You are here

Policy Brief: TANF Cash Benefits Are Too Low to Help Families Meet Basic Needs

UPDATED
October 13, 2017

A core purpose of the Temporary Assistance for Needy Families (TANF) program is to provide families that have fallen on hard economic times with cash assistance to help them meet basic needs.  But TANF benefit levels are low and have eroded in value since TANF’s creation in 1996.[1]  As of July 2017, 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 should halt the erosion of TANF benefits.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 begin restoring the purchasing power lost over the past 20 years.

Benefits Are Low and Have Eroded in Value

TANF benefits leave family incomes below half the poverty line in every state.[2]  (See Figure 1.)  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, 34 states and the District of Columbia do.  In 18 of those states, benefit levels are at or below 20 percent of the poverty line — that is, $340 a month for a family of three or less. 

 

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

 

Benefits have lost considerable value in the vast majority of states.  Since 1996, they have shrunk by 20 percent or more in 35 states plus the District of Columbia, after adjusting for inflation.  Sixteen states had the same nominal benefit levels in July 2017 as in 1996, meaning that benefits have fallen in inflation-adjusted terms by more than 35 percent.  (See Figure 2.)

Five states (Arizona, Hawaii, Idaho, Oklahoma, and Washington) have cut TANF benefits in the last 20 years, so benefits there are below their 1996 levels even without adjusting for inflation.  In two of those states — Arizona and Hawaii — benefits have shrunk by more than 40 percent after adjusting for inflation.

 

Figure 2
TANF Benefits in Most States Have Declined in Inflation-Adjusted Terms Since 1996

 

Benefits Cover Only Fraction of Modest Housing Costs

Even as TANF benefits continue declining, housing costs in most areas are rising. 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 estimated cost of a modest two-bedroom apartment and utilities.  It’s less than half of the Fair Market Rent in 30 states and D.C., compared with only 7 states in 1996. (See Appendix Table 1.)  

Moreover, most TANF families receive no housing subsidies — in fact, only 1 in 4 families with children eligible for federal housing assistance (including both TANF and non-TANF families) receive it.[3]  Some states provide small 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 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.[4]  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.[5] 

TANF Benefits Should Support Families Getting Back to Work

TANF recipients have a limited time on benefits and are required to participate in work or work-preparation activities such as education or training (unless they qualify for a state exemption).  During this time-limited, work-focused window, TANF benefits have an important role to play in helping parents to succeed in school or work.

Recent research on the impacts of living in chronic scarcity, where essentials such as food and housing are in short supply, highlight the ways in which income support can help parents succeed.[6]  With many state TANF caseloads reaching their lowest levels ever, state policymakers can use the resulting savings to provide more adequate basic assistance:

