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Chart Book: Temporary Assistance for Needy Families

August 21, 2019

The Temporary Assistance for Needy Families (TANF) block grant, created in 1996 as a replacement for the Aid to Families with Dependent Children (AFDC) program, has an important role to play in stabilizing families so that parents can regain their economic footing and provide a foundation that helps their children grow and prosper. The direct financial assistance it provides can help families meet their basic needs and give parents access to economic opportunities and work supports that can help them realize their full potential.

But TANF’s record since its enactment has been dismal. TANF provides direct financial assistance to few families in need, and the benefits it does provide are not sufficient to help families afford the basics or to improve their employability. TANF’s emphasis on taking benefits away when parents do not meet a work requirement has resulted in millions of families — most often those who face the greatest labor market challenges — losing access to the very benefits that could help them to escape deep poverty and improve their employment prospects.

In addition, TANF’s funding structure has been a bad deal for states — and an especially bad deal for children in the poorest families. TANF provided states with a fixed allocation of federal funds in exchange for greater flexibility in how they could use the funds. The block grant has eroded for all states over time. Allocations per poor child were inequitable at the block grant’s inception and this inequity increased over time as the program failed to account for demographic changes such as the rise in the number of poor children, particularly in poor states. Importantly, instead of using the funds to provide direct financial assistance and employment assistance to the families with the greatest needs, states have used the funds to fill budget holes, with few funds going to families receiving TANF cash assistance.

Taking into account the full 23 years of TANF’s history, this chart book illustrates that:

  • Over time, TANF has provided basic cash assistance to fewer and fewer families, even when need has increased.
  • Nearly all states have let cash assistance benefits lose value in inflation-adjusted terms, leaving families without sufficient funds to meet their most basic needs.
  • States spend little of their TANF funds to help improve recipients’ employability.
  • Work requirements for cash assistance recipients fueled a rise in deep poverty.

TANF has provided basic cash assistance to fewer and fewer eligible families over time.

Over the last two decades, the national TANF average monthly caseload has fallen by almost two-thirds — from 4.4 million families in 1996 to 1.3 million families in 2017 — even as poverty and deep poverty remain widespread. The number of families with children in poverty hit a low of 5.1 million in 2000, but has since risen to about 5.6 million. Similarly, the number of families with children in deep poverty (with incomes below half of the poverty line) hit a low of about 1.9 million in 2000, but is now at about 2.6 million.

TANF caseloads failed to adequately respond to need during and after the Great Recession, when poverty was high. Nationally, they rose modestly but returned to their pre-recession levels while poverty remained high. In some states, the TANF caseloads didn’t respond at all to the increased need.

These opposing trends — TANF caseloads falling while poverty is rising — mean that TANF reaches far fewer poor families than AFDC did. Some 68 families received assistance for every 100 families in poverty when TANF was enacted; that number has since fallen to just 23 out of 100.

In a number of states, TANF provides cash assistance to a much smaller share of poor families than even the national data suggest. In 16 states, 10 or fewer families receive cash assistance for every 100 families in poverty.

The growing gap between the number of single parents who are not working and the number of families receiving TANF also shows its limited reach to families in need. Since 1999, the number of single mothers who were not employed during the year has exceeded the number of families receiving cash assistance in an average month. This gap was widest during the recession and remains wider than before the recession: in 2017 the number of unemployed single mothers was more than 2.5 times the number of families receiving TANF.

Nearly all states have let cash assistance benefits lose value in inflation-adjusted terms.

Not only do fewer needy families receive TANF cash benefits, but benefit levels for those who do are extremely low. TANF benefits are below two-thirds of the federal poverty line in all 50 states and the District of Columbia and at or below 20 percent of the poverty line in 17 states. In the median state in 2018, a family of three received $486 per month; in 14 states, such a family received less than $300.

TANF benefit levels were not high in most states at the start of TANF, and most states have allowed their benefits to erode even further. In all but three states, the real (inflation-adjusted) value of TANF cash benefits has fallen since 1996, and in the majority of states, TANF cash benefits are worth at least 30 percent less today than in 1996.

