INSIGHTi

Temporary Assistance for Needy Families
(TANF) and Work Requirements
Updated May 30, 2023
The Fiscal Responsibility Act of 2023 (H.R. 3746), which embodies an agreement between President
Biden and House Speaker McCarthy of budgetary and policy changes to accompany an increase in the
debt limit, would alter the work requirements that apply under Temporary Assistance for Needy Families
(TANF). TANF is a broad purpose block grant, which is best known for helping to fund states’ family
cash assistance (sometimes called welfare) programs.
TANF was created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (also
known as the 1996 welfare reform law; P.L. 104-193) and is associated with policies that sought to
increase work. The statutory purpose of the TANF block grant is to “increase the flexibility of states” to
meet certain goals, including ending the dependence of needy parents on government benefits through
work, job preparation, and marriage.
TANF’s Mandatory Work Participation Standards and Caseload
Reduction Credit
The main TANF work requirements are numerical performance standards that states must meet. The law
says that a state must have 50% of all families and 90% of two-parent families receiving assistance
engaged in either work or activities. In turn, it is the states that determine the work participation
requirements that apply to individual recipients. States have flexibility in setting work rules for
individuals (see state rules here), though many have based their requirements for individuals on the
federal rules for what counts as being engaged in work.
A state can meet its mandatory work participation standard either partially or wholly through reducing the
number of families receiving cash assistance, and thus receiving a caseload reduction credit. Under
current law, states can receive a caseload reduction credit of 1 percentage point for each percent decline in
the caseload not explicitly caused by policy changes that have occurred since FY2005. If a state reduced
the number of families receiving assistance since 2005 by half (50%) or more, it reduced its 50% work
standard to 0%. In FY2021, 32 jurisdictions had a 0% after-credit work standard.
Congressional Research Service
https://crsreports.congress.gov
IN12150
CRS INSIGHT
Prepared for Members and
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Historical Context
Most states were never required to meet TANF’s 50% or 90% participation standards. The standards,
particularly the 50% standard that applies to all families, are round numbers that straddle sending signals
of high expectations and allowing flexibility. Pre-1996 welfare-to-work experiments, sometimes used
today as evidence of the impact of work requirements, did not achieve these participation rates. The single
national standard also does not take into account the differing characteristics of families in state assistance
programs.
The Congressional Budget Office (CBO), writing in 1996, said about the standards:
Most states will be unlikely to satisfy this requirement [TANF work participation standards] for
several reasons. The cost of administering such a large scale work and training program will be high,
and federal funding will be frozen at historical levels.... Some states may technically meet the
required participation requirement without increasing the number of recipients working.
Most jurisdictions either fully or partially met their TANF work standards through reductions in the
number of families receiving assistance via the caseload reduction credit. Some of the reduction in
families receiving TANF assistance was a result of fewer people being eligible for benefits, while a
comparatively larger share of the decline was due to a lower rate of receipt of assistance among those
eligible.
In terms of the percentage of families engaged in work or activities, most states relied on counting
families engaged in work at an unsubsidized job to meet their standards rather than engaging non-
employed recipients in activities to meet their standard. Under TANF, as compared with prior law, many
states expanded eligibility to working families. This policy change was in part to provide a financial
incentive to adult recipients to get a job (they lost less assistance when going to work than under prior
policies) and in part for states to be able to count such families toward their work standards. In recent
years, some states have created separate programs that provide comparatively small TANF-funded
benefits to parents receiving assistance in the Supplemental Nutrition Assistance Program (SNAP) who
are already working. Funding this small benefit from TANF permits states to count these families as
working TANF families, hence helping them meet their TANF work standard.
House-Passed Limit, Save, Grow Act of 2023 (H.R. 2811)
As passed by the House on April 26, H.R. 2811 would make changes to the TANF work requirements,
including resetting the caseload reduction credit to measure only future caseload reductions from FY2022
forward, eliminating the ability of states to use small benefits targeted to working families, and
eliminating a credit against the TANF work standards for state spending on TANF-related populations and
activities in excess of what they are required to spend under TANF’s state spending (maintenance of
effort, or MOE) requirement. The House passed bill would also require states to collect data on
employment outcomes.
Fiscal Responsibility Act of 2023 (H.R. 3746)
As introduced in the House on May 29, changes made by H.R. 3746 to the TANF work standard would
differ from those that were included in the House-passed H.R. 2811.
Caseload Reduction Credit
H.R. 3746 would give states credit against their work standards for caseload reductions from FY2015
forward. Thus, unlike the House-passed H.R. 2811, states would receive credit against their work

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standard for some past caseload reduction. Most states experienced a reduction in the number of families
receiving assistance since FY2015. Caseload declines from FY2015 to FY2021 have varied by state.
Small Checks
H.R. 3746 would curtail, but not end, the practice of paying small checks in separate programs. It would
require that the state pay a benefit of at least $35 per month to a working family in a separate program in
order for that family to be counted toward meeting the TANF work standard.
Excess MOE
H.R. 3746 would not change the credit toward the TANF work standards that states receive for spending
excess state dollars on TANF-related populations and activities.
Pilot Programs and Outcome Reporting
H.R. 3746 would give the Department of Health and Human Services (HHS) the option to allow up to
five states to operate a pilot program that would test an alternative performance system for state TANF
work programs. States in the pilot would not be required to operate their work program under the usual
work standards. Instead, they would be held accountable through a negotiated set of employment
outcomes (including employment rates and median wages for those leaving assistance), and other
measures of family stability and well-being. The pilots would operate for a period of six years. A
performance measure based on outcomes was proposed in a 2018 bill that was approved by the House
Ways and Means Committee (H.R. 5861). That bill was never acted on by the full House.
H.R. 3746 would also require all states to report on employment outcome measures similar to those used
to measure performance under the Workforce Innovation and Opportunity Act.

Author Information

Gene Falk

Specialist in Social Policy




Disclaimer
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Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
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IN12150 · VERSION 5 · UPDATED

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