September 28, 2001
Analysis of TANF Spending Through
the Middle of Federal Fiscal Year 2001
by Zoë Neuberger and Ed Lazere
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In the five years since the 1996 welfare law created the Temporary Assistance for Needy Families block grant, the nature and rate of state spending on low-income families has changed dramatically. In federal fiscal years 1997 and 1998 many states left a significant portion of their TANF funds unspent. The accumulation of unspent funds was largely a result of decreasing cash assistance caseloads and initial uncertainty states had about the extent of flexibility to use TANF funds to establish or expand programs to serve low-income families. Since the release of the final TANF regulations in 1999, states have generally been spending close to their full TANF grant amount each year. Many states have taken advantage of the TANF funds freed up by cash assistance caseload declines to invest in a wide range of benefits and services for low-income families, such as transportation, child care, job training, services for parents with disabilities, and substance abuse treatment.
New TANF financial data indicate that spending trends that began to appear in federal fiscal years 1999 and 2000 have continued in fiscal year 2001. Midway through the fiscal year, many states have spent an amount equal or nearly equal to half of their fiscal year 2001 TANF grant. While some states still have substantial balances of unspent funds from the early years of the program, TANF spending has increased in many states to a level that is beginning to draw down those balances in some states.
- Nationally, the use of TANF funds in the first half of fiscal year 2001 that is, TANF expenditures and TANF funds transferred to either the Social Services Block Grant or the Child Care and Development Fund equaled 93 percent of half of the fiscal year 2001 TANF allocation.
- Twenty-two states used TANF funds amounting to 95 percent or more of half of their fiscal year 2001 TANF allocation.
- Sixteen states used TANF funds exceeding half the state's fiscal year 2001 allocation plus bonuses, which means that if spending continued at the same rate throughout the year, these states would draw on balances from earlier years to strengthen programs serving low-income families.
Under the 1996 welfare law, funds that a state leaves unspent in a given year are reserved by the federal government and can be accessed by the state in future years. As a result, states that are spending their entire grant amount may still have unspent balances from prior years. Most states still have some unspent balances that are available to implement investments that help needy families overcome barriers to work and provide supports that help low-income working families remain employed.
This paper analyzes TANF spending through the middle of federal fiscal year 2001 March 31, 2001 based on expenditure data states have prepared for federal reporting purposes. (The federal fiscal year runs from October through September.) It also includes information on the amount of funds states have transferred from TANF to the Child Care and Development Fund and the Social Services Block Grant, as well as the level of expenditures states have made from their own funds as part of the TANF maintenance-of-effort requirement. This paper is an update of earlier Center reports on TANF spending.(1) While mid-year spending trends are generally indicative of spending over the course of the entire fiscal year, it is important to bear in mind that states do not necessarily spend or transfer funds at a uniform rate throughout the year.
Each state is required to report quarterly to the U.S. Department of Health and Human Services on its expenditures of TANF funds, using the "ACF-196" federal reporting form. These reports identify expenditures of TANF funds by major category assistance and non-assistance and also by more specific uses of the funds, such as education and training, child care, or transportation. The reports also show the extent to which states transferred TANF funds to the Social Services Block Grant and the Child Care and Development Fund, the amount of TANF funds that remain unspent, and expenditures states made from their own funds as a condition of receiving the TANF block grant known as state maintenance-of-effort (MOE) funds.
The ACF-196 reports for the quarter ending on March 31, 2001 were collected from May 2001 through July 2001 by the Center on Budget and Policy Priorities from the state agencies responsible for preparing the ACF-196 reports typically the budget, accounting, or federal reporting division of the state's welfare agency. These data have not been verified by the U.S. Department of Health and Human Services and thus should be considered preliminary. In addition, some states may have revised their ACF-196 reports since the time they were obtained for this analysis. With the exception of Table IV, analyses involving spending or grant amounts for prior fiscal years are based on ACF-196 forms collected by the Center on Budget and Policy Priorities for fiscal year 2001 and on data for prior fiscal years that HHS has made available.(2) Data on unspent funds and analyses in Table IV, rely on ACF-196 forms collected by the Center on Budget and Policy Priorities. The tables in this paper use rounding, and therefore rows and columns do not always appear to add to the total amount shown.
1. See, for example, Ed Lazere, Unspent TANF Funds at the End of Federal Fiscal Year 2000, Center on Budget and Policy Priorities, February 23, 2001, /cms/index.cfm?fa=view&id=935, or Ed Lazere, Unspent TANF Funds in the Middle of Federal Fiscal Year 2000, Center on Budget and Policy Priorities, August 2, 2000 /archiveSite/8-2-00wel.htm.
2. See http://www.acf.dhhs.gov/programs/ofs/data/index.html.