In Focus

Jun 30, 2016  |  PERMALINK »

Arizona Cuts TANF Lifetime Limit to 12 Months—Harshest in the Country

By Jessica Gehr

Effective July 1, Arizona will lower its lifetime limit on receipt of cash assistance under the Temporary Assistance for Needy Families (TANF) block grant to just 12 months, the shortest in the nation. When this limit takes effect tomorrow, 938 families including 1,500 children will immediately lose benefits that allow them to meet basic needs, as well as the connection to services that help parents obtain skills, education, or employment. Moreover, families who have previously received TANF assistance for at least 12 months will no longer be able to receive help if they lose their job or have a new baby.

This move by Arizona is the latest in a series of draconian reductions in the lifetime limit, beginning in 2010 when the limit was lowered from 60 months to 36 months and continuing in 2011 when the state further reduced TANF’s lifetime limit to 24 months. In addition to lowering the number of months that families can receive assistance, in 2009, Arizona reduced the amount of cash assistance provided to families through TANF by 20 percent. As a result of all these cuts, for every 100 Arizona families in poverty, just nine receive cash benefits from TANF — down from 55 families before welfare reform in 1996, according to the Center on Budget and Policy Priorities.

Federal TANF law requires states to provide families with an adult receiving benefits no more than 60 months of federally funded TANF assistance. However, TANF does not establish minimum benefits, and many states have established shorter limits. The Arizona time limit even applies to families where a relative is not personally receiving benefits but is caring for a child who is eligible for assistance. The state will save less than one percent of its annual budget by limiting TANF eligibility.

TANF block grant funds can be used for a broad range of services that benefit low-income families. At the same time that Arizona has cut TANF benefits, it has increasingly used TANF funds to support child welfare activities. In FY 2014, Arizona reported three-quarters of combined TANF and state maintenance of effort (MOE) spending as “other,” which is possible because the structure of the block grant allows states to divert funds from TANF to plug budget holes in other areas. While child welfare is an important service, states should not divert TANF funds away from families in need to finance other shortfalls. Instead, states should spend general-fund dollars to address the increasing demands in other areas of the state budget. 

 

Limiting a critical work support such as TANF exacerbates the struggles families are experiencing and can make it harder for parents to get back in the workforce. According to Arizona’s TANF agency data, more than a quarter of the parents who will be cut off tomorrow are currently in education and training activities; losing benefits will make it harder for them to complete this training and find lasting work. These cuts will force more children into deep poverty and hardship, putting them at risk of lasting negative effects on their mental and physical health, as well as educational and economic outcomes. Arizona should reverse this ill-advised and short-sighted policy choice. And as part of TANF reauthorization, Congress should establish minimum standards for TANF benefits and require states to spend a minimum portion of their TANF funds on cash assistance, child care, and work activities.

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Apr 29, 2016  |  PERMALINK »

HHS Guidance Highlights State Responsibility to Provide Less-Costly Access to TANF Benefits

By Elizabeth Lower-Basch

This week, the Administration for Children and Families (ACF) at the U.S. Department of Health and Human Services issued a “program instruction” to state agencies operating Temporary Assistance for Needy Families (TANF) programs. It provides first-ever guidance on the important requirement that states ensure clients have free or low-cost access to their benefits. In a 2014 joint paper from CLASP, the California Reinvestment Coalition (CRC), and the Asset Building Program at the New America Foundation, we addressed this issue and highlighted best practices for electronic benefit transfer (EBT) payment cards used to deliver TANF benefits.  

