The 109th Congress is considering legislation to reauthorize and amend programs that werecreated or revised in the 1996 welfare reform law. (1) Early in the 109th Congress, the Senate Finance and Health,Education, Labor, and Pensions Committees approved and reported their welfare reauthorizationlegislation (respectively, S. 667 and S. 525 ). Neither bill has yet seenaction in the full Senate. In the House, a welfare reauthorization proposal ( H.R. 240 ), introduced by the HouseRepublican Leadership, has also failed to reach the floor. On November 18, 2005, the House passed its budget reconciliation bill ( S. 1932 ), which includes welfare reauthorization legislation similar to that which passed the House in2002 and 2003. (The House-passed version of S. 1932 is H.R. 4241 asamended and approved by the House.) Welfare reauthorization legislation was not included in theSenate-passed reconciliation bill. This report compares the welfare reauthorization policies proposed in the Senate committeebills with those included in the House-passed budget reconciliation bill. It is not a comparison ofwelfare provisions in the House and Senate reconciliation bills. (Such a comparison, which displaysHouse-passed welfare provisions with corresponding "No Provision" entries for the Senate-passedversion of reconciliation, is available from the Congressional Research Service upon request.) The original funding authority for the block grant of Temporary Assistance for NeedyFamilies (TANF), the Child Care and Development Block Grant (CCDBG), abstinence education,and transitional medical assistance (TMA) under Medicaid expired on September 30, 2002. Fundingand program authority for TANF, mandatory child care, abstinence education, and TMA have beencontinued by special temporary extension legislation since then, with the latest extension set toexpire on December 31, 2005. CCDBG discretionary funding has been provided, absentauthorization, in annual appropriation bills. Also included in "welfare reauthorization" legislationhave been initiatives to create a responsible fatherhood grant program, revise the Child SupportEnforcement program, amend child welfare programs, and make some changes to SupplementalSecurity Income, as well as create new "superwaiver" authority. Most of the welfare reauthorization provisions approved early in 2005 have counterparts inthe House budget reconciliation bill. There are notable exceptions. S. 667 (the FinanceCommittee bill) would extend the abstinence education state grant program and revise and extendTMA through FY2010, whereas the House budget reconciliation bill includes none of thoseprovisions. Further, the House reconciliation bill, unlike the Senate committee bills or the earlierHouse Republican Leadership welfare reauthorization bill ( H.R. 240 ), includes someadditional provisions that would reduce spending, including proposals to reduce federal matchingfunds for state Child Support Enforcement programs and to revise foster care and adoption assistanceeligibility rules to negate a court ruling that expanded eligibility for these programs in certain states. Table 1 summarizes what provisions are included in the Senate committee bills and theHouse reconciliation bill. Note that when provisions are included in both, they still may differsignificantly in their details. These differences are the subject of the remainder of this report. Table 1. Welfare Reauthorization Provisions Included in SenateCommittee Bills and House Budget Reconciliation Bill Source: Congressional Research Service (CRS). The Senate-committee and House welfare reauthorization proposals have many similarities,with both extending basic TANF funding at current levels through FY2010 and incorporatingPresident Bush's proposal to provide categorical "marriage promotion" grants. (2) Both bills also raise TANFwork participation standards, though the two differ in terms of how much more work would berequired and what activities count toward the participation standards. TANF Funding Provisions. Both theSenate-committee and House bills have very similar funding provisions, although they do differ insome details. The major differences between the two proposals are in the contingency fund andbonuses. 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 has been adjusted for inflation. Both the Senate-committee and House proposals would continue both the basic block grantand the MOE at their current funding levels (without inflation or caseload adjustment) throughFY2010. Supplemental Grants. During the consideration oflegislation 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 the Senate and Houseproposals would continue supplemental grants for the same 17 states at the current funding levelthrough 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 proposed revisions to the TANF contingency fund. The House budget reconciliation bill would continue the fund under existing rules, with somerelatively minor modifications: allowing some additional state spending to count toward meetingthe FY1994 funding level threshold and modifications to increase grants for states that qualify forfunds for only part of the year. The Senate Finance Committee proposal fully revamps the contingency fund. It wouldeliminate the requirement that states increase expenditures from their own funds above the regularTANF MOE level and would eliminate the matching requirements. Instead, it requires that unspentTANF balances be below a certain threshold to qualify for contingency funds. The Senate committeeproposal would base contingency grants on a portion of the estimated cost of increased cashassistance caseloads. It also would revise the criteria of economic need for a state. Bonus Funds. Current TANF law provides "bonusfunds" to states that rank high on a set of outcomes that seek to measure whether they are achievingthe block grant's goals. It has a "High Performance Bonus" of $200 million per year for states thatrank high in achieving employment and certain other outcomes, as well as a second $100 million peryear bonus paid to the five states with the greatest reduction in out-of-wedlock birth ratios that alsohave a decline in abortions. The Senate Finance Committee bill scales back bonuses, by eliminating the $100 million peryear bonus for reductions in out-of-wedlock births, and reducing and refocusing the "HighPerformance Bonus" on employment outcomes. Funding reductions are used to "pay for" grants topromote healthy marriages and responsible fatherhood initiatives (see a discussion of theseinitiatives, below). The House budget reconciliation bill eliminates both TANF bonuses, in part topay for grants to promote healthy marriage and in part achieving budget reductions. 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%. The House budgetreconciliation bill would raise the overall transfer limit to 50%; the Senate Finance Committeeproposal would retain the current 30% transfer limit. Both bills include provisions to ease some rules regarding use of TANF funds. Both Houseand Senate committee bills 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.