TANF Funding Cuts Result in Less Assistance to Poor Families

Jun 04, 2012

By Elizabeth Lower-Basch and Elizabeth Kenefick

New data released by the Administration on Children and Families show some of the impacts of cuts in federal fiscal year 2011 funding for the Temporary Assistance for Needy Families (TANF) block grant, which was $4.1 billion less than the previous year - a decline of nearly 19.6 percent.  The decline in funding was primarily due to Congress allowing the TANF Emergency Contingency Fund (TANF EF) to end, as well as Congress' failure to fully fund either the regular Contingency Fund or the Supplemental Grants awarded to states that were disadvantaged by the TANF block grant formula. In addition to cuts in funding, the block grant has experienced gradual erosion in its purchasing power due to inflation, which alone has reduced TANF's real value by 30 percent since the program was created in 1996. The TANF block grant provides states with funding for cash assistance and a range of other programs serving low-income children and families. All told, these cuts have serious effects for families struggling to meet their basic needs.

The new data show the hard choices states were forced to make as a result of these cuts. While state spending claimed toward the maintenance of effort (MOE) requirement increased slightly between 2010 and 2011, this was not enough to offset the deep cuts in federal funding.  Moreover, as discussed in CLASP's recent testimony for the record at a House Ways and Means Committee hearing, the increase in reported MOE spending appears to largely result from states' claiming existing government and third-party expenditures, rather than from actual new spending.

When looking at the uses of combined federal TANF and state MOE funds, the data show that states made the largest percent changes in the areas where increased spending had been supported by the TANF EF: work subsidies (-53.6 percent), non-recurrent short-term benefits (-33.6 percent), and basic assistance (-10.2 percent).  Spending on transportation and supportive services also declined (-10.8 percent). The largest decrease in dollars spent was in basic assistance, with over $1 billion less federal and MOE spent in 2011 than in 2010.

These cuts in spending result in cuts to vital life supports for low-income children and adults.  For example, in 2011 most states froze benefit levels and six states plus the District of Columbia went so far as to cut them - leading many families to see a reduction in the benefits they receive to help cover items like rent and transportation costs. These cuts were from already low grant levels - less than half the poverty level in every state. California and Arizona shortened time limits, and other states tightened exemption or extension policies. In spite of the widespread and bipartisan support for subsidized employment programs that placed over 260,000 adults and youth in jobs between 2009 and 2010 with funding from the Emergency Fund, most states terminated their programs, while others scaled them back substantially. 

These cuts are continuing in 2012. Congress provided no funding for the Supplemental Grants, which reached 17 mostly high-poverty states. Faced with a Sophie's choice between TANF cuts and delaying payments to providers of child care for low-income families, many of whom would likely have gone out of business as a result, Illinois recently reinstated a waiting period for TANF benefits. California is considering further reductions to its grant levels. With unemployment stubbornly high, these cuts are both frightening and counterproductive. Congress and state legislators both should stop trying to balance their budgets on the backs of the neediest families.

For a discussion of TANF funds used for child care assistance, read CLASP's In Focus TANF Child Care Spending in 2011 >>  

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