The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) significantly changed federal welfare policy for low- income families with children, from a program that entitled eligible families to monthly cash payments to a capped block grant that emphasizes employment and work supports for most adult recipients. As part of PRWORA, Congress created the TANF program, through which HHS provides states about $16.5 billion each year in block grant funds to implement the program. To receive its TANF block grant, each state must also spend at least a specified level of its own funds, which is referred to as state maintenance of effort (MOE). TANF is a flexible funding stream that states can use to provide cash assistance and a wide range of services that further the program’s four goals, including assisting needy families so that children can be cared for in their own homes or in the homes of relatives. In 2009, states spent about 30 percent of their TANF funds on cash assistance for needy families, and the remaining funds were spent on other purposes, such as child care, employment programs, and child welfare services. Although the specific eligibility requirements vary by state, to qualify for TANF cash assistance, families must pass both nonfinancial tests based on the demographic characteristics of the family, and financial tests based on the income and asset holdings available to the family. The TANF program gives states the flexibility to develop their own definition of an eligible family. While some states allow unrelated caregivers acting in place of a parent to apply for TANF benefits, other states limit benefits to relative caregivers and parents, according to information contained in the Urban Institute’s Welfare Rules Database. Each state sets its own TANF benefit levels, and the amount a family receives depends in part on who is in the assistance unit. An assistance unit is a group of people living together, often related by blood or some other legal relationship. States can exclude adults from the assistance unit but still allow the children to receive some assistance. In these child- only cases, the adults in the family are excluded from the assistance unit and are not considered when calculating the benefit amount. There are four main types of family circumstances that result in child-only cases:  SSI parents. A parent is receiving Supplemental Security Income (SSI) and is receiving TANF child-only payments on behalf of their children. Immigrant parents. A family is headed by an immigrant parent who is not eligible for TANF. These parents could include illegal immigrants, as well as certain recent legal immigrants who are ineligible for TANF. Ineligible immigrants can receive TANF for their children, provided the children are U.S. citizens.  Sanctioned or disqualified parents. The parent has not complied with TANF program requirements, such as work requirements, and has been denied benefits, but the state allows the children to continue receiving benefits. States must also disqualify adults from receiving TANF benefits for other reasons, such as if they are fleeing to avoid a felony conviction, violating a condition of probation or parole, or in certain circumstances, fraudulently receiving TANF assistance.  Nonparent caregivers. A child is living with a family headed by a nonparent caregiver, often a relative who receives cash assistance on a child’s behalf. According to HHS, nonparent caregivers may not be legally obligated to support these children, and states can provide child-only grants to any relative caring for a child, regardless of the relative’s income, provided that the relative meets the state’s TANF definition of a relative caretaker. If the nonparent caregiver chooses to have their income and resources considered in order to receive a higher level of assistance, the caregiver may be subject to work requirements and time limits. Families receiving cash assistance with adults in the assistance unit are subject to federal time limits and work requirements. PRWORA established a 60-month time limit for families with an adult receiving aid; however, states have the option to use federal funds to extend assistance beyond the federal time limit for hardship reasons the state has defined. PRWORA also requires adults to engage in work activities after 2 years of assistance, or sooner, if the state determines the recipient is ready. TANF child-only cases are typically not subject to these requirements. Child welfare programs provide services to protect children from abuse and neglect, to help parents care for their children successfully, and to provide support to children who cannot safely live with their parents. HHS’ Children’s Bureau oversees federal funding to states for child welfare programs, and states administer these programs. The principal federal funding sources for child welfare are through Titles IV-E and IV-B of the Social Security Act, although child welfare services are also supported by nondedicated federal funding sources, including TANF. In fiscal year 2011, about $6.5 billion was available under IV-E, and about $757 million was made available to states under IV-B, according to HHS budget documents. Child welfare agencies typically become involved in family situations after receiving reports of child abuse and neglect. Child welfare staff screen and investigate reports of child maltreatment and make recommendations about whether a child can remain safely at home. When abuse or neglect is identified, the agency may provide services designed to improve the situation and avoid removing children from their homes. If such services cannot ensure a child’s safety in their home, the agency may work with the family to determine another living arrangement for the child or petition a court to place the child in foster care. When children are taken into foster care, the state child welfare agency becomes responsible for determining where the child should live and providing the child with support. The agency may place the foster child in the home of a relative or with unrelated foster parents. States receiving Title IV-E foster care funding must make foster care payments on behalf of eligible children whose foster care placements have been licensed or approved. Under the act, states are responsible for establishing standards for foster family homes and child care institutions that protect the safety of children. Foster parent licensing requirements vary by state and may include training, background checks, and home inspections, according to a HHS report. States must provide foster care payments on behalf of each child who meets certain requirements to cover the cost of providing food, clothing, shelter, daily supervision, and other expenses, but are given flexibility in determining the payment amount. The agency must also assess the needs of the children and arrange for needed services. States must ensure that caseworkers develop a case plan for each child receiving foster care payments to assure that services are provided, and caseworkers must visit with the children periodically. Foster care is intended to be a temporary living arrangement until children can be returned safely to their parents or placed in some other permanent living arrangement, such as guardianship or adoption by a nonparent caregiver. HHS’ Administration on Aging oversees a separate program that provides support to nonparent caregivers. The National Family Caregiver Support Program, established in 2000, provides grants to states to fund a range of supports that assist caregivers. In fiscal year 2010, the National Family Caregiver Support Program was allocated about $153 million. State agencies can use up to 10 percent of their funding to provide support services to grandparent caregivers or caregivers age 55 and older who are raising children of relatives. The Administration on Aging funds these activities primarily through grants to each state’s agency on aging. States must fund five types of services under this program: information to caregivers about available services; assistance to caregivers in gaining access to the services; individual counseling, organization of support groups, and caregiver training in the areas of health, nutrition, and financial literacy; respite care; and supplemental services on a limited basis. The TANF child-only caseload increased slightly between fiscal years 2000 and 2008, but comprised a greater share of the overall TANF caseload because TANF cases with adults in the assistance unit decreased substantially. During this time period, the number of TANF child-only cases increased from about 772,000 cases to approximately 815,000 cases, but the number of families with adults receiving assistance decreased by about 700,000 cases from about 1.5 million to about 800,000 cases. As a result, the share of child-only cases in the overall TANF caseload increased from about 35 percent to about half (see fig. 1). We previously reported that changes states made to their welfare programs as they implemented TANF, including work requirements, time limits, sanctions, and diversion policies, contributed to a significant decline in program participation. TANF cases also declined in part because during the 1990s when the economy was stronger, incomes increased, and fewer families were eligible for TANF. Our past work and survey results indicated that one of the reasons child- only cases may not have declined as much as cases with adults in the assistance unit is because these cases are not subject to time limits in most states and recipients may receive assistance for a longer time period. Between fiscal years 2000 and 2008, increases in two of the categories were statistically significant: children living with parents who were ineligible because they receive SSI benefits and children living with parents who were ineligible because of their immigration status. Cases in which the parents were ineligible due to immigration status almost doubled and increased from 11 percent of the TANF child-only caseload in fiscal year 2000 to 19 percent in fiscal year 2008 (see fig. 2). This increase of 8 percentage points is statistically significant and represents an increase from about 83,000 cases in fiscal year 2000 to over 155,000 cases in fiscal year 2008, with the greatest increase occurring in California. Specifically, TANF child-only cases headed by ineligible immigrants in California more than doubled, from about 46,000 to almost 93,000.