Why Block Grants Fail America’s Neediest: Part II

by Amanda Luketich

April 24, 2017

Cover Photo Credits

This article is the second part of a two-part series.

The reason for the lack of widespread adoption of “true” TANF related programs (those accounting for all four tenants of the original 1996 bill) is a lack of repercussions. If a state chooses not to put TANF dollars into cash assistance, they can use that money in other areas, like pre-kindergarten or daycare. Every dollar not spent relieving poverty can be utilized for other programs that the state then does not have to pay for out of their own budget. The nebulous guidelines around program compliance, along with lack of any true repercussions means states have a clear incentive to use these federal funds to pad their budgets around a variety of programs they would have incurred regardless. The problem is not that the programs being funded are unworthy of funding, but that they are not the intended recipients of TANF spending.

This lack of adherence to the original missive of the program means TANF is not a good safety net for families in need. While the caseloads of states over the last two decades have declined, they have not changed in response to deepening poverty or recessions. When the job market is weak is when TANF problems (the lack of cash assistance) are most exposed, because other safety nets cannot help people who have no money to save, or who have used up their lifetime TANF benefits. Having TANF set up as a block grant assumes that eventually, all the people who need assistance will be able to get jobs as they cease to qualify for the program. In times such as the 2008 recession, that was not true. Despite the decline in caseloads over the last two decades, the number of people in poverty has not decreased with the number of people receiving TANF. In 1996, 68 families received TANF for every 100 families in poverty. In 2013, only 26 families received TANF for every 100 in poverty. These states have not ended poverty, they have simply stopped acknowledging it.

According to the Center on Budget and Policy Priorities, on average across states in 2015, only 25% of all TANF funds, or $1 in every $4 across the country were spent on basic assistance. Instead, about half of spending goes to core programs, basic assistance, work and supportive services, and childcare. There is no evidence that the reallocation of these funds away from core services improved outcomes for poor families. Because of lax guidelines from the federal government, much of the block grant no longer goes to providing cash assistance and support services, the intended core welfare initiatives, and is instead used in various ways across the states.

Although TANF is funded through a federal block grant, it is truly a state-by-state program. Diversity in eligibility requirements, allocation, and set-up of TANF funds are as diverse as the states themselves. One theme across most states is that TANF no longer focuses on providing cash assistance, and there are still many more people in poverty across the country than are being served by TANF. When TANF comes up for its next reauthorization, the federal government must decide if this new brand of TANF, as a social services funding stream, meets their standards, or if reform is necessary.

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.