Welfare
Temporary Assistance for Needy Families (TANF)
On
August 22, 1996, "The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996" (PRWORA) became law. This comprehensive, bipartisan legislation
changed the nation's welfare system into one requiring work in exchange for
time-limited assistance. It created the Temporary Assistance for Needy Families
(TANF) program, which replaced the Aid to Families with Dependent Children
(AFDC), Emergency Assistance (EA), and Job Opportunities and Basic Skills
Training (JOBS) programs. The law marks the end of federal entitlement to
assistance. In TANF, states and territories operate programs, and tribes have
the option to run their own programs. States, territories, and tribes each
receive a block grant allocation, and states must maintain a historical level
of state spending known as maintenance of effort. The basic block grant provides
states and tribes $16.5 billion in federal funds each year, through 2002.
This amount covers benefits, administrative expenses, and services targeted
to needy families.
PRWORA
provides states with great flexibility in designing individual state TANF
programs. Unless expressly provided under the statute, the federal government
may not regulate the conduct of states.
States
may use TANF funds in any manner "reasonably calculated to accomplish
the purposes of TANF." The purposes are: assisting needy families so
that children can be cared for in their own homes; reducing dependency of
needy parents by promoting job preparation, work, and marriage; preventing
out-of-wedlock pregnancies, and encouraging the formation and maintenance
of two-parent families.
Since
the enactment of Temporary Assistance for Needy Families (TANF) program in
1996, millions of families have moved from dependence on welfare to greater
independence through work. Employment among low income single mothers (earning
below 200 percent of poverty), reported in the U. S. Census Bureau's Current
Population Survey (CPS) has increased significantly since 1996. Although it declined slightly in 2002, it is
still 8 percentage points higher than in 1996 –a remarkable achievement, particularly
since it remained high through the brief recession in 2001. Among single-mothers with children under age
6 – a group particularly vulnerable to welfare dependency - employment rates
are still 13 percentage points higher than in 1996.
In
addition to more low-income single mothers entering the work force, employment
data specifically for welfare recipients that is used to rank states competing
for the TANF’s High Performance Bonus reflected
strong job retention and earnings. Thirty-six
percent of unemployed adult welfare recipients entered the work force in FY
2002. Fifty-nine percent of those who
started work were still employed six months after getting a job.
Average quarterly earnings increased 33 percent for current and former
welfare recipients, from $1935 in the first quarter of employment to $2578
in the third quarter.
There
were 2,032,157 families receiving TANF cash benefits in June 2003, the most
recent month for which data are available. The total represents a 0.3
percent decrease from March 2003 and a 54 percent decrease from August 1996,
when TANF was enacted. A total of 4,955,479 individuals were receiving
TANF benefits in June 2003, 0.6 percent fewer than in March and 60 percent
fewer than in August 1996. From January 2001 to June 2003, the number of
TANF families declined 5 percent and the number of recipients declined 9.2
percent.
Although
the TANF program was enacted in PRWORA through fiscal year 2002, the program’s
reauthorization has yet to be completed, and TANF has been operating under
series of continuing resolutions and extensions.
The latest extension takes the existing program through June 30, 2004. The House passed
a reauthorization bill supported by the Administration, H.R. 4, on February 13, 2003, taking work requirements and other measures to the next
step in welfare reform. The Senate
Committee on Finance adopted a substitute bill on September 10, 2003, and it awaits action by the full Senate.
Highlights of TANF
Work
Requirements. With few exceptions, recipients must work as soon as job
ready, or no later than two years after coming on assistance.
In FY1997, each state had to ensure that 25 percent of all families in the
state were engaged in work activities. This percentage increased to 50 percent
in fiscal year 2002 and thereafter. Minimum participation rates for two-parent
families started at 75 percent in FY 1997 and increased to 90 percent in FY
1999 and thereafter. (If a state reduces its caseload, without restricting
eligibility, it can receive a caseload reduction credit. This credit reduces
the minimum participation rates the state must achieve.) During 1997 and 1998,
single parents had to participate in work activities for at least 20 hours
per week; by FY 2000 and thereafter they had to participate at least 30 hours
per week. Two-parent families had to participate in work activities for at
least 35 or 55 hours per week, depending upon the circumstances. Failure to
participate in work requirements can result in a reduction or a termination
of benefits to the family. However, states cannot penalize single parents
with a child under six for failing to meet work requirements if they cannot
obtain child care. A state may exempt single parents with children under the
age of one from the work requirements and disregard these individuals in the
calculation of participation rates for up to twelve months.
Work
Activities. Activities that count towards a state's participation rates
are: unsubsidized or subsidized employment, on-the-job training, work experience,
community service, job search, vocational training, job skills training related
to work, or education directly related to work; satisfactory secondary school
attendance; and providing child care services to individuals who are participating
in community service. However, no more than 12 months of vocational training,
no more than six total weeks of job search, and no more than four consecutive
weeks of job search may count. Further, effective in FY 2000 and thereafter,
no more than 30 percent of those meeting the participation rates may count
toward the work requirement on the basis of participation in vocational training
or by being a teen parent in secondary school.
Five-Year
Time Limit. Families with an adult
who has received federally-funded assistance for a total of five years (or
less at state option) are not eligible for cash aid under the TANF program.
States may extend assistance beyond 60 months to up to 20 percent of their
caseload. They may also elect to provide assistance to families beyond 60
months using state-only funds, or they may provide services to families that
reach the time limit using Social Services Block Grants.
