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Policy Brief: More States Raising TANF Benefits to Boost Families’ Economic Security

UPDATED
December 9, 2019

Temporary Assistance for Needy Families (TANF), the primary cash assistance program for families living in poverty, can play a key role in ensuring that families struggling to make ends meet have sufficient income for rent and other basic expenses. Studies show that income matters: financial stability gives children a better chance of growing up healthy and with the opportunity to thrive. Recognizing the importance of income for children’s long-term growth and development — and the inadequacy of their existing TANF benefits — a number of states have chosen to raise their TANF grants to families in the past few years.

Yet states need to do much more for TANF to fulfill its core purpose of helping families that struggle to meet basic needs. TANF benefit levels are still too low and have eroded in value since TANF’s creation in 1996.[1] These low benefits disproportionately affect Black children, who are more likely than white children to live in the states with the lowest benefits. As of July 2019, benefits for a family of three with no other income:

  • Are at or below 60 percent of the poverty line in every state.
  • Have lost at least 20 percent of their inflation-adjusted value since 1996 in most states.
  • Don’t meet the rent and utility costs of a modest two-bedroom apartment in any state.

States have considerable flexibility in how they use their TANF funds. As caseloads have declined, many states have invested those funds in other areas — in some cases to supplant (replace) existing state spending and thereby help close budget holes or to free up funds for purposes unrelated to low-income families or children. States should halt the erosion of TANF benefits and continue restoring the purchasing power lost over the past 23 years.

Fourteen states and the District of Columbia raised TANF benefits levels between July 1, 2018 and July 1, 2019. In addition, four states made legislative or administrative changes to increase benefits later in 2019 or in 2020. Some of the grant increases represent historic changes for the state TANF programs, though they still leave benefits far below the poverty line for a family of three.

TABLE 1
States Raising TANF Benefits in Past Year
(Monthly benefit for family of three)
  July 2019 Benefit Increase Since July 2018 Increase Due to an Annual or Periodic Adjustment
New Jersey $559 $93  
Tennessee $277 $92  
Illinois $520 $88  
California $785 $71  
District of Columbia $642 $66  
Colorado $508 $46  
Maryland $709 $32 X
New Hampshire $1,066 $27 X
Virginia $442 $23  
Wyoming $697 $22 X
Nebraska $468 $18 X
Ohio $497 $14 X
Maine $594 $12 X
South Carolina $292 $6 X
Texas $295 $5 X

Note: TANF = Temporary Assistance for Needy Families.

Source: CBPP-compiled 2019 state benefit levels

Benefits Are Low and Have Eroded in Value

TANF benefits leave family incomes below half the poverty line in every state except New Hampshire (see Table 2).[2] And TANF families are further below the poverty line than when TANF began two decades ago: in 1996, 16 states had benefit levels at or below 30 percent of the poverty line; today, 32 states do. (See Figure 1.)

In 18 states, benefit levels are at or below 20 percent of the poverty line — that is, $356 a month or less for a family of three (see Figure 1). Over half (55 percent) of the country’s Black children live in these 18 states, compared to only 40 percent of white children.[3] Many of these states had some of the lowest benefits under TANF’s predecessor, Aid to Families with Dependent Children (AFDC), and have failed to make much progress since then.

Figure 1
Maximum TANF Benefits Leave Families Well Below Federal Poverty Line

Benefits have lost considerable value over time in the vast majority of states. Since 1996, they have shrunk by 20 percent or more in 33 states, after adjusting for inflation. Fourteen states had the same nominal benefit levels in July 2019 as in 1996, meaning that benefits have fallen in inflation-adjusted terms by 39 percent.

Four states (Arizona, Hawaii, Idaho, and Oklahoma) have cut and not restored TANF benefits in the last 20 years, so benefits there are below their 1996 levels even without adjusting for inflation. In three of those states — Arizona, Hawaii, and Oklahoma — benefits have shrunk by 40 percent or more after adjusting for inflation.