  • First, they should reinvest federal and state TANF funds back into the core purposes of TANF, such as providing cash grants for poor families. 
  • Second, as part of this reinvestment, states should restore the full value of benefits lost in recent years and reverse any additional cuts made during the recession, even if that requires several incremental increases over a period of years. 
  • Third, they should establish mechanisms to prevent benefits from eroding in the future.[7]  Adjusting TANF benefits yearly in step with inflation can maintain families’ purchasing power and help them meet basic needs — thereby improving the lives of parents and children receiving TANF while also helping local communities, as poor families quickly put that money into the local economy.
APPENDIX TABLE 1
State TANF Benefit Levels Related to Measures of Need and Erosion of Value
State Monthly benefit, July 2017 Benefit, percent of poverty line Change 1996-2017, adjusted for inflation Percent of Fair Market Rent
Alabama 215 12.6% -16.0% 28.0%
Alaska 923 43.4% -35.9% 73.5%
Arizona 278 16.3% -48.7% 30.4%
Arkansas 204 12.0% -35.9% 28.6%
California 714 42.0% -23.2% 44.4%
Colorado 462 27.1% -16.8% 40.4%
Connecticut 698 41.0% -29.7% 54.3%
Delaware 338 19.9% -35.9% 30.1%
D.C. 508 29.9% -21.5% 29.1%
Florida 303 17.8% -35.9% 28.2%
Georgia 280 16.5% -35.9% 32.1%
Hawaii 610 31.2% -45.1% 33.3%
Idaho 309 18.2% -37.5% 40.6%
Illinois 432 25.4% -26.6% 39.8%
Indiana 288 16.9% -35.9% 36.5%
Iowa 426 25.0% -35.9% 56.2%
Kansas 429 25.2% -35.9% 52.9%
Kentucky 262 15.4% -35.9% 36.1%
Louisiana 240 14.1% -19.0% 28.5%
Maine 485 28.5% -25.6% 51.7%
Maryland 648 38.1% 11.3% 44.1%
Massachusetts 618 36.3% -29.9% 43.4%
Michigan 492 28.9% -31.3% 58.3%
Minnesota 532 31.3% -35.9% 55.0%
Mississippi 170 10.0% -9.2% 22.0%
Missouri 292 17.2% -35.9% 35.8%
Montana 588 34.6% -14.0% 75.9%
Nebraska 450 26.4% -20.8% 56.9%
Nevada 383 22.5% -29.5% 40.9%
New Hampshire 1021 60.0% 19.0% 90.4%
New Jersey 424 24.9% -35.9% 29.9%
New Mexico 409 24.0% -32.6% 49.8%
New York 789 46.4% -12.4% 54.0%
North Carolina 272 16.0% -35.9% 33.1%
North Dakota 486 28.6% -27.7% 57.1%
Ohio 474 27.9% -10.9% 60.8%
Oklahoma 292 17.2% -39.0% 38.0%
Oregon 506 29.7% -29.5% 49.2%
Pennsylvania 421 24.7% -35.9% 43.4%
Rhode Island 554 32.6% -35.9% 54.7%
South Carolina 283 16.6% -9.3% 34.4%
South Dakota 615 36.1% -8.3% 83.8%
Tennessee 185 10.9% -35.9% 23.2%
Texas 286 16.8% -2.5% 29.9%
Utah 498 29.3% -23.3% 56.3%
Vermont 640 37.6% -31.3% 56.2%
Virginia 419 24.6% -24.1% 34.6%
Washington 521 30.6% -38.8% 42.4%
West Virginia 340 20.0% -13.9% 45.1%
Wisconsin 653 38.4% -19.0% 77.9%
Wyoming 660 38.8% 17.5% 80.4%

For more detailed notes on state benefit levels, please see our full report at http://www.cbpp.org/research/family-income-support/tanf-cash-benefits-have-fallen-by-more-than-20-percent-in-most-states.

Sources: TANF benefit levels for a single-parent family of three were compiled by CBPP from various state source are as current as of July 1, 2017. Share of the poverty line calculated using Health and Human Services 2017 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 Ife Floyd, “TANF Cash Benefits Have Fallen by More Than 20 Percent in Most States and Continue to Erode,” CBPP, updated October 13, 2017, http://www.cbpp.org/research/family-income-support/tanf-cash-benefits-have-fallen-by-more-than-20-percent-in-most-states.

[2] The 2017 poverty guideline from the Department of Health and Human Services (HHS) for a family of three is $1,702 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] Will Fisher and Barbara Sard, “Chart Book: Federal Housing Spending Is Poorly Matched to Need,” CBPP, March 8, 2017, https://www.cbpp.org/research/housing/chart-book-federal-housing-spending-is-poorly-matched-to-need.

[4] Matthew Desmond, “Eviction and the Reproduction of Urban Poverty,” American Journal of Sociology, 118(1), 2012.

[5] 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.

[6] Allison Daminger et al., “Poverty Interrupted: Applying Behavioral Science to the Context of Chronic Scarcity,” ideas42, May 2015, http://www.ideas42.org/wp-content/uploads/2015/05/I42_PovertyWhitePaper_Digital_FINAL-1.pdf.

[7] 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, the state’s inflation indicator, 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 SSI benefits:  the state uses the Social Security Administration’s COLA percentage to raise TANF benefits at the start of every calendar year.