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How States Use Funds Under the TANF Block Grant

UPDATED
February 19, 2019

States only spend a little more than half of their combined federal and state dollars under Temporary Assistance for Needy Families (TANF) on core areas — basic assistance for families with children, child care for low-income families, and work-related activities or supports (see Figure 1) — and a handful of states spend less than a quarter on these areas, our look at the latest data from fiscal year 2017 shows. Those figures point to fundamental flaws with the TANF block grant, which the President and Congress created under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and which gives states great flexibility on using the funds. A look at how states spend the TANF funds provides compelling evidence on why basic safety net programs should not be block-granted.

TANF’s predecessor, Aid to Families with Dependent Children (AFDC), provided federal funds that matched half or more of every state dollar of direct financial assistance, or cash assistance, for a needy family. The TANF block grant, meanwhile, combines fixed federal funding with broad state flexibility to use the money. Its proponents said that states would use that greater flexibility to shift spending from providing financial assistance benefits to investing in work programs and work supports, such as child care subsidies to enable parents to work.A look at how states spend the TANF funds provides compelling evidence on why basic safety net programs should not be block-granted.

In TANF’s early years, when the economy was strong and cash assistance caseloads were shrinking, states did use their flexibility to take some of the funds that had gone for benefits to families and redirect them to child care and work-related programs or supports. But over time, states redirected a substantial portion of their state and federal TANF funds to other purposes, to fill state budget holes, and in some cases to substitute for existing state spending. Even when need rose during the Great Recession, states often didn’t bring the funds back to the three core areas of basic assistance, child care, and work programs, and instead cut them.

Among our other key findings for 2017:

  • States spent a little less than one-quarter of their federal and state TANF funds on one core area: basic cash assistance to help very poor families care for their children and meet very basic needs such as shelter. There is significant variation across states; nine states spent less than 10 percent of their funds on basic cash assistance in 2017.
  • States spent only about 30 percent of their federal and state TANF dollars on the other core areas combined: child care, and work activities and supports. States used 11 percent of their federal and state TANF funds for work activities, 3 percent for work supports or supportive services, and 16 percent for child care.
  • States used nearly half of federal and state TANF funds that previously helped poor families for other state services. In some cases, states used TANF funds to expand programs, such as state Earned Income Tax Credits (EITCs) or pre-K education, or to cover the growing costs of existing services, such as child welfare. In other cases, they used TANF funds to replace existing state funds, thereby freeing those state funds for purposes unrelated to providing financial assistance or work opportunities for low-income families.
  • Black families are likelier than white families to live in states that spend less in TANF funds on core program areas. Due in part to the great flexibility that TANF’s block grant structure provides, spending on core and non-core areas varies widely across states. This state variation results in disparities between racial groups: black families disproportionately live in the states that spend the least TANF funds on programs best suited to help families in poverty make ends meet and have access to child care.
Figure 1
States Spent Only About Half of Federal and State TANF Funds on Core Program Activities in 2017

 

2017 was the third year that states have had to provide the Department of Health and Human Services greater detail on how they spend federal and state TANF dollars outside the core areas. The data provide insight into where states are spending substantial amounts of these funds. For example, states spent 7 percent of their TANF dollars on child welfare services in 2017 (ten states spent more than 20 percent) and 8 percent of their TANF dollars on pre-K education or Head Start (six states spent more than 20 percent). Although these are important investments for states to make, the federal policymakers who created TANF didn’t intend for states to use their funds for such services. And when states use their TANF funds this way, they leave fewer resources to provide cash assistance, child care, and employment assistance, even though need remains high. That’s especially troubling at a time when more than 2 million more families with children are in deep poverty, with incomes below half of the official poverty line, than when TANF was created.

Direct financial assistance for the nation’s poorest families with children has weakened significantly under TANF, with potentially devastating long-term consequences for children growing up in families with little or no cash income to meet basic needs. In 2017 states provided cash assistance to just 23 families for every 100 families in poverty, down from 68 families when the TANF block grant was created. And states engage few recipients in work activities, leaving most unemployed low-income parents to find work on their own.

The broad flexibility that states have for how they use their block grant funds means that a family’s experience with TANF is highly dependent on the state in which they live. Since black and white families are not equally distributed across the states, state TANF spending choices can exacerbate racial inequities and unequal access to TANF cash assistance. In fact, black families are more likely than white families to live in the states that spend the least on basic assistance, and thus black children face a particularly high risk of growing up in families with little or no access to basic needs. If states spent a greater portion of their TANF funds on basic assistance, this could give all children long-lasting benefits that reports have shown result from boosting the incomes of families experiencing poverty.[1] In this report, whenever possible, we compare how black and white families[2] are faring in states that spend more or less of their TANF funds on the core purposes of TANF.

