Why Block Grants Fail America’s Neediest: Part I

by Amanda Luketich

April 21, 2017

Cover Photo Credits

Temporary Assistance for Needy Families (TANF) is a block grant program provided to the states by the federal government. Over the past two decades, TANF has evolved to become a highly individualized program across states. With little federal oversight, aside from required targets, states have generally moved away from utilizing TANF funds for their original purpose. TANF has become a state slush-fund, used differently across states based on their political, demographic, historical, and economic backgrounds with a disregard for the original purpose of the program.

The purpose of TANF is to help needy families achieve self-sufficiency. According to the Office of Family Assistance, TANF provides “cash assistance and support services to assist needy families with children younger than 18”. The four tenets of TANF are to: “provide assistance to needy families so that children can be cared for in their own homes, reduce the dependency of needy parents by promoting job preparation, work and marriage, prevent and reduce the incidence of out-of-wedlock pregnancies [and] encourage the formation and maintenance of two-parent families”. These tenets, with an emphasis on pregnancies and marriage, were born from a bipartisan fear of single parent families, and were generally ignored when the bill was signed, but have become pivotal to TANF spending today. .

Currently, TANF is provided to states as a block grant through the Department of Health and Human Services. The TANF program allows states a large amount of flexibility in how they use money from the block grant. The federal government allows states to set their own eligibility requirements, as long as they follow  two restrictions : 1) States cannot provide cash assistance with federal funds for more than 60 months to a family including an adult recipient, with an option to exceed that for 20% of their caseload in hardship conditions, 2) Federal TANF dollars cannot be used on legal immigrants until they have been in the country for five years. However, both these conditions only apply to federal dollars, meaning states’ Maintenance Of Effort (MOE) funds are exempt. On top of these two restrictions, no funds, federal or state, can be used for illegal immigrants. Barring these three restrictions, the main guidance for states spending of MOE and federal money is to “meet any of the four goals set out in the 1996 law”. In addition to the previous restrictions, the TANF program also includes a work requirement. States are free to choose what is considered a work activity, who must participate in it, and the corresponding sanctions for failure to meet them. Parallel to state requirements, the federal government requires all states meet a federal TANF work participation rate, and states can be penalized if they do not meet it. When TANF was reauthorized with the 2005 Deficient Reduction Act states’ work requirements were increased, making them more difficult for states to meet. President Obama introduced waivers to move states away from needing to require strict work requirements, but not all states have chosen to utilize them.

In total, the TANF Block Grant is an established $16.5 billion a year. Participating states also spend an additional ~$15.3 billion in MOE funds. The $16.5 billion set amount is distributed among the states every year, regardless of the number of people who are actually eligible for its benefits. Congress has not changed the funding of the grant since its 1996 inception, causing the real value of the block grant to be reduced by one third. The required MOE amount for states is generally set at 80% of their 1994 contribution to AFCD-related programs, with some exceptions. After adjusting for inflation, that is about half of what states actually spent on AFCD-related programs in 1994. The allocation of the block grant varies across states, based on the states’ historical spending levels under AFDC. This, coupled with the subsequent required MOE match, has led to great disparities in the amounts available per low-income child across states.

Luke Shaefer, associate professor at the University of Michigan in public policy, explained the problem with TANF block grants today;

“if the [caseloads] are low, it makes it a lot easier for the states to meet the requirements of the program imposed by federal law, but they also can reallocate the money they don’t spend on cash assistance to other things. Some states are just wholesale reallocating part of the money to things they were going to spend on otherwise”.

There are no incentives for states to use the money for cash assistance, which is essential to helping families in need, who cannot pay their rent or buy clothes with food stamps.  It is “easier to comply with TANF regulations by simply pushing people off the [welfare] rolls”. Beyond not providing cash assistance, employment assistance is also not being widely provided and has a national allocation average of only 8% of TANF funds per state. The majority of programs funded today are done so under the 3rd and 4th provisions, “prevent and reduce the incidence of out-of-wedlock pregnancies [and] encourage the formation and maintenance of two-parent families”, even if the services only nebulously fit in this category.

Amanda Luketich is a 1st year MPP student at the College of William & Mary and the incoming Submissions Editor of the William & Mary Policy Review.