The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions

Contents

• Introduction
• Funding and Expenditures
• How Are TANF Programs Funded?
• How Much Has the TANF Basic Block Grant Declined in Value Because of Inflation?
• How Have States Used TANF Funds?
• How Much of the TANF Grant Has Gone Unspent?
• The Caseload
• How Many Families Receive TANF- or MOE-Funded Benefits and Services?
• How Many Families and People Currently Receive TANF- or MOE-Funded "Assistance"?
• How Does the Current Assistance Caseload Level Compare with Historical Levels?
• What Are the Characteristics of Families Receiving TANF Assistance?
• TANF Cash Benefits: How Much Does a Family Receive in TANF Cash Per Month?
• TANF Work Participation Standards
• What Is the TANF Work Participation Standard States Must Meet?
• Have There Been Changes in the Work Participation Rules Enacted Since the 1996 Welfare Reform Law?
• What Work Participation Rates Have the States Achieved?
• How Many Jurisdictions Have Failed the All-Families Standard?
• Have States Met the Two-Parent Work Participation Standard?

Summary

The Temporary Assistance for Needy Families (TANF) block grant funds a wide range of benefits and services for low-income families with children. TANF was created in the 1996 welfare reform law (P.L. 104-193). This report responds to some frequently asked questions about TANF; it does not describe TANF rules (see, instead, CRS Report RL32748, The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements, by [author name scrubbed]).

TANF Funding and Expenditures. TANF provides fixed funding to states, the bulk of which is provided in a $16.5 billion-per-year basic federal block grant. States are also required in total to contribute, from their own funds, at least $10.4 billion under a maintenance-of-effort (MOE) requirement.

Though TANF is best known for funding cash assistance payments for needy families with children, the block grant and MOE funds are used for a wide variety of benefits and activities. In FY2015, expenditures on basic assistance (cash assistance) totaled $7.8 billion—25% of total federal TANF and MOE dollars. TANF also contributes funds for child care and services for children who have been, or are at risk of being, abused and neglected. Some states also count expenditures in pre-kindergarten programs toward the MOE requirement.

Cash Assistance Caseload. A total of 1.5 million families, composed of 3.7 million recipients, received TANF- or MOE-funded cash in June 2016. The bulk of the "recipients" were children—2.7 million in that month. The cash assistance caseload is heterogeneous. The type of family historically thought of as the "typical" cash assistance family—one with an unemployed adult recipient—accounted for 35% of all families on the rolls in FY2015. Additionally, 29% of cash assistance families had an employed adult, while 36% of all TANF families were "child-only" and had no adult recipient. Child-only families include those with disabled adults receiving Supplemental Security Income (SSI), adults who are nonparents (e.g., grandparents, aunts, uncles) caring for children, and families consisting of citizen children and ineligible noncitizen parents.

Cash Assistance Benefits. TANF cash benefits are set by states. In July 2015, the maximum monthly benefit for a family of three ranged from $923 in Alaska to $170 in Mississippi. Benefits in all states represent a fraction of poverty-level income. In the median jurisdiction (Kansas), the maximum monthly benefit of $429 for a family of three represents 26% of poverty-level income.

Cash Assistance Work Requirements. TANF requires states to engage 50% of all families and 90% of two-parent families in work activities. However, these standards are reduced by the amount of a state's caseload reduction from FY2005. Further, states may get an extra credit against these standards by spending more than required under the TANF MOE. Therefore, the effective standards states face are often less than the 50% or 90% targets, and vary by state. In FY2014 states achieved, on average, an all-family participation rate of 36.6% and a two-parent rate of 30.8%. That year, 9 jurisdictions failed the all-family standard, and 18 jurisdictions failed the two-parent standard. States that fail to meet work standards are at risk of being penalized by a reduction in their block grant.

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The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions

Introduction

This report provides responses to frequently asked questions about the Temporary Assistance for Needy Families (TANF) block grant. It is intended to serve as a quick reference to provide easy access to information and data. This report does not provide information on TANF program rules. For a discussion of TANF rules, see CRS Report RL32748, The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements, by [author name scrubbed].