Background

Under TANF, the federal government gives states a fixed block grant totaling $16.5 billion each year. [3] This annual amount has not increased for inflation over the past two decades and now is worth over one-third less than when TANF was created. Under the law’s maintenance-of-effort (MOE) requirement, states must maintain a certain level of state TANF spending, based on a state’s spending for AFDC and related programs prior to TANF’s creation in 1996. (States are required to maintain 80 percent, or in some cases 75 percent, of their historical spending level.) This minimum state spending threshold has also declined by one-third in value due to inflation. States may also qualify for federal “Contingency Funds”; roughly 20 states have done so for the last several years.

In 2017, states spent $31.1 billion in combined federal TANF ($16.4 billion) and state MOE ($14.7 billion) funds.[4]

States can use these funds for a broad range of activities related to promoting the four purposes of TANF specified in federal law: (1) assisting needy families so children can be cared for in their own homes or the homes of relatives; (2) reducing the dependency of needy parents by promoting job preparation, work, and marriage; (3) preventing out-of-wedlock pregnancies; and (4) encouraging the formation and maintenance of two-parent families.[5]

States must report quarterly and annually to HHS on how much they have spent and for what purposes; the data cited here on states’ use of TANF and MOE funds come from these reports. Starting with fiscal year 2015, HHS revised the financial data reporting form to provide greater and more uniform detail on how states spend the funds, particularly spending in other areas of state budgets that was not foreseen when the original data reporting form was designed.[6] Because some of the new detailed breakout is not available for years prior, this report focuses on the most recent, 2017 spending and how it varies across states.[7]

This report groups spending into nine categories:[8]

  • Basic assistance
  • Work-related activities
  • Work supports and supportive services
  • Child care (including transfers to the Child Care and Development Fund);
  • Program management
  • Refundable tax credits for low-income working families
  • Child welfare services
  • Pre-kindergarten or Head Start
  • Other areas[9]

This analysis uses the term “federal TANF dollars” to include the TANF block grant and any additional federal funds, such as the TANF Contingency Fund. It uses the term “state TANF funds” to refer to MOE spending. The analysis combines TANF and MOE spending data rather than focus on whether the funds used for a particular benefit or service were federal TANF funds or state MOE funds, and often generally refers to the combined funds as TANF funds. Since the federal and state dollars are mostly fungible, combined state and federal funds provide the best basis for comparisons across states.

States Spend Only About Half of TANF Funds in Core Areas

When TANF was created in 1996, a primary intent was to make a program that helped cash assistance recipients find and maintain work that would reduce their need for cash assistance. We therefore consider spending related to these purposes to be for “core” purposes — specifically, basic assistance, work-related activities, work supports/supportive services, and child care. Nationally, states use only about half (52 percent) of federal and state TANF funds in these core areas and some states spend much less. Nine states spend less than 30 percent of these funds on core activities. Only five states spent more than 75 percent of funds on core areas.

Reduced Spending on Basic Assistance Means Fewer Families Get Help to Meet Needs

States spent $7.1 billion (23 percent) of their federal and state TANF funds on basic assistance for poor families in 2017. By contrast, when TANF was first implemented in 1997, states spent $14 billion (70 percent) of their TANF funds on basic assistance. After adjusting for inflation, this change from 1997 to 2017 represents a 67 percent decrease in spending on basic assistance. Prior to TANF, basic assistance represented the single biggest use of federal and state AFDC funds for all states.

The share of federal and state TANF funds spent on basic assistance varies widely across states, from 3 percent to 63 percent in 2017. Nine states spent less than 10 percent on basic assistance, while eight states spent more than 30 percent. (See Figure 2.) Black families are more likely to live in these nine lowest-spending states than white families are; over 30 percent of black families live there, compared to only 23 percent of white families.[10] (See Appendix III.)

Not surprisingly, the states that spend the smallest shares of their TANF funds on basic assistance generally have lower benefits and assist a smaller share of poor families than the typical state.[11] In some states, TANF cash assistance reaches very few poor families; in 16 states, 10 or fewer of every 100 poor families received this help. For families that do receive assistance, benefit levels are at or below 60 percent of the poverty line in every state and below 30 percent of the poverty line in most states.[12] Two examples of states that spend little on basic assistance and reach few poor families are Indiana and North Carolina:

  • Indiana spent only 3 percent of its TANF funds on basic assistance in 2017 — the smallest proportion of any state in the country. The state’s TANF caseload has fallen by more than 87 percent since 1996 while the number of families in deep poverty has increased by 86 percent. Indiana has not reinvested any of its savings from the caseload decline to strengthen the temporary safety net for poor families. 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. In 2017, nearly 140,000 families were in deep poverty in North Carolina, up from nearly 66,000 in 1996, representing an increase of 108 percent. For those receiving cash aid, benefits are just $272 a month for a family of three.
Figure 2
9 States Spent Less Than 10 Percent of Federal and State TANF Funds on Basic Assistance in 2017

 

Despite “Welfare to Work” Rhetoric, States Spend Little on Work Activities or Supports

A central tenet of TANF was that cash assistance should provide temporary support while a family engages in required activities to help it connect to or prepare for work — the so-called “welfare to work” strategy. Yet most states spend little of their TANF funding on work-related activities. States raised work-related spending somewhat in TANF’s early years, but this spending has been flat or has fallen for more than a decade, even though poor families are greatly in need of help preparing for and connecting to work. Nationwide, there are about 4 million non-employed single parents.

In 2017 states spent $3.3 billion (11 percent) of their federal and state TANF funds on work-related activities.[13] As with basic assistance, the share varied widely among states, ranging from less than 1 percent to 36 percent. (See Figure 3.) Eight states spent less than 2 percent of their funds on work-related activities, while six states spent more than 15 percent.

Similarly, states in 2017 spent just $900 million (3 percent) of their federal and state TANF funds on work supports (such as transportation) or supportive services (such as mental health or domestic violence services). State spending in this area ranged from zero to 29 percent of total TANF spending, with 16 states spending less than 1 percent and eight states spending more than 5 percent.[14] Ten states spent less than 5 percent of their funds on work activities and work supports/supportive services combined.

Even when states spend TANF funds on work activities generally, the funds are not always targeted as they should be. Many states that reported spending large shares of their TANF dollars on work activities in the past few years spent much of it on state universities and scholarships for low- or moderate-income students.[15] These are important areas for states to fund, but such expenditures are not directed at those receiving TANF cash assistance and do not help these recipients prepare for or connect to work. In fact, states often do not let students meet their TANF work requirement by attending college.

Two examples are Hawaii and Mississippi; over half of each state’s TANF spending on work activities in 2017 was for state higher education programs that served a broad group of students, essentially using TANF to fund portions of the state higher education or financial aid budget.

  • Some 22 percent of Hawaii’s total TANF funds were used to fund work activities in 2017 — a higher share than all but three other states, but the majority of it went towards funding the state university system. Hawaii spent nearly $32 million of its federal or state TANF funds — representing 74 percent of the state’s spending on work activities — on the University of Hawaii.[16] This funding served families with incomes up to 300 percent of the federal poverty line and was not focused on helping TANF cash assistance recipients prepare for work. In comparison, the TANF benefit level for a single-parent family of three in Hawaii represents 31 percent of the federal poverty line.[17]
  • Mississippi spent 28 percent of its total TANF funds on work activities in 2017 — second highest among all states — but over half of that ($19 million) went to a state-funded scholarship program that serves families with incomes up to 350 percent of the federal poverty line.[18] The TANF benefit level for a single-parent family of three in Mississippi represents only 10 percent of the federal poverty line.
Figure 3
27 States Spent Less Than 10 Percent of Federal and State TANF Funds on Work Assistance in 2017

 

Insufficient TANF Spending on Child Care to Let Parents Work

Another central tenet of TANF’s creation was that states could spend more of the funds on child care subsidies — which are essential to enabling low-income parents to work — rather than on direct financial assistance. States’ TANF spending on child care rose dramatically in TANF’s early years (from $1.1 billion in 1997 to $5.9 billion in 2000)[19] but has been flat or declining for over a decade, fluctuating between $5 billion and $6 billion annually. In 2017 states spent $5 billion (16 percent) of their federal and state TANF funds on child care.[20] When considered in inflation-adjusted dollars, this change from 2000 to 2017 represents a 44 percent decrease in TANF spending on child care.

The share spent on child care varies tremendously across states, from zero to 59 percent. (See Figure 4.) Nine states spent more than 30 percent of their TANF funds on child care, while 14 states spent less than 5 percent. Some 37 percent of black families live in these 14 states, compared to 27 percent of white families. (See Appendix III.)

The need for child care subsidies remains high.[21] Nineteen states either have waiting lists or have frozen admissions to their child care programs, and in 19 states the income eligibility limit for child care subsidies is a lower percentage of the federal poverty line than in 2001.[22] Low-income parents who can’t get a subsidy may not be able to take or keep a job or may have to leave children alone or in an unsafe situation. Black families disproportionately face this burden because they are more likely to live in the states spending the smallest portion of TANF funds on child care. This leaves black children at greater risk of being in informal care arrangements and leaves black parents with fewer resources to help them find and maintain employment.

Figure 4
19 States Spent Less Than 10 Percent of Federal and State TANF Funds on Child Care in 2017

 

States Spend Nearly Half of TANF Funds Outside Core Areas

States Spend Relatively Little on Program Management

In 2017 states spent $3.3 billion (11 percent) of their federal and state TANF funds on program management, which includes administration and systems as well as the cost of screening and assessing applicants and recipients and providing case management services.

Spending on Working-Family Tax Credits Helps These Families Make Ends Meet

Refundable tax credits for low-income working families are an important work support and a permissible use of federal and state TANF funds. In 2017, 21 states spent $2.8 billion of these funds for refundable tax credits, most commonly a state EITC — 9 percent of national federal and state TANF spending and 19 percent of spending for those 21 states. Among those states, the share of TANF spending going to refundable tax credits ranged from less than 1 percent to 34 percent; seven states spent more than 20 percent.

Refundable state EITCs help working families make ends meet and stay employed. They also reduce poverty among working families — including people of color, a larger proportion of whom benefit from the state credits relative to population size — with both immediate and long-lasting benefits for children.[23] The availability of TANF funds may encourage a state to enact or retain a state EITC.

How States Spend the Rest of TANF Funds

States use the rest of their federal and state TANF funds elsewhere, representing 28 percent of total spending nationwide and more than half of the TANF spending in nine states. The data available since 2015 give richer information on where these funds are used.

The biggest-ticket areas are child welfare services and pre-kindergarten/Head Start. These and other areas of spending are worthy and important investments, but states should use funding sources other than federal and state TANF for them — particularly when the average state spends only around half of its TANF funds to provide direct financial assistance to families, connect TANF families to work, or provide child care help to low-income working families.

Child welfare. Some 39 states used $2.2 billion in federal and state TANF funds for child welfare services.[24] This represents 7 percent of total national TANF spending and 9 percent of spending for those 39 states. Among the 39 states, the share of spending going to child welfare services ranged from less than 1 percent to 54 percent; 18 states spent more than 10 percent and ten states spent more than 20 percent.

Pre-K/Head Start. Some 27 states used $2.5 billion in federal and state TANF funds for pre-K/Head Start in 2017. This represents 8 percent of federal and state TANF spending and 15 percent of spending for those 27 states. Among those states, the share of spending going to pre-K/Head Start ranged from less than 1 percent to 65 percent; six states spent more than 20 percent.

Other areas. The rest of federal TANF spending — $4 billion in 2017, representing 13 percent of the total — goes to areas such as short-term non-recurring benefits, which are used to help low-income families in crisis situations (3 percent of total TANF spending), transfers to the Social Services Block Grant (4 percent), preventing out-of-wedlock pregnancies and supporting marriage (2 percent), services for youth and children (2 percent), and services “authorized under prior law,” meaning they are not within the four TANF purposes but were in the state’s AFDC Emergency Assistance plan when TANF replaced AFDC (about 2 percent).[25] (See Appendix I.) The share of spending going to other areas varies greatly across states, ranging from less than 1 percent to 36 percent.

Black Families Likelier to Live in States Spending the Least on Basic Assistance

As we have described throughout this paper, the flexibility given to states through the TANF block grant results in a wide range of how much states invest in different spending categories. These variations disproportionately burden black families. Black families are likelier than white families to live in states that spend the least on basic assistance and child care — two of the TANF’s core areas. Often these low-spending states are also the ones with the lowest TANF benefit levels and the most limited reach, where the smallest share of poor families receive direct financial assistance from TANF. Texas and Louisiana are examples of states that are low on all three of these indicators and are home to a large share of the nation’s black families. These two states house 12 percent of the nation’s black population, and only 7 percent of the white population.

Louisiana. Louisiana only spent 9 percent of its TANF funds on basic assistance and about 5 percent of funds on child care in 2017. Meanwhile, over 15 percent of the state’s TANF funds went towards child welfare spending. While child welfare is a valuable investment for a state to make, it is not a core area of TANF and is not what lawmakers intended TANF funds to be used for. In 2016-2017, TANF only reached 4 out of every 100 poor families in Louisiana, the lowest reach of any state in the country. For families that do receive TANF benefits in the state, those benefits were $240 for a family of three, which only covered about 14 percent of the federal poverty line in 2018.

