TANF Cash Benefits Have Fallen by More Than 20 Percent in Most States and Continue to Erode
October 15, 2015
Cash assistance benefits for the nation’s poorest families with children fell again in purchasing power in 2015 and are now at least 20 percent below their 1996 levels in 35 states and the District of Columbia, after adjusting for inflation. Nine states and Washington, D.C. raised Temporary Assistance for Needy Families (TANF) benefits between July 2014 (the start of fiscal year 2015 in most states) and July 2015; three others enacted legislation that raised benefit levels after July 2015. The remaining 38 states did not adjust benefit levels, allowing inflation to continue to erode the benefits’ value. (No state cut TANF benefits in nominal dollars in the past year.) For 99 percent of TANF recipients nationally, the purchasing power of their benefits is below 1996 levels, after adjusting for inflation. States should halt the erosion of TANF benefits and begin restoring the purchasing power lost over the past 19 years.
The erosion of TANF benefits since TANF’s creation in 1996 comes on top of even larger benefit declines over the preceding quarter-century. Between 1970 and 1996, the value of cash assistance benefits for poor families with children fell by more than 40 percent in real terms in two-thirds of the states.
As of July 1, 2015, every state’s TANF benefits for a family of three with no other cash income were below 50 percent of the poverty line, measured by the Department of Health and Human Services’ (HHS) 2015 poverty guidelines. Most states’ benefits were below 30 percent of the poverty line. Benefits for a family of three with no other cash income were also below the Fair Market Rent (the Department of Housing and Urban Development’s estimate of the rent and utility costs of modest housing in a local area) for a two-bedroom apartment in every state; in 29 states and D.C., they covered less than half of the Fair Market Rent. Even when benefits from SNAP (formerly food stamps) are added to TANF family grants, families with no other income remain below the poverty line in every state.
In addition, TANF provides a safety net to significantly fewer poor families than in the past: in 2014, just 23 families received TANF benefits for every 100 poor families, down from 68 families receiving TANF for every 100 poor families in 1996. Even more troubling, 12 states’ TANF programs reach only ten families or fewer for every 100 families with children in poverty. For those families, TANF often is their only source of support; without it they would have no cash income to meet basic needs.
This paper, an annual update of state TANF benefit levels as of July 1, covers changes in TANF benefit levels between July 1, 2014 and July 1, 2015. The benefit levels cited here reflect the monthly benefits for a family of three with no other income as of July 1, 2015. The benefit levels cited here may exceed what many families actually receive because TANF benefits in six states (Connecticut, Illinois, New York, Pennsylvania, Vermont, and Virginia) vary by geographic region. Unless noted otherwise, this paper reports the benefit level in the state’s most populous region.
Nine States and D.C. Have Raised TANF Benefits Since 2014
|States That Have Raised TANF Benefits in Past Year (monthly benefit for a family of three)|
|July 2015 Benefits||Increase Since July 2014|
|District of Columbia||$434||$6|
Note: TANF = Temporary Assistance for Needy Families
Source: CBPP-compiled 2015 state benefits
Nine states and the District of Columbia raised TANF benefit levels between July 1, 2014 and July 1, 2015, increasing the median state benefit from $428 to $429. (See Table 1 and Appendix Table 1.) Most of these increases reflected default periodic adjustments to benefit levels, such as automatic cost-of-living adjustments (COLAs).
During and after the recent recession, California cut benefits twice (in 2009 and 2011) and repealed its COLA provision. In recent years, the state has partially restored the cuts. The latest increase this year, the result of legislative action in 2014, raised benefit levels by $34 to $704 for a family of three, though benefits remain below the July 2008 level in nominal dollars. In future years, the state will increase benefit levels if funds in the state’s new Family Supplemental Support Account exceed the funding needed to pay benefit costs that year.
The District of Columbia raised benefit levels by $6 to $434 on October 2014 as part of a new COLA. Benefit levels increased again this October to $441.
Maryland often adjusts benefits based on changes in the state’s “minimum living level,” a standard of need tied to living costs. The state raised benefits by $12 to $636 for a family of three in October 2014. Maryland did not increase benefits as of October 2015.
Montana raised benefits by $76 to $586 in July 2015. The state increased benefits to 35 percent of the federal poverty level.
North Dakota raised benefits by $9 to $486 in 2015 as the result of legislative action.