Funding and Expenditures

How Are TANF Programs Funded?

TANF programs are funded through a combination of federal and state funds. In FY2017, TANF has two federal grants to states. The bulk of the TANF funding is in a basic block grant to the states, totaling $16.5 billion for the 50 states and the District of Columbia. There is also a contingency fund available that provides extra federal funds to states that meet certain conditions.

Additionally, states are required to expend a minimum amount of their own funds for TANF and TANF-related activities under what is known as the maintenance of effort (MOE) requirement. States are required to spend at least 75% of what they spent in FY1994 on TANF's predecessor programs. The minimum MOE amount, in total, is $10.4 billion per year for the 50 states and the District of Columbia.

How Much Has the TANF Basic Block Grant Declined in Value Because of Inflation?

TANF was created in the 1996 welfare reform law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193).The TANF basic block grant amount—both nationally and for each state—was established in the 1996 welfare reform law. It has not been adjusted for changes since then, such as inflation, the size of the TANF assistance caseload, or changes in the poverty population.

From FY1997 (the first full year of TANF funding) through FY2016 (ended September 30, 2016), the real (inflation-adjusted) value of the TANF block grant declined by 33.1%. Table 1 shows the impact of inflation on the value of the TANF block grant for each year, FY1997 through FY2016.

How Have States Used TANF Funds?

Figure 1 shows the uses of federal TANF grants to states and state MOE funds in FY2015. In FY2015, a total of $31.7 billion of both federal TANF and state MOE expenditures were either expended or transferred to other block grant programs. Basic assistance, ongoing benefits to families to meet basic needs, represented 25% ($7.8 billion) of total FY2015 TANF and MOE dollars.

TANF is a major contributor of child care funding. In FY2015, 17% of all TANF funds used were either expended on child care or transferred to the child care block grant (the Child Care and Development Fund, or CCDF). TANF is also a major contributor to the child welfare system, which provides foster care, adoption assistance, and services to families with children who either have experienced or are at risk of experiencing child abuse or neglect. It provides short-term and emergency benefits for families with immediate and crisis needs. Some states also count as MOE dollars their expenditures on pre-kindergarten programs.

Figure 1. Uses of TANF and MOE Funds, FY2015 (Dollars in billions)

Source: Congressional Research Service (CRS) based on data from the U.S. Department of Health and Human Services (HHS).

See Table A-1 for dollar amounts of total federal TANF and state MOE funds associated with each of these categories. For state-specific information on the use of TANF funds, see Table B-1 and Table B-2.

How Much of the TANF Grant Has Gone Unspent?

TANF law permits states to "reserve" unused funds without time limit. This permits flexibility in timing of the use of TANF funds, including the ability to "save" funds for unexpected occurrences that might increase costs (such as recessions or natural disasters).

At the end of FY2015 (September 30, 2015, the latest data currently available), a total of $3.7 billion of federal TANF funding remained neither transferred nor spent. However, some of these unspent funds represent monies that states had already committed to spend later. At the end of FY2015, states had made such commitments to spend—that is, had obligated—a total of $1.4 billion. Generally, obligations are binding commitments to spend, and they come in the form of contracts and grants to provide benefits and services. However, the definition of "obligation" varies from program to program, and because TANF essentially consists of 54 different programs (one for each state, the District of Columbia, and the territories), what constitutes an obligation may vary.

At the end of FY2015, states had $2.3 billion of "unobligated balances." These funds are available to states to make new spending commitments. Table B-3 shows unspent TANF funds by state.

The Caseload

How Many Families Receive TANF- or MOE-Funded Benefits and Services?

This number is not known. Federal TANF reporting requirements focus on families receiving only ongoing basic assistance, with no complete reporting on families receiving other TANF benefits and services. Assistance includes monthly cash assistance benefits provided to families to meet ongoing, basic needs. It also includes other ongoing benefits to meet basic needs, such as food assistance added to monthly Supplemental Nutrition Assistance Program (SNAP) allotments in California for working parents or food assistance for immigrants barred from regular SNAP benefits in certain states.

