TANF Cash Benefits as of January 1, 2004

Order Code RL32598 CRS Report for Congress Received through the CRS Web TANF Cash Benefits as of January 1, 2004 Updated September 12, 2005 Meridith Walters, Gene Falk, and Vee Burke Domestic Social Policy Division Congressional Research Service ˜ The Library of Congress TANF Cash Benefits as of January 1, 2004 Summary The Temporary Assistance for Needy Families (TANF) block grant is a major source of cash assistance — commonly referred to as “welfare” — for low income families with children. TANF also provides funds to states for a wide range of benefits and services for both families receiving cash assistance and other families. Though the federal government provides TANF funds to states, the states themselves determine cash benefit amounts. As of January 1, 2004, maximum benefit amounts vary greatly by state: for a family of three, benefits vary from $923 per month in Alaska to $170 per month in Mississippi. TANF was created by the 1996 welfare reform law, which ended the Aid to Families with Dependent Children (AFDC) program. States also determined AFDC benefit amounts, and most have retained their pre-1996 benefit structure under TANF. During the debate on welfare reform in the mid-1990s, some feared that fixed funding would lead states to cut benefits in a “race-to-the-bottom.” The race to the bottom did not happen. In 24 jurisdictions, there was no change in maximum benefits from July 1996 to January 2004. Twenty-one jurisdictions increased their benefits; eight of these had benefit increases sufficient to offset inflation over the period. Six jurisdictions cut benefits. Maximum benefits are generally paid to families without a wage earner. However, almost all jurisdictions have increased rewards for recipients who work, effectively raising the amount of earnings a recipient may keep before she becomes ineligible for cash assistance. The percent of adult recipients reported as “employed” climbed from 11% in FY1996 to 26% in FY2002. State TANF programs generally disregard a sizable share of earnings for at least a period of time (some disregard 100% of earnings for the first few months on a job). The rules for treating families with earnings vary greatly from state to state, and thus the level of earnings at which a family becomes ineligible for TANF varies greatly by state. A recipient in a family of three (single mother, two children) who obtains a job and works 20 hours a week at a minimum wage job remains eligible for TANF in most states, though in some she becomes ineligible for assistance in a few months. However, in most states her earnings plus the Earned Income Tax Credit (EITC) and food stamps would be insufficient to raise her total income above the poverty line. A recipient in a family of three who obtains a job and works 40 hours per week at the minimum wage remains eligible for TANF in the first month on the job in 29 states. However, after a year on the job, she would be eligible for TANF cash in only 17 states. In all cases, with or without TANF, the family with yearround, 40 hour per week, minimum wage earnings would have total income (counting federally determined food stamps and EITC) slightly about the poverty threshold. This report will be updated when information about January 2005 benefit levels becomes available. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Maximum Benefit Amounts under TANF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Maximum Benefits by Family Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Maximum Combined TANF and Food Stamps . . . . . . . . . . . . . . . . . . . . . . . 5 Changes in Maximum Benefits from 1996 to 2004 . . . . . . . . . . . . . . . . . . . . 7 From Welfare to Work: Eligibility and Benefit Amounts . . . . . . . . . . . . . . . . . . . 9 Income Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Countable Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Earnings Disregards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Gross Income Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Maximum Earnings Eligibility Thresholds . . . . . . . . . . . . . . . . . . . . . 10 Maximum Hours a Minimum Wage Earner Can Work and Retain Eligibility for TANF . . . . . . . . . . . . . . . . . . . . . . . . . 16 Family Income by Hours per Week of Work . . . . . . . . . . . . . . . . . . . . . . . . 18 Earnings Disregards and TANF Work Participation Standards . . . . . . . . . . 25 Appendix A. Resource Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Appendix B. TANF Exit Points, Monthly Earnings That End Eligibility, Family of Three, January 1, 2004 ($) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Appendix C. State Benefit Computation Methods . . . . . . . . . . . . . . . . . . . . . . . 32 List of Tables Table 1. Maximum Monthly TANF Benefit for Single Parent Families of One to Six Persons on January 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Table 2. Maximum Combined TANF and Food Stamps Benefit for Single Parent Families of One to Six Persons on January 1, 2004 . . . . . 5 Table 3. TANF Maximum Monthly Benefits for a Family of Three (Single Parent Families): 1996-2004 . . . . . . . . . . . . . . . . . . . . . . . 7 Table 4. TANF Maximum Monthly Benefits, Earnings Disregards, and Exit Points for a Family of Three (Single Parent Families), January 1, 2004 . . . 11 Table 5. Maximum Hours per Week That a Minimum Wage Earner Can Work and Retain Eligibility for TANF Cash Assistance (Based on January 2004 Benefit Levels and Minimum Wages) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Table 6. Annualized Earnings and Income from Selected Benefit Programs for a Single Parent with Two Children, Working 20 Hours per Week at Minimum Wage, in the 13th Month of Work, January 1, 2004 . . . 19 Table 7. Annualized Earnings and Income from Selected Benefit Programs for a Single Parent with Two Children, Working 40 Hours per Week at Minimum Wage, in the 13th Month of Work, January 1, 2004 . . . . . . . . . . . . . . . . . . . 22 Table A1. TANF Resource Limits and Vehicle Disregards, January 2004 . . . . 26 Table C1. Benefit Computation Methods Used by States for TANF Cash Assistance, January 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . 33 TANF Cash Benefits as of January 1, 2004 Introduction The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA. P.L. 104-193), also known as the 1996 welfare reform law, ended the entitlement program of Aid to Families with Dependent Children (AFDC) and replaced it with the state block grant program of Temporary Assistance to Needy Families (TANF). TANF gives states broad flexibility in the design of their programs. States have adopted a wide range of financial eligibility and benefit rules in their cash assistance programs to further the policy objectives of moving families from welfare to work, supporting work, and moving families off the cash benefit rolls. TANF is a major source of cash assistance for low-income families with children. However, ongoing cash assistance is only one use of TANF funds. States may use TANF funds on other types of benefits and services, such as child care, short-term emergency benefits, work programs, or education programs. Following the state and federal welfare reforms of the mid-1990s, the cash assistance caseload declined markedly, from a historical high of 5.1 million families in March 1994 to 2.2 million families in September 2003. The shrinkage in the cash assistance caseload has resulted in a decline in the share of TANF funds devoted to ongoing cash assistance and an increase in the share of funds spent on other TANF benefits and services. This report describes cash assistance benefits paid to families by state TANF programs on January 1, 2004, with historical data to portray changes in benefit payments over time. It discusses the rules for determining eligibility and benefit amounts for a recipient who gets a job, showing the maximum amount of earnings a family may have and remain eligible for cash