Podcast: Rising Need, Falling Funding for TANF Program

December 21, 2010

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In this podcast we’ll talk about cuts to the safety net despite the rising need among our most vulnerable citizens. I’m Michelle Bazie and I’m joined by the Director of the Center’s Welfare Reform and Income Support Division, Dr. LaDonna Pavetti.

1. Donna, in 1996, President Clinton and Congress created the Temporary Assistance for Needy Families – or TANF – block grant as part of welfare reform. By design, the program was structured to provide additional funds from the federal government to states to help them respond to increases in the number of needy families due to difficult economic times. And, Congress provided additional emergency funds as part of the Recovery Act. What’s the current status of those funds?

The TANF Contingency Fund which was part of the original TANF legislation still exists but there is no money in it and the TANF Emergency Fund which was created as part of the Recovery Act expired on September 30th. This means for the first time since the TANF was created in 1996, as you mentioned, states have no additional funds to respond to hard economic times. But as we know, increased need still remains. Unemployment is stubbornly high, millions of families are struggling to make ends meet. The need for emergency and temporary assistance (including helping people find work) is at its highest level in decades.

2. What will happen without these additional funds?

The impact is two-fold. For people, this means that more low-income parents will go without jobs, more homeless families will go without shelter, fewer low-wage workers will receive help with child care expenses, and fewer families involved with the child welfare system will receive preventive services. For states, it means that in their budgets, they will have an average of 15 percent less federal funding in fiscal year 2011 to help low-income families with children than they had on average in each of fiscal years 2009 and 2010.

3. What’s the economic context for these cuts?

That’s what’s particularly striking and a significant cause for concern. The numbers tell the story. These cuts come at a time when unemployment stands at 9.8 percent and is expected to remain roughly at or near this level for the foreseeable future. There is only one job opening for every four to five people looking for work. More than 40 percent of the 15 million unemployed Americans have been looking for work for more than half a year. This is one of the highest such percentages in the last 60 years. What’s more is that the number of people in deep poverty – that means people with incomes below half the poverty line, which is around $11,000 for a family of four -- reached a record 19 million in 2009, up 2 million from 2008; and the number of families who were homeless and spent time in a shelter increased by 30 percent between 2007 and 2009. 

4. Wow, those are a lot of numbers. You mentioned that this also affects state budgets. How?

These TANF reductions come as states face large budget gaps. A number of states are already facing mid-year shortfalls and budget gaps for 2012 are likely to be even larger. In developing their 2011 budgets, a number of states counted on an extension of the TANF Emergency Fund, because the House of Representatives had twice passed such an extension. When that Fund wasn’t extended, it left states holding the bag. Moreover, states that receive Supplemental Grants — which Congress has always fully funded — counted on these funds continuing fully in 2011. Now that states will receive less funding than they anticipated, some of them are already considering substantial cuts to programs for low-income families with children.

5. What’s the bottom line?

For the first time since the creation of the Temporary Assistance for Needy Families program, states will have no extra federal resources to help respond to increased need. With less funding and few jobs available, there also is considerable risk of seriously weakening states’ abilities to maintain a strong focus on work in their TANF programs.

This is not what Congress intended when it reformed the welfare system in 1996. Helping welfare recipients find work in this economy requires more help from the federal government, not less.

Thanks for joining me, Donna.

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