Order Code 98-369 EPW
Updated November 8, 2002
CRS Report for Congress
Received through the CRS Web
Welfare Reform: TANF Trends and Data
Vee Burke
Domestic Social Policy Division
Summary
The size and character of U.S. family cash welfare rolls and the composition of
welfare spending have changed markedly since August, 1996, when Congress created
the time-limited and work-conditioned block grant program of Temporary Assistance
for Needy Families (TANF). Enrollment has plunged more than 50%. The share of
recipients who combine welfare and work has risen sharply (from 11% to 26%). The
share of “child-only”cases, which are free of work and time limit rules, has climbed
above one-third nationally and in nine states exceeds one-half of all TANF cases. The
smaller caseload holds a rising proportion of black and Hispanic families. To promote
work, programs use tough work sanctions, liberal work rewards, “Work First” policies,
and diversion payments. States with more than 40% of the nation’s caseload say they
use their own funds to continue aid to families who reach the 5-year limit on federal
benefits (if the families exceed the number that can receive a federally paid hardship
extension). Many states offer new services aimed at TANF goals for a broad non-
welfare population. Before TANF, 75% of family welfare outlays were for cash
benefits, but in FY2000 cash aid (including some new kinds of payments) accounted for
only 64% of the total. This report will be updated for new data.
TANF Policy Choices Made by States
P.L. 104-193, which replaced Aid to Families with Dependent Children (AFDC)
with TANF, sets some ineligibility rules and many work rules. States may not use TANF
to assist unwed mothers under 18 unless they live in an adult-supervised setting and, if
a high school dropout, attend school. They cannot give federally funded ongoing basic
aid to a family with an adult member who has received aid for 60 months, and they must
require work, under state definition, as a condition of continued aid after 24 months of
benefits. Otherwise, states are generally free to design their own programs. To avoid loss
of TANF funds, however, the states must engage 50% of most adult recipients in specified
“work activities” for a general average of 30 hours weekly (20 hours for single parents of
preschool children.
Expansionary Policies. More than 30 states have expanded eligibility by
adopting one or more of these policies: ending special eligibility restrictions for two-
parent families, continuing benefits for those who go to work, and increasing asset limits.
Congressional Research Service ˜ The Library of Congress

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Some states made these changes before TANF, under AFDC waivers. About half the
states exempt from work single parents with an infant, and in FY2000 this policy
exempted 4% of the caseload (a monthly average of 94,240 mothers). All but about 10
states have adopted the Family Violence Option (FVO), which permits exemption from
TANF rules of victims of domestic violence. To reward work, states generally disregard
a sizable share of earnings for at least a year. In 11 states TANF benefits do not end until
gross earnings exceed or come very close to the 2001 poverty guideline ($1,220 for a
family of three). Ten states ignore from 20% to 67% of all earnings in all months, and
two, 100%, subject to a gross income cap. See TANF Benefits and Earnings Limits in the
CRS Welfare Reform Electronic Briefing Book. New Jersey has launched a supplemental
work support program ($200 monthly payment for up to 2 years for families with earnings
below 250% of the poverty level who withdraw from TANF although eligible for a partial
benefit), and Montana now offers a one-time Work Support Payment ($494) for those
who leave TANF with jobs. Further, in a pilot program, Montana pays mothers who have
a work history to stay home and provide full-time care for their infant child or toddler for
up to 24 months, provided their income is within limits of the state’s Child Care and
Development Fund plan. This “at-home infant care” program is paid with state dollars
counted toward TANF’s maintenance-of-effort (MOE) spending requirement. The Senate
Finance Committee version of H.R. 4737 proposes $30 million in annual grants for
demonstration at home-infant care programs.
Restrictive Policies. State TANF policy choices that tend to restrict the caseload
include: time limits shorter than outer federal limits, tough sanctions, welfare avoidance
(diversion) payments, and family caps (reduced or zero benefits for a new baby in a TANF
family). Some states adopted these policies under AFDC waivers. Twenty-two states
have benefit cutoff limits shorter than 60 months, and almost a dozen require work
immediately, rather than after 24 months (some defining this to include job search, some
restricting it to a job or community service). Some 19 states penalize recipients for their
first failure to comply with required work activities by suspending the family’s whole
benefit, sometimes until compliance, sometimes for specified periods. Under some
conditions, eight states end benefits permanently (see CRS Report RS21070). Pre-TANF
law required states to continue aid for the child(ren). Twenty-two jurisdictions impose
family caps. Georgia reports that in FY1999, 3,596 children were subject to these caps,
and in September, 2002, North Dakota reported 287 “benefit cap” children. Two states
pay flat benefits for all family sizes. More than 30 states make lump sum payments that
divert some applicants from enrollment. September 2002 diversion data: Oklahoma, 212
families, equal to 7.5% of cases opened; Virginia, 144 cases, 5.7% of approved
applications; and Mexico, 23 cases, 1.1% of approved applications. In April Washington
diverted 321 families from TANF enrollment, some with 2 adults. In FY2001, Oklahoma
diverted 2,830 families and, in FY2000, Iowa made diversion payments to 304 families.
(For details of state TANF programs, see CRS Report RL30695).
Benefit Levels. According to the fourth annual TANF report, cash benefits
averaged $349 per family in FY2000 (and 23% of families had non-TANF income
averaging $580). Of TANF families, 80% received food stamps averaging $224 monthly,
and 18% received subsidized housing. Between July 1996 and January 2002, most
jurisdictions did not change their maximum benefit levels; five reduced benefits (the
District of Columbia, Hawaii, Idaho, Oklahoma, and Wyoming), and 18 raised them, but
increases exceeded the 11.6% rise in consumer prices in only 8 states. (See Cash
Welfare Benefit Amounts in the Welfare Reform electronic briefing book.) Two states

