2007, CSE program expenditures amounted to nearly $5.6 billion. The federal government and the states share program costs at the rate of 66% and 34%, respectively.

The federal government also pays states an incentive payment to encourage them to operate effective CSE programs. The incentive payment is based on several factors including the state's performance in five program areas. Federal law capped the amount of incentive payments to the states (in aggregate) at $483 million for FY2008. For fiscal years after FY2008, the aggregate incentive payment amount is to be increased to account for inflation. Federal law requires states to reinvest CSE incentive payments back into the CSE program or related activities. The Deficit Reduction Act of 2005 ( P.L. 109-171 ) prohibited federal matching/reimbursement of CSE incentive payments that are reinvested in the CSE program.

Temporary Reinstatement of Authority To Provide Federal Matching Payments For State Spending of Child Support Incentive Payments

The ARRA requires HHS to temporarily provide federal matching funds on CSE incentive payments that states reinvest back into the CSE program. This means that CSE incentive payments that are/were received by states and reinvested in the CSE program can be used to draw down federal funds. The ARRA provides the federal matching funds for FY2009 and FY2010 (i.e., the period October 1, 2008, through September 30, 2010).

Child Welfare8

Child welfare agencies seek to ensure the well-being of children and their families, including protecting children from abuse or neglect and ensuring that they have safe and permanent homes. The federal government provides support to state child welfare agencies primarily through programs that are authorized under Title IV-B and Title IV-E of the Social Security Act. Title IV-E of the Social Security Act authorizes the foster care, kinship guardianship, and adoption assistance program. Under this program, states are required to provide foster care maintenance payments and adoption assistance payments to eligible children, and the federal government is obligated to reimburse states for a part of the cost of those payments. The recent enactment of the Fostering Connections to Success and Increasing Adoptions Act of 2008 ( P.L. 110-351 ) also gives states the option of providing kinship guardianship assistance payments to eligible children.

Title IV-E Funding

Federal Title IV-E funds are paid quarterly to each state based on the amount of the "claims" submitted by the state. The total claim amount is equal to the total expenditures made by the state that are eligible for federal support under the Title IV-E program. The federal share of the claim amount that is related to making foster care maintenance, adoption assistance, and kinship guardianship assistance payments – that is the amount of federal reimbursement to the state for those costs – is determined using the state's "federal medical assistance percentage" or FMAP. A state's FMAP, which is generally determined for the Medicaid program, is annually computed by HHS using a formula provided in statute. States with higher per capita income (relative to the per capita income nationally) receive lower federal reimbursement rates, while states with lower per capita income receive higher federal reimbursement rates. However, no state may have an FMAP that is less than 50% or more than 83%. The state's FMAP is applied to its total claim amount to determine the federal share of Title IV-E funding that is provided to the state for foster care maintenance, adoption assistance, and kinship guardianship assistance payments. For example, if a state has an FMAP of 55%, for every $100 in Title IV-E foster care maintenance, adoption assistance and kinship guardianship assistance payment claims it submits, the federal government is obligated to reimburse it $55. In FY2007, states received federal Title IV-E funding for foster care maintenance payments and adoption assistance payments combined, of $3.1 billion, which represented roughly 55% of the total claims submitted for those payments.

Temporary Increase in the Matching Rate for Foster Care, Adoption Assistance, and Kinship Guardian Assistance

The ARRA temporarily increases the federal matching rate for Title IV-E foster care maintenance, adoption assistance, and kinship guardianship assistance payments. The law provides a general 6.2 percentage point increase in each state's FMAP that applies from October 1, 2008 through December 2010. Further it ensures that no state may have a lower calculated FMAP (before application of the general increase) than it had in FY2008 or any subsequent year during the temporary increase period. The ARRA also provides an additional FMAP increase for states with high unemployment. However, this increase applies only to the Medicaid program and does not apply for purposes of state reimbursement of Title IV-E program costs. The Congressional Budget Office (CBO) estimated that the temporary FMAP increases will provide states with additional federal child welfare funding (under Title IV-E) of just over $1.0 billion, which will primarily be received during FY2009 and FY2010.

To be eligible for the increased FMAP (for both the Title IV-E and Medicaid programs) states must maintain their Medicaid eligibility standards, methodologies, and procedures as they were in effect on July 1, 2008, and they are not permitted to require local governments to pay a larger part of the state's non-federal Medicaid program costs than otherwise would have been required on September 30, 2008.

Head Start11

Head Start is a federal program that has provided comprehensive early childhood development services to low-income children since 1965. Services provided to preschool-aged children include child development, educational, health, nutritional, social and other activities, intended to prepare low-income children for entering kindergarten. Federal Head Start funds are provided directly to local grantees, rather than through states. Programs are locally designed and are administered by a network of over 1,600 public and private nonprofit and for-profit agencies. In FY2007, Head Start was funded at $6.888 billion, allowing for funded enrollment of 908,412 children (of whom 61,788 were served by Early Head Start programs).