As discussed in a previous section of this report, TANF basic assistance accounts for about 25% of all TANF expenditures. Therefore, the federal reporting requirements that pertain to families receiving "assistance" are likely to undercount the number of families receiving any TANF-funded benefit or service.

How Many Families and People Currently Receive TANF- or MOE-Funded "Assistance"?

Table 2 provides assistance caseload information. A total of 1.5 million families, composed of 3.7 million recipients, received TANF- or MOE-funded assistance in June 2016. The bulk of the "recipients" were children—2.7 million in that month. For state-by-state assistance caseloads, see Table B-4.

How Does the Current Assistance Caseload Level Compare with Historical Levels?

Figure 2 provides a long-term historical perspective on the number of families receiving assistance, from July 1959 to June 2016. Before 1997, these are families that received cash assistance from the Aid to Families with Dependent Children (AFDC) program. From 1997 onward, these are families that received assistance from TANF.

The shaded areas of the figure represent months when the national economy was in recession. Though the health of the national economy affected the trend in the cash assistance caseload, the long-term trend in receipt of cash assistance does not follow a classic counter-cyclical pattern. Such a pattern would have the caseload rise during economic slumps, and then fall again during periods of economic growth. Factors other than the health of the economy (demographic trends, policy changes) also influenced the caseload trend.

The figure shows two periods of sustained caseload increases: the period from the mid-1960s to the mid-1970s and a second period from 1988 to 1994. The number of families receiving assistance peaked in March 1994 at 5.1 million families. The assistance caseload fell rapidly in the late 1990s (after the 1996 welfare reform law) before leveling off in 2001. In 2004, the caseload began another decline, albeit at a slower pace than in the late 1990s.

During the recent 2007-2009 recession and its aftermath, the caseload began to rise from 1.7 million families in August 2008, peaking in December 2010 at close to 2.0 million families. In June 2016, the assistance caseload had declined to 1.5 million families.

Figure 2. Number of Families Receiving Cash Assistance, July 1959-June 2016

Source: Congressional Research Service (CRS) with data from the U.S. Department of Health and Human Services (HHS). Notes: Shaded areas denote months when the national economy was in recession. Information represents families receiving cash assistance from Aid to Dependent Children (ADC), Aid to Families with Dependent Children (AFDC), and TANF. For October 1999 through June 2016, includes families receiving assistance from Separate State Programs (SSPs) with expenditures countable toward the TANF maintenance of effort requirement. See Table A-2 for average annual data on families, recipients, adult recipients, and child recipients of ADC, AFDC, and TANF cash assistance for 1961 to 2015.

Table B-5 shows recent trends in the number of cash assistance families by state.

What Are the Characteristics of Families Receiving TANF Assistance?

Historically, the "typical" family receiving assistance has been headed by a single parent (usually the mother) with one or two children. The single parent has also typically been unemployed. However, the assistance caseload decline has occurred together with a major shift in the composition of the rolls. Figure 3 shows the change in the size and composition of the assistance caseload under both AFDC (1988 and 1994) and under TANF. In FY1988, 84% of AFDC families were headed by an unemployed adult recipient. In FY2015, families with an unemployed adult recipient represented 35% of all cash assistance families. This decline occurred, in large part, as the number of families headed by unemployed adult recipients declined more rapidly than other components of the cash assistance caseload. In FY1994, a monthly average of 3.8 million families per month who received AFDC cash assistance had adult recipients who were not working. In FY2015, a monthly average of 578,000 families per month had adult recipients or work-eligible individuals, with no adult recipient or work-eligible individual working.