Texas. Texas only spent 6 percent of its TANF funds on basic assistance and spent no funds on child care in 2017. In addition, Texas spent nearly one-third of its TANF funds on child welfare instead of investing in the core areas. In 2016-2017, TANF only reached 4 out of every 100 poor families in Texas. For the few families who did receive TANF benefits, which was $290 for a family of three, they only covered 17 percent of the federal poverty line in 2018.

These two states reflect an issue of national concern: the states that spend the least on basic assistance and/or child care are home to 54 percent of the black population in the United States, while only 40 percent of the white population lives in those same states. Black families are also likelier than white families to live in the states with the lowest TANF benefit levels and that reach the fewest poor families. This leaves black families with less access to cash during times of hardship and less access to supports like child care that can help them find and maintain work.

Lessons from Spending Experience Under TANF Block Grant

The track record of state spending under TANF offers broader lessons about the risks of block-granting core programs for low-income families and giving states greater flexibility on how to spend funds that were previously used to meet basic needs. States’ flexibility under TANF has enabled them to divert a significant portion of the funds from supporting needy families to using them to fill state budget holes. The bulk of funds withdrawn from cash assistance to low-income families — which had been the primary use of AFDC funds — have not gone to programs that connect families to work or to support low-income working families. States sharply reduced cash assistance spending during the early years of TANF, when a strong economy reduced the need for assistance, and then largely failed to reinvest in basic assistance when the economy weakened and need increased.

Under TANF, states generally bear the financial burden of meeting increased need for cash assistance when the economy slows or the low-income population grows for other reasons, but many states have not been willing to shoulder that burden. As a result, TANF did not provide an effective safety net in response to the Great Recession. In fact, many states cut spending on basic assistance, work programs, and child care even while continuing to divert much of their federal or state TANF funding to other areas of the state budget.

Key lessons from the TANF experience include:

  • Maintaining a strong safety net for the most disadvantaged families and children has not been a priority for most states. Block-grant proponents often argue that states are better than the federal government at determining how to help families in need. Yet under TANF, many states shifted substantial funds intended to help poor families meet their basic needs or find and maintain work to other uses, often leaving many of the most disadvantaged families without the resources needed to fulfill their basic needs — and without the employment resources that might help them gain a foothold in the labor market. In every state, TANF plays a markedly smaller role in providing cash assistance to help very poor families meet basic needs than AFDC did.
  • States have not used the block grant’s flexibility to invest in helping families prepare for and connect to work. Moreover, states have used only a modest share of their TANF resources to help individuals find or prepare for employment, and few have invested the necessary resources to help poor parents with the most serious employment barriers make the transition to work. Experience has not borne out proponents’ claims that block-granting would enable states to become laboratories for developing new ways to help benefit recipients obtain work. While states had an opportunity and resources to innovate and rigorously evaluate new approaches to service delivery, that is not the path they chose.

TANF’s combination of broadly defined purposes and limited accountability for much of its spending has enabled states to divert funds from supporting the poorest families and use them instead to help fill state budget holes. TANF should not bear the burden of inadequate funding from the federal and state governments in other areas, such as child welfare. In addition, the federal TANF block grant is not adjusted for inflation and thus has eroded badly over time, losing over one-third of its value since 1996. These two factors — the funds’ diminished value and broadened dispersal — have left states with fewer resources to serve needy families. The lessons of TANF spending patterns should provide a cautionary tale for proposals to restructure other means-tested programs along similar lines.

 

Appendix I: Background on Funds Available to States Under TANF Federal Funding

Each state receives a fixed annual amount of federal TANF funding, technically known as the State Family Assistance Grant but generally referred to as the TANF block grant. The total amount of federal block grant funds available to all states each year is $16.5 billion. The TANF block grant allocations are set for each state in accordance with the 1996 law that created TANF, based on the amount of federal funding that the state had received in AFDC and related programs before 1996. Each state’s annual block grant amount has generally remained unchanged since TANF’s creation and thus has declined in value by more than one-third due to inflation. (In 2017, each state’s allocation was reduced by 0.33 percent as a set-aside for research funding.) Because states can carry over unspent TANF funds to use in future years, the amount of federal TANF funds that a state spends in a given year may vary.

A state can transfer up to 30 percent of its block grant funds per year to the Child Care and Development Block Grant (CCDBG) and up to 10 percent to the Social Services Block Grant (SSBG), as long as the total amount transferred doesn’t exceed 30 percent. Transferred funds are subject to the rules of the program to which they are transferred, not to TANF rules. Funds transferred to SSBG must be spent on programs and services for children or families with incomes below 200 percent of the poverty line.

