The New Welfare Law: Temporary Assistance for Needy Families

The New Welfare Law: Temporary Assistance for Needy Families

96-902 EPW
Updated September 2, 1997
Received through the CRS Web
The New Welfare Law: Temporary Assistance for
Needy Families
Vee Burke
Education and Public Welfare Division
Temporary Assistance to Needy Families (TANF) is a fixed block grant for state-
designed programs of time-limited and work-conditioned aid to families with children.
Effective July 1, 1997 (earlier in most states, by their choice) TANF replaced Aid to
Families with Dependent Children (AFDC), Emergency Assistance for Needy Families,
and the education, work and training program for AFDC recipients, known as the Job
Opportunities and Basic Skills Training (JOBS) program. The TANF law (P.L. 1 04-
193) combines recent peak federal funding levels for each state (generally those of
FY1994-95) for these three programs into a single block. Nationally the block grant
is $16.5 billion annually through FY2002. The 1996 welfare law provides TANF
grants for outlying areas; it also permits Indian tribes to operate their own TANF
programs. Further, the law provides an average of $2.3 billion annually in a new
child care block grant (about double the recent federal funding level for AFDC-related
child care). Supplementing the basic TANF block grant for qualifying states are funds
of five kinds (see chart on reverse page), including welfare-to-work grants enacted in
1997.
TANF has greatly enlarged state discretion in operating family welfare, and it has
ended the entitlement of individual families to benefits. States decide what categories
of needy families to help (AFDC law defined eligible classes and required states to aid
families in these classes if their income were below state-set limits).
States decide
whether to adopt financial rewards/penalties to induce work and other desired behavior.
They set asset limits (AFDC law imposed an outer limit). Moreover, states continue
to set benefit levels. TANF explicitly permits states to administer benefits and provide
services through contracts with charitable, religious, or private organizations.
Attached to the TANF block grant are some federal conditions. For instance, to
receive full grants, states must achieve minimum work participation rates and spend
a certain sum of their own funds on behalf of eligible families (“maintenance-of-effort”
rule). Moreover, states must impose a general 5-year time limit on TANF-funded
benefits and require unwed mothers under 18 to live in an adult-supervised setting (and
attend school unless they already have a high school diploma) in order to receive aid.
In their TANF plans, at least one-third of the states said they would extend aid to two-
parent families with full-time jobs (working poor families). More than one-third said
that in lieu of TANF benefits, they would make “diversion”payments, generally one-
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time payments for immediate needs. Some plan to continue aid for children with state
funds after their parents lose eligibility because of the time limit.
For full state grants, TANF requires participation in specified “work activities”
by 30% of all beneficiary families in FY1998 (rising to 50% by FY2002). These
required rates are to be reduced if a state's caseload is smaller than in FY1995 (the
case in almost all states). For two-parent families, higher minimums apply (75% now,
rising to 90% in FY1999.
Work activities credited toward a state's participation
requirement exclude education, except for high school dropouts, but TANF allows
limited use of vocational educational training). See CRS Report 96-720, New Welfare
Law:
Comparison of the New Block Grant Program with Aid to Families with
Dependent Children, by Vee Burke.
SOME KEY DIFFERENCES: AFDC/EA/JOBS AND TANF
AFDC/EA/JOBS
TANF
(Old Law)
(New Law)
Federal
Unlimited for AFDC and EA.
Fixed grant, plus extras (for
funding
Capped entitlement for JOBS.
population growth/low federal
(Federal share of AFDC and
spending per poor person, loan
JOBS costs varies inversely with
funds, contingency funds,
state per capita income.)
performance bonuses, bonuses
for reducing out-of-wedlock
births); and welfare-to-work
grants .
State funding
Matching required for each
States must spend 75% of
federal dollar.
“historic” level (100% for
contingency funds) and must
provide matching for
contingency funds, most welfare-
to-work grants—and some child
care funds.
Categories
Children with one parent or with
Set by state
eligible
an incapacitated or unemployed
second parent.
Income limits
Set by state
Set by state
Benefit levels
Set by state
Set by state
Entitlement
All families eligible under state
TANF expressly denies
standards must be aided.
entitlement.
Exemptions
Parents (chiefly mothers) with
None, but states may exempt
from work
child under age 3 (under age 1, at
single parents caring for child
requirement
state option)
under 1.
Work trigger
None
Work required after maximum of
2 years of benefits
Time limit for
None
5-year limit (20% hardship
benefits
exceptions allowed)