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

Contents

• Introduction
• Funding and Expenditures
• When Does TANF Funding Expire?
• How Are TANF Programs Funded?
• How Much Has the Value of the TANF Basic Block Grant Changed Over Time?
• 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 for the 50 states, the District of Columbia, the territories, and American Indian tribes. The basic block grant totals $16.5 billion per year. States are also required in total to contribute, from their own funds, at least $10.3 billion annually 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 FY2016, expenditures on basic assistance totaled $7.4 billion—24% of total federal TANF and MOE dollars. Basic assistance is often—but not exclusively—paid as cash. In addition to funding basic assistance, 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 prekindergarten programs toward the MOE requirement.

The TANF Assistance Caseload. A total of 1.4 million families, composed of 3.4 million recipients, received TANF- or MOE-funded assistance in September 2017. The bulk of the "recipients" were children—2.5 million in that month. The assistance caseload is heterogeneous. The type of family historically thought of as the "typical" assistance family—one with an unemployed adult recipient—accounted for 32% of all families on the rolls in FY2016. Additionally, 31% of cash assistance families had an employed adult, while 38% 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 2016, the maximum monthly benefit for a family of three ranged from $923 in Alaska to $170 in Mississippi. In all states, the maximum TANF cash assistance amount for this sized family was less than 50% of poverty-level income.

Work Requirements. TANF's main federal work requirement is actually a performance measure that applies to the states, rather than individual recipients. States determine the work rules that apply to individual recipients. TANF law requires states to engage 50% of all families and 90% of two-parent families in work activities, though these standards can be reduced by "credits." Therefore, the effective standards states face are often less than the 50% or 90% targets, and vary by state. In FY2016, states achieved, on average, an all-family participation rate of 51.9% and a two-parent rate of 70.8%. In FY2016, four jurisdictions failed to meet the all-family participation standard: Colorado, Nevada, Wisconsin, and Guam. This is a reduction from FY2012, when 16 states failed that standard. In FY2016, 11 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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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

When Does TANF Funding Expire?

Under the terms of the FY2019 continuing resolution (P.L. 115-245), federal TANF funding is scheduled to expire on December 7, 2018.

How Are TANF Programs Funded?

TANF programs are funded through a combination of federal and state funds. In FY2018, 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, the District of Columbia, the territories, and American Indian tribes. 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 $10.3 billion per year for the 50 states, the District of Columbia, and the territories.

How Much Has the Value of the TANF Basic Block Grant Changed Over Time?

TANF was created in the 1996 welfare reform law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193). A TANF basic block grant amount—both nationally and for each state—was established in the 1996 welfare reform law. The amount established in that law for the 50 states, District of Columbia, territories, and tribes was $16.6 billion in total. From FY1997 through FY2016, that amount remained the same. It was not adjusted for changes that occur over time, such as inflation, the size of the TANF assistance caseload, or changes in the poverty population. During this period, the real (inflation-adjusted) value of the block grant declined by one-third (33.1%). Beginning with FY2017, the state family assistance grant was reduced by 0.33% from its historical levels to finance TANF-related research and technical assistance. The reduced block grant amount is $16.5 billion.

Table 1 shows the state family assistance grant, in both nominal (actual) and real (inflation-adjusted) dollars for each year, FY1997 through FY2017. It also shows the value of the block grant if the funding level were maintained at its current (FY2018) level and inflation is as projected by the Congressional Budget Office (CBO) for FY2018 through FY2028. In real (inflation-adjusted) terms, the FY2017 block grant was 34.7% below its value in FY1997. By FY2028, the block grant would have lost almost half its value (49.8%) from FY1997.

How Have States Used TANF Funds?

Figure 1 shows the uses of federal TANF grants to states and state MOE funds in FY2016. In FY2016, a total of $30.9 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 24% ($7.4 billion) of total FY2016 TANF and MOE dollars.

TANF is a major contributor of child care funding. In FY2016, $5.1 billion (17% of all TANF and MOE funds) were either expended on child care or transferred to the child care block grant (the Child Care and Development Fund, or CCDF). TANF work-related activities (including education and training) were the third-largest TANF and MOE spending category at $2.8 billion, or 9% of total TANF and MOE funds. TANF also helps low-wage parents by helping to finance state refundable tax credits, such as state add-ons to the Earned Income Tax Credit. TANF and MOE expenditures on refundable tax credits in FY2016 totaled $2.8 billion, or 9% of total TANF and MOE spending.

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, spending about $2.3 billion on such activities. TANF and MOE funds also help fund state prekindergarten (pre-K) programs, with total FY2016 expenditures for that category also at $2.3 billion. TANF and MOE funds are also used for short-term and emergency benefits and a wide range of other social services.