The Head Start Act was reauthorized with the signing of the Improving Head Start for School Readiness Act of 2007 ( P.L. 110-134 ) on December 12, 2007. The new law significantly restructured the statutory formula for allocating Head Start funds. Under section 640 of reauthorized Head Start Act, funds are to be distributed as follows: (1) all programs are allotted the same base grant they received in the prior fiscal year; (2) certain set-asides are taken off the total appropriation for activities related to training and technical assistance, research and demonstrations, and discretionary payments for activities such as monitoring; and (3) any funds remaining are then allocated, depending on the amount left available, toward cost-of-living increases, program expansions, quality improvement activities, and State Advisory Councils.

Head Start Funding

The continuing resolution provides FY2009 funding for Head start at a $6.9 billion annual rate. Both the House and Senate versions of the Labor, Health and Human Services (HHS) and Education Department FY2009 appropriations would provide higher funding for Head Start.

Additional Head Start Funds

The ARRA appropriates an additional $2.1 billion for Head Start. Of the $2.1 billion, the ARRA specifies that $1.0 billion be distributed through the regular Head Start formula. The remaining $1.1 billion is to be directed toward the expansion of Early Head Start programs. Of the $1.1 billion for Early Head Start, up to 10% may be spent on training and technical assistance activities for Early Head Start programs and up to 3% may be spent on monitoring activities for such programs. The ARRA does not provide direction on how the Early Head Start expansion funding is to be allocated to grantees by the Department of Health and Human Services.

Community Services Block Grant (CSBG)13

The Community Services Block Grant (CSBG) program provides federal funds to states, territories and Indian tribes for distribution to local agencies in support of a variety of antipoverty activities. The origins of the Community Services Block Grant date back to 1964 and Lyndon Johnson's War on Poverty. A centerpiece of the federal antipoverty campaign was the Community Action Program, under which a nationwide network of local, mostly non-profit, Community Action Agencies (CAAs) was developed.

CSBG funds are used for activities designed to have a "measurable and potentially major impact on causes of poverty." A key feature is the direct involvement of low-income people in the design and administration of antipoverty activities, through mandatory representation on the CAAs' governing boards. There is no typical CAA, since each agency designs its programs based on a local community needs assessment. Examples, however, of CSBG-funded services include emergency assistance, home weatherization, activities for youth and senior citizens, transportation, income management and credit counseling, domestic violence crisis assistance, parenting education, food pantries, and emergency shelters. In addition, local agencies provide information and referral to other community services, such as job training and vocational education, depending on the needs of individual clients. The program is intended to serve the poor, but states (and eligible entities within those states) may choose to serve populations with incomes up to 125% of the federal poverty level.

Of amounts appropriated for the CSBG, 1.5% is reserved by HHS for certain activities, including training and technical assistance, evaluation and program monitoring. Another half of 1% is reserved for the territories, and the remainder is allocated among states according to a formula, which effectively gives states the same percentage shares they received in 1981. States, in turn, are required to pass through at least 90% of their federal block grant allotments to local "eligible entities," or Community Action Agencies.

Funding for CSBG

About 1,000 local CAAs are currently in existence and receive funding though the CSBG. The block grant is funded at an annual level of $654 million in FY2009.

CSBG Funding Increase

The ARRA appropriates an additional $1 billion for the CSBG. The funds are subject to set-aside provisions in the underlying CSBG law that reserve half of 1% for allocation among the territories and 1.5% for training, technical assistance, evaluation and monitoring. Remaining funds are distributed according to the regular CSBG formula to states. The House Appropriations Committee, in its draft report on the recovery package, stated:

The Community Services Block Grant (CSBG) supports employment, food, housing, health, and emergency assistance to low-income families and individuals (including those without children who do not qualify for other types of assistance like Medicaid), the homeless, and the elderly. ... Due to rising unemployment, housing foreclosures, and high food and fuel prices, community action agencies have seen dramatic increases in requests for assistance. These additional economic recovery funds will help to fill gaps in safety net services by targeting funds directly to community action agencies in over 1,000 local communities while they are impacted by revenue shortfalls."

The ARRA requires states to use at least 1% of funds for state-level activities to coordinate identification and enrollment of eligible individuals in federal, state and local benefit programs for which they are eligible. The remainder would be required to be passed through to local entities.

Funding for Nonprofit Community-Based Organizations14

Under the authority of section 1110 of the Social Security Act, the Compassion Capital Fund provides grants to help local faith-based and community organizations expand their ability to provide social services to low-income communities. The fund does not typically provide money for direct services.

Compassion Capital Funding

The FY2009 continuing resolution provides $53 million for the Compassion Capital Fund in FY2009.

New Funding for Community-Based Nonprofit Organizations

The ARRA provides $50 million for direct grants to nonprofit organizations for capacity building activities to expand social services to communities affected by the economic downturn. These grants will not be provided through the Compassion Capital Fund (as proposed in the House version of ARRA), but through a separate funding stream.