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.