welfare. Finally, this report examines the interaction of TANF with two other federal benefit programs, food stamps and the earned income tax credit. The report shows total income available from these sources plus wages at various hours of weekly work, state by state. This report does not discuss nonfinancial eligibility rules in state TANF cash assistance programs nor does it cover eligibility rules for the wider range of TANF benefits and services provided to families. The information in this report is based on responses to a Congressional Research Service (CRS) survey of state cash benefit programs. It is possible that in some cases CRS may have misinterpreted the information provided by the states or failed to ask the correct questions to elicit the appropriate response. CRS-2 Maximum Benefit Amounts under TANF The pre-1996 program of AFDC entitled families with children who met a state-determined test of need to cash assistance. Federal funding was unlimited. States determined the amount of cash paid to needy families, subject to minimal federal guidelines. The block grant of Temporary Assistance for Needy Families (TANF) established in the 1996 law (P.L. 104-193) eliminated the entitlement to cash welfare for needy families as well as those federal guidelines. States are not required to use the TANF block grant to pay cash welfare — it may be used for other benefits and services to achieve TANF goals — although all states have continued a cash assistance program. Under AFDC, states based benefits on financial “need,” which varied by family size. Financial need was greater the larger the family. The degree of a family’s need also depended on its nonwelfare income, so maximum AFDC benefits generally were paid to those with no income other than the welfare benefit. Most states continue to pay greater maximum benefits for larger families, but there are some exceptions. Wisconsin pays benefits based on the work activity of the adult in the family, and its benefit amount is based on the type and hours of work performed by the adult, not the size of the family. Idaho has the same maximum benefit ($309) for families of all sizes. Additionally, a number of states have adopted “family cap” policies that pay a reduced or zero benefit for a new baby born to a welfare family. A few states have also restructured their benefits to pay lower maximum benefits for those families with adults who are expected to work. Under TANF, the maximum benefit still is paid to a family with no income other than welfare. However, in order to receive the maximum TANF benefit, families must also be in compliance with work rules and cooperate in establishing child support orders, because federal TANF law requires states to penalize families that fail to do so. AFDC benefits varied greatly among the states. Large variations in benefits among the states have continued under TANF. In January 2004, maximum benefits for a family of three ranged from a low of $170 a month in Mississippi to $923 in Alaska. Maximum Benefits by Family Size Table 1 shows maximum monthly benefits by family size for January 2004. Maximum benefits are generally paid to a family with no income other than the welfare benefit. The table shows benefits for a family with a single adult. Some states pay different benefits to families without adult recipients (the “child-only” cases) or to two-parent families. Some states vary benefit payments by geographic locations, usually for differences in housing costs. The table generally shows the highest benefit paid in the state for recipients expected to work, though benefit amounts are shown for New York City and Wayne County (Detroit) in Michigan CRS-3 because of the size of the caseload in these localities.1 Also shown is whether the state has implemented a “family cap.” Table 1. Maximum Monthly TANF Benefit for Single Parent Families of One to Six Persons on January 1, 2004 State Alabama Onea $165 Family size Two Three Four $190 $215 $245 Five $275 Six Family cap $305 No Alaska 514 821 923 1,025 1,127 Arizona 204 275 347 418 489 561 Yes Arkansas 81 162 204 247 286 331 Yes California 349 568 704 839 954 1,072 Yes Colorado 214 280 356 432 512 590 No Connecticut 402 513 636 741 835 Delaware 201 270 338 407 475 935 Yes. Partial increase for additional child 544 Yes D.C. 239 298 379 463 533 627 No Florida 180 241 303 364 426 Georgia 155 235 280 330 378 487 Yes. Partial increase for first additional child. 410 Yes Hawaii 335 452 570 687 805 922 No Idaho 309 309 309 309 309 309 n/a Illinois 223 292 396 435 509 572 No Indiana 139 229 288 346 405 463 Yes Iowa 183 361 426 495 548 610 No Kansas 267 352 429 497 558 619 No Kentucky 220 253 289 325 361 398 No Louisiana 122 188 240 284 327 366 No Maine 230 363 485 611 733 856 No Maryland Massachusetts 213 418 376 518 477 618 577 713 668 812 735 No 912 Yes Michigan 276 371 459 563 659 792 No Minnesota 250 437 532 621 697 773 Yes. (New policy, first capped child would be born in May 2004) 1 1,229 No The highest maximum benefits paid in Michigan in Jan. 2004 were in Washtenaw County ($489 per month for a family of three). The highest maximum benefits paid in New York state in Jan. 2004 were in Suffolk County ($738 per month for a family of three). CRS-4 State Mississippi Onea 110 Family size Two Three Four 146 170 194 Five 218 Six Family cap 242 Yes Missouri 136 234 292 342 388 431 No Montana 221 298 375 452 530 607 No Nebraska 222 293 364 435 506 577 Yes Nevada New Hampshire 230 489 289 556 348 625 407 688 466 748 525 No 829 No New Jersey 162 322 424 488 552 616 Yes New Mexico 231 310 389 469 548 627 No New York 414 501 691 825 964 1,059 No North Carolina 181 236 272 297 324 349 Yes North Dakota 282 378 477 573 670 767 Yes Ohio 223 305 373 461 539 600 No Oklahoma 180 225 292 361 422 483 Yes. Increase paid as a noncash voucher. Oregon 310 395 460 565 660 755 No Pennsylvania 215 330 421 514 607 687 No Rhode Island 327 449 554 634 714 794 No South Carolina 121 163 205 248 290 333 Yes South Dakota 360 441 493 544 596 649 No Tennessee 95 142 185 226 264 305 Yes Texas 90 188 217 261 290 333 No Utah 274 380 474 555 632 696 No Vermont 503 604 709 795 885 946 No Virginia 242 323 389 451 537 587 Yes Washington 349 440 546 642 740 841 No West Virginia 349 401 453 512 560 613 No Wisconsin 0 673 673 673 673 673 n/a Wyoming 195 320 340 340 360 360 Yes b Source: Table prepared by the Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. a. A family size of one is a pregnant woman. Two states, Colorado and Texas have separate payment schedules for cases that consist of a pregnant woman. b. Wisconsin does not pay a benefit under its regular W-2 (TANF) program for a pregnant woman with no other eligible dependent children. CRS-5 Maximum Combined TANF and Food Stamps Most households composed entirely of TANF recipients are automatically eligible for food stamps without regard to food stamp tests of need. The combined cash welfare benefit plus the food stamp benefit used to be referred to as the “guarantee” level of income that a family eligible for welfare would receive without work. In the post-welfare reform era of benefits conditioned upon work, the combined cash and food stamp benefit refers to the amount of income a family would receive if it had no other countable income and complied with all program requirements (including work requirements). Table 2 shows the maximum monthly combined benefit from TANF and food stamps in each state on January 1, 2004. The food stamp program treats TANF benefits as income and reduces food stamp benefits accordingly. The calculations in the table assume no earned income and no food stamp excess-shelter deduction.2 Hawaii and Alaska have higher food stamp benefit amounts than other jurisdictions. Table 2. Maximum Combined TANF and Food Stamps Benefit for Single Parent Families of One to Six Persons on January 1, 2004 State Alabama 1 2 $296 $432 Alaska 595 Arizona Family size 3 4 5 6 $561 $682 $797 $936 950 1,153 1,344 1,520 1,724 324 491 654 803 947 1,116 Arkansas 222 412 554 684 804 955 California 425 696 904 1,098 1,272 1,473 Colorado 331 495 660 813 963 1,136 Connecticut 462 658 856 1,029 1,189 1,377 Delaware 321 488 647 796 937 1,104 D.C 348 507 676 835 977 1,162 Florida 307 467 623 766 902 1,064 Georgia 289 463 607 742 869 1,010 Hawaii 501 759 1,008 1,239 1,454 1,705 Idaho 397 515 627 727 821 939 Illinois 337 503 688 815 961 1,123 Indiana 278 459 612 753 888 1,047 Iowa 309 551 709 857 988 1,150 Kansas 368 545 711 859 995 1,156 2 The excess shelter deduction is for excessively high, but not all, shelter costs. Generally, these are costs above about one-third of a household’s total cash income. CRS-6 State Kentucky 1 2 335 476 Louisiana 263 Maine Family size 3 4 5 6 613 738 857 1,001 430 579 710 833 979 342 553 750 938 1,117 1,322 Maryland 330 562 745 915 1,072 1,237 Massachusetts 473 661 843 1,010 1,173 1,361 Michigan 374 558 732 905 1,066 1,277 Minnesota 356 605 783 945 1,092 1,264 Mississippi 251 401 530 647 757 892 Missouri 276 463 615 750 876 1,025 Montana 335 507 673 827 975 1,148 Nebraska 336 504 666 815 958 1,127 Nevada 342 523 501 688 654 848 796 992 930 1,128 1,090 1,303 294 524 708 852 991 1,154 New Mexico 342 516 683 839 988 1,162 New York 471 649 894 1,088 1,279 1,464 North Carolina 307 464 601 719 831 967 North Dakota 378 563 745 912 1,073 1,260 Ohio 337 512 672 833 982 1,143 Oklahoma 307 456 615 763 900 1,061 Oregon 398 575 733 906 1,066 1,251 Pennsylvania 331 530 705 871 1,029 1,204 Rhode Island 410 613 799 955 1,104 1,279 South Carolina 262 413 554 684 807 956 South Dakota 433 607 756 892 1,021 1,177 Tennessee 236 398 540 669 789 936 Texas 231 430 563 693 807 956 Utah 373 565 743 899 1,047 1,210 Vermont 533 722 907 1,067 1,224 1,385 Virginia 350 525 683 826 980 1,134 Washington 425 607 793 960 1,122 1,312 West Virginia 425 579 728 869 996 1,152 Wisconsin 141 770 882 982 1,075 1,194 Wyoming 317 523 649 749 856 975 New Hampshire New Jersey a Source: Table prepared by the Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. CRS-7 Note: Food stamp calculations assume that the family does not receive an excess shelter cost deduction. In very low TANF benefit states, combined benefits shown reflect the maximum food stamp allotment for the family size, but in some states the excess shelter deduction would increase benefits by up to $83 monthly — more in Alaska and Hawaii. a. Wisconsin has no one-person families in its TANF program. Pregnant women without children are ineligible. Changes in Maximum Benefits from 1996 to 2004 During discussions of welfare reform in the mid-1990s, it was feared by some that states facing limited federal funding would engage in a “race-to-the bottom” by cutting benefit amounts. Some thought that a state that had higher benefit levels than its neighbors would attract welfare families from other states. These factors would set in motion a competitive downward spiral, the “race-to-the bottom,” of benefit levels among the states. This “race-to-the-bottom” did not happen. Twenty-four states paid the same maximum monthly benefits in January 2004 as they did in 1996; however, a few states did reduce benefits. Hawaii reduced maximum benefits for families with an adult expected to work. Benefits were also cut in the District of Columbia, Idaho, Montana, Oklahoma, and Wyoming. Table 3 shows maximum benefits for a family of three (headed by a single adult) by state for July 1996 to January 2004. Under TANF, benefits generally have fallen in real value. Twenty-one states have increased benefit levels during the July 1996 to January 2004 period. In eight of these (Alabama, California, Louisiana, Maryland, Mississippi, New York, West Virginia, and Wisconsin) benefits increased by more than the increases in prices between July 1996 and January 2004. Table 3. TANF Maximum Monthly Benefits for a Family of Three (Single Parent Families): 1996-2004 State July 96 July 98 Jan. 00 Jan. 02 Jan. 04 % Real change from July 96 to Jan. 2004 Alabama 164 164 164 164 215 11.14% Alaska 923 923 923 923 923 -15.23% Arizona 347 347 347 347 347 -15.23% Arkansas 204 204 204 204 204 -15.23% California 596 565 626 679 704 0.14% Colorado 356 356 356 356 356 -15.23% Connecticut 636 636 636 636 636 -15.23% Delaware 338 338 338 338 338 -15.23% District of Columbia 415 379 379 379 379 -22.58% Florida 303 303 303 303 303 -15.23% Georgia 280 280 280 280 280 -15.23% CRS-8 State July 96 July 98 Jan. 00 Jan. 02 Jan. 04 % Real change from July 96 to Jan. 2004 Hawaii 712 570 570 570 570 -32.13% Idaho 317 276 293 293 309 -17.36% Illinois 377 377 377 377 396 -10.95% Indiana 288 288 288 288 288 -15.23% Iowa 426 426 426 426 426 -15.23% Kansas 429 429 429 429 429 -15.23% Kentucky 262 262 262 262 289 -6.49% Louisiana 190 190 190 240 240 7.08% Maine 418 439 461 485 485 -1.64% Maryland 373 388 417 472 477 8.41% Massachusetts 565 565 565 618 618 -7.27% Michigan 459 459 459 459 459 -15.23% Minnesota 532 532 532 532 532 -15.23% Mississippi 120 120 170 170 170 20.10% Missouri 292 292 292 292 292 -15.23% Montana 438 461 469 494 375 -27.42% Nebraska 364 364 364 364 364 -15.23% Nevada 348 348 348 348 348 -15.23% New Hampshire 550 550 575 600 625 -3.67% New Jersey 424 424 424 424 424 -15.23% New Mexico 389 439 439 389 389 -15.23% New York 577 577 577 577 691 1.52% North Carolina 272 272 272 272 272 -15.23% North Dakota 431 440 457 477 477 -6.18% Ohio 341 362 373 373 373 -7.27% Oklahoma 307 292 292 292 292 -19.37% Oregon 460 460 460 460 460 -15.23% Pennsylvania 421 421 421 421 421 -15.23% Rhode Island 554 554 554 554 554 -15.23% South Carolina 200 201 204 205 205 -13.11% South Dakota 430 430 430 469 493 -2.81% Tennessee 185 185 185 185 185 -15.23% Texas 188 188 201 201 217 -2.15% Utah 416 451 451 474 474 -3.41% Vermont 633 656 708 709 709 -5.05% Virginia 354 354 354 389 389 -6.84% CRS-9 State July 96 July 98 Jan. 00 Jan. 02 Jan. 04 % Real change from July 96 to Jan. 2004 Washington 546 546 546 546 546 -15.23% West Virginia 253 253 328 453 453 51.79% Wisconsin 517 673 673 673 673 10.35% Wyoming 360 340 340 340 340 -19.94% Source: Table prepared by the Congressional Research Service (CRS) based on a survey of the state TANF cash assistance programs. Note: The inflation factor used to convert July 1996 dollars to Jan. 2004 dollars was 1.1796 (representing the change in the Consumer Price Index for all Urban Consumers from July 1996 to Jan. 2004). From Welfare to Work: Eligibility and Benefit Amounts The preceding section described cash assistance benefits for families with no income other than welfare. However, under TANF, more families are combining cash assistance with work. This section describes the maximum level of earnings a family may have and retain eligibility for TANF cash aid and shows how the TANF benefit contributes to total family income as a recipient increases her work effort. Income Eligibility Federal law requires that TANF cash be paid to needy families with children, and all states require that a family have income below specified income eligibility thresholds to receive cash aid. All states except Ohio and Virginia also require that a family have assets valued below a certain threshold; see Appendix A for a discussion of TANF resource limits. Determining if a family is financially eligible for TANF is often a complicated process with considerable variation among the states. The majority of states (33) have different income eligibility rules for initial eligibility (new applicants) and for continued eligibility for families already enrolled. Most of the differences concern the treatment of earnings. This report will focus on the rules for families already on the rolls. As was generally the case under AFDC, states may determine the eligibility threshold for cash aid. Further, TANF does not specify federal rules for what types of income — and how much of each type of income — must be counted in determining eligibility for cash aid. In particular, states have developed a diverse set of rules for the treatment of earnings. Countable Income. Whether a family with a working member remains