Policy Brief: TANF Reaching Few Poor Families

The Temporary Assistance for Needy Families (TANF) block grant, created by the 1996 welfare law, is designed to provide a temporary safety net to poor families — primarily those with no other means to meet basic needs — but its reach has shrunk considerably over time.^[1]  In 2016, for every 100 families in poverty, only 23 received cash assistance from TANF — down from 68 families when TANF was first enacted.  This “TANF-to-poverty ratio” (TPR) reached its lowest point in 2014 and remained there in 2015 and 2016.  (See Figure 1.)

TANF provides strong evidence that work requirements and block granting exacerbate, rather than reduce, poverty.TANF provides strong evidence that work requirements and block granting exacerbate, rather than reduce, poverty and should not be extended to other programs:

• TANF provides a temporary safety net to few poor families and its reach continues to shrink, both nationally and in nearly every state.
• Caseloads fall for two reasons: the need for assistance goes down or states make changes that make the program less accessible.  Both have occurred in recent years, but the biggest declines manifested in states with major policy changes.
• TANF does less to lift families out of deep poverty than its predecessor, Aid to Families with Dependent Children (AFDC), and has put poor children at risk of much greater hardship, with the potential for long-term negative consequences.

The federal government has a critical role in ensuring that low-income families have access to a minimum level of support to meet their basic needs.  The TANF block grant handed that responsibility over to states, which — with no national standards to hold them accountable for providing assistance to families in need — acted in their own self-interest, not in the best interest of the most vulnerable members of society. 

Figure 1

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Weak Safety Net Getting Weaker

During TANF’s early years, when the economy was strong and employment among never-married mothers rose, TANF caseloads fell more than the number of poor families, causing the TPR to drop.  More recently, the continued decline in the TPR reflects growth in the number of families in poverty without a parallel rise in the number of families receiving TANF.  Nationwide, the number of families in poverty dropped by 3 percent between 2006 (the year after TANF was last reauthorized) and 2016, while the national TANF caseload fell by 28 percent (from 1.9 million families to fewer than 1.4 million). 

The national TANF-to-poverty ratio misses the extreme — and growing — variation among the states.  In 2015-16 the TPR ranged from a high of 66 in California to a low of 4 in Louisiana.^[2]  (See Table 1.)  The TPR fell in a majority of states between 2006 and 2016 due to increases in the number of families living in poverty, the failure of state TANF programs to meet increased need during and after the recession, and state policy and administrative changes that made TANF less accessible.

An especially troubling trend is the growing number of states with TPRs of 10 or less.  In 2006, only two states, Idaho and Wyoming, had such low ratios.  The list grew during the recession and has continued growing in its aftermath.  In 2016, 15 states — Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Kansas, Louisiana, Mississippi, North Carolina, North Dakota, Oklahoma, Texas, Utah, and Wyoming — had TPRs of 10 or less. 

State Policy and Administrative Changes Drive Big Declines

Caseloads are lower in most states than they were when TANF was reauthorized in the Deficit Reduction Act (DRA), which took effect in 2006. In 33 states, caseloads fell more than 20 percent from 2006 to 2016.  Caseloads fall for two reasons: the need for assistance goes down or states make changes that make the program less accessible.  Both have occurred in recent years, but the biggest declines were in states with major policy changes that made the program less accessible.  Some states shortened or otherwise changed their time limits, cutting off families that remained in need.  Others made changes that made it harder for families to qualify for benefits, such as more stringent applicant requirements. 

States made these changes for a range of reasons.  The TANF-related DRA changes put pressure on states to reduce caseloads, and caseloads began to fall in many states starting in 2006.  In subsequent years, a number of states made TANF cuts because of budgetary shortfalls caused by the recession.  At the same time, states made changes to TANF programs for ideological reasons. 

These changes all lessened TANF’s reach.  For example, Arizona cut benefits, shortened time limits, and imposed other eligibility restrictions starting in 2009 to help address its budget problems.  These changes account for the majority of the three-quarters drop in Arizona’s TANF caseload between 2006 and 2016.  The state’s TPR fell from 27 in 2005-06 to 6 in 2015-16.  Indiana made administrative and procedural changes, including instituting job search requirements for applicants and toughening sanctions.  Between 2006 and 2016, Indiana’s caseload dropped by 82 percent.  Its TPR fell from 35 in 2006 to 7 in 2016.

TANF Lifts Far Fewer Children out of Deep Poverty Than AFDC

Decreased access to TANF benefits has left the poorest families without resources needed to meet their basic needs.  AFDC played a significant role in reaching families, particularly those with children and those in deep poverty; TANF has failed to maintain that standard.  TANF benefits are not sufficient to lift families out of poverty in any state, and TANF does far less than AFDC did to lift families out of deep poverty.  While AFDC lifted more than 2.5 million children out of deep poverty in 1995, TANF lifted only 420,000 children out of deep poverty in 2014.^[3] 

Two well-known poverty researchers, Greg J. Duncan and Katherine Magnuson, have shown that poverty among young children not only slows them in school but also shrinks their earnings as adults.  Welfare-to-work programs and other anti-poverty experiments “suggest that income plays a causal role in boosting younger children’s achievement” in preschool and elementary school, they note.  (TANF is often a critical source of income for the most vulnerable families with young children.) 

Duncan and Magnuson also found that among families with incomes below $25,000, children whose families received a $3,000 annual income boost when the children were under age 6 earned 17 percent more as adults and worked 135 more hours per year after age 25 than otherwise-similar children whose families didn’t receive the income boost.  This suggests that TANF policy changes that cut income, such as establishing harsher sanctions or shorter time limits or significantly reducing benefits, could harm young children now and into the future.^[4]