Benefits Cover Only Fraction of Modest Housing Costs

Although TANF benefit levels have risen slightly, housing costs in most areas also continue to rise, substantially in some areas. In every state, the monthly TANF benefit for a family of three is well below the Fair Market Rent, the Department of Housing and Urban Development’s (HUD) estimated cost of a modest two-bedroom apartment and utilities. It’s less than half of the estimated Fair Market Rent in 30 states and D.C., compared with only 8 states in 1996. (See Table 2.)

TANF benefits cover an especially small share of housing costs in states where Black children are likelier to live. Almost half (46 percent) of Black children live in states with benefits that cover less than one-third of the housing costs for a modest two-bedroom apartment, compared to 27 percent of white children.

Moreover, most TANF families receive no housing subsidies — in fact, only about 17 percent of TANF families receive HUD housing assistance.[4] Some states provide small additional funds to help low-income families cover housing costs, but these rarely cover the large gap between TANF grants and local Fair Market Rents.

Low-income families without housing assistance likely have high rates of housing instability, research shows, resulting in doubling up with friends or relatives, living in substandard conditions, frequent moves, eviction, or homelessness.[5] Such instability can harm both adults and children and is associated with poor school performance, poor cognitive development, increased health risks, and mental health problems.[6]

Child Development Research Highlights Potential Gains From Raising TANF Benefits

Income supports like TANF during early childhood can improve the lives of children living in poverty, researchers generally agree. Raising the incomes of families in poverty relieves the stress caused by a scarcity of resources, which research has linked to lasting negative consequences for children’s brain development and physical health. Income support programs can improve children’s academic, health, and economic outcomes, the National Academies of Sciences’ report on reducing childhood poverty finds.[7] Even relatively small infusions of cash, like those from TANF, can make a difference.

Unfortunately, TANF does not do enough to stabilize families in poverty. States with the lowest TANF benefits, in particular, need to do more to ensure that all families in poverty have access to more cash to help them meet their basic needs. Many of the states that raised benefits in the past year did so through annual or periodic adjustments that generally occur by default or automatically. Such an approach — when combined with an initial benefit increase to recover lost purchasing power due to inflation — can be an effective way to protect benefits from erosion due to inflation. With many state TANF caseloads reaching their lowest levels ever, state policymakers can use the resulting savings to provide more adequate levels of basic assistance:

  • States should reinvest federal TANF and state maintenance-of-effort funds in basic assistance or other areas to meet families’ basic needs, starting with providing higher cash grants for participating families. As part of this reinvestment, states should, at a minimum, restore the full value of benefits that has been lost since 1996 and any additional cuts made during the Great Recession, even if that requires several incremental increases over a period of years.
  • States should establish mechanisms to prevent benefits from eroding in the future.[8] Adjusting TANF benefits yearly in step with inflation can maintain families’ purchasing power and help them meet basic needs. This not only improves the lives of parents and children receiving TANF, but also helps local communities, as poor families quickly put that money into the local economy.
  • States should direct any remaining funds toward services and activities that support families that either receive or qualify for assistance.
TABLE 2
State TANF Benefit Levels Relative to Measures of Need and Erosion of Value
State Monthly benefit, July 2019 Benefit, percent of poverty line Change 1996-2019, adjusted for inflation Percent of Fair Market Rent