eligible for cash assistance often depends on its circumstances: what type of income it has, what types of expenses (for example, child care) it incurs, and how long CRS-10 working recipients have been on the job. Most states base eligibility, at least in part, on a family’s countable income. Countable income is the family’s income minus deductions specified in a state’s program rules for working expenses and a portion of earnings disregarded as an incentive to work. Earnings Disregards. In most states, the maximum level of earnings a family may have and retain eligibility for cash assistance depends on its benefit amount and “earnings disregards.” Most states reduce benefits for families with earnings, though the size of the benefit reduction varies by state. States generally do not count some earnings when determining benefits, sometimes to compensate for work expenses and sometimes as an incentive for recipients to get a job. Under AFDC, federal law specified that earnings disregards were provided for only a short period of time, so that soon after a family member went to work most families became ineligible for cash assistance.3 Under TANF, states are free to set their own earnings disregards and, today, almost all jurisdictions have increased rewards for recipients who work. State TANF programs generally disregard a sizable share of earnings for at least a year, and some disregard 100% of earnings for new job holders for the first few months. Higher earnings disregards increase the “exit point” from TANF, the amount of income recipients can earn before cash benefits are terminated. (Also, they raise the income eligibility entry point in the18 jurisdictions that do not have different rules for treating the earnings of applicants.) Gross Income Test. Some states have adopted a second income test to determine whether a family with a working member remains eligible for benefits based on gross income. These “gross income tests” cut off eligibility to a family at a certain income level, generally without regard to its individual circumstances. That is, a family is made ineligible at a certain level of income without regard to earnings disregards that otherwise apply and any deductions allowed for expenses. Federal AFDC law required states to impose a gross income test. TANF does not require states to adopt a gross income test, but 26 have retained such tests in their programs. Maximum Earnings Eligibility Thresholds. Table 4 provides TANF benefit levels at zero income, earnings disregard rules, and the TANF “exit point” by state for a family of three as of January 2004. It shows that 33 states now disregard from 20% to 75% of all earnings in all months, and two states — Connecticut and Virginia — disregard all earnings until total income reaches the poverty level. Five states disregard 100% of earnings from one to three months. However, eight states (three in all months, five after four-six months of work) use flat dollar disregards, under which extra earnings reduce benefits. Table 4 shows that in 10 states TANF benefits for a three-person family would not end until gross earnings exceeded or came very close to the 2004 poverty guideline of $1,272 monthly for a family of three: Alaska ($1,931 in the first 12 3 Under AFDC, earnings disregards were taken in the following order: both applicants and recipients received a $90 work expense earnings disregard, then recipients received an additional $30 earnings disregard for the first 12 months of employment. In the first four months of employment, recipients also received an additional 33.33% earnings disregard. CRS-11 months of work): California ($1,613); Colorado ($1,227 in the first 12 months of work); Connecticut ($1,272); District of Columbia ($1,267); Hawaii, ($1,343); New Hampshire ($1230); New York ($1,272 in New York City); Rhode Island, ($1,258); and Virginia ($1,262). Higher or equal exit points exist in some other states, for three to six months (see Delaware, Louisiana, North Dakota, and Texas). At the other extreme are these low TANF-exit points: Alabama, $256 (after three months); Mississippi, $441; and Georgia, $534 (after four months); and Wyoming, $530. The complexity and variation in policy can be illustrated by considering hypothetical single-parent families with two children in five states: California, Connecticut, Louisiana, and New York (New York City), and Virginia. Assume that each has gross monthly earnings of $1,000. So long as the adult had not reached the state’s time limit on benefits, the family in Connecticut would receive a full TANF benefit of $636 monthly; in New York City, a reduced benefit of $245; in California, a reduced benefit of $316. In Louisiana, the family would receive a full benefit of $240 for six months in a lifetime, but would be ineligible for TANF after this period. In Virginia, the family would receive a full benefit of $389 for the first four months of work, a reduced benefit of $372 for the next eight months and thereafter a reduced benefit of $342. Table 4. TANF Maximum Monthly Benefits, Earnings Disregards, and Exit Points for a Family of Three (Single Parent Families), January 1, 2004 State Benefit at zero incomea Earnings disregarded and when TANF exit point (gross earnings)b Alabama $215 100%, months 1-3; 20% after 3 months No limit, months 1-3 $256 after 3 months Alaska $923 $150 + 33% of the rest, year 1 $150 + declining %, years 2-5. $1,961 year 1, dropping to $1,363 by year 5 Arizona $347 $90 + 30% of the rest all months $571 Arkansas $204 20% + 60% of the rest all months $696 California $704 $225 + 50% of the rest all months $1,613 Colorado $356 66.67% (up to 12 cumulative months); then use old AFDC rules. See Delaware. $1,227 (for 12 cumulative months) dropping to $499 after 2 years. CRS-12 State Benefit at zero incomea Earnings disregarded and when TANF exit point (gross earnings)b Connecticut $636 100% (up to poverty guideline of $1,272) all months $1,272 gross earnings limit, all months Delaware $338 Old AFDC rules: $120 + 1/3 of the rest, months 1-4; $120, months 5-12; $90 thereafter $1,520 months 1-4 $1,054 months 5-12 D.C. $379 $160 + 66.67% of the rest all months $1,267 Florida $303 $200 +50% of the rest all months $786 Georgia $280 Old AFDC rules. See Delaware $740 months 1-4 $534 months 5-12 Hawaii $570 20% + $200 + 36% of the rest all months $1,343 Idaho $309 40% all months $631 Illinois $396 66.67% all months $1,185 Indiana $288 75% $1,148 Iowa $426 20% + 50% of the rest, all months $1,040 Kansas $429 $90 + 40% of the rest, all months $788 Kentucky $289 100% for 2 months in lifetime (time chosen by recipient) $120 + 1/3 of the rest, months 3-6, $120 months 7-14 $90 thereafter No limit, months 1 and 2 (recipient assumed to make this choice) $881 months 3-6 $628 months 7-14 Louisiana $240 $900 (6 months in lifetime) $120 all other months $1,250, 6 months in lifetime. $350 thereafter. Maine $485 $108 plus 50% of the rest, all months $1,023, gross income test, all months Maryland $477 40% all months $778 Massachusetts $618 $120 + 50% of the rest, all months $1,143 gross income test, all months CRS-13 State Benefit at zero incomea Earnings disregarded and when TANF exit point (gross earnings)b Michigan $459c Minnesota $532d 36% all months $914d Mississippi $170 $90 all months $441 Missouri $292 66.67% + $90 all months $1,116 Montana $375 $200 + 25% of the rest, all months $700 Nebraska $364 20% all months $751 Nevada $348 100% months 1-3 50% months 4-12 No limit, months 1-3 $845 months 4-12 New Hampshire $625 50% all months $1,230 New Jersey $424 100%, 1st full month of work 50% after month 1 No limit, first month $848 after month 1 New Mexico $389 $125 + 50% of the rest. Plus, for the 1st 24 months, all earnings from work hours above minimum required $901 + (in the 1st 24 months) earnings from “excess” hours of work New York $691e $90 + 51% of the rest all months $1,272 (New York City) (100% of poverty-based, gross income limit, all months) North Carolina $272 100% months 1-3 (standard