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TANF at 23: States Spend Only a Quarter of TANF Funds to Help Families Meet Basic Needs

August 21, 2019 at 10:30 AM

In replacing the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance for Needy Families (TANF) block grant 23 years ago, policymakers promised all families living in poverty a better economic future by providing temporary financial support, along with job preparation and work support. TANF has fallen far short in fulfilling this promise, particularly in states where Black families are likelier to live. It can, and must, do better. Our week-long blog series examines TANF’s role — and its performance — in providing modest but crucial anti-poverty support.

In drafting the 1996 law that created TANF, federal policymakers gave states broad flexibility in how they could use federal and state TANF funds. States now spend less than one-quarter of these funds on basic assistance to meet the daily needs of children living with parents or other relatives experiencing poverty. This is the mirror image of TANF’s outset when states spent nearly three-quarters on basic assistance. State and federal policymakers should act to ensure that TANF funds better target assistance to needy families.

The share of funds spent on basic assistance has dropped by 67 percent under the TANF block grant. While overall states spent 23 percent of federal and state TANF funds on basic assistance in 2017, one-third of states spent less than 15 percent. Nine states spent less than 10 percent.

Spending on basic assistance is so low because TANF cash assistance reaches very few families living in poverty and, when it does, benefits are very low. Contributing to both of these shortcomings is the fact that states use the TANF block grant’s flexibility to spend the funds elsewhere in the state budget, sometimes on families much higher up on the income scale.

Indiana and North Carolina provide two examples of what extremely low TANF spending on basic assistance looks like in a state:

  • Indiana spent only 3 percent of its TANF funds on basic assistance in 2017 — the smallest share of any state. Its TANF caseload has fallen by more than 87 percent since 1996 while the number of families in deep poverty has risen by 86 percent. Benefits are just $288 a month for a family of three and have lost more than a third of their value since 1996.
  • North Carolina spent only 7 percent of its TANF funds on basic assistance in 2017. The state’s TANF caseload has fallen by more than 86 percent since 1996 while the number of families in deep poverty has doubled. For those receiving cash aid, benefits are just $272 a month for a family of three.

Last week, we looked at the importance of cash assistance to families and cited the research on how income supports can improve the lives of children living in poverty, including findings from the National Academies of Sciences on the positive impacts of cash support in children’s academic, health, and economic outcomes. States should support a better future for these kids by increasing TANF investments on basic assistance. Federal policymakers, too, should do more, including by holding states accountable for how they spend their state and federal TANF funds.


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