The impact on families is even greater than these data suggest because as TANF benefits have declined in value, in many places the cost of families’ basic needs has increased. That’s especially true for housing, which for most families is their largest expense. Consequently, TANF benefits cover only a fraction of a family’s housing costs. The monthly TANF benefit level for a family of three is less than the estimated cost of a modest two-bedroom apartment in all states (based on the Department of Housing and Urban Development’s Fair Market Rents, or FMRs). Additionally, the monthly TANF benefit level for a family of three in 2018 was less than half of the FMR in 30 states, compared to only seven states in 1996. Because modest housing is so often out of reach for TANF families, they can find themselves living in substandard conditions, doubled up with family or friends, or homeless.

States spend little of their TANF funds to help with recipients’ employability.

A key reason for block-granting TANF was to give states greater flexibility to help cash assistance recipients find and maintain work so they would no longer need assistance. States, in theory, would take the funds they previously used for cash grants to help recipients find jobs and to cover the costs of work supports like child care and transportation. But states have not sustained the modest spending increases in work support they made in TANF’s early years. Direct financial assistance is also a critical work support for many families as it helps parents who lose their job or experience a crisis to meet their basic needs until they are able to return to work. But as noted, few families receive direct financial assistance and when they do, it’s rarely enough to meet their basic needs.

Nationally, states spend just over half of federal and state TANF funds on core program areas: 23 percent on basic assistance for TANF recipients; 16 percent on child care, much of which does not go to TANF or former TANF families; just 11 percent on work activities; and 3 percent on work supports (such as transportation) and supportive services (such as mental health or domestic violence services). States vary widely in their spending on work-related activities, from as little as 1 percent to as much as 36 percent. Ten states spend less than 5 percent of their funds on work activities and work supports/supportive services combined. And even when states spend TANF funds on work activities generally, they don’t always target the funds to families receiving cash assistance as they should, for example spending it on college scholarships that often go to students who are not low-income.

The rest of federal and state TANF funds are spent on non-core areas such as program management, working-family tax credits, and other state services. Program management is important for TANF operations, and state working-family tax credits ultimately support the goal of work. However, states use these other services, which make up about 27 percent of total TANF spending, to expand programs like pre-K education or to cover the growing costs of existing services such as child welfare. In other cases, states use TANF funds to replace existing state funds, freeing up those state funds for purposes unrelated to providing a safety net or work opportunities for low-income families.

Work requirements for parents receiving cash assistance fueled a rise in deep poverty.

Taking away direct financial assistance for not meeting a work requirement has been shown to raise deep poverty levels. A large and rigorous study in the 1990s examined 11 pilot programs — local forerunners of the work requirements in the 1996 law that created TANF — and found that while most of them slightly improved short-term employment and overall poverty rates, they cut many families off the program or reduced their benefits due to work-related sanctions. As a result, deep poverty rates rose by a statistically significant amount in six of the 11 programs — and didn’t fall significantly in any — relative to randomly assigned control groups.

The 11 programs reduced poverty by an average of 2.1 percentage points but raised deep poverty by 2.9 percentage points. This pattern suggests that the programs raised the stakes for poor families, pushing some to find more work and perhaps climb above the poverty line, while letting other families — or the same families in months they were less fortunate — fall into deeper financial hardship when they failed to find work or their earnings were especially low.

In addition, the employment and overall poverty rate improvements didn’t last. The results above reflect the programs’ second year. A follow-up study found that over five years the employment gains weakened, and because the earnings gains were offset by reductions in direct financial assistance, the 11 programs did not yield greater income or reduced poverty and did not generally improve the recipients’ economic well-being.

Evaluators did not track the pilot programs’ impacts on deep poverty over the longer period. Nationwide data, however, suggest that the work requirements and other policies of the 1990s erected lasting barriers to cash assistance for families in need. For example, more than 2 million families have lost all of their TANF direct financial support because of work-related sanctions, and many more have had their support reduced since July 1997, when the federal government began collecting these data. Many parents losing assistance face significant employment barriers as well as racial bias when sanctions are imposed, studies find.