counties)f 27.5% after 3 months (all counties) No limit, months 1-3 $681 after 3 months North Dakota $477 27% or $180 (if greater) plus: 50% months 1-6 35% months 7-9 25% months 10-13 $1,279 months 1-6 $984 months 7-9 $852 months 10-13 Ohio $373 $250 + 50% of the rest, all months $976 Oklahoma $292 $120 + 50% of the rest, all months $684 $200 + 20% of the rest, all months $761 (Wayne County) CRS-14 State Benefit at zero incomea Earnings disregarded and when TANF exit point (gross earnings)b Oregon $460 50% all months $616 gross income limit, all months Pennsylvania $421 50% all months $822 Rhode Island $554 $170 +50% of the rest, all months $1,258 South Carolina $205 50% months 1-4 $100 after month 4 $1,174 gross income limit, months 1-4 $704 after 4 months South Dakota $493 $90 + 20% of the rest, all months $694 Tennessee $185 $150 all months $1,020 Texas $217 $120 + (for 4 months) 90% of the rest, but disregard (including the $120) cannot exceed $1,400. $1,727 months 1-4 $327 thereafter Utah $474 $100 + 50% of the rest, all months $1,050 Vermont $683g $150 + 25% of the rest, all months $1,082 (in Chittenden County) Virginia $389 Old AFDC rules used to determine countable income (see Delaware). Countable income is subtracted from poverty guideline. As long as countable income + full benefits (and gross income alone) are below the poverty guideline of $1,252, full benefits are paid. $1,252 Washington $546 50% all months $1,072 West Virginia $453 40% all months $755, gross income limit, all months CRS-15 State Benefit at zero incomea Earnings disregarded and when TANF exit point (gross earnings)b Wisconsin $673h No disregards. $628i Recipient cannot work more than 29 hours per week and remain eligible for the program. As long as gross income test is met and participants fulfill work hour rules, benefits are paid based on number of hours of participation. Gross income limit: 115% of federal poverty level — $1,462 Wyoming $340 $200 all months $530 Source: Table prepared by the Congressional Research Service (CRS) based on a survey of the states. a. In cases where states differentiate between families required to work and exempt from work, this column shows benefits for the former group. Similarly, where states pay higher benefits to groups with greater housing need (no housing subsidy, no sharing of housing, etc.) this column shows these higher amounts. In some regions of some states, benefits may be different from those shown here. Note: Table takes no account of child care disregards, which many states provide. They would raise exit points. b. Thirty-nine jurisdictions pay no benefit smaller than $10 monthly; one (North Carolina) pays no benefit smaller than $25 in most counties. The remaining 11 states do not impose a minimum benefit to qualify for actual cash (Arkansas, Indiana, New Jersey, New Mexico, North Dakota, Connecticut, Illinois, Minnesota, Montana, West Virginia, and Wisconsin). Calculations in the table reflect state minimum benefit policies, which lower TANF exit points. c. Wayne County (Detroit) d. Minnesota combines TANF and food stamps in a single benefit. This number reflects only the cash portion of the grant. e. New York City f. Standard counties operate programs under state rules. In addition, North Carolina’s program allows certain “electing counties” to have more flexibility in their program rules. “Electing counties” decide whether to offer the three-month 100% disregard. g. Chittenden County h. For community service (all family sizes). i. For participation in W-2 transition program (all family sizes). CRS-16 Maximum Hours a Minimum Wage Earner Can Work and Retain Eligibility for TANF. Another way to illustrate how states treat families with earners is to consider a minimum wage worker and how many hours she may work and remain eligible for TANF. That is, in how many states can a minimum wage earner work 20 hours or 40 hours per week and remain eligible for TANF? Table 5 shows the maximum number of hours per week a person earning the minimum wage could work and still retain eligibility for TANF cash assistance as of January 1, 2004. (For the dollar amounts by month of employment see Appendix B.) In states where the minimum wage is above the federal $5.15 per hour, the higher state minimum wage was used in the calculation. The information in the table is based on the rules for a family of three (the average family size for those on cash assistance). Because the rules for counting or disregarding earnings sometimes change depending on how long a recipient has been working — states sometimes have generous disregards of earnings for the first few months on the job — these maximum hours are shown for months one through 13 on the job. Most recipients working 20 hours per week remain eligible for TANF cash. The table shows that all states except Mississippi allow a minimum wage earner, with a family of three, working 20 hours per week to have her family remain on TANF in the first month of employment. However, after the third month on a job, this family would no longer be eligible for cash benefits in Alabama; after the fourth month on a job, the family would no longer be eligible for cash benefits in Texas. After a year working (month 13 on a job) a recipient remains eligible for some TANF cash in 46 jurisdictions. On the other hand, TANF recipients working 40 hours a week often lose eligibility for TANF cash — though in a majority of states TANF cash is still paid, albeit in some states for a short period of time. In the first month on a job, a recipient who gets a minimum wage job and works 40 hours per week remains eligible for TANF cash assistance in 29 jurisdictions. However, after a year of work (month 13 on a job), she would remain eligible for TANF cash in only 17 jurisdictions. Table 5. Maximum Hours per Week That a Minimum Wage Earner Can Work and Retain Eligibility for TANF Cash Assistance (Based on January 2004 Benefit Levels and Minimum Wages) State Alabama Alaska Arizona Arkansas California Colorado Connecticut 1 n/a 63 25 31 55 55 41 2 n/a 63 25 31 55 55 41 3 n/a 63 25 31 55 55 41 4 11 63 25 31 55 55 41 5 11 63 25 31 55 55 41 Month on a job 6 7 8 11 11 11 63 63 63 25 25 25 31 31 31 55 55 55 55 55 55 41 41 41 9 11 63 25 31 55 55 41 10 11 63 25 31 55 55 41 11 11 63 25 31 55 55 41 12 11 63 25 31 55 55 41 13 11 57 25 31 55 32 41 CRS-17 State Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 1 57 47 2 57 47 3 57 47 4 57 47 5 39 47 35 33 49 28 49 51 46 35 n/a 56 37 34 39 34 40 19 50 31 33 n/a 55 n/a 40 57 n/a 57 43 30 20 36 43 52 31 45 77 47 37 56 34 33 29 23 35 33 49 28 49 51 46 35 n/a 56 37 34 39 34 40 19 50 31 33 n/a 55 38 40 57 n/a 57 43 30 20 36 43 52 31 45 77 47 37 56 34 33 29 23 35 33 49 28 49 51 46 35 39 56 37 34 39 34 40 19 50 31 33 n/a 55 38 40 57 n/a 57 43 30 20 36 43 52 31 45 77 47 37 56 34 33 29 23 35 33 49 28 49 51 46 35 39 56 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 57 43 30 20 36 43 52 31 45 77 47 37 56 34 33 29 23 35 23 49 28 49 51 46 35 39 56 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 57 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 Month on a job 6 7 8 39 39 39 47 47 47 35 23 49 28 49 51 46 35 39 56 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 57 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 35 23 49 28 49 51 46 35 28 15 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 44 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 35 23 49 28 49 51 46 35 28 15 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 44 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 9 39 47 10 39 47 11 39 47 12 39 47 13 38 47 35 23 49 28 49 51 46 35 28 15 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 44 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 35 23 49 28 49 51 46 35 28 15 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 38 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 35 23 49 28 49 51 46 35 28 15 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 38 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 