In addition to the basic block grant, some states can receive additional TANF federal funds from the TANF Contingency Fund. Congress created this $2 billion fund when it created TANF to provide additional help to states in hard economic times. States made little use of it until the latest recession, but they began to draw on it in 2008, and nearly half of the states have done so since then. After the original $2 billion provided in 1996 was depleted early in fiscal year 2010, Congress has added limited funds for each year; qualifying states have received less than half of the amount for which they qualified each year since 2010.

State Maintenance-of-Effort Funding

Each year, states are required to meet a maintenance-of-effort (MOE) obligation under the TANF block grant or face a fiscal penalty. (The statute refers to this spending as “qualified state expenditures” but common usage is “state MOE.”) Each state’s MOE amount is based on its historical spending, defined as its 1994 financial contribution to AFDC and related work programs. To meet its MOE obligation, a state must report spending at least 80 percent of this historical spending level; this minimum share falls to 75 percent for any year in which a state meets its TANF work participation rate requirement.

The fact that the MOE requirement is only 75 percent or 80 percent of a state’s historical spending, rather than the full 100 percent, itself allowed states to withdraw part of the funds they had spent on AFDC and related programs. Moreover, a state’s MOE requirement is based on its 1994 expenditure level, with no adjustment for inflation over the years since then.

Expenditures that qualify as MOE include state and local government spending or other “third-party” spending that benefits members of needy families and meets one of TANF’s four purposes. Examples of qualifying third-party expenditures include spending by food banks or domestic violence shelters on TANF-eligible families. Third-party MOE also can include in-kind contributions, such as volunteer hours or employer-provided supervision and training for people in subsidized jobs.

Since the Deficit Reduction Act of 2005 made it harder for states to meet their TANF work participation rate requirements — thereby threatening some states with the loss of some federal TANF funds due to penalties — a number of states have found it advantageous to claim as MOE certain existing expenditures they hadn’t previously claimed. States with MOE spending exceeding their minimum MOE requirement can obtain a “caseload reduction credit” that lowers their work participation rate requirement. Claiming excess MOE also helps a state qualify for additional federal money from the TANF Contingency Fund.

Thus, since 2006, total MOE spending across states has risen above the minimum required levels. In 2017, 37 states reported spending over 80 percent MOE, with 22 of these reporting spending of more than 100 percent. This increase does not necessarily represent an increase either in underlying state spending or in benefits or services for low-income families. Some of the reported MOE may represent existing state spending or existing third-party spending that the state hadn’t previously counted as MOE. In analyzing a state’s TANF and MOE expenditures, therefore, it is important to understand the extent to which they may be part of an “excess MOE” strategy.

MOE expenditures must occur during the year for which the state claims them; states cannot carry them over to a future year. MOE expenditures can come from any area of the state budget and are not limited to spending by the TANF agency. MOE spending, however, must be an actual expenditure, not simply forgone revenue; thus, a state can count the refundable portion of a state EITC as MOE but not the portion that simply reduces the amount of income tax owed to the state.

 

Appendix II: CBPP Groupings of Federal TANF Reporting Categories

CBPP Category Federal Reporting Categories
Basic Assistance Basic Assistance (excluding Relative Foster Care Maintenance Payments and Adoption and Guardianship Subsidies) Relative Foster Care Maintenance Payments and Adoption and Guardianship Subsidies
Work-Related Activities Subsidized Employment Education and Training Additional Work Activities
Work Supports and Supportive Services Work Supports Supportive Services
Child Care Child Care - Assistance and Nonassistance Transferred to Child Care and Development Fund
Program Management Administrative Costs Assessment/Service Provision Systems
Refundable Tax Credits Refundable Earned Income Tax Credit Non-EITC Refundable State Tax Credits
Child Welfare Services Family Support/Family Preservation/Reunification Adoption Services Additional Child Welfare Services Authorized Under Prior Law: Child Welfare or Foster Care (Assistance and Nonassistance)
Pre-Kindergarten/Head Start Pre-Kindergarten/Head Start
Other Areas Nonrecurrent Short-Term Benefits Transferred to Social Services Block Grant Services for Children and Youth Home Visiting Programs Financial Education and Asset Development Authorized Solely Under Prior Law (Assistance and Nonassistance): Juvenile Justice Payments Authorized Solely Under Prior Law (Assistance and Nonassistance): Emergency Assistance Other

 

Appendix III: Share of Black and White U.S. Population Living in States with Lowest Spending on Basic Assistance and Child Care

