The Temporary Assistance for Needy Families Block Grant: An Overview
Released: 2014-11-05T00:00:00

Introduction

The Temporary Assistance for Needy Families (TANF) block grant provides grants to states, Indian tribes, and territories for a wide range of benefits, services, and activities that address economic disadvantage. TANF is best known for funding state cash assistance programs for low-income families with children. However, in FY2013, cash assistance represented only 28% of TANF funds. TANF funds a wide range of activities that seek to both ameliorate the effects of and address the root causes of child poverty. In addition to state block grants, TANF includes competitive grants to fund healthy marriage and responsible fatherhood initiatives.

This report provides a nontechnical introduction to the TANF block grant. It briefly describes

The history of cash assistance and how the "welfare reform" debates led to the creation of TANF; TANF financing, amount of federal and state funds, how TANF funds may be used, and how TANF funds are being used; the TANF cash welfare programs; and other TANF benefits, services, and activities.

For a more technical discussion of federal financing and program rules in TANF, see CRS Report RL32748, The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements , by [author name scrubbed]. For current issues and data and statistics on activities funded by TANF, see CRS Report RL32760, The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions , by [author name scrubbed].

TANF and Welfare Reform

The TANF block grant was created in the 1996 welfare reform law (The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193 ), ending a decades-long debate to modify or replace the system of cash assistance for needy families with children. It replaced the Aid to Families with Dependent Children (AFDC) cash assistance program and several related programs.

The modern form of cash assistance for needy families with children dates back to the Progressive Era of the early 1900s and state- or locally funded mothers' pensions for "fatherless" families. The purpose of these programs was to permit these mothers to stay at home and care for their children. The Social Security Act of 1935 (P.L. 74-271) provided federal funding for these types of programs by creating the Aid to Dependent Children (ADC) program. In the early years, benefits were paid only on behalf of the children (not the caretaker, usually the mother). Families receiving benefits were usually headed by a widow or had a disabled father.

However, over time, the nature of both the program and the families it aided changed. Social Security survivors benefits were created in the Social Security Amendments of 1939, and those receiving ADC increasingly were families where the father was alive but absent. The caseload also increasingly became nonwhite. Amendments to the program made in 1950 authorized benefits for caretakers. In 1956, the goals of creating "self sufficiency" and strengthening family life were added to ADC, along with funding for services that would seek to achieve these goals. In 1962, the program was renamed Aid to Families with Dependent Children (AFDC).

Policymakers became concerned that cash assistance was a contributing cause of economic disadvantage. Providing cash to a nonworking parent was seen as a work disincentive, during a time when an increasing number of women, and mothers, were going to work. Economic studies generally confirmed that providing cash assistance was a disincentive to work.

Further, there was concern that restricting benefits to only single-parent families (usually headed by the mother) contributed to the trend of an increasing number of children living in single-parent families. The social science research on the impact of assistance, as embodied in AFDC, on family structure is inconclusive. Cash assistance benefits for families headed by two able-bodied parents became available in 1961 at state option. It was not until the Family Support Act of 1988 ( P.L. 100-485 ) that states were mandated to provide benefits for such families, and even then it was on more restrictive terms than those for single-parent families. Two-parent families never became a large portion of the cash assistance caseload.

The 1980s also saw increasing attention to the notion of "welfare dependency." Research showed that many single mothers received cash assistance for only a short period of time, but others were likely to spend a long time on the rolls. Additional research conducted in the 1980s showed that mandatory welfare-to-work programs could move families off the rolls and into employment.

The Family Support Act of 1988 ( P.L. 100-485 ) established in AFDC the notion of mutual responsibility between the cash assistance recipient and the state. It created the Job Opportunity and Basic Skills (JOBS) Training program, which provided employment services, education, and training for cash assistance recipients. Following the Family Support Act, states also experimented with "waivers" of federal law, and began designing their own cash assistance programs and requirements for cash assistance recipients. The 1996 welfare law abolished AFDC, and consolidated the funding of AFDC, a program that provided emergency assistance, and JOBS into the TANF block grant.

TANF Funds

TANF financing involves both federal and state monies. Most TANF funding is set at a fixed amount that does not change with state circumstances. In addition to federal grants to states, there are also TANF competitive grants to community-based organizations for healthy marriage and responsible fatherhood initiatives.

Basic Block Grants

The bulk of federal TANF funding is in a basic block grant totaling $16.5 billion for the 50 states and the District of Columbia. TANF funds also go to Puerto Rico, Guam, and the Virgin Islands. Indian tribes also may operate their own TANF programs, with funding coming from a state's block grant amount.

The amount each state is entitled to is based on its historical expenditures in the early to mid-1990s in TANF's predecessor programs (AFDC and related programs). This amount has been frozen since TANF's creation in the 1996 welfare law. It has not been adjusted for inflation or changes in a state's circumstances such as its cash welfare caseload, population, or number of poor children. For basic block grants by state, see Table A-1 .

The State Maintenance of Effort Requirement

States are required to spend at least a minimum amount each year from their own funds on TANF-related populations and activities. This is known as the "maintenance of effort" (MOE) requirement. Like the basic federal TANF block grant, which is based on historical federal funding in TANF's predecessor programs, the amount each state is required to spend from its own funds is based on historical expenditures from its own funds in AFDC and related programs. In total, a minimum of $10.4 billion must be spent collectively by the states from their own funds under the MOE requirement.

Healthy Marriage and Responsible Fatherhood Grants

While most federal TANF funding is for state grants, TANF law includes competitive grants that have been made to community-based organizations (including faith-based organizations) for healthy marriage and responsible fatherhood initiatives. Funding for these grants is $150 million, split evenly ($75 million each) for healthy marriage and responsible fatherhood initiatives. These initiatives often include education and training sessions for parents or prospective parents in relationship skills and conflict resolution. Responsible fatherhood programs can also include employment services and education for noncustodial parents. Both healthy marriage and responsible fatherhood grants can also fund media campaigns on their respective topics.

Uses of State TANF Funds

States may use TANF funds in any manner "reasonably calculated" to achieve the four goals set forth in TANF statute. These four goals are

1. provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; 2. end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; 3. prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and 4. encourage the formation and maintenance of two-parent families.

States may also use TANF funds to finance any activity that was included in the pre-1996 predecessor programs. This gives states broad leeway in spending TANF funds. In general, state MOE funds can be used for these same activities (there are some technical differences in the use of federal and state funds).

States have used this flexibility to create very diverse programs in terms of the benefits, services, and activities they fund. Figure 1 shows the uses of federal TANF and state MOE funds in FY2013. Of the total $31.6 billion, 28% ($8.7 billion) was used for basic assistance, which most closely corresponds to cash assistance.

TANF Cash Assistance

To many, TANF is synonymous with cash assistance (sometimes called "welfare") for needy families. As discussed above, this is not true: TANF is far broader than cash assistance. However, the policy concerns around cash assistance are what led to the creation of TANF. This section provides a discussion of cash benefit amounts, the requirements on cash assistance recipients, and an overview of the number and type of families on the cash assistance caseload.

Benefit Amounts

There are no federal rules on how much a state pays needy families in its TANF cash assistance program. There is a great deal of variation in benefits paid among the states. However, TANF cash assistance benefits in all states represent only a fraction of poverty-level income.

Figure 2 provides a map showing the TANF maximum cash assistance benefit by state for July 2012. The maximum benefit is generally the amount paid for a family with no other income who is complying with program requirements.

In July 2012, the maximum benefit for a family of three was $923 per month in Alaska or 48% of the poverty line that applies in Alaska. (The poverty line in Alaska is higher than that in the 48 contiguous states and District of Columbia.) New York had the highest benefits in the lower 48 contiguous states and the District of Columbia, paying $770 per month (48% of poverty-level income). In the median benefit state (North Dakota), the maximum benefit for a family of three was $427 per month, 27% of poverty-level income. Mississippi, the state with the lowest benefit levels, paid a family of three a maximum of $170 per month, 11% of poverty-level income.

