Lessons Learned

Apr 08, 2011

By Elizabeth Lower-Basch

In 1995 and 1996, the Republican-controlled Congress sought to convert into block grants three key programs for low-income families -- Aid to Families with Dependent Children (AFDC), Food Stamps, and Medicaid.  The welfare reform bill that Congress ultimately passed and President Bill Clinton signed into law did block grant AFDC, now renamed Temporary Assistance for Needy Families (TANF), but left the fundamental structure of the other two programs alone.  This week, proposals to block grant both Medicaid and Food Stamps (now known as the Supplemental Nutritional Assistance Program, or SNAP) have resurfaced as part of Rep. Paul Ryan's budget plan.  It is therefore appropriate to examine what has happened to TANF in the fifteen years since it was made a block grant.

  • Funding has been eroded over time. The core block grant has not been adjusted for inflation since it was created, and thus the value has eroded by nearly 30 percent. Even the $5 billion Emergency Fund provided by the 2009 Recovery Act did not bring the value of funds available under TANF back to their 1996 levels. The "Contingency Fund" established in 1996 has been fully exhausted, and Congress has not replenished it.
  • State flexibility has led to a patchwork safety net. Maximum monthly cash assistance benefits for a single parent family of three in June 2010 ranged from $170 in Mississippi to $923 in Alaska. While overall caseloads increased modestly during the recession, in six states, caseloads continued to decline even as unemployment reached historic highs.
  • States have cut benefits in the recession due to budget constraints. Since the Emergency Fund expired in September 2010, at least 5 states have imposed cuts in benefit levels. Others have shortened time limits, or cut back the "earned income disregard" that ensures that recipients will have more income when they work. In Oregon, the Governor has proposed limiting benefits to a lifetime limit of just 18 months.
  • Little is known about the effectiveness of programs. TANF's primary performance measure is the work participation rate. This process measure only captures whether a recipient of cash assistance spent the required number of hours in one of the limited set of countable activities. It provides no information as to whether these activities led to the recipient finding a job or escaping poverty. This measure also fails to collect any information about the results of the services provided with TANF funds to low-income families who are not receiving cash assistance. At the same time, caseworkers are forced to spend significant portions of their time documenting hours of participation, rather than providing services to families.
  • Progress in reducing poverty and increasing work was limited to the boom years of the 1990s. Supporters of welfare reform like to claim credit for the increased work participation of single mothers during the late 1990s, and the corresponding decline in child poverty. However, all progress in these areas halted well before the current recession. Moreover, welfare reform must share the credit for these gains with a near-full-employment economy, a large expansion of the earned income tax credit, a tripling of child care funding, broadened health care coverage for low-income families, and an increased minimum wage.

Those who sincerely hope to improve services for low-income individuals and families by providing states with increased flexibility should draw warning from these lessons.  The history of TANF shows that block grants are often simply a way to cut federal funding over time while shifting responsibility for service cuts to the states.

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