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have adopted bonuses (Oregon for cooperation with its work program and West Virginia
for marriage). Wisconsin and Idaho no longer adjust benefits for family size. The
Wisconsin Works (W-2) program pays flat monthly amounts of $673 for community
service jobs and $628 for W-2 transitional activities (e.g., sheltered workshops, vocational
rehabilitation, parenting, life skills, job skills training).
TANF Spending. In FY1996, last full AFDC year, spending on AFDC, AFDC-
related child care, Emergency Assistance (EA), and JOBS totaled $30.4 billion ($16.3
billion in federal funds and $14.1 billion in state funds). In FY1998, first full year of
TANF, comparable spending was $21.5 billion (down 29% from 1996), and the average
monthly caseload was down 29% from its 1996 level. Thereafter the cash caseload
continued to shrink (17% in FY1999, 15% in FY2000, and 6% in FY2001), but spending
rose, reaching $21.7 billion in FY1999 and $22.8 billion in FY2000. Composition of
FY2000 spending: cash aid (including diversion payments, refundable tax credits and IDA
contributions) 64%, TANF services, 16%, TANF child care, 10%, TANF work activities,
10%. Of FY2000 outlays, $12.5 billion (55%) was from federal funds The annual federal
TANF grant is $16.5 billion, and states must spend at least $10.4 billion of their own
funds each year (MOE rule) on behalf of TANF-eligible families. On June 30, 2002,
states had an unobligated and unspent TANF balance of $4.5 billion.
Caseload Decline. Nationally (as of June 2002) caseloads continued a decline
that began in 1995 (see Chart 1). New York numbers were down 66,000 from a year
earlier (and U.S. totals, down 62,000). However, in 28 states enrollment topped June
2001 levels. Persons now on the rolls include rising proportions of long-term recipients
and minorities, and TANF “families” include a larger proportion with no adult recipient
(child-only cases). The 2001 poverty rate among children in female-headed families (no
spouse present) was 39.3%, 10 percentage points below that of 1996.
Figure 1. AFDC/TANF Families, June Cases, 1989-2002
6000
5000
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a 3000
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2000
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1989
1990
1991
1992
1993
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1995
1996
1997
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2002
Many factors have helped to shrink the TANF caseload since 1996, including the
“Work First” culture, the improved economy until recently, tougher sanctions, the benefit
time limit and widespread adoption of diversion practices. Under TANF, not only have
recipients departed from welfare at a faster rate, but (at least until recently) fewer persons
have joined the rolls to replace them. For instance, an Illinois study found that annual
TANF entries in the state declined 45% from FY1997 to FY1999, while exits increased
by 8%. However, Florida case entries in September, 2002 (9,894) outnumbered closures

