Senior Policy Analyst
As states’ revenues plummet and they shift resources to fight the public health crisis, state officials will be looking for ways to fill their budget shortfalls and meet their balanced-budget requirements. In the face of extreme and growing hardship created by the COVID-19 pandemic and deep economic downturn, states shouldn’t use Temporary Assistance for Needy Families (TANF) funds to help balance their budgets as they did during the Great Recession. With TANF applications rising in some states, state and federal policymakers should protect TANF funds to meet the growing need for direct financial assistance, and the next fiscal stimulus package should include additional state fiscal relief to help states avoid making deep budget cuts.
Families in poverty can use the critical cash that TANF provides for food, rent, medicine, hand sanitizer, disinfectant, toilet paper, diapers, and other necessities to keep them safe and healthy during the pandemic.
TANF funds to help families meet such basic needs are inadequate, however. The block grant has lost almost 40 percent of its inflation-adjusted value since its start. In addition, for years states have taken advantage of TANF’s flexible funding to use it in areas outside of basic assistance or direct payments to families.
While the nation was still recovering from the Great Recession, several states in 2012 cut their TANF programs to cover budget shortfalls despite still-high poverty. Today — as we face a far worse economic crisis —TANF is at its weakest point ever. The share of spending on basic assistance dropped from 71 percent in 1997 to 21 percent in 2018. TANF’s reach has also declined; its predecessor, Aid to Families with Dependent Children, served 68 families for every 100 in poverty in 1996, but under TANF that figure dropped to 22 by 2018. (See graphic.) If states cut TANF programs, even fewer families in poverty would have the cash to meet their basic needs.
While federal lawmakers have provided a one-time stimulus payment for families and new expansions of unemployment benefits, these don’t replace the need for TANF cash assistance. Many TANF families won’t be eligible for unemployment benefits, and some may not receive the one-time stimulus payments if they can’t navigate the application process. But many TANF families will face needs that will be long-lasting: the Congressional Budget Office has projected that high levels of unemployment could extend at least through the end of 2021, making it harder for adults receiving TANF to find a job.
States shouldn’t shift TANF’s limited resources to help plug state budget holes, and federal policymakers can take several steps to prevent them from doing so. In the next stimulus package, they should: