Temporary Assistance for Needy Families: Implications of Changes in Participation Rates

Testimony issued by the Government Accountability Office with an abstract that begins "This testimony is based on our report entitled "Temporary Assistance for Needy Families: Fewer Eligible Families Have Received Cash Assistance Since the 1990s, and the Recession's Impact on Caseloads Varies by State." As a result of sweeping changes made to federal welfare policy in 1996 with the creation of TANF, welfare changed from a program entitling eligible families to monthly cash payments under Aid to Families with Dependent Children (AFDC) to a capped block grant that emphasized employment and work supports for most adult participants who receive such assistance. With the creation of TANF, the number of families who received cash assistance fell significantly, from 4.8 million families on average each month in 1995--just prior to the creation of TANF--to 1.7 million in 2008. During this time frame, poverty among all children initially fell, from about 21 percent in 1995 to about 16 percent in 2000, and then rose thereafter to 19 percent in 2008. Most families receiving cash assistance are single mothers with children, and children in such families have historically experienced high rates of poverty. Furthermore, the recession, which began in late 2007 and deepened nationally in 2008, put additional pressures on families living in poverty, especially families with children, who are particularly vulnerable. Under the TANF block grant program, created by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), states receive federal funds to design and operate their own welfare programs within federal guidelines. The Department of Health and Human Services (HHS) administers the TANF program, which provides states with up to about $16.5 billion each year in TANF block grant funds, and each state must contribute a specified level of its own funds to qualify for the grant. In addition, under TANF, states must involve a minimum percentage of their adult TANF cash assistance recipients in work activities for a required number of hours each week. They must also restrict most families to a lifetime limit of 60 months of federally funded TANF cash assistance. Within certain limitations, states set their own eligibility limits and benefit levels for cash recipients. States also impose financial consequences, or sanctions, on families that do not comply with TANF work or other requirements, and many states have also implemented programs or strategies intended to divert families from cash assistance. To help states in an economic downturn, PRWORA created a TANF contingency fund of up to $2 billion, and most recently, the American Recovery and Reinvestment Act of 2009 made an additional $5 billion available to states for fiscal years 2009 and 2010 through a new Emergency Contingency Fund.