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(9,144), and California case closures in July 2002 (37,263) barely exceeded entries
(37,129).
Rise in Mothers’ Employment. Among families with children that are
maintained by the mother, the share with an employed mother soared from 61.6% in 1994
to 74.7% in 1999, according to the Bureau of Labor Statistics (BLS). During the first
quarter of 2000, the employment rate of mothers maintaining families with children (not
adjusted for seasonal variation) was 75.5%, but in the comparable quarter of 2001 the rate
slipped to 74.9%. In its 2001 annual report, the CEA said that the EITC has increased the
probability of employment for low-income persons, and it cited an estimate that the EITC
was responsible for 34% of the rise in annual employment among unmarried mothers
between 1992 and 1996. The poverty rate of children in female-headed families dropped
from 52.9% in 1994 to 46.1% in 1998, 41.9% in 1999, 39.8% in 2000, and 39.3% in
2001.
Time Limits. The General Accounting Office (GAO) estimates that states excluded
11% of adult recipients of TANF cash aid from the federal time limit, as of autumn 2001,
by three means: paying certain recipients with state-only funds (and thereby stopping the
federal time clock), continuing pre-TANF waivers that permit time limit exemptions, and
granting hardship exemptions (see GAO-02-501T). TANF’s 5-year anniversary marks
the earliest date that a family could accumulate 60 months of federally paid benefits, and
it varies by state, ranging from October 1, 2001 to July 1, 2002. States may grant
hardship extensions of federally paid benefits to 20% of the caseload. Further, eight states
containing more than 40% of the 1999 national caseload say they use state funds to
continue benefits for cases not within the hardship exemption (this spending can be
credited toward required MOE expenditures). Maine, Michigan, Maryland, New York,
and Vermont continue full benefits (generally in noncash form in New York), and
California and Rhode Island pay reduced benefits. In August 2002, New York’s TANF
caseload (142,262 families) was down 65,601 from August, 2001; and it is estimated that
many former TANF families who had reached the federal time limit were placed in the
state’s MOE-funded safety net program, which grew to 44,172 families in August.
Michigan reports that its August caseload included 6,157 cases that had exceeded the
federal time limit (but, presumably, were granted hardship extensions). Families in 20
states are subject to state-imposed limits shorter than 60 months. See CRS Report
RS21069. In these states, families often receive extensions of time. At the end of
September 2002, for example, 2,638 Connecticut families who had exhausted their
original 21 months of aid received 6-month benefit extensions because they had been
unable to obtain work that paid more than TANF (another 348 families lost eligibility
because of the time limit). In October, 2,593 Florida families who had reached the state’s
time limit (24 or 36 months) received extended benefits, some because of unsubsidized
employment (under which they earned a one-month TANF extension for each month of
work).

Characteristics of TANF Families
(For details and state data, see the fourth annual TANF report to Congress at
[http://www.acf.dhhs.gov/programs/opre/ar2001/indexar.htm].)
Marital Status, Race/Ethnicity. In FY2000, 59.3% of TANF adult recipients
had never married; 18.8% were married and living together; 12.8% had married, but were

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separated, 8.5% were divorced, and 0.8%, widowed. Compared with FY1996, the share
of TANF children who were Hispanic or black rose, and the share who were white
declined in FY2000: white, 26.8% (down from 31.6% in FY1996); black, 40.1%
(compared with 38.4%); Hispanic, 26.8% (22.4%). Asians represented 2.8% of TANF
children; American Natives, 1.6%; other, 0.6%; and unknown race, 1.3%.
Child-only Cases. In child-only cases, which are free of TANF work rules and
time limits, the parent or other relative caretaker is ineligible because of being non-needy,
an illegal immigrant, under sanction, or for some other reason (or, though eligible,
declines TANF). During FY2000, 34.5% of TANF families had no adult recipient. This
compares with 11.6% in FY1990, 21.5% in FY1996, and 29% in FY1999. In nine states,
more than one-half of TANF families in FY2000 had no adult recipient (Alabama,
Florida, Idaho, Mississippi, North Carolina, South Carolina, South Dakota, Wisconsin,
and Wyoming). The composition of child-only cases (by status of the caretaker) varies
among states. Examples: Florida (October) non-needy caretaker relative, 64%; SSI
recipient, 23%; non-citizen, 9%; sanctioned, 1.6%, and other, 2.9%; California (FY1999)
non-needy caretaker relative, 11%; SSI recipient, 16%; non-citizen, 44%; sanctioned,
12%; and other, 17%; and Nevada (September), non-needy caretaker, 65%; SSI
recipient,14%; non-citizen, 15%, kinship case, 3%, and family preservation plan case, 3%.
Recipients with Jobs. Under TANF there has been a sharp increase in welfare
plus work. In FY2000 and 2001, 26% of welfare adults were employed (in paid jobs),
more than double the FY1996 rate of 11% (but below the FY1999 rate of 28%). Seven
states had TANF adult employment rates of one-third or higher in FY2001: Hawaii,
Illinois, Indiana, Maine, Michigan, Minnesota, and New Mexico. Available state data
provide more recent employment data. In March 2002, Connecticut says that 16% of
TANF families had earnings averaging $7.39 hourly ($770 monthly). This included 31%
of families in time-limited cases. Percentages of total TANF families (including no-adult
families) with earnings in some other states: Michigan (September), 28% (45% of those
required to work); Florida (October) 5.6% (18% of work-required group); Pennsylvania
(June), 20% (36% of work-required group); Oregon (August), 0.9% of 1-parent families
and 9.1% of 2-parent families; Illinois (September), 17% (35% of work-required group);
Indiana (June) 3.2% (11.1% of the work-required group); and Virginia (September), 22%
(64% of work-required group). Some state reports provide work exemption data. During
September, Connecticut exempted 5,197 adults and minor household heads from work
requirements (more than half because of caring for a child under age one); in June,
Pennsylvania exempted 27% of adult recipients from work requirements, most because
of disability; in October, Florida exempted 8% of adult recipients from work, more than
half because of being pregnant or incapacitated, and in September, 2002, Massachusetts
(under a waiver lasting until September 30, 2005) exempted 89% of the caseload from
work requirements (and 70% from time limits).
Sanctioned Recipients. The fourth annual TANF report attributed 6.5% of
TANF case closings in FY2000 to sanctions (3.9% were sanctions related to work; 2.6%
were sanctions related to child support, teen parent requirements, or failure to meet an
individual responsibility plan). Sanctions accounted for more than one-fifth of closures
in four jurisdictions: Florida, 26.9%; Idaho, 21.2%; Mississippi, 42% and Oklahoma,
30.9%. However, 10 jurisdictions reported no FY2000 case closures attributed to
sanctions: Colorado, Maine, Minnesota, Pennsylvania, Puerto Rico, Rhode Island, Texas,
Vermont, Virgin Islands, and Washington). More recent available state data on sanctions:

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In FY2001, sanctions caused closure of 7,352 cases in Oklahoma (28% of all closures).
In August 2002, the proportion of Oklahoma case closures attributed to TANF work
refusal/failure was 35.9%. In October, Florida suspended parental benefits of 547
families (381 for work violations and 166 for other reasons); the children’s benefits
continued. During September sanctions caused 3% of closures in Connecticut.
TANF Services for An Expanded Population
States are free to use TANF dollars to offer benefits and services to families
ineligible for ongoing cash aid, provided the services promote a TANF goal. In addition
to traditional welfare goals of helping needy children in their own homes and promoting
self-sufficiency of needy parents, TANF seeks to reduce out-of-wedlock pregnancies and
promote formation and maintenance of two-parent families. In their 2000-2001 plans, 40
states describe special programs for at-risk families (some with income limits up to 250%
of poverty) and 31 indicate they will offer special services for non-custodial parents. New
York in September 2000 issued a list of 28 “State TANF 200% Programs” for persons and
families with incomes up to 200% of the poverty level. The list includes technology
training, home visiting, alternatives to incarceration, support services for caretaker
relatives, foster care worker recruitment/retention, summer youth employment. (The
TANF time limit applies only to basic ongoing aid and support services for the
unemployed, not to services generally. Thus, states can use federal funds to help working
poor families without exposing them to time limits.) The single largest TANF-funded
service is child care (federal/state outlays estimated at $4.3 billion in FY2000). Estimated
federal/state TANF spending in FY2000 on various support, rehabilitative, and preventive
services totaled $3.7 billion. Services provided by these funds included transportation
subsidies, parental skill building services, home energy aid, responsible parenthood
counseling, family planning, and numerous others.
Findings about Welfare “Leavers”
State studies explore the circumstances of families who have left welfare: reasons
for departure, employment and earnings, and returns to the rolls. More than 30 leaver
studies completed as of January 2000 show that most families who left TANF or AFDC
waiver programs between 1995 and 1998 did so because of employment. In the quarter
after exit, administrative data indicate that employment rates ranged from 50% to 64%,
but rose to 66%-86% when based upon employment at any time since exit. Studies using
survey data found generally higher employment rates and a broader range, from 35% to
83%, at the time of the survey. Among welfare leavers who worked, survey data indicate
that average hourly wages ranged from $5.50 to $8.16. Annualized (on the basis of
reported weekly or quarterly work hours) their earnings exceeded cash welfare guarantees
in all 22 states studied. For all these leavers, year-round work paid more than welfare.
However, in all but six of the states, income from wages alone would leave a family of
three below the poverty level. Within 1 year of exit or at the time of the leaver study,
from 13% to 36% of leavers returned to welfare. This count excludes “churners,” persons
who returned to welfare almost immediately, within 1 or 2 months of exit. (For a final
synthesis report of 15 HHS-funded studies about welfare leavers, see
[http://aspe.hhs.gov/search/hsp/leavers99/synthesis02/index.htm].)

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