Ohio, which adjusts benefits annually in line with the Social Security COLA, raised benefits by $8 to $473 on January 2015.
South Carolina cut benefits by 20 percent in 2011, but has since fully restored the cut. In October 2014, the state raised benefits by $3 to $277. The benefit level is set at roughly 17 percent of the federal poverty level.
Texas raised benefits by $4 to $281 on October 2014. The legislature generally adjusts benefit levels annually to maintain the maximum grant at 17 percent of the poverty line. In October 2015, the benefit increased to $285.
Washington raised benefits $43 to $521 in July 2015, partially restoring a 15 percent cut in 2011.
Wyoming’s benefits have kept pace with inflation since the state implemented a COLA in 2009. In July 2015, the benefit rose to $652.
A few other states adopted benefit increases to take effect in the second half of 2015 or in 2016. Nebraska enacted legislation that took effect in September 2015 to raise benefits and tie benefit levels to 55 percent of the state’s “standard of need,” which adjusts biannually. In August 2015, New Mexico raised benefits by 7.5 percent, partially restoring cuts from 2011. Virginia enacted a 2.5 percent benefit increase to take effect in January 2016.
Benefits Leave Families Below Half of Poverty Line
TANF benefits leave family incomes below half of the poverty line in every state. (See Figure 1 and Appendix Table 2.) In 1996, 16 states had benefit levels below 30 percent of the poverty line; today, 33 states and D.C. do. In 16 of those states, benefit levels are below 20 percent of the poverty line — that is, below $335 a month for a family of three.
Because TANF benefits have declined substantially in value, they do much less to help families escape “deep poverty” (family incomes below half of the poverty line) than in 1996. A poor family relying solely on TANF to provide the basics for its children — such as during a period of joblessness, illness, or disability — is further below the poverty line today than in 1996 in every state except Maryland, Texas (which keeps benefits pegged at 17 percent of the poverty line), and Wyoming. (See Figure 2 and Appendix Tables 2 and 3.) In many states, the decline has been dramatic:
Since 1996, the value of benefits has fallen by 20 percent or more in 35 states and D.C., after adjusting for inflation.
Seventeen states had the same nominal benefit levels in July 2015 as in 1996, meaning that benefits have fallen in inflation-adjusted terms by more than 30 percent.
In six states (Arizona, Hawaii, Idaho, New Mexico, Oklahoma, and Washington), TANF benefits are below their nominal 1996 levels. Benefits in Arizona and Hawaii are worth at least 40 percent less than in 1996, after inflation.
The decline in the value of TANF benefits since 1996 follows a quarter-century of major declines in the real value of benefits provided through TANF’s predecessor, Aid to Families with Dependent Children (AFDC). Between 1970 and 1996, AFDC benefit levels fell by more than 20 percent in every state but one and by more than 40 percent in two-thirds of the states, after adjusting for inflation.
Some families can combine TANF benefits with earned income to help meet basic needs; nearly all states have adopted “make work pay” policies under which TANF benefits phase out gradually as family earnings increase. But such families still become ineligible for TANF cash assistance at very low income levels in nearly all states. And, not all TANF families can supplement benefits with earnings; many families include parents who have significant disabilities or other barriers to work or cannot find jobs in a labor market that remains weak.
Benefits Cover Only Fraction of Modest Housing Costs
TANF benefits cover only a fraction of a family’s housing costs, and housing is only one of a family’s basic needs (though one of the largest). The monthly TANF benefit level for a family of three is now less than the estimated cost of a modest two-bedroom apartment (based on HUD Fair Market Rents) in all states, and less than half of the Fair Market Rent in 29 states and D.C. (See Figure 3.) Most TANF families receive no housing subsidies — in fact, only one in four families with children eligible for federal housing assistance (including both TANF and non-TANF families) receive it. Many states provide small additional funds to help families cover housing costs, but these often do not cover the large gap between TANF grants and local Fair Market Rents.
Between 2000 and 2015, the median Fair Market Rent nationally rose from $580 to $817, while the median TANF benefit rose from $379 to $429. (These figures are in nominal dollars.) Since TANF benefits have declined in real terms in most states, so has the share of housing costs they cover, as Figure 3 shows.
The decline has been especially large in some states. Vermont’s TANF benefit level, for example, equaled the Fair Market Rent for a two-bedroom apartment in 2000 but covered less than two-thirds of it by 2015. (See Appendix Table 4.)
