In Focus

Sep 19, 2014  |  PERMALINK »

TANF Extended through Continuing Resolution

By Elizabeth Lower-Basch

Before departing to campaign, members of Congress extended the Temporary Assistance for Needy Families (TANF) block grant through December 11, 2014, as part of the continuing resolution to keep the government running.  Without this legislation, TANF would have lapsed on September 30.  Since 2010, TANF has been operating under a series of short-term extensions, often tied to appropriations bills.

While the TANF extension did not include any policy changes, it did include two funding cuts:

  • The Contingency Fund was cut to $598 million, down from the previously authorized level of $612.  In FY 2014, 20 states requested funds from the Contingency Fund. States must qualify based on high levels of unemployment or receipt of nutrition benefits, and must spend state dollars above historical levels on services for needy families. 
  • No money was provided for TANF-related research, which has been set at $15 million per year since TANF was created in 1996.   If these funds are not restored, several major studies of employment strategies currently under way will be at risk.

There is still the possibility that these cuts could be restored when Congress returns in November and grapples with how to provide for funding for the rest of the year, either through appropriations bills or an additional continuing resolution.

In addition, before recessing, the House of Representatives passed by voice vote HR 4137, which would add stores that sell marijuana to the list of locations where states are required to prohibit TANF recipients from accessing their benefits through EBT transactions.  This builds on a provision, enacted in 2012, that requires states to block recipients from withdrawing TANF benefits at liquor stores, casinos and strip clubs.  There is no evidence that either provision addresses a real problem; rather, like proposals to require recipients to submit to drug tests, they are based on unfounded stereotypes about welfare recipients. 


 

Aug 22, 2014  |  PERMALINK »

TANF Came Up Short in Response to the Recession

By Elizabeth Lower-Basch

A recent Brookings blog post poses a provocative question: “was the TANF welfare program's response to the Great Recession adequate?”  While the blog post asserts that it was, the answer is actually a resounding “no.”  As our colleagues at the Center on Budget and Policy Priorities (CBPP) have shown, while state programs varied in their response to the recession, TANF (Temporary Assistance for Needy Families) cash assistance overall failed to keep pace with sharp increases in unemployment and poverty.

The blog draws on a new Brookings paper (authored by Ron Haskins, Vicky Albert, and Kimberly Howard) that claims TANF largely met increased need during the recession.  But Brookings’ two major arguments are extremely flawed and don’t hold up to scrutiny.

TANF’s Responsiveness to Recession Unemployment Compared to the Old Program

Brookings argues that TANF is more responsive to unemployment during recessions than its predecessor program, Aid to Families with Dependent Children (AFDC), which was replaced by TANF in 1996.  While that’s technically true, it ignores important context.   Under TANF, poor single mothers are expected to work whenever possible.  AFDC had no such expectation, even when jobs were available.  Therefore, it’s not surprising that there was little correlation between AFDC single-mother caseloads and unemployment rates.  The number of families receiving cash assistance fell sharply when TANF replaced AFDC; even in the states where TANF grew the most in response to the recession, caseloads remained well below their AFDC levels.  Too often, low-income single mothers who lost their jobs in the recession often received neither TANF cash assistance nor unemployment benefits.

How to Measure TANF’s Growth During Increased Unemployment

Brookings asserts that because the recent recession hit states at somewhat different times, analyzing TANF growth during the period recognized as the “national recession” (as CBPP’s report did) does not fully capture the program’s responsiveness to increased unemployment.  Brookings offers two alternative measures: one that captures changes in a state’s TANF caseload during a period of rising unemployment, and another that captures caseload increases relative to their lowest level during the recession (completely ignoring the fact that caseloads declined in many states even as unemployment levels climbed). The first alternative is somewhat reasonable; the second is absurdly weighted in favor of caseload growth.