Among the key points raised in the new guidance are:

  • States should maximize the flexibility for recipients to access cash withdrawals, including allowing clients to have benefits direct deposited into their own bank accounts.  Direct deposit to a consumer’s bank account often confers significant advantages, including access to a wider ATM network, the ability to pay bills and make purchases online, and a mechanism for saving and participating in the financial mainstream, which can be particularly helpful once the household has transitioned off of TANF. 
  • States should minimize or eliminate restrictions on the frequency or number of cash withdrawals and the amount that a recipient may withdraw at any one time.  The guidance is clear that provisions such as Kansas’ proposal to limit recipients to $25 withdrawals a day are disallowed because they would “prevent a needy TANF family from having adequate access to its cash assistance and impose an additional burden by requiring multiple trips to an ATM to access assistance.”
  • States should strive to minimize or eliminate withdrawal fees and ATM surcharges for TANF recipients, and must provide recipients an opportunity to access assistance with no fees or charges.  While most states already provide a limited number of free withdrawals each month, others charge fees starting with the first transaction.  States can also limit the surcharges that clients experience by contracting with a network having a large number of ATMs.  For example, California recently announced a new EBT contract that, starting in 2017, will allow TANF recipients to withdraw cash and check their balance without surcharges at Bank of America and NYCE network ATMs statewide.
  • States should maximize geographic distribution of ATMs and/or provide other cash access points so clients do not have to travel excessive distances—sometimes requiring significant expense and time—in order to access their benefits without surcharges.

In a CRC study, parents receiving TANF described the impacts of ATM fees: “Being on assistance means we need financial help and every cent matters. Paying fees to withdraw money takes away from the money our families need.”  In this guidance, ACF commits to reviewing state TANF plans to ensure that they are addressing these issues.  All states should review their policies and contracts to ensure that TANF benefits are helping needy families, and not being diverted to bank fees and that they are not otherwise creating unnecessary hurdles to accessing benefits.

Mar 4, 2016  |  PERMALINK »

It’s Not 1996 Anymore; TANF Cash Assistance Doesn’t Go Far Enough

By Randi Hall

Since 1996, inflation has eroded the value of a dollar by more than 30 percent. Some key costs have gone up much more—the average fair market rent for a two-bedroom apartment in the United States has increased by 71 percent and average transit fares have increased by 50 percent. But in many states, families with children receiving cash assistance under the Temporary Assistance for Needy Families (TANF) block grant are struggling to make ends meet with benefits that have remained stuck at 1996 levels.

In 23 states, TANF benefit levels have either decreased or remain unchanged since welfare reform was enacted in 1996. In some states, it has been even longer since families received an increase. The Mid-Minnesota Legal Aid recently released a report highlighting the erosion in value of basic cash assistance under the state’s Minnesota Family Investment Program (MFIP). A family of three can receive a maximum monthly grant of $532 under MFIP, an amount determined in 1986 that has not increased since. Similarly, New Jersey Policy Perspective reports that the maximum amount of assistance for a family of three has been set at $424 per month since 1987. Basic cash assistance under TANF leaves low-income families with significant gaps to meet their basic needs.

Cash assistance has failed to serve those who need it most, both in its nominally small grant amounts and in the restrictive income limits that disqualify working poor families. In 26 states and the District of Columbia, a family of three reporting annual earnings at 50 percent of the federal poverty level, or $19,790 in 2014, made too much to qualify for cash assistance under TANF. Annually adjusting the cash assistance amounts would immediately benefit working poor families facing material hardship. For example, if Minnesota’s monthly cash grant had been adjusted annually for inflation, a family of three would afford to purchase $1,148 in goods and services (more than double the purchasing power of the $532 amount that’s been frozen in time since 1986.)

A few states are trying to address this issue. This year, New Jersey lawmakers have stated their intent to raise the state’s monthly benefit grant over three years while calling for an annual cost of living increase. State representatives in Virginia have offered two separate bills that would increase the monthly benefit amount for TANF recipients.

One reason benefit levels have remained stagnant in so many states is that the TANF block grant itself has not been adjusted for inflation since the program was created. Another reason is that many states use a large share of their grants for purposes other than cash assistance. President Obama’s proposed FY 2017 budget addresses both these issues. It would increase the block grant by $8 billion over 5 years—requiring a corresponding increase in state spending—and would also require states to spend at least 55 percent (rising to 60 percent over time) of the funds for core purposes and benefits: cash assistance, work-related activities, and child care. While these improvements are vital to expand economic opportunity and stability for poor families with children, states should not wait for federal action to adjust monthly benefit amounts to meet the cost of living in the 21st century. After all, it’s not 1996 anymore.

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