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.