SNAP Benefits Help Fill Gap, But Substantial Shortfall Remains
Unlike TANF, SNAP has provided a strong safety net for many unemployed families and individuals during the economic downturn and slow recovery. TANF and SNAP benefits together do a better job of pulling families out of deep poverty than TANF alone. About 83 percent of TANF households consistently receive SNAP benefits. In 2013, the average monthly SNAP benefit for households with TANF income was $432.
Nevertheless, families receiving both SNAP and TANF benefits fall below 75 percent of the poverty line in every state except Alaska and New York, as Figure 4 shows. (In addition, to simplify the comparison, the SNAP benefit levels used for this comparison overstate the SNAP benefit that many TANF families actually receive.)
After Years of Disinvestment and Erosion, It’s Time to Raise TANF Benefits
States spend only a quarter of federal and state TANF funds on basic assistance, down from 70 percent in 1997. In the years immediately after the 1996 welfare law, large caseload declines allowed states to channel freed-up funds from cash benefits to welfare reform efforts like child care and welfare-to-work programs. But funding in those areas has been flat or declined for over a decade. Instead, states over time redirected a substantial portion of their TANF and maintenance-of-effort (MOE) funds to other purposes, in some cases to “supplant” (replace) existing state spending and thereby help close budget holes or to free up funds for purposes unrelated to low-income families or children. Overall, states did not invest the funds freed up by falling cash assistance caseloads to maintain or strengthen the safety net that basic assistance provides to recipients. This failure left the most disadvantaged families without much of a safety net.
As this paper shows, it is increasingly difficult for TANF recipients to meet basic needs, even when they also receive SNAP. TANF recipients have a limited time on benefits and must participate in work or work-preparation activities (unless they qualify for a state exemption). During this time-limited, work-focused window, TANF benefits need to do a better job of enabling families to meet basic needs so they can focus on finding work and/or increasing their skills in order to leave welfare. The destitution that accompanies today’s low TANF benefit levels frequently creates instability that can interfere with these goals and undermine welfare reform.
Many of the states that raised benefit levels between July 2014 and July 2015 did so through annual or periodic adjustments that generally occur by default or automatically. Such approaches are an effective strategy to protect TANF benefits from erosion due to inflation. With state fiscal conditions beginning to improve, this is a good time for state policymakers to consider several steps to provide more adequate levels of basic assistance.
First, they should reinvest TANF and MOE funds back into TANF to provide a stronger safety net for poor families. Second, as part of this reinvestment, states should restore at least some of the value of benefits that has been lost in recent years and the additional cuts made during the recession, even if that requires several incremental increases over a period of years. Third, they should establish mechanisms to prevent benefits from eroding in the future. Adjusting TANF benefits yearly in step with inflation can maintain families’ purchasing power and help them meet basic needs — thereby improving the lives of parents and children receiving TANF while also helping local communities, as poor families quickly put that money into the local economy.
TANF Benefits Leave Families in or Near Extreme Poverty in Nine States
In their book, $2.00 a Day: Living on Almost Nothing in America, researchers Kathryn J. Edin and H. Luke Shaefer document the rise of extreme poverty in America. The authors define extreme poverty as household income of less than $2.00 per person per day, a World Bank measure for poverty in developing counties. Edin and Shaefer show that the drop in cash assistance receipt since welfare reform is one of the main drivers of the rise in extreme poverty. Between 1996 and 2011, the number of households living in extreme poverty in a given month more than doubled, from 636,000 to 1.46 million. Some 2.8 million children lived in those extremely poor households in 2011.
In the two states with the smallest TANF benefits, even families that manage to get on TANF (and have no other cash income) are extremely poor:
- Mississippi’s monthly benefit of $170 for a family of three provides $1.83 per person per day in a 31-day month.
- Tennessee’s monthly benefit of $185 for a family of three provides $1.99 per person per day in a 31-day month.
Families in Alabama, Arizona, Arkansas, Louisiana, Kentucky, North Carolina, and South Carolina don’t fare much better. TANF benefits in these states amount to $2 to $3 a day per person.
A growing body of research highlights the importance of income — and the devastating impact of poverty — on children’s early development.* TANF’s very low benefits thus should concern those who want to provide a better future for poor children. Even modest increases in family income for young children in poor families can significantly improve their chances of succeeding in school — and may have a big impact in adulthood as well.