TANF maximum benefits vary greatly by state; there is also a very apparent regional pattern to benefit amounts. States in the South tend to have the lowest benefit payments; states in the Northeast tend to have the highest benefits.

TANF cash benefits have declined over time in real terms because of inflation. States sometimes make benefit adjustments, but these tend to be ad hoc (not automatic or tied to the inflation rate) and have failed to keep pace with inflation. For more information on eligibility rules and benefit amounts in state TANF cash assistance programs, see CRS Report R43634, Temporary Assistance for Needy Families (TANF): Eligibility and Benefit Amounts in State TANF Cash Assistance Programs , by [author name scrubbed].

Families that receive TANF cash assistance usually benefit from other programs as well. Most TANF cash assistance families receive aid from the Supplemental Nutrition Assistance Program (SNAP, the program formerly known as Food Stamps) and have coverage from Medicaid. Housing subsidies are received sometimes. Families with earnings can also get benefits from the Earned Income Tax Credit (EITC) and the child credit.

Federal Requirements for Cash Assistance

The overarching purpose of TANF is to increase the flexibility of states to operate a program to achieve its four statutory goals. States have broad flexibility in designing their cash assistance programs. As discussed above, there are no federal rules that states must follow to determine the size of the cash benefit paid to a family. Additionally, there are no federal rules for determining the income eligibility level, how much money a family may have in the bank, the value of a family's car(s), whether or not a state pays benefits to families with earnings, or other factors that go into determining a family's eligibility for TANF and its cash assistance benefit amount.

However, cash assistance paid to a family does come with some federal requirements. States must meet numerical work participation standards, which specify that a percentage of the cash assistance caseload must be engaged in certain activities. These standards also require that a minimum number of hours be spent in these activities, with the hours varying by family type. Guided by these standards, states themselves design participation rules that apply to individual recipient families and determine the sanction for families that fail to comply.

The federal TANF time limit prohibits the use of federal funds to provide assistance to a family with an adult recipient beyond 60 months in a lifetime. States are free to use state funds—and even count those funds toward their MOE requirements—to assist a family beyond 60 months. States may also impose shorter time limits. Most states do end benefits for families entirely after a certain number of months, most often 60.

Families that receive TANF cash assistance also must assign (legally turn over) to the state any child support paid by a noncustodial parent. This is to reimburse the state and the federal government for the assistance paid to the family. States may pass along collected child support to the family. If the amount passed through does not adversely affect the family's eligibility for TANF cash or reduce its benefit, the pass-through amount can count toward the state's MOE as state spending on needy families or be partially financed by the federal government up to a certain level.

The Cash Assistance Caseload

In December 2013, the cash assistance caseload stood at 1.7 million families. The caseload is down dramatically from its pre-welfare-reform level, reduced by 67% from the historic peak of 5.1 million families in March 1994.

Figure 3 shows the long-term, historical trend in the number of needy families with children receiving cash assistance, from July 1959 to December 2013. The shaded areas of the figure represent months when the national economy was in recession. Though the health of the national economy affected the trend in the cash assistance caseload, the long-term trend in receipt of cash assistance does not follow a classic counter-cyclical pattern. (Such a pattern would have the caseload rise during economic slumps, and then fall again during periods of economic growth.) Factors other than the health of the economy (demographic trends, policy changes) also affected the caseload trend.

The figure shows two periods of sustained caseload increases: the period from the mid-1960s to the mid-1970s, and a second period from 1988 to 1994. The number of families receiving cash assistance peaked in March 1994 at 5.1 million families. The cash assistance caseload fell rapidly in the late 1990s (after the 1996 welfare reform law) before leveling off in 2001. In 2004, the caseload began another decline, albeit at a slower pace than in the late 1990s.