  States Spent Less Than 10% on Basic Assistance States Spent Less Than 5% on Child Care State Share of U.S. Black Population State Share of U.S. White Population
Alabama   X 3% 2%
Alaska     0% 0%
Arizona   X 1% 2%
Arkansas X X 1% 1%
California     5% 7%
Colorado   X 1% 2%
Connecticut     1% 1%
Delaware     1% 0%
Dist. Of Colum.     1% 0%
Florida     8% 6%
Georgia   X 8% 3%
Hawaii     0% 0%
Idaho     0% 1%
Illinois X   4% 4%
Indiana X   2% 3%
Iowa     0% 1%
Kansas X X 0% 1%
Kentucky     1% 2%
Louisiana X X 4% 1%
Maine     0% 1%
Maryland   X 4% 2%
Massachusetts     1% 3%
Michigan   X 3% 4%
Minnesota     1% 2%
Mississippi X   3% 1%
Missouri     2% 2%
Montana     0% 0%
Nebraska     0% 1%
Nevada     1% 1%
New Hampshire     0% 1%
New Jersey X   3% 3%
New Mexico     0% 0%
New York     7% 6%
North Carolina X   5% 3%
North Dakota   X 0% 0%
Ohio     4% 5%
Oklahoma     1% 1%
Oregon   X 0% 2%
Pennsylvania     3% 5%
Rhode Island     0% 0%
South Carolina   X 3% 2%
South Dakota   X 0% 0%
Tennessee     3% 3%
Texas X X 8% 6%
Utah     0% 1%
Vermont     0% 0%
Virginia     4% 3%
Washington     1% 3%
West Virginia     0% 1%
Wisconsin     1% 2%
Wyoming     0% 0%
Total Population Shares for States Spending Less than 10% on Basic Assistance     31% 23%
Total Population Shares for States Spending Less than 5% on Child Care     37% 27%

Source: CBPP analysis of Department of Health and Human Services 2017 TANF financial data. Racial composition analysis based on U.S. Census July 2017 population data.

End Notes

[1] Greg J. Duncan et al., “Early Childhood Poverty and Adult Attainment, Behavior, and Health,” Child Development, January/February 2010, pp. 306-325.

[2] We did not incorporate other racial groups into our analysis, in part because the smaller sample sizes reduce the reliability of our analysis in smaller states. For the Hispanic population, the trends were skewed by a couple of very heavily populated states. For these reasons, we only comment on trends for black and white communities.

[3] Additional background on the TANF block grant funding structure is available in Appendix I. See also Liz Schott et al., “How States Have Spent Federal and State Funds under the TANF Block Grant,” Center on Budget and Policy Priorities, August 8, 2012, http://www.cbpp.org/research/how-states-have-spent-federal-and-state-funds-under-the-tanf-block-grant; and “Temporary Assistance for Needy Families: Spending and Policy Options,” Congressional Budget Office, January 21, 2015, http://www.cbo.gov/publication/49887.

[4] Spending of federal TANF funds may vary from year to year, as states can carry over some unspent federal TANF dollars to a subsequent year. States may also build up reserves with their unspent TANF federal allotment that can be spent at a later date. The federal TANF funds are primarily the annual fixed block grant amount (the State Family Assistance Grant, or SFAG) but also include other federal dollars, primarily the TANF Contingency Fund, which 18 states received in 2017.

[5] States may also spend funds on activities that they supported with Emergency Assistance funds prior to 1996 even if the activities do not fall under one of these four TANF purposes. Spending under this grandfathered authority is reported as “authorized under prior law” (AUPL).

[6] The new reporting form and instructions are available at http://www.acf.hhs.gov/ofa/resource/tanf-acf-pi-2014-02. For a cross-walk between the pre-2015 TANF expenditure reporting categories and the new ones, see HHS’s State TANF Spending Fact Sheet, Figure 4, http://www.acf.hhs.gov/sites/default/files/ofa/2015_tanf_financial_data_report_factsheet_final.pdf.

[7] The data used in this report are posted at https://www.acf.hhs.gov/sites/default/files/ofa/tanf_financial_data_fy_2017_12819_values.xlsx and are based on 2017 HHS data available at https://www.acf.hhs.gov/ofa/resource/tanf-financial-data-fy-2017. See also state fact sheets posted at http://www.cbpp.org/research/family-income-support/state-fact-sheets-how-states-have-spent-federal-and-state-funds-under.

Prior reports, which had a greater focus on longitudinal spending, are still available, and supporting longitudinal data are available on request. See Liz Schott et al., “How States Have Spent Federal and State Funds under the TANF Block Grant,” Center on Budget and Policy Priorities, August 8, 2012, http://www.cbpp.org/research/how-states-have-spent-federal-and-state-funds-under-the-tanf-block-grant; Liz Schott, LaDonna Pavetti, and Ife Floyd, “How States Use Federal and State Funds Under the TANF Block Grant,” Center on Budget and Policy Priorities, updated October 15, 2015,

http://www.cbpp.org/research/family-income-support/how-states-use-federal-and-state-funds-under-the-tanf-block-grant.

[8] Details of the new HHS reporting categories and how we group them into the nine categories used in this report are available in Appendix II.

[9] We use the term “other areas” to encompass a number of categories detailed in the state reporting to HHS, including: non-recurrent short-term benefits, funds transferred to the Social Services Block Grant, services for children and youth, home visiting programs, financial education and asset development, funds authorized solely under prior law for juvenile justice programs, funds authorized solely under prior law for emergency assistance, and other.

[10] CBPP analysis of Census July 2017 population estimates by race and the TANF spending rates.

[11] For information on the ratio of families receiving TANF to the number of families in poverty, by state and for the United States as a whole, see Ife Floyd, Ashley Burnside, and Liz Schott, “TANF Reaching Few Poor Families,” Center on Budget and Policy Priorities, updated November 28, 2018, https://www.cbpp.org/research/family-income-support/tanf-reaching-few-poor-families.

[12] For information on state TANF benefit levels, see Ashley Burnside and Ife Floyd, “TANF Benefits Remain Low Despite Recent Increases in Some States,” Center on Budget and Policy Priorities, updated October 25, 2018, https://www.cbpp.org/research/family-income-support/tanf-benefits-remain-low-despite-recent-increases-in-some-states.

[13] This analysis combines three categories as work-related activities: subsidized employment, education and training, and additional work activities. Previous CBPP analyses also included work supports such as transportation in this combined work category, but following the revised HHS data form, we now combine work supports with supportive services in a new category.

[14] Starting in 2015, CBPP analyses combined spending on work supports and supportive services and broke this out separately from overall work-related activities. We include this work supports/supportive services category as part of core spending. Previously, we included work supports as part of work-related activities and did not have specific state data on supportive services spending (as it was reported to HHS under “other nonassistance”). The new detail available starting in 2015 provides spending information for supportive services.

[15] Currently, states are not required to provide a breakdown of TANF spending to indicate amounts that are spent on those receiving cash assistance as compared to amounts on other groups, such as recipients of college financial aid.

[16] Hawaii TANF-MOE Report, ACF-204 for Temporary Assistance for Needy Families, October 1, 2016 through September 30, 2017.

[17] 2018 Health and Human Service Poverty Guidelines. TANF benefit levels for a single-parent family of three were compiled by CBPP from various sources and are current as of July 31, 2018.

[18] Mississippi TANF-MOE Report, ACF-204 for Temporary Assistance for Needy Families, October 1, 2016 through September 30, 2017.

[19] Recognizing the importance of child care to support work, the 1996 law that created TANF created a new Child Care Development Fund under the Child Care and Development Block Grant (CCDBG), which provides a set amount of federal funds for child care each year; CCDBG was reauthorized in 2014. The law also allows states to transfer some of their TANF block grant dollars to CCDBG (up to a cap). In addition, under TANF, states can spend federal or state TANF funds directly on child care (without having to transfer the funds to CCDBG and without any cap or limit), since spending on child care for needy families furthers the TANF goal of connecting families to work. States need not limit child care assistance financed by federal or state TANF funds to families receiving cash assistance; states can also use these funds for families that have left TANF for work or other low-income working families.

[20] This analysis examines trends in state use of federal or state TANF funds for child care, including federal TANF funds transferred to CCDBG, but not other federal funds, such as those directly appropriated to CCDBG.

[21] Karen Schulman, “Overdue for Investment: State Child Care Assistance Policies 2018,” National Women’s Law Center, https://nwlc-ciw49tixgw5lbab.stackpathdns.com/wp-content/uploads/2018/11/NWLC-State-Child-Care-Assistance-Policies-2018.pdf

[22]Ibid.

[23] For more information on state EITCs, see Erica Williams and Samantha Waxman, “States Can Adopt or Expand Earned Income Tax Credits to Build a Stronger Future Economy,” Center on Budget and Policy Priorities, updated February 7, 2018, https://www.cbpp.org/research/state-budget-and-tax/states-can-adopt-or-expand-earned-income-tax-credits-to-build-a.

[24] 2017 is the third year for which comprehensive data are available for TANF spending on child welfare services. Child welfare services grouped here include child protective services, family support and preservation, and adoption support, as well as foster care payments that are a permissible TANF use because they were “authorized under prior law.”

[25] The AUPL spending listed here does not include the child welfare or foster care expenditures that were “authorized under prior law”; those expenditures are included in child welfare services for this report and related state fact sheets and spreadsheet, as well as in the HHS fact sheets and pie charts.