35 23 49 28 49 51 46 35 28 15 37 34 39 34 40 19 50 31 33 37 55 38 40 57 30 38 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 35 22 49 28 49 51 46 35 28 15 37 34 39 34 40 19 16 31 33 19 55 38 40 57 30 38 43 30 20 36 43 31 31 45 14 47 37 56 34 33 29 23 Source: Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. Minimum wage data by state are from the Department of Labor (DoL). CRS-18 Family Income by Hours per Week of Work Most states still base TANF cash welfare payments on the degree of a family’s financial need, and reduce cash benefits for a family with nonwelfare income such as earnings. That is, a one dollar increase in earnings often yields a family less than a one dollar increase in total income. However, the combined family income of families with the same work effort (20 hours per week, 40 hours per week) varies widely by state depending on their TANF cash benefit amounts and how they count the earnings of family workers. Table 6 shows the net earned income, tax credits, food stamp benefits, and TANF benefits for a family of three who begin working 20 hours per week at minimum wage for one year. When a state has a minimum wage rate higher than the national minimum wage, the state’s minimum wage is used in calculating earnings. The net earnings column shows gross earnings less employee Federal Insurance Contributions Act (FICA) taxes. The EITC column shows the effect of the EITC on gross earnings.4 The TANF column shows the monthly benefit at month 13 of employment annualized.5 The food stamp column shows the annualized food stamp benefit based upon monthly gross earnings and TANF benefits. The combined total column shows the summation of income from the four previous columns. The columns to the right show the respective dollar amounts on the left as a percent of the 2004 poverty threshold issued by the Department of Health and Human Services. In month 13 of employment, no TANF benefits are paid to half-time minimum wage workers in Alabama, Louisiana, Mississippi, Missouri, and Nevada. In seven states — Alaska, California, Connecticut, Hawaii, Massachusetts, Rhode Island, and Vermont — the combined total exceeds the federal poverty threshold. Table 7 shows the same information as Table 6, except that the worker is employed for 40 hours per week for one year. At this level of income, 17 states pay a TANF benefit for a family of three in month 13 on a job. Families in every state have combined total incomes above the poverty threshold based on federallydetermined EITC and food stamp benefits. Earnings plus EITC and food stamps yield an income for a family of three equal to 105% of the poverty threshold in the 48 contiguous states and the District of Columbia (Alaska and Hawaii have different poverty thresholds). However, at this level of earned income, the largest component of income is earnings, followed by EITC. 4 For more information on EITC, see CRS Report RS21477, The Earned Income Tax Credit: Policy and Legislative Issues, by Christine Scott. 5 Benefits may be zero in some months. In Alabama, for example, a recipient working 20 hours per week at minimum wage would receive a TANF benefit only in months one through four. CRS-19 Table 6. Annualized Earnings and Income from Selected Benefit Programs for a Single Parent with Two Children, Working 20 Hours per Week at Minimum Wage, in the 13th Month of Work, January 1, 2004 State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Net earnings $4,942 6,862 4,942 4,942 6,478 4,942 6,814 5,902 5,902 4,942 4,942 5,998 4,942 5,278 4,942 4,942 4,942 4,942 4,942 5,998 4,942 6,478 EITC $2,141 2,972 2,141 2,141 2,806 2,141 2,951 2,556 2,556 2,141 2,141 2,598 2,141 2,286 2,141 2,141 2,141 2,141 2,141 2,598 2,141 2,806 TANF $0 7,920 1,164 2,448 6,288 2,064 7,632 3,060 3,048 2,160 816 5,040 1,452 2,844 2,112 2,964 2,580 1,320 0 4,836 2,508 4,620 Food Combined stamps total $3,648 $10,731 1,932 19,686 3,300 11,547 2,904 12,435 1,356 16,928 3,024 12,171 864 18,261 2,472 13,990 2,484 13,990 3,000 12,243 3,396 11,295 4,320 17,956 3,204 11,739 2,700 13,108 3,012 12,207 2,760 12,807 2,868 12,531 3,252 11,655 3,648 10,731 1,920 15,352 2,892 12,483 1,860 15,764 Net Food Combined earnings EITC as a TANF as a stamps as a total as a as a % of % of % of % of % of poverty poverty poverty poverty poverty 32% 14% 0% 23% 68% 35 15 40 10 100 32 14 7 21 74 32 14 16 19 79 41 18 40 9 108 32 14 13 19 78 45 19 49 6 120 38 16 20 16 89 38 16 19 16 89 32 14 14 19 78 32 14 5 22 72 33 14 28 24 100 32 14 9 20 75 35 15 19 18 86 32 14 13 19 78 32 14 19 18 82 32 14 16 18 80 32 14 8 21 74 32 14 0 23 68 38 17 31 12 98 32 14 16 18 80 41 18 29 12 101 CRS-20 State Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Net earnings 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 4,942 6,622 4,942 6,478 4,942 4,942 4,942 4,942 4,942 6,478 EITC 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,141 2,868 2,141 2,806 2,141 2,141 2,141 2,141 2,141 2,806 TANF 3,144 3,696 0 0 2,280 3,048 0 4,824 2,412 2,736 6,192 1,320 3,324 3,300 1,548 1,932 2,376 4,152 1,116 2,496 2,220 0 4,740 4,596 Food Combined stamps total 2,700 12,927 3,840 14,619 3,648 10,731 3,648 10,731 2,964 12,327 2,724 12,855 3,648 10,731 2,196 14,103 2,916 12,411 2,820 12,639 1,788 15,063 3,252 11,655 2,652 13,059 2,652 13,035 3,180 11,811 2,628 14,050 2,928 12,387 2,004 15,440 3,312 11,511 2,892 12,471 2,976 12,279 3,648 10,731 2,220 14,043 1,872 15,752 Combined Food Net earnings EITC as a TANF as a stamps as a total as a % of % of as a % of % of % of poverty poverty poverty poverty poverty 32 14 20 17 82 32 14 24 25 93 32 14 0 23 68 32 14 0 23 68 32 14 15 19 79 32 14 19 17 82 32 14 0 23 68 32 14 31 14 90 32 14 15 19 79 32 14 17 18 81 32 14 40 11 96 32 14 8 21 74 32 14 21 17 83 32 14 21 17 83 32 14 10 20 75 42 18 12 17 90 32 14 15 19 79 43 18 27 13 101 32 14 7 21 73 32 14 16 18 80 32 14 14 19 78 32 14 0 23 68 32 14 30 14 90 43 18 30 12 103 CRS-21 State Virginia Washington West Virginia Wisconsin Wyoming Net earnings 4,942 6,872 4,942 4,942 4,942 EITC 2,141 2,976 2,141 2,141 2,141 TANF 4,668 2,820 2,220 2,760 1,128 Food Combined stamps total 2,244 13,995 2,292 14,960 2,976 12,279 2,820 12,663 3,300 11,511 Source: Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. Combined Food Net earnings EITC as a TANF as a stamps as a total as a % of % of as a % of % of % of poverty poverty poverty poverty poverty 32 14 30 14 89 45 20 19 15 98 32 14 14 19 78 32 14 18 18 81 32 14 7 21 73 CRS-22 Table 7. Annualized Earnings and Income from Selected Benefit Programs for a Single Parent with Two Children, Working 40 Hours per Week at Minimum Wage, in the 13th Month of Work, January 1, 2004 State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Earnings $9,885 13,724 9,885 9,885 12,956 9,885 13,628 11,804 11,804 9,885 9,885 11,996 9,885 10,557 EITC $4,282 4,127 4,282 4,282 4,300 4,282 4,149 4,300 4,300 4,282 4,282 4,300 4,282 4,300 9,885 9,885 9,885 9,885 9,885 11,996 9,885 12,956 4,282 4,282 4,282 4,282 4,282 4,300 4,282 4,300 TANF $0 3,708 0 0 2,772 0 7,632 0 924 0 0 1,716 0 936 780 828 0 0 0 0 0 0 Food Combined stamps total $2,364 $16,531 1,404 22,963 2,364 16,531 2,364 16,531 732 20,760 2,364 16,531 0 25,409 1,860 17,964 1,584 18,612 2,364 16,531 2,364 16,531 3,768 21,780 2,364 16,531 1,908 17,701 2,124 2,112 2,364 2,364 2,364 1,812 2,364 1,560 17,071 17,107 16,531 16,531 16,531 18,108 16,531 18,816 Net Food Combined earnings EITC TANF stamps total as a % of as a % of as a % of as a % of as a % of poverty poverty poverty poverty poverty 63% 27% 0% 15% 105% 70 21 19 7 117 63 27 0 15 105 63 27 0 15 105 83 27 18 5 132 63 27 0 15 105 87 27 49 0 162 75 27 0 12 115 75 27 6 10 119 63 27 0 15 105 63 27 0 15 105 67 24 10 21 121 63 27 0 15 105 67 27 6 12 113 63 63 63 63 63 77 63 83 27 27 27 27 27 27 27 27 5 5 0 0 0 0 0 0 14 13 15 15 15 12 15 10 109 109 105 105 105 116 105 120 CRS-23 State Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Earnings 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 9,885 13,244 9,885 12,956 9,885 