With the decline in families headed by unemployed adults, the share of the caseload that represent families with employed adults and "child only" families has increased. In FY2015, families with employed adult recipients represented 29% of all assistance families. "Child-only" families are those where no adult recipient receives benefits in their own right; the family receives benefits on behalf of its children. The share of the caseload that was child-only in FY2015 was 36%. In FY2015, families with a non-recipient, non-parent relative (grandparents, aunts, uncles) represented 13% of all assistance families. Families with ineligible, noncitizen adults or adults who have not reported their citizenship status made up 10% of the assistance caseload in that year. Families where the parent received Supplemental Security Income (SSI) and the children received TANF made up 9% of all assistance families in FY2015.

Figure 3. Characteristics of Assistance Families, Selected Years FY1988 to FY2015

Source: Congressional Research Service (CRS) tabulations of the TANF national data files. Notes: TANF cash assistance caseload includes families receiving assistance in state-funded programs counted toward the TANF maintenance of effort (MOE) requirement.

TANF Cash Benefits: How Much Does a Family Receive in TANF Cash Per Month?

There are no federal rules that help determine the amount of TANF cash benefits paid to a family. (There are also no federal rules that require states to use TANF to pay cash benefits, though all states do so.) Benefit amounts are determined solely by the states.

Most states base TANF cash benefit amounts on family size, paying larger cash benefits to larger families on the presumption that they have greater financial needs. The maximum monthly cash benefit is usually paid to a family that receives no other income (e.g., no earned or unearned income) and complies with program rules. Families with income other than TANF often are paid a reduced benefit. Moreover, some families are financially sanctioned for failure to meet a program requirement (e.g., a work requirement), and are also paid a lower benefit.

Figure 4 shows the maximum monthly TANF cash benefit by state for a single mother caring for two children (family of three) in July 2015.¹ The benefit amounts shown are those for a single-parent family with two children.² For a family of three, the maximum TANF benefit paid in July 2015 varied from $170 per month in Mississippi to $923 per month in Alaska. The map shows a regional pattern to the maximum monthly benefit paid, with lower benefit amounts in the South than in other regions. In all states, the maximum TANF cash assistance amount for this sized family was less than 50% of poverty-level income.³

Figure 4. TANF Cash Assistance Maximum Monthly Benefit Amounts for a Single Parent Family with Two Children, July 2015

Source: Congressional Research Service (CRS), based on data from the Urban Institute's Welfare Rules Database.

TANF Work Participation Standards

What Is the TANF Work Participation Standard States Must Meet?

The TANF statute requires states to have 50% of their caseload meet standards of participation in work or activities—that is, a family member must be in specified activities for a minimum number of hours.⁴ There is a separate participation standard that applies to the two-parent portion of a state's caseload, requiring 90% of the state's two-parent caseload to meet participation standards. States that fail the TANF work participation standards are at risk of being penalized by a reduction in their block grant amounts.

However, the statutory work participation standards are reduced by a "caseload reduction credit." The caseload reduction credit reduces the participation standard one percentage point for each percentage point decline in a state's caseload. Additionally, under a regulatory provision, a state may get "extra" credit for caseload reduction if it spends more than required under the TANF MOE. Therefore, the effective standards states face are often less than the 50% and 90% targets, and vary by state and by year.

States that fail to meet the TANF work participation standard are at risk of being penalized through a reduction in their block grant. However, penalties can be forgiven if a state claims, and the Secretary of HHS finds, that it had "reasonable cause" for failing the standard. Penalties can also be forgiven for states that enter into "corrective compliance plans," and subsequently meet the work standard.

Have There Been Changes in the Work Participation Rules Enacted Since the 1996 Welfare Reform Law?

The 50% and 90% target standards that states face, as well as the caseload reduction credit, date back to the 1996 welfare reform law. However, the Deficit Reduction Act of 2005 (P.L. 109-171) made several changes to the work participation rules effective in FY2007:

• The caseload reduction credit was changed to measure caseload reduction from FY2005, rather than the original law's FY1995.
• The work participation standards were broadened to include families receiving cash aid in "separate state programs." Separate state programs are programs run with state funds, distinct from a state's "TANF program," but with expenditures countable toward the TANF MOE.
• HHS was instructed to provide definition to the allowable TANF work activities listed in law. HHS was also required to define what is meant by a "work-eligible" individual, expanding the number of families that are included in the work participation calculation.
• States were required to develop plans and procedures to verify work activities.

