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) 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. 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. 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.