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TANF at 15, Part IV: Looking Ahead

In the 15 years since its creation as part of welfare reform, TANF has performed better than most people expected when the economy was booming and jobs were plentiful, and worse than most people expected during the continuing severe downturn.  Gordon Berlin, the highly respected president of the research organization MDRC — which has conducted the vast majority of evaluations of state welfare reform efforts — laid out the challenge ahead:

Now with unemployment rates at levels unimaginable even five years ago, the context for reform has changed, posing profound questions for Congress as it revisits the law that “changed welfare as we knew it” when it expires next month.

In renewing TANF, which replaced the old Aid to Families with Dependent Children (AFDC) program, Congress should strengthen it both as a work program and as a safety net for unemployed parents and their children.  Congress could help to achieve these goals by making changes that include:

  • Redesigning and adequately funding the TANF Contingency Fund. Congress created the fund along with the TANF block grant to give states extra resources during economic downturns, since the block grant itself doesn’t respond to changes in need.  But the fund was poorly targeted and has provided limited help to states during the current downturn.  Congress can significantly improve the fund by:  (1) making it easier for states with high unemployment to qualify for money from the fund; (2) requiring states to use the fund for activities that respond directly to a weak economy — such as subsidized employment — rather than to simply help cover their ongoing costs; and (3) providing adequate funding.
  • Redefining how TANF measures state performance. Under TANF, each state must have a certain share of its caseload participating in work activities or face fiscal penalties.    The easiest way to meet this target (known as the Work Participation Rate) is to serve fewer families over time and to avoid serving families with significant employment barriers, even though they have the most to gain from employment assistance.  Congress should give states the option to develop alternative measures of success that more adequately reflect TANF’s goals, such as participants’ employment rates and earnings.  States that serve a greater share of families in need should be rewarded, not penalized, for providing a strong safety net to families who have nowhere else to turn for basic support.
  • Redefining TANF’s work requirements to better reflect the diversity of the TANF caseload. Under current rules, only a very narrowly defined set of activities count toward the Work Participation Rate, and these are not a good match for the needs of the current caseload.  Simplifying the work requirements and expanding the types and duration of activities that can count toward the work rate would encourage states to serve more needy individuals, especially those whose employment prospects are the most limited.

Congress should not only strengthen TANF, but do so promptly.  The last time TANF came up for renewal, in 2001, it took Congress more than four years to pass comprehensive reauthorization legislation — a delay that set back state program innovations permanently.  We should not allow the same thing to happen again.

All four posts in the series: