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Trump Would Cut TANF by $21 Billion, Impose Harmful Spending Restrictions

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In his new budget, President Trump proposes to cut Temporary Assistance for Needy Families (TANF) by $21 billion over ten years, which would leave many families with less assistance when they fall on hard times. The cuts include a 10 percent reduction in the annual block grant funding for states and an end to the $608 million TANF Contingency Fund, which gives states additional funds at times of economic distress.

The budget also would impose new TANF spending restrictions, which together with the funding reductions would likely prompt states to cut basic assistance — the funds that go directly to families — as they’ve done in the past. And, like TANF’s current work requirement, the proposed work requirement would retain TANF’s rigid policy of conditioning one’s benefits on meeting certain hourly requirements, which families would continue to find challenging. The harm from these proposals far outweighs other proposed programmatic changes that actually could improve TANF.

The proposed changes, and their effects, include:

  • Cuts to already shrinking federal TANF funds. Significant projected declines in the block grant’s value — by 40 percent in inflation-adjusted terms from its implementation in 1997 to 2021 — would grow to about 46 percent under the President’s budget. The third of the states that receive Contingency Funds would lose even more.
  • New spending requirements for states. States would have to spend at least 30 percent of federal and state TANF dollars on work activities, such as education, training, and subsidized employment; work supports, such as transportation assistance; child care; and assessing and providing services such as case management. Half of the required spending (or 15 percent of total funds) would have to go to work and training. Basic assistance isn’t included in the required spending.
  • Blunted impacts from targeted policies. The budget would restrict spending to families with income under 200 percent of the poverty line — and rightly so, given TANF’s history and purposes. Currently, states face very few restrictions on how they spend their TANF funds, a growing share of which goes to other state priorities and in some cases to programs serving families with much higher incomes. But the budget’s other threats to TANF’s basic assistance may blunt the impact of this 200 percent requirement.

States spend less than a quarter of TANF funds on basic assistance, and history shows that they’d likely cut that amount further to address the 10 percent block grant funding cut and new spending requirements. Fewer families would therefore receive the assistance they need under a program with already limited reach. The number of families receiving assistance for every 100 in poverty has dropped from 68 in 1996 under the last year of Aid to Families with Dependent Children (AFDC) to 22 in 2018 under TANF (which replaced AFDC); this TANF-to-poverty ratio will only continue to decline if states continue to reduce basic assistance.

Among its programmatic changes to TANF, the budget proposes:

  • A rigid “universal engagement” requirement that all parents participate in work activities for at least 20 hours. While universal engagement plans claim to take into account the unique circumstances of families, a rigid hour minimum is inconsistent with the individualized approach that they purport to foster. Under universal engagement, all families, including those facing an immediate crisis or with a medical or mental health issue, would be at risk of losing their cash assistance if they don’t meet the minimum requirement. The proposal doesn’t provide any detail on the types of activities in which parents must participate but, if proposals from other Republican policymakers are any indication, it would favor immediate work over education, training, and family stabilization.
  • A shift to employment outcome measures and away from the current official measure of TANF’s performance, the Work Participation Rate. The budget proposes measuring the number of TANF recipients who take a job, those who are still employed two quarters later, and their earnings. While such measures could help us better understand how well TANF gets and keeps people in jobs, they lack a way to determine how many families in need TANF actually serves in the first place. Without that, states could improve their performance on employment targets by keeping the families facing the biggest barriers to work out of the program entirely.

Overall, the President’s budget would aggressively push TANF in the wrong direction. Several states have taken concrete steps to make TANF more accessible and beneficial to families in poverty. This budget would halt states’ progress and encourage them to withdraw critical supports to families in poverty.

Ife Floyd

Director of TANF Research and Analysis