With its second measure, Brookings categorizes states based on whether they had higher- or lower-than-median percentage increases in unemployment rates and higher- or lower-than-median increases in TANF rolls.  Their analysis concludes that only seven states were unresponsive and problematic: Arizona, Georgia, Indiana, New Jersey, North Carolina, Rhode Island, and Tennessee.  But many of the states that they describe as “status quo”—lower than average in both categories—still had extremely high unemployment rates.  For instance, Michigan is considered a “status quo” state because its 109 percent growth in unemployment during its state-level recession was slightly less than the national average, even though  its unemployment rate climbed towards 15 percent.  That’s why it’s extremely misleading that the authors cite South Dakota, which peaked with 6 percent unemployment, as the illustrative example of a “status quo” state.   By using the median to determine a state’s responsiveness to the recession, Brookings is (by definition) asserting that just 25 states experienced high increases in unemployment—a claim with which almost no one would agree.

Michigan's total TANF family caseloads and unemployment rates from 2007 to 2011.

Having obfuscated TANF’s weakness with misleading statements, the  report then shifts to the safety net as a whole, concluding: “all in all, the American system of balancing work requirements and welfare benefits worked fairly well, even during the most severe recession since the Depression of the 1930s.”  This is true—but not thanks to TANF.  The elasticity of the safety net is largely owed to SNAP (the Supplemental Nutrition Assistance Program – formerly called Food Stamps), Unemployment Insurance, the Earned Income Tax Credit, and the Child Tax Credit—all of which respond automatically to recession and received additional boosts as part of the American Recovery and Reinvestment Act.  This distinction is critically important because some politicians, such as Congressman Paul Ryan (R-WI), want to use TANF as a model for other programs—a change that would severely undermine the safety net success of which Haskins and his co-authors cite. On the 18th anniversary of TANF, its impact on “ending welfare as we know it” remains to be seen.

Aug 8, 2014  |  PERMALINK »

Less TANF Spending on Cash, Work Activities, Child Care

By Randi Hall

According to the most recent Temporary Assistance for Needy Families (TANF) financial data, $31.6 million in federal TANF and state funds claimed toward the Maintenance of Effort (MOE) were spent or transferred in FY 2013, a slight increase of $291 million from the previous year. However, spending on core TANF purposes (including basic assistance, child care and work-related activities) continued to decline. Basic assistance spending saw the largest decline, falling by $244.3 million. In FY 2013, just 27.6 percent of TANF dollars were spent on basic assistance. The average monthly number of families receiving assistance TANF assistance in the U.S. fell by over 125,000 caseloads.  In 7 states, spending on basic assistance made up 10 percent or less of total TANF-related spending.

Funds used for refundable tax credits, including refundable Earned Income Tax Credits, also fell by $161.2 million. Combined TANF and MOE spending for all work related activities, including employment subsidies, education and training, and other work-related activities fell by $129 million (6 percent). TANF spending on child care (both direct spending and transfers to the Child Care Development Block Grant, or CCDBG) fell by $114 millionAnalysis of the most recently available CCDBG expenditure data shows that spending within that program fell to a 10-year low in FY 2012.

The category of TANF spending with the largest increase was “out-of-wedlock pregnancy prevention,” which rose by $609.4 million—a 31 percent growth from the previous year. The five states which most contributed to this increase were California, New Mexico, Oklahoma, Pennsylvania and South Carolina. States report a range of activities under this category, making it difficult to determine what these expenditures support.   The new quarterly report forms issued by the U.S. Department of Health and Human Services’ Administration for Children and Families will require states to break down expenditures into more specific categories, such as early care and education, programs that provide sex education and abstinence education, and youth work supports. These new requirements will help us better understand how funds are being used.

In addition, the new reporting requirements should reduce the share of TANF-related funds reported in broad categories such as “other nonassistance” and “authorized under prior law.”  In FY 2013, $4.6 billion or 14.6 percent of total spending was classified as “other nonassistance” and another $44.3 million was reported as “authorized under prior law.” The new reporting categories take effect in FY 2015 and should provide advocates and policymakers better data with which to analyze future TANF spending. 

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