The Temporary Assistance for Needy Families (TANF) Block Grant

Introduction

The Temporary Assistance for Needy Families (TANF) block grant was created in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193). That law was the culmination of a series of legislative changes that altered the rules for providing benefits and services to needy families with children.

Brief History

Public cash assistance to needy families with children has its origin in the early 1900s state and locally financed “mother’s pension” programs that aided single mothers (often widows) so that children could be raised in their own homes rather than be institutionalized. The Social Security Act of 1935 provided federal funding for these programs with the explicit goal to aid mothers so they would not have to work and could stay home to raise their children.

Post-1935 changes altered the context in which programs for needy families with children operated. In 1939, survivors’ benefits were added to Social Security, providing social insurance benefits to widows and their children. The increase in labor force participation among married mothers altered views about whether government should aid single mothers to stay at home. Families with children whose fathers were alive but absent comprised more of the public cash assistance caseload. An increasing share of those receiving assistance were African-American. Cash assistance to needy families with children became among the most controversial of social programs, particularly beginning in the late 1960s as the cash assistance caseload had its first large increase. Proposals to replace or reform cash assistance for needy families were debated across four decades, ultimately leading to the enactment of PRWORA.

The TANF Block Grant

PRWORA and the creation of TANF altered the federal rules that applied to states for their cash assistance programs. It also ended dedicated funding for cash assistance to needy families. Federal funding for such assistance was folded into a broad-purpose block grant. The TANF block grant’s overall purpose is to “increase the flexibility of states” to meet four statutory goals: (1) provide assistance to needy families so that children may remain in their homes; (2) end the dependence of needy parents on government benefits through work, job preparation, and marriage; (3) reduce out-of-wedlock pregnancies; and (4) promote the formation and maintenance of two-parent families.

Federal Grants and State Funds TANF provides grants to the 50 states, the District of Columbia, Puerto Rico, Guam, and the U.S. Virgin Islands. American Indian tribes may also operate their own TANF

programs with federal dollars. The bulk of TANF funding is in a basic block grant of $16.5 billion per year. Every year, each state receives a fixed grant based on how much it received in federal funding in the pre-1996 cash assistance and related programs during the early- and mid-1990s. Tribes also may receive grants based on mid-1990s expenditures.

The TANF block grant has not been increased since the enactment of the 1996 welfare law. There has been no adjustment for inflation or population change. From 1997 to 2024, the basic TANF block grant has lost 49% of its value to inflation. During TANF’s history, states have at times received TANF funds in addition to the basic block grant. Since 2011, some states have routinely tapped a “contingency fund,” that was originally intended to provide extra funding during economic recessions.

In addition to federal funding, states are required to contribute a minimum amount of nonfederal funds on the TANF-related populations and TANF-related activities. This amount is also based on historical expenditures in pre- TANF programs and is known as the “maintenance of effort” (MOE) requirement. Some states spend more than the minimum.

Use of TANF Funds States may use federal block grant and MOE funds in any manner that is “reasonably calculated” to achieve TANF’s statutory purpose and goals. In FY2023, a total of $33.9 billion was spent by states from federal TANF and state MOE funds. FY2023 TANF basic assistance, including monthly cash benefits to families with children, totaled $8.3 billion. In addition to assistance, TANF helps fund state programs that provide work, education, and training; child care and pre-kindergarten; benefits and services to children who have been abused and neglected or are at risk of it (child welfare); and other services (e.g., youth activities, responsible fatherhood, healthy marriage promotion).

Figure 1. Uses of Federal TANF and State MOE Funds, by Category, FY2023 ($ in billions)

Source: CRS, based on data from the Department of Health and Human Services. Detail does not add to total because of rounding.

The Temporary Assistance for Needy Families (TANF) Block Grant

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State TANF Cash Assistance Programs

Federal law requires that a family aided by TANF cash assistance have a dependent child, and limits to five years federally funded aid to families with an adult recipient. States set most TANF rules that apply to recipient families.

States determine the TANF benefit amounts. In July 2022, the maximum monthly TANF cash benefit for a single- parent family with one child ranged from $915 in New Hampshire to $162 in Arkansas. There is a regional pattern to these maximum benefits; they are generally lowest in the South.

Figure 2. Maximum Monthly TANF Cash Assistance for a Single Parent with One Child, July 2022

Source: CRS, based on data from the Urban Institute’s Welfare Rules database. In September 2023, a total of 1.0 million families received TANF assistance. This compares with the historical peak in receipt of assistance under TANF’s predecessor program in March of 1994 at 5.1 million families.

Figure 3. Number of Families Receiving Cash Assistance, July 1959–September 2023

Source: CRS, based on data from the Department of Health and Human Services. Shaded months denote economic recessions. The post-1994 decline in the cash assistance caseload resulted from both a reduction in the number of people eligible for assistance and a reduction in the share of those eligible who actually receive assistance. In 1994, an estimated 79% of individuals eligible for cash assistance actually received benefits; in 2018, an estimated 26% of persons in families that met states’ eligibility requirements actually received benefits.

Work Requirements Current TANF rules for engagement of assistance recipients in work are in the context of meeting the minimum work participation rate (WPR). The minimum WPR is a performance standard for the state; it does not apply directly to individual recipients. States that do not meet the minimum WPR are at risk of a reduction in their federal TANF funds. To meet the current TANF work participation standard, a state must have 50% of “all families” and 90% of families with two parents either working or engaged in activities. A state may lower these statutory percentages by reducing its caseload from FY2005 levels. Under the Fiscal Responsibility Act of 2023 (P.L. 118-5), beginning in FY2026, caseload reduction is to be measured from FY2015 levels. Work in an unsubsidized job and participation in job preparation activities count toward meeting the standard. There are rules for the minimum hours per week of participation required for a family to be counted toward meeting the state’s minimum WPR. Under P.L. 118-5, HHS may authorize up to five states to operate pilot programs that would be assessed using employment and other family well-being outcomes, rather than the WPR and the caseload reduction credit.

In FY2023, all jurisdictions met the “all families” work standard and all but 7 met the two-parent standard. States that met their work standard generally did so through caseload reduction and aiding families who were already working, rather than engaging unemployed recipients in activities. States determine the work and participation requirements that apply to individual recipients.

Issues

P.L. 118-83, the FY2025 Continuing Appropriations and Extensions Act, funds TANF through December 20, 2024.

Several issues have been raised in recent discussions around TANF:

• Both the overall level of funding and its distribution

among the states date back to spending in pre-TANF programs in the early-to-mid 1990s. Congress might consider updates to funding levels and/or how funding is distributed among the states.

• In the 118^th Congress, there are current legislative

proposals addressing the use of TANF funds. H.R. 7441 would require that a minimum amount of basic TANF funding be targeted to certain “core” activities related to work and work supports H.R. 7426 would target funding for many TANF activities to families with income no greater than 200% of the federal poverty guidelines. The Biden Administration has proposed a regulation for a similar (though different in details) upper federal income limit of 200% of the federal poverty guidelines.

• The almost continuous decline in the number of families

receiving assistance since the mid-1990s, along with a decline in the percentage of eligible families who receive assistance, has raised questions about whether it is meeting the needs of low-income families.

Gene Falk, Specialist in Social Policy

IF10036

The Temporary Assistance for Needy Families (TANF) Block Grant

https://crsreports.congress.gov | IF10036 · VERSION 33 · UPDATED

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