* Greg J. Duncan and Katherine Magnuson, “The Long Reach of Early Childhood Poverty,” Pathways, Winter 2011, https://web.stanford.edu/group/scspi/_media/pdf/pathways/winter_2011/PathwaysWinter11_Duncan.pdf and Nicole L. Hair et al., “Association of Child Poverty, Brain Development, and Academic Achievement,” JAMA Pediatrics, September 2015, http://archpedi.jamanetwork.com/article.aspx?articleid=2381542.
|APPENDIX TABLE 1|
|TANF Benefit Levels as of July 2015 (Single-Parent Family of Three)|
|July 1996||July 2000||July 2005||July 2011||July 2013||July 2014||July 2015||Change 1996-2015 (inflation-adjusted)|
|APPENDIX TABLE 2|
|TANF Benefit Levels as Percentage of Federal Poverty Level|
|APPENDIX TABLE 3|
|Changes in Real (Inflation-Adjusted) TANF Benefits
Comparing 2015 Levels with Levels in 1996, 2000, 2005, and 2014
|APPENDIX TABLE 4|
|TANF Benefit Levels as Percentage of Fair Market Rents|
|APPENDIX TABLE 5|
|2015 TANF and SNAP Benefit Levels as Percentage of Federal Poverty Level (FPL)|
|TANF as Percent of FPL||SNAP + TANF as Percent of FPL|
 Katie Eddins contributed to this report.
 See Appendix Table 1 for states with regional variation in TANF benefits.
 Maryland reconsiders its TANF benefit each year under a state law that requires SNAP and TANF benefits combined to equal at least 61 percent of the minimum living level. If the combined benefits do not meet the 61 percent threshold, the state will increase the TANF benefit.
 South Carolina’s benefit level is indirectly tied to the federal poverty level. The benefit is a share (currently 33.7 percent) of the state’s Need Standard, and the Need Standard is 50 percent of the federal poverty level. The state can change the benefit level by adjusting its percentage of the Need Standard or by adjusting the Need Standard’s percentage of the poverty level.
 The 2015 poverty guideline from the Department of Health and Human Services for a family of three is about $1,674 per month in the 48 contiguous states and Washington, D.C.; Alaska and Hawaii have higher guidelines. (See http://aspe.hhs.gov/poverty/15poverty.cfm.) CBPP uses HHS’ poverty guidelines in this analysis because they are a simplification of the poverty thresholds (the Census Bureau’s measure of poverty) and are used to determine financial eligibility for certain programs.
1996 Green Book, House Ways and Means Committee, Table 8-15, http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=104_green_book&docid=f:wm014_08.pdf.
 Barbara Sard and Will Fisher, “Chart Book: Federal Housing Spending Is Poorly Matched to Need,” Center on Budget and Policy Priorities, December 18, 2013, http://www.cbpp.org/research/chart-book-federal-housing-spending-is-poorly-matched-to-need#Three.
Temporary Assistance for Needy Families (TANF) Tenth Annual Report to Congress, Department of Health and Human Services, Office of Family Assistance, December 2013, http://www.acf.hhs.gov/sites/default/files/ofa/10th_tanf_report_congress.pdf.
Characteristics of Supplemental Nutrition Assistance Program Households: Fiscal Year 2013, Department of Agriculture, Food and Nutrition Service, December 2014, http://www.fns.usda.gov/sites/default/files/ops/Characteristics2013.pdf.
 In calculating typical SNAP benefits, this analysis assumed that a family’s shelter costs are the same as the median shelter costs for families with incomes at or below 80 percent of the poverty line. A family’s SNAP benefit is based on its income and deductions, with the capped deduction for high shelter costs playing a significant role. For two-thirds of the states, the estimated SNAP benefit used in Figure 4 is the maximum monthly benefit for a family of three ($511). The SNAP benefit that an individual TANF family actually qualifies for, based on its particular circumstances, is often lower, however, because many TANF households do not incur shelter expenses high enough to qualify them for the maximum SNAP benefit.
 See “State Cost-of-Living Adjustments for TANF Benefits” box in Ife Finch and Liz Schott, “The Value of TANF Cash Benefits Continued to Erode in 2012,” Center on Budget and Policy Priorities, March 28, 2013, http://www.cbpp.org/cms/?fa=view&id=3943.