The 108th Congress did not complete action on legislation to reauthorize the block grant ofTemporary Assistance for Needy Families (TANF). Instead it and its predecessor, the 107thCongress, adopted short-term funding extensions since the original funding authority for TANFexpired on September 30, 2002. The latest short-term extension funds the program through March31, 2005. The House of Representatives did pass a bill in February 2003 ( H.R. 4 ), and the Senate Finance Committee reported an amended version of the legislation in October 2003. Thoughthe full Senate took up the bill in late March 2004, the measure was set-aside in that chamber aftera motion to limit debate on the bill failed to receive the required 60 votes on April 1. The lack of final action in the 108th Congress means that welfare reauthorization is likely to again be a topic in the 109th Congress. This report describes both the House-passed and SenateFinance Committee-approved versions of welfare reauthorization legislation in the 108th Congress. The differences in the two bills highlight some of the contentious issues in the reauthorizationdebate. Before the bill was pulled from the Senate floor, the Senate did approve one amendment tothe bill which would have added $6 billion over five years for child care funding (to a total of $7billion in child care funds above current law levels for the five years). There were no approvedamendments to the Senate Finance Committee bill's TANF provisions. The bills had many similarities, with both extending basic funding at current levels throughFY2008 and incorporating President Bush's proposal to provide categorical "marriage promotion"grants. They both also raised TANF work participation standards, though the two bills differed interms of how much more work would be required and what activities count toward the participationstandards. This report provides a comparison of the TANF provisions of H.R. 4 as itpassed the House and was reported from the Senate Finance Committee. It does not addressnon-TANF provisions of both bills, such as revisions to the Child Care and Development Fund,Child Support Enforcement, Abstinence Education, and transitional Medicaid. The House-passed and Senate Finance Committee bills had very similar funding provisions. The major difference in the funding provision between the two bills was that the Senate FinanceCommittee bill would have completely revamped the TANF contingency (recession) funds, whilethe House-passed bill would have made relatively minor revisions to the fund. Basic Funding. The 1996 welfare reform law entitled states to a basic TANF block grant equal to peak expenditures in the pre-1996 welfareprograms 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 work participationrequirements) of what they spent in these programs in FY1994. The mid-1990s were the period whencash welfare caseloads were at their peak. Both the basic TANF grant and the MOE are legislativelyfixed: they did not change when cash welfare caseloads declined in the mid- and late-1990s, nor didthey increase when caseloads in some states increased during the recent economic slump. Neitherthe basic TANF block grant nor the MOE have been adjusted for inflation. Both the House-passed and Senate Finance Committee versions of H.R. 4 would have continued both the basic block grant and the MOE at their current funding levels (withoutinflation or caseload adjustment) through FY2008. Supplemental Grants. During the consideration of 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) states 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. In FY2003, supplemental grants totaled $319 million. Both the House-passed and Senate Finance Committee bills would have continued supplemental grants for the same 17 states at theFY2003 funding level through FY2007 (unlike other grants, which expire in FY2008). Contingency Funds. The fixed basic grant under TANF 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 differed substantially in their revisions to the TANF contingency fund. The House-passed version of H.R. 4 essentially would have continued the fund on existingrules, with some relatively minor modifications: allowing some additional state spending to counttoward meeting the FY1994 funding level threshold and modifications to increase grants for statesthat qualify for funds for only part of the year. The Senate Finance Committee bill fully revamped the contingency fund. It would have eliminated the requirement that states increase expenditures from their own funds above the regularTANF MOE level and eliminated the matching requirements. It added a new financial requirementthat unspent TANF balances be below a certain threshold to qualify for contingency funds. TheFinance Committee proposal would have based contingency grants on a portion of the estimated costof increased cash assistance caseloads. The Senate Finance Committee bill would have also revisedthe criteria 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, though the limit on transfers toSSBG is set at 4.25% (though annual appropriations have restored the SSBG transfer limit to itsoriginal limit set in the 1996 welfare law of 10%). 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 have set the SSBG transfer limit permanently at 10%. However, the Housebill would have raised the overall transfer limit to 50%. The Senate Finance Committee bill wouldhave retained the current law 30% transfer limit. Both bills included provisions to ease some rules regarding use of TANF funds. Both the House-passed and Senate Finance Committee versions of H.R. 4 would have: Allowed 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." Narrowed the definition of "assistance" to exclude all child care andtransportation aid. TANF funds spent on assistance trigger certain program requirements, such aswork requirement, 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 have eliminated such aidfrom the definition of assistance, freeing nonworking families who receiving only child care ortransportation aid from these requirements. Both the House-passed and Senate Finance Committee bills substantially revised TANF workparticipation requirements that apply to both the states and to individuals. They both raised workparticipation rates that states must meet from the current law's standard of 50% to 70%, raised therequired hours of working to receive full credit and provided partial credit for participating familiesthat do not meet the full credit standard, and revised the list of activities. However, the bills differedin how they did these three things. Both bills also incorporated the Bush Administration's "universal engagement" proposal, which requires states to develop a self-sufficiency plan for all TANF adult recipient to monitor progresstoward that plan. The House -passed bill also required states to end benefits ("full family sanction")for families that fail to comply with work participation rules. Participation Rate Standards. Current law requires states to have a specified percentage of their families with an adult recipient (or minor headof household) 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 reduction (not attributable to policychanges) that have occurred since before enactment of welfare reform (FY1995). This "caseloadreduction credit" has had a large effect on participation standards, reducing the standardconsiderably from its statutory rate. In FY2002, the standard was reduced to 0% for 21 states. Both the House-passed and Senate Finance Committee bills raised the work participation standard for all families to 70% by FY2008 and eliminated the separate standard for two-parentfamilies. Both bills also would have revised the credits that reduce these standards from theirstatutory rate (i.e., reduce the 70% standard to a lower rate), but they did so in different ways. The House-passed bill revised the current caseload reduction credit so that caseload change is measured from a more recent year (rather than the pre-welfare reform caseload level of 1995). Ultimately, caseload reduction would have been measured based on the most recent four years. TheHouse bill also included a provision to give an additional credit to states that achieved a caseloadreduction of 60% of more from FY1995 to FY2001. The Senate Finance Committee bill retained the current caseload reduction credit for FY2004 and FY2005, but beginning in FY2006 would have replaced the caseload reduction credit with acredit for employed welfare leavers. The bill would have also capped all credits against theparticipation standard, so that the minimum effective rate standard would have been 10% in FY2004,20% in FY2005, 30% in FY2006, 40% in FY2007, and 50% in FY2008. Hours Standards. Current law requires that a family 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 six), and 30 hours is required for other families. Higher hours are set for the purposes ofthe two-parent work participation rate. Both the House-passed and Senate Finance Committee bills raised the hours standards. TheHouse-passed bill incorporated a 40-hour workweek standard for full credit, but would also haveprovided "partial" credit for families with at least 24 hours of participation. No special lower hourstandard would have been provided for single parents with preschoolers. The Senate Finance Committee bill also raised the hours standard for full credit, but by less than proposed in the House-passed bill. Single parents with a pre-school child would have been givenfull credit for participation at 24 hours per week, and other single parent families would have beengiven full credit at 34 hours per week. Partial credit for single parent families would have beenprovided at 20 hours per week. Higher hours requirements would apply to two-parent families. Creditable Activities. Current law lists 12 activities 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 is 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. Both bills would have revised the list of countable activities, but in very different ways. TheHouse-passed bill would have narrowed what counts as "core" activity by removing job search andvocational educational training from that list. Except for a limited period of time (see below), theHouse bill would have required that families participate for at least 24 hours per week in work,community service, or work experience programs to be counted toward the state's standard. Forthree months in a 24-month period (four months in the case of an educational program), states wouldhave been allowed to define activities that count toward the standards. These activities would haveincluded job search and vocational educational training or other types of activities (e.g., English forSpeakers of Other Languages classes, substance abuse treatment or treatment for victims of domesticviolence). States would also have been allowed to determine the activities for which hours wouldcount above the 24-hour-per-week standard. The Senate Finance Committee bill retained the current law list of activities, including keeping time-limited job search and vocational educational training as "core" activities. However, itprovided states with options to allow recipients to participate in an additional set of activities forthree months in a 24-month period. In the case where that participation is in a rehabilitative activity,another three months of rehabilitation would have been allowable if combined with a core workactivity. The Senate Finance Committee bill would also have allowed these additional activities (andjob search and vocational educational training to count without regard to their usual time limits) tocount for hours above 24 hours per week spent in core activities. The Senate Finance Committee bill also allowed states to have up to 10% of their caseload enrolled in a special