The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5), a law enacted in response to the sharp economic downturn of 2007-2009, held states "harmless" for caseload increases affecting the work participation standards for FY2009 through FY2011. It did so by allowing states to "freeze" caseload reduction credits at pre-recession levels through the FY2011 standards.

What Work Participation Rates Have the States Achieved?

HHS computes two work participation rates for each state that are then compared with the effective (after-credit) standard to determine if it has met the TANF work standard. An "all-families" work participation rate is computed and compared with the all-families effective standard (50% minus the state's caseload reduction credit). HHS also computes a two-parent work participation rate that is compared with the two-parent effective standard (90% minus the state's caseload reduction credit).

Figure 5 shows the national average all-families work participation rate for FY2002 through FY2014. For the period FY2002 through FY2011, states achieved an average all-families work participation rate hovering around 30%. In FY2012, the average all-families work participation rate ticked up to 34.4%. In that year, states faced higher work participation standards because the "freeze" to the caseload reduction credit enacted in ARRA expired. In FY2014, the all-family work participation rate increased to 36.6%. The increase in the work participation rate over the FY2012 to FY2014 period is because of an increase in the percent of families working while also receiving some form of TANF assistance, rather than an increase in non-employed individuals participating in job readiness activities.⁵

Figure 5. National Average TANF Work Participation Rate for All Families, FY2002-FY2014

Source: Congressional Research Service (CRS), based on data from the U.S. Department of Health and Human Services (HHS).

How Many Jurisdictions Have Failed the All-Families Standard?

Table 3 shows which states failed the TANF all-families work participation standards from FY2002 through FY2014. Before FY2007, only a few jurisdictions failed to meet TANF all-families work participation standards. However, in FY2007, 15 jurisdictions failed to meet the all-families standard. FY2007 was the first year in which policies under the DRA were effective. This number declined to 9 in FY2008 and 8 in FY2009.

In FY2012, despite the uptick in the national average work participation rate, 16 states failed to meet the all-family standard, the largest number of states that did not meet their participation standards in any one year since the enactment of TANF. FY2012 was the year that ARRA's "freeze" of the caseload reduction credit expired, and states were generally required to meet higher standards than in previous years.

In FY2014, the number of jurisdictions that failed the all-family work participation standard declined to 9. The 9 jurisdictions are California, Colorado, Nevada, Pennsylvania, Vermont, Washington, Wisconsin, Puerto Rico, and Guam. California and Guam have failed their all-family work standards for all years, FY2007 through FY2014.

For state-by-state information on FY2014 caseload reduction credits, effective (after credit) standards, and work participation rates related to the "all families" standard, see U.S. Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, Work Participation Rates for FY2014, TANF-ACF-IM-2016-04, July 2016, http://www.acf.hhs.gov/ofa/resource/tanf-acf-im-2016-04.

Have States Met the Two-Parent Work Participation Standard?

In addition to meeting a work standard for all families, TANF also imposes a second, 90% standard for the two-parent portion of its cash assistance caseload. This standard too can be reduced for caseload reduction.

Table 4 shows whether each state met its two-parent work participation standard for FY2002 through FY2014. However, the display on the table is more complex than that for reporting whether a state failed its "all family" rate. A substantial number of states have reported no two-parent families subject to the work participation standard.⁶ These states are denoted on the table with an "NA," indicating that the two-parent standard was not applicable to the state in that year. For states with two-parent families in its caseload, the table reports "Yes" for states that met the two-parent standard, and "No" for states that failed the two-parent standard. Of the 28 jurisdictions that had two-parent families in their FY2014 TANF work participation calculation, 10 met the standard and 18 did not.

Appendix A. Supplementary Tables

Appendix B. State Tables