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Fixing Some of TANF’s Failures

All three witnesses at a hearing yesterday on Temporary Assistance for Needy Families agreed that TANF has failed in two important respects.  First, it has not adequately prepared program participants for long-term employment success.  Second, it did not respond adequately to increased need during the recession.

Congress will not likely reauthorize TANF before its most recent extension expires on September 30, 2012.  Instead, Congress will likely extend the program temporarily again before considering full reauthorization next year.

In the meantime, Congress could make several changes that would improve the program in the short term and help to set the stage for next year’s deliberations.

I would recommend four changes:

  • Allow states to measure employment outcomes instead of participation in work activities.  As I pointed out in my testimony before the House Ways and Means Subcommittee a few weeks ago, the TANF Work Participation Rate (WPR) is a failed measure of state performance.  States that achieve the highest WPR can do so because they serve very few families in need – leaving many of the most vulnerable with nowhere to turn for employment assistance.  Although there is widespread support for measuring employment outcomes instead of participation in work activities, there is not a consensus on a new measure.  Thus, the best path forward would be to allow states to propose and report on alternative measures with the requirement that they focus on outcomes.
  • Give states expanded and more flexible options for implementing work requirements. TANF agencies today face a very different task than they did 15 years ago.  Never-married mothers with a high school education or less are just as likely to work as single women without kids – and more likely than married women with kids.  TANF recipients who are not employed often face significant labor market barriers and are competing for jobs with individuals who have more education and labor market experience.  TANF agencies could do more to help recipients achieve long-term employment success if they could provide assistance based on individual needs and circumstances rather than on a narrowly defined set of options that are inconsistent with the characteristics of TANF’s caseload and the current economic reality.
  • Fix the Contingency Fund. When Congress created TANF, it recognized that states would need more assistance during hard economic times.  However, the TANF Contingency Fund that it created for this purpose has not worked as intended.  With high unemployment rates expected to continue for some time, now is the time to redesign the Contingency Fund.  A redesign should ensure that states with the greatest need can access the Fund and restrict the funds to activities that directly address economic hardship caused by a weak economy, such as subsidized employment.

  • Fund the Supplemental Grants. Congress should include funding for the Supplemental Grants in its TANF extension.  The loss of the Supplemental Grants dealt an especially harsh blow to the 17 states that had received them since 1996, reducing their overall federal TANF funding by as much as 10 percent.  The states that received this funding are poorer states with substantial numbers of families living in poverty and deep poverty.  They cannot be expected to provide the same level of assistance with less funding, especially when state budgets have been hard hit by the economic downturn.