Alabama
$215 12.1% -20% 27.7%

Alaska
923 41.5% -39% 71.4%

Arizona
278 15.6% -51% 27.4%

Arkansas
204 11.5% -39% 27.5%

California
785 44.2% -19% 43.5%

Colorado
508 28.6% -13% 38.6%

Connecticut
698 39.3% -33% 52.8%

Delaware
338 19.0% -39% 29.6%

D.C.
642 36.1% -5% 38.6%

Florida
303 17.0% -39% 25.5%

Georgia
280 15.8% -39% 29.2%

Hawaii
610 29.8% -48% 31.9%

Idaho
309 17.4% -40% 38.4%

Illinois
520 29.3% -15% 48.0%

Indiana
288 16.2% -39% 34.5%

Iowa
426 24.0% -39% 53.1%

Kansas
429 24.1% -39% 51.8%

Kentucky
262 14.7% -39% 33.9%

Louisiana
240 13.5% -23% 27.4%

Maine
594 33.4% -13% 57.4%

Maryland
709 39.9% 16% 49.5%

Massachusetts
633 35.6% -31% 36.0%

Michigan
492 27.7% -34% 54.8%

Minnesota
532 29.9% -39% 51.8%

Mississippi
170 9.6% -13% 22.7%

Missouri
292 16.4% -39% 35.1%

Montana
588 33.1% -18% 70.8%

Nebraska
468 26.3% -21% 56.0%

Nevada
386 21.7% -32% 39.4%

New Hampshire
1066 60.0% 19% 88.2%

New Jersey
559 31.4% -19% 37.2%

New Mexico
447 25.1% -30% 52.6%

New York
789 44.4% -16% 49.3%

North Carolina
272 15.3% -39% 30.9%

North Dakota
486 27.3% -31% 56.1%

Ohio
497 28.0% -11% 60.8%

Oklahoma
292 16.4% -42% 36.1%

Oregon
506 28.5% -33% 42.4%

Pennsylvania
421 23.7% -39% 41.8%

Rhode Island
554 31.2% -39% 51.1%

South Carolina
292 16.4% -11% 32.5%

South Dakota
615 34.6% -12% 77.3%

Tennessee
277 15.6% -8% 32.1%

Texas
295 16.6% -4% 28.0%

Utah
498 28.0% -27% 52.3%

Vermont
640 36.0% -34% 54.1%

Virginia
442 24.9% -23% 36.7%

Washington
569 32.0% -36% 39.4%

West Virginia
340 19.1% -18% 45.8%

Wisconsin
653 36.7% -23% 74.9%

Wyoming
697 39.2% 19% 81.4%

For more detailed notes on state benefit levels, please see our full report at https://www.cbpp.org/research/family-income-support/tanf-benefits-remain-low-despite-recent-increases-in-some-states.

Sources: TANF benefit levels for a single-parent family of three were compiled by CBPP from various state sources and are current as of July 1, 2019. Share of the poverty line calculated using Health and Human Services 2019 Poverty Guidelines. 1996 TANF benefits for a family of three collected from the Congressional Research Service. Benefits adjusted for inflation using the CPI-U-RS. Share of Fair Market Rents calculated using housing cost data from the National Low Income Housing Coalition’s “Out of Reach” report.

End Notes

[1] For more detail, see Ashley Burnside and Ife Floyd, “More States Raising TANF Benefits to Boost Families’ Economic Security,” Center on Budget and Policy Priorities, updated December 9, 2019, https://www.cbpp.org/research/family-income-support/tanf-benefits-remain-low-despite-recent-increases-in-some-states.

[2] The 2019 poverty guideline from the Department of Health and Human Services (HHS) for a family of three is $1,778 per month in the 48 contiguous states and Washington, D.C. (See https://aspe.hhs.gov/poverty-guidelines.) CBPP uses HHS’ poverty guidelines in this analysis because they are used to determine financial eligibility for certain programs.

[3] Racial composition analysis based on U.S. Census American Community Survey data for 2018.

[4] CBPP calculation of TANF caseload and HUD administrative data.

[5] Matthew Desmond, “Eviction and the Reproduction of Urban Poverty,” American Journal of Sociology, Vol. 118, No. 1, 2012.

[6] Will Fischer, “Research Shows Housing Vouchers Reduce Hardship and Provide Platform for Long-Term Gains Among Children,” CBPP, October 7, 2015, http://www.cbpp.org/research/housing/research-shows-housing-vouchers-reduce-hardship-and-provide-platform-for-long-term.

[7] National Academies of Sciences, Engineering, and Medicine, “A Roadmap to Reducing Child Poverty,” 2019, https://www.nap.edu/read/25246/chapter/2#6.

[8] A statutory cost-of-living adjustment (COLA) is the best way to ensure that benefits keep pace with inflation. TANF agencies will fare much better in their state budget process if a COLA is part of the baseline of a current-needs budget. For example, Wyoming’s COLA is based on the Wyoming Cost of Living Index for the previous year. The COLA has made Wyoming one of only three states whose benefits have risen since 1996 in inflation-adjusted terms. Ohio’s COLA follows the same approach used for Social Security and Supplemental Security Income benefits: the state uses the Social Security Administration’s COLA percentage to raise TANF benefits at the start of every calendar year.