program of two- or four-year undergraduate education or vocational educationaltraining. This program is modeled after the "Parents as Scholars" program that has operated inMaine using TANF MOE funds. Current law allows states to use TANF funds for any activity "reasonably calculated" to achievea TANF purpose. One of the statutory purposes of TANF is to end dependency of needy parents ongovernment benefits, and one of the stated means to end such dependency is "marriage." Anotherof the statutory purposes of TANF is to promote the formation and maintenance of two-parentfamilies. "Promoting marriage" is a currently allowable use of TANF funds. Both the House-passed and Senate Finance Committee versions of H.R. 4 would have carved out special "marriage promotion grants" from existing TANF funding. Both billsincluded $100 million in competitively awarded matching funds for states, territories, and tribes formarriage promotion activities. The bills would have allowed states to use other federal TANF fundsor state funds as the match for these new marriage promotion grants. Both bills also would have provided an additional $100 million for research and demonstrations. The House-passed bill required that these funds be used "primarily" for marriagepromotion; the Senate Finance Committee bill required that 80% of these funds be used for marriagepromotion. Marriage promotion activities listed in both bills were: public advertising campaigns on the value 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 only have been funded from these grants if offered in conjunction with othermarriage activities. The language of the two bills was similar, though the Finance Committee billhad 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. Both the House-passed bill and Senate Finance Committee bill would have made additional amendments to TANF provisions regarding state plans, data reporting, tribal TANF programs, andother provisions of TANF law. These provisions are included in the detailed bill comparison tableshown below. The House-passed and Senate Finance Committee versions of H.R. 4 also included amendments to the Child Care and Development Fund, child support enforcement, theabstinence education program, and transitional Medicaid. These provisions are not addressed in thisreport. Table 1 provides a detailed comparison of the TANF programs of theHouse-passed and SenateFinance Committee reported versions of H.R. 4 . The table provides references towhere current law provisions are found in the Social Security Act (SSA). It also denotes the sectionnumber in each of the bills in which the provision is found. Table 1. Comparison of Current Law with H.R.4, as Passed by the House andas Reported by the SenateFinance Committee (TANF Provisions) Return to CONTENTS section of this Long Report.

Summary: The 108th Congress did not complete action on legislation to reauthorize the block grant ofTemporary Assistance for Needy Families (TANF), instead adopting short-term extensions. Thelatest extension funds the program through March 31, 2005. Though welfare reauthorization failedto receive final action, a bill ( H.R. 4 ) did pass the House and a substitute measure wasreported from the Senate Finance Committee. The differences in the two bills highlight some of thecontentious issues in the reauthorization debate. The House-passed and Senate Finance Committee bills were very similar in terms of how they would continue funding under the TANF program. Both bills would have extended basic TANFfunding at current levels ($16.6 billion for the 50 states, the District of Columbia, and the territories)through FY2008 and extended supplemental grants provided to 17 states through FY2007. Both billsalso would have provided new, categorical grants for marriage promotion activities. The majordifference in the funding provisions of the two bills was how they provided extra contingency(recession-related) funding to the states. The House bill essentially extended the current law fundthat provides matching grants to states that experience high and increased unemployment rates andfood stamp caseloads. The Senate Finance Committee bill eliminated the requirements that statesexpend additional money to access contingency funds, and instead based extra funding on the costof increased caseloads for states that meet revised unemployment or food stamp caseload criteria. The two bills would have substantially revised TANF work participation standards that states must meet or be subject to a financial penalty. Under current law, 50% of TANF families with anadult or minor household head must participate, though the 50% rate is reduced by caseloadreductions that have occurred since welfare reform. Both versions of H.R. 4 wouldhave raised this standard to 70%, though under both bills the standard could have been reducedthrough credits (though the credits differ between the two bills). They also both eliminated aseparate 90% participation rate requirement for two-parent families. Both bills would have raisedthe minimum hours required of family members to be considered full participants, though the Houseraised them more than did the Senate Finance Committee bill. The bills also differed in the activitiescountable toward the participation standards: the House narrowed the list of activities countable,requiring recipients to spend at least 24 hours in work, community service, or work experienceprograms except for a short (usually three month) period when states may define what counts asactivities themselves. The Senate Finance Committee bill kept all activities on the current law list,and also allowed states to count activities on an expanded list for three months (six months in somecircumstances). Both bills included non-TANF provisions relating to child support enforcement, responsible "fatherhood" programs, and transitional medical assistance (not addressed herein). This report willnot be updated.