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Senate Republican Plan’s Emergency Fund a Good Step, But Inadequate

The Temporary Assistance for Needy Families (TANF) Coronavirus Emergency Fund in the Senate Republican relief plan is a step in the right direction, but it won’t nearly meet the sharply rising need due to COVID-19 and the resulting recession. Its $2 billion is just 40 percent of the $5 billion that states received through the TANF Emergency Fund during the Great Recession of a decade ago, when unemployment was lower and hardship much less than today.

States used the TANF Emergency Fund for ongoing cash assistance and short-term emergency assistance to help families stave off hunger and homelessness, and to provide subsidized jobs for 260,000 low-income unemployed adults and youth. Because the need is so much greater today, policymakers should provide states with at least $10 billion in flexible emergency assistance funding, as the Senate Finance Committee’s top Democrat, Ron Wyden, proposes in the Pandemic TANF Assistance Act. They should also expand the fund’s uses to include subsidized jobs, when it’s safe for individuals to fill them, and make funding available to families with and without children.

In response to growing hardship, the number of families receiving TANF benefits rose between February and May in 24 of the 36 states for which we have data, reversing a long-term trend of shrinking caseloads. Some states saw dramatic spikes, with Michigan’s caseload jumping 82 percent, or by more than 12,000 families, and Indiana’s rising 42 percent.

Some state caseload increases already exceed their peak increase during the Great Recession. Michigan’s 82 percent increase far exceeds its 10.6 percent increase in the Great Recession, while Arizona’s 26.6 percent in just three months far exceeds its 6.2 percent in the Great Recession. States across the country have seen large increases (see graphic), and the higher need is expected to continue: Florida officials anticipate elevated caseloads for years.

The sharp rise in TANF caseloads reflects the urgent, growing need for cash assistance by millions of families with children facing unemployment and financial distress. The pandemic-driven hardships have disproportionately affected Black, Latino, and Native people due in large measure to systemic racism in public policies in health and other areas, as well as historical disinvestment in communities of color.

Due to TANF’s fixed funding under its restrictive block grant structure, the burden of responding to growing caseloads falls on states, which are already strapped for cash. Some states have already begun cutting funding for TANF services and diverting TANF funds to fill their 2021 budget holes. States have long used TANF funds for purposes well beyond meeting low-income families’ basic needs, spending just 20 percent of funds on basic assistance in 2018.

State actions during the Great Recession provide a cautionary tale. Once the TANF Emergency Fund expired, states cut their caseloads by tightening eligibility and imposing other restrictions, like more stringent time limits on benefits. As a result, TANF is even less equipped to respond to growing need than when the Great Recession started in December of 2007. That year, TANF reached 29 of every 100 families with children in poverty; in 2018 (the most recent year for which we have data), it reached only 22.

This is a moment for the federal and state governments to help families in need, not to provide inadequate funding or to cut benefits or restrict access to them. A flexible emergency fund, targeted to families and individuals with the lowest incomes and large enough to meet the need, must be a central part of the next federal relief package.