9,885 9,885 9,885 9,885 12,956 EITC 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,282 4,237 4,282 4,300 4,282 4,282 4,282 4,282 4,282 4,300 TANF 0 372 0 0 0 0 0 2,148 0 2,196 3,576 0 0 624 0 0 0 648 0 0 1,656 0 2,064 0 Food Combined stamps total 2,364 16,531 3,840 18,379 2,364 16,531 2,364 16,531 2,364 16,531 2,364 16,531 2,364 16,531 1,716 18,031 2,364 16,531 1,704 18,067 1,284 19,027 2,364 16,531 2,364 16,531 2,172 16,963 2,364 16,531 1,488 18,969 2,364 16,531 1,368 19,272 2,364 16,531 2,364 16,531 1,860 17,683 2,364 16,531 1,740 17,971 1,560 18,816 Combined Food Net total stamps earnings EITC TANF as a % of as a % of as a % of as a % of as a % of poverty poverty poverty poverty poverty 63 27 0 15 105 63 27 2 25 117 63 27 0 15 105 63 27 0 15 105 63 27 0 15 105 63 27 0 15 105 63 27 0 15 105 63 27 14 11 115 63 27 0 15 105 63 27 14 11 115 63 27 23 8 121 63 27 0 15 105 63 27 0 15 105 63 27 4 14 108 63 27 0 15 105 85 27 0 9 121 63 27 0 15 105 83 27 4 9 123 63 27 0 15 105 63 27 0 15 105 63 27 11 12 113 63 27 0 15 105 63 27 13 11 115 83 27 0 10 120 CRS-24 State Virginia Washington West Virginia Wisconsin Wyoming Earnings 9,885 13,743 9,885 9,885 9,885 EITC 4,282 4,123 4,282 4,282 4,282 TANF 4,668 0 0 0 0 Food Combined stamps total 960 19,795 1,356 19,222 2,364 16,531 2,364 16,531 2,364 16,531 Source: Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. Combined Food Net total stamps earnings EITC TANF as a % of as a % of as a % of as a % of as a % of poverty poverty poverty poverty poverty 63 27 30 6 126 87 26 0 9 123 63 27 0 15 105 63 27 0 15 105 63 27 0 15 105 CRS-25 Earnings Disregards and TANF Work Participation Standards The adoption of more generous earnings disregards — and consequent expansion of eligibility for families on the rolls who have earnings — is one of the most profound changes states made to their cash assistance programs once freed from federal rules for how they must count the earnings of a family with a working adult. These more generous disregards have been seen as increasing incentives to work: the more generous disregards mean that the implicit “tax rate” on earnings (reduced welfare benefits as earnings increase) is reduced. More generous earnings disregards also have been seen as part of strategies to help “make work pay,” as continued cash welfare benefits supplement the earnings of low wage earners. From the state’s perspective the more generous earnings disregards also have a practical consequence: they help states meet TANF work participation standards. TANF law requires states to meet minimum standards of work participation, and the share of all families (with an adult) who must engage in specified work activities for minimum hours weekly climbed from a statutory level of 25% in FY1997 to 50% in FY2002 and following years. One of the specified work activities creditable toward states meeting work participation standards is “unsubsidized employment,” combining welfare and work. This differs from the pre-1996 program, the Job Opportunity and Basic Skills (JOBS) training program, which counted “unsubsidized employment” only in the first month on a job toward participation standards. In other months, recipients who worked 35 hours per week or more were excluded from the participation rate calculation. Under pre-1996 federal rules, recipients who went to work soon became ineligible for cash assistance. With the adoption of more generous earnings disregards under TANF, the proportion of adults who combine welfare with unsubsidized work has risen sharply from 11% in FY1996 to 26% in FY2002. Combining welfare and work is by far the most common activity among TANF adults — job search ranks a distant second in terms of the percent of TANF adults engaged in an activity at 6%. Though the work reward policies of states help them meet TANF work participation requirements, reduce disincentives to work, and help “make work pay,” research shows that they tend to increase the amount of time families spend on cash welfare.6 Thus, the work reward policies implicitly conflict with TANF time limits on cash assistance and the federal law’s statutory goal of ending dependence on government benefits.7 Longer use of cash welfare, even by parents with jobs, sometimes is viewed as prolonging welfare “dependence.” 6 See U.S. Congress, House Ways and Means Committee, 2004 Green Book, Appendix L, “Assessing the Effects of Welfare Reform Initiatives,” Mar. 2004. 7 TANF sets a 60-month time limit on the use of federal funds to pay cash assistance to a family with an adult. To continue the work incentive for more than 60 months, states must use their own funds — though state funds spent for families who passed the time limit are counted toward meeting TANF’s maintenance of effort (MOE) requirement. CRS-26 Appendix A. Resource Limits Under AFDC, states could not set their countable resource limit above $1,000 for both applicants and recipients. Under TANF, states have the flexibility to establish their own financial eligibility guidelines, and most states have raised their resource limits. Of the states that raised their resource limits, the majority have adopted rules similar to that of the food stamp program. The resource limit for most families in the food stamp program is $2,000 per family. Although the definition of what constitutes a resource varies from state to state, it generally includes savings accounts and other liquid assets. States do not count the primary residence against the resource limit and some states disregard life insurance policies as an asset. A number of states allow recipients to set up individual development accounts (IDAs) for specific purposes, such as education, home purchase, and business start-up capital. The savings in these accounts may be excluded. Additionally, eight states exclude all vehicles from countable assets and 21 states exclude one vehicle per family. Other states exclude a portion of the auto’s value. Table A1. TANF Resource Limits and Vehicle Disregards, January 2004 State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Resource limits Applicants and recipients: Household without aged or disabled member: $2,000 Household with an aged or disabled member: $3,000 Applicants and recipients: Household without a member 60+ years: $2,000 Household w/ a member 60+ years: $3,000 Applicants and recipients: $2,000 Applicants and recipients: $3,000 Applicants and recipients: Household without aged or disabled member: $2,000 Household with an aged or disabled member: $3,000 Applicants and recipients: $2,000 Applicants and recipients: $3,000 Applicants and recipients: $1,000 Applicants and recipients: Household without a member 60+ years: $2,000 Household with a member 60+ years: $3,000 Vehicle disregards All vehicles Any vehicle used for family transportation, to produce self-employment income, or participate in an approved work activity All vehicles 1 vehicle $4,650 of fair market value 1 vehicle $9,500 of equity value $4,650 of equity value All vehicles CRS-27 State Florida Georgia Resource limits Applicants and recipients: $2,000 Applicants and recipients: $1,000 Hawaii Idaho Applicants and recipients: $5,000 Applicants and recipients: $2,000 Illinois Applicants and recipients: Family size 1: $2,000 Family size 2: $3,000 Family size 3: $3,050 Family size 4: $3,100 Family size 5: $3,150 Family size 6: $3,200 Family size 7: $3,250 Family size 8: $3,300 Applicants only: $1,000 Recipients only: $1,500 Applicants only: $2,000 Recipients only: $5,000 Applicants and recipients: Applicants and recipients: Applicants and recipients: Applicants and recipients: Applicants and recipients: $2,000 Applicants and recipients: Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi $5,000 of equity value $2,000 $2,000 $2,000 $2,000 $2,500 Applicants and recipients: $3,000 Applicants only: $2,000 Recipients only: $5,000 Applicants and recipients: $2,000 Missouri Applicants only: $1,000 Recipients only: $5,000 Montana Nebraska Applicants and recipients: $3,000 Applicants and recipients: One person: $4,000 Two or more persons: $6,000 Applicants and recipients: $2,000 Nevada Vehicle disregards $8,500 of equity value Employed, engaged in training, or actively seeking employment: $4,650 of equity value Not employed, in training, or actively seeking employment: $1,500 of equity value All vehicles $4,650 of fair market value 1 vehicle $4,115 of equity value for each adult All vehicles All vehicles All vehicles 1 vehicle All vehicles $5,000 of equity value and $10,000 of “fair market value” All vehicles $7,500 of loan value Any vehicle used for personal and household transportation 1 vehicle 2nd vehicle: $1,500 equity value 1 vehicle 1 vehicle 1 vehicle CRS-28 State New Hampshire Resource limits Applicants and recipients: Received benefits in last 6 months: $2,000 Applicants only: Received no benefits in last 6 months: $1,000 Applicants and recipients: $2,000 Vehicle disregards 1 vehicle per adult New Mexico Applicants and recipients: Liquid resource limit of $1,500. Non-liquid resource limit of $2,000 1 vehicle in areas of public transportation. In other areas, 1 vehicle for each adult. New York Applicants and recipients: Household without 60+ member: $2,000 Household with a 60+ member: $3,000 $9,300 of fair market value if used for employment or seeking employment (localities have the option to set this limit higher); $4,650 of fair market value otherwise. North Carolina North Dakota 1 vehicle per adult 1 vehicle Pennsylvania Rhode Island Applicants and recipients: $3,000 Applicants and recipients: One person: $3,000; Two people: $6,000, plus $25 per additional family member No resource limit Applicants and recipients: $1,000 Applicants and recipients: Someone in JOBS program: $10,000 No one in JOBS program: $2,500 Applicants and recipients:$1,000 Applicants and recipients: $1,000 South Carolina South Dakota Applicants and recipients: $2,500 Applicants and recipients: $2,000 Tennessee Texas Applicants and recipients: $2,000 Applicants and recipients: $1,000 New Jersey Ohio Oklahoma Oregon $9,500 of fair market value 2nd vehicle: $4,650 of fair market value No resource limit $5,000 of equity value $10,000 of equity value 1 vehicle One vehicle per adult, not to exceed two vehicles per household 1 vehicle per driver 1 vehicle 2nd vehicle: $4,650 of fair market value $4,600 of equity value $4,650 of fair market value CRS-29 State Utah Resource limits Applicants and recipients: $2,000 Vermont Applicants and recipients: $1,000 Virginia Washington West Virginia Wyoming No resource test Applicants and recipients: $1,000 Applicants and recipients: $2,000 Applicants and recipients: $2,500 Wisconsin Wyoming Applicants and recipients: $2,500 Applicants and recipients: $2,500 Vehicle disregards Household with a disabled member/ transportation: 1 vehicle No disabled member / transportation: $8,000 of equity value 1 vehicle per adult with a maximum of 2 vehicles per household No resource test $5,000 of equity value 1 vehicle $12,000 of fair market value $10,000 of equity value $12,000 of fair market value Source: Table prepared by the Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. CRS-30 Appendix B. TANF Exit Points, Monthly Earnings That End Eligibility, Family of Three, January 1, 2004 ($) State Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas 1 n/a 1,961 571 696 1,613 1,227 1,272 1,520 1,267 786 740 1,343 631 1,185 1,148 1,040 788 2 n/a 1,961 571 696 1,613 1,227 1,272 1,520 1,267 786 740 1,343 631 1,185 1,148 1,040 788 3 n/a 1,961 571 696 1,613 1,227 1,272 1,520 1,267 786 740 1,343 631 1,185 1,148 1,040 788 4 256 1,961 571 696 1,613 1,227 1,272 1,520 1,267 786 740 1,343 631 1,185 1,148 1,040 788 5 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 6 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 7 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 8 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 9 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 10 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 11 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 12 256 1,961 571 696 1,613 1,227 1,272 1,054 1,267 786 534 1,343 631 1,185 1,148 1,040 788 13 256 1,768 571 696 1,613 733 1,272 1,024 1,267 786 504 1,343 631 1,185 1,148 1,040 788 Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi n/a 1,250 1,023 778 1,143 761 914 441 n/a 1,250 1,023 778 1,143 761 914 441 881 1,250 1,023 778 1,143 761 914 441 881 1,250 1,023 778 1,143 761 914 441 881 1,250 1,023 778 1,143 761 914 441 881 1,250 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 628 350 1,023 778 1,143 761 914 441 CRS-31 State Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 1 1,116 700 751 n/a 1,230 n/a 901 1,272 n/a 1,279 976 684 616 822 1,258 1,174 694 1,020 1,727 1,050 1,082 1,252 1,072 755 1,462 530 2 1,116 700 751 n/a 1,230 848 901 1,272 n/a 1,279 976 684 616 822 1,258 1,174 694 1,020 1,727 1,050 1,082 1,252 1,072 755 1,462 530 3 1,116 700 751 n/a 1,230 848 901 1,272 n/a 1,279 976 684 616 822 1,258 1,174 694 1,020 1,727 1,050 1,082 1,252 1,072 755 1,462 530 4 1,116 700 751 845 1,230 848 901 1,272 681 1,279 976 684 616 822 1,258 1,174 694 1,020 1,727 1,050 1,082 1,252 1,072 755 1,462 530 5 1,116 700 751 845 1,230 848 901 1,272 681 1,279 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 6 1,116 700 751 845 1,230 848 901 1,272 681 1,279 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 7 1,116 700 751 845 1,230 848 901 1,272 681 984 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 Source: Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs. 8 1,116 700 751 845 1,230 848 901 1,272 681 984 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 9 1,116 700 751 845 1,230 848 901 1,272 681 984 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 10 1,116 700 751 845 1,230 848 901 1,272 681 852 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 11 1,116 700 751 845 1,230 848 901 1,272 681 852 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 12 1,116 700 751 845 1,230 848 901 1,272 681 852 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 13 1,116 700 751 428 1,230 848 901 1,272 681 852 976 684 616 822 1,258 704 694 1,020 327 1,050 1,082 1,252 1,072 755 1,462 530 CRS-32 Appendix C. State Benefit Computation Methods The formula for computing benefits varies among the states. This appendix provides a description of benefit computation formulas. Most states pay reduced benefits to families with nonwelfare income. Generally, countable income is subtracted from a dollar standard (called the “payment standard”) to determine benefits. The most common benefit computation formula subtracts countable income from a payment standard, and the benefit amount is the difference between the payment standard and income. However, some states have maximum benefit payments that constrain benefit payment; others pay a percentage of the difference between the state’s payment standard and countable income. Table C1 provides a typology of computation methods used by states in their TANF cash assistance programs. CRS-33 Table C1. Benefit Computation Methods Used by States for TANF Cash Assistance, January 2004 Benefit = payment standard countable income Benefit = the lesser of the payment standard countable income or the maximum benefit Benefit = payment standard countable income * ratable reduction Benefit = the lesser of the payment standard countable income * ratable reduction or the maximum benefit Other benefit computation methods Alabama Arizona California District of Columbia Florida Hawaii Idaho Illinois Indiana Iowa Kansas Louisiana Maryland Massachusetts Michigan Missouri Montana Nevada New Hampshire New Jersey New Mexico New York Ohio Oklahoma Oregon Pennsylvania Rhode Island South Dakota Texas Utah Vermont Washington West Virginia Wyoming Georgia Maine Minnesota Nebraska North Dakota Tennessee North Carolina South Carolina Alaska Delaware Colorado Kentucky Mississippi Arkansas Connecticut Virginia Source: Congressional Research Service (CRS) based on a survey of state TANF cash assistance programs.