Figure 1. Uses of TANF Funds by Spending Category, FY2016 (Dollars in billions)

Source: Congressional Research Service (CRS) based on data from the U.S. Department of Health and Human Services (HHS). Notes: Detail may not add to totals because of rounding

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 FY2016 (September 30, 2016, the most recent data currently available), a total of $4.7 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 FY2016, states had made such commitments to spend—that is, had obligated—a total of $1.7 billion. At the end of FY2016, states had $3.0 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 assistance. There is no complete reporting on families receiving other TANF benefits and services.

Assistance is defined as benefits provided to families to meet ongoing, basic needs.¹ It is most often paid in cash. However, some states use TANF or MOE funds to provide an "earnings supplement" to working parents added to monthly Supplemental Nutrition Assistance Program (SNAP) allotments. These "earnings supplements" are paid separately from the regular TANF cash assistance program. Additionally, TANF MOE dollars are used to fund food assistance for immigrants barred from regular SNAP benefits in certain states. These forms of nutrition aid meet an ongoing need, and thus are considered TANF assistance.

As discussed in a previous section of this report, TANF basic assistance accounts for about 24% 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 1.4 million families, composed of 3.4 million recipients, received TANF- or MOE-funded assistance in September 2017. The bulk of the "recipients" were children—2.5 million in that month. (The September 2017 data exclude Puerto Rico.) 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 September 2017. 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 countercyclical 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 September 2017, the assistance caseload had declined to 1.4 million families.

Figure 2. Number of Families Receiving Cash Assistance, July 1959-September 2017

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 September 2017, includes families receiving assistance from Separate State Programs (SSPs) with expenditures countable toward the TANF maintenance of effort requirement. See Table A-1 for average annual data on families, recipients, adult recipients, and child recipients of ADC, AFDC, and TANF cash assistance for 1961 to 2016.

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, an estimated 84% of AFDC families were headed by an unemployed adult recipient. In FY2016, families with an unemployed adult recipient represented 32% 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 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 FY2016, a monthly average of 485,000 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 FY2016, families with employed adult recipients represented 31% of all assistance families. This category includes families in "earnings supplement" programs separate from the regular TANF cash assistance program. "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 FY2016 was 38%. In FY2016, families with a nonrecipient, nonparent relative (grandparents, aunts, uncles) represented 14% of all assistance families. Families with ineligible, noncitizen adults or adults who have not reported their citizenship status made up 11% 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 FY2016.

Figure 3. Characteristics of Assistance Families, Selected Years FY1988 to FY2016

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 2016.² The benefit amounts shown are those for a single-parent family with two children.³ For a family of three, the maximum TANF benefit paid in July 2016 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.⁴

Figure 4. TANF Cash Assistance Maximum Monthly Benefit Amounts for a Single Parent Family with Two Children, 50 States and the District of Columbia, July 2016

Source: Congressional Research Service (CRS), based on data from the Urban Institute's Welfare Rules Database. The welfare rules database has information for the 50 states and District of Columbia. It does not have information on TANF assistance programs in Puerto Rico, Guam, and the Virgin Islands or tribal TANF programs.

TANF Work Participation Standards

TANF's main federal work requirement is actually a performance measure that applies to the states, rather than individual recipients. States determine the work rules that apply to individual recipients.

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.⁵ 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.

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 (DRA, 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 FY2016. For the period FY2002 through FY2011, states achieved an average all-families work participation rate hovering around 30%. The work participation rate increased since then. In FY2016, it exceeded 50% for the first time since TANF was established. However, it is important to note that the increase in the work participation rate has not come from an increase in the number of recipients in regular TANF assistance programs who are either working or in job preparation activities. This increase stems mostly from states creating new "earnings supplement" programs that use TANF funds to aid working parents in the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) or who have left the regular TANF assistance programs for work.⁶

Figure 5. National Average TANF Work Participation Rate for All Families, FY2002-FY2016

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 FY2005 through FY2016. Before FY2007, the first year that DRA was effective, 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.

The number of jurisdictions that failed to meet the all-families standard declined over the FY2012 to FY2016 period. In FY2016, four jurisdictions failed to meet the all-family participation standard: Colorado, Nevada, Wisconsin, and Guam.

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 percentage too can be lowered by caseload reduction.

Table 4 shows whether each state met its two-parent work participation standard for FY2005 through FY2016. 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. 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. Before the changes made by the DRA were effective, a number of states had their two-parent families in separate state programs that were not included in the work participation calculation. When DRA brought families receiving assistance in separate state programs into the work participation rate calculations, a number of states moved these families into solely state-funded programs. These are state-funded programs with expenditures not countable toward the TANF maintenance of effort requirement, and hence are outside of TANF's rules.

For states with two-parent families in their caseloads, 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 FY2016 TANF work participation calculation, 17 met the standard and 11 did not.

Appendix A. Supplementary Tables

Appendix B. State Tables