During the 2007-2009 recession and its aftermath, the caseload began to rise from its post-welfare reform low in August 2008 (1.7 million families), peaking in December 2010 at close to 2 million families. By December 2013, the cash assistance caseload had again declined to approximately match its post-welfare reform low at about 1.7 million families.

Families with recipient, able-bodied parents have been the focus of traditional concerns about "welfare dependency" and historically represented most of the cash assistance caseload. However, the time period since 1988 saw not only an initial increase, and then a decline, in the cash assistance caseload, but also a change in its composition with the caseload becoming increasingly diverse.

Over this period, an increasing share of the cash assistance caseload represented "child-only" cases, without a recipient adult. These cases represented families in several different types of situations: families where nonparent relatives (e.g., grandparents, aunts, uncles) are caring for children for whom they have no legal financial responsibility, families headed by a disabled parent receiving Supplemental Security Income (SSI), and families with ineligible noncitizen adults who have eligible (usually citizen) children. In addition, there was also an increase in the share of families with a working recipient parent.

For more information on the trends in the number and composition of the TANF cash assistance caseload, see CRS Report R43187, Temporary Assistance for Needy Families (TANF): Size and Characteristics of the Cash Assistance Caseload , by [author name scrubbed].

TANF Benefits and Services Other than Cash Assistance

The fixed funding of TANF combined with the sharp decline in the cash welfare caseload made available to states new funds to address the broad purposes of TANF. In FY2013, more than half of federal TANF and state MOE funds were used for activities that are generally not associated with a traditional cash assistance program. TANF funds have been and continue to be used for a wide range of benefits, services, and activities that both address the effects of child poverty and attempt to deal with its root causes.

Among other things, TANF funds are used to

support work for low-income families through funding subsidized child care and refundable tax credits such as state Earned Income Tax Credits (EITCs); operate subsidized employment programs for low-income parents (both on and off the cash assistance rolls) and for youth; fund post-secondary educational programs for low-income parents; provide economic aid to families with children on an emergency and short-term basis; fund programs that address child abuse and neglect; and fund early child development programs, such as pre-kindergarten programs and Head Start programs.

These funds can be used to provide additional help to families who receive cash assistance, but also to provide benefits and services to the wider population of disadvantaged families with children in general. TANF state plans and reports indicate that many TANF "services" are provided to families with incomes well above the cutoff for cash assistance—they still go to low-income families, but in many states the cash assistance cutoff is just a fraction of the poverty line, while services typically are provided to families with incomes of up to 200% of poverty, and in some instances even higher.

Table 1 shows expenditures in TANF benefit and service categories other than categories typically associated with traditional cash assistance programs (cash, administration, and work). It shows the range of benefits and services funded at least partially from TANF. In FY2013, these categories represented close to 6 out of 10 federal TANF and state MOE dollars.

There is limited information available on the populations served and specific activities funded by TANF outside of the traditional cash assistance programs. TANF's statutory reporting requirements focus on obtaining information about the cash assistance population. However, HHS has recently revised the financial reporting system for TANF to obtain more detail on TANF expenditures in the categories shown in Table 1 . This new detail will be available with the publication of expenditure data for FY2015.

Conclusion

TANF is not a program, but rather a flexible funding stream that states can use to provide a wide range of benefits, services, and activities. TANF is not simply another term to describe state cash assistance programs. More than half of TANF money goes to activities outside what one would describe as being part of a traditional cash assistance program: for example, child care and refundable tax credits for low-income families with workers, early childhood education programs, and services related to child abuse and neglect. Even within the cash assistance caseload, less than half of all families represent families with an unemployed adult recipient, which have been the focus of the traditional policy interest of moving families from welfare to work. Thus, the issues related to TANF broadly span those that reflect the effects and address the root causes of disadvantage among families with children.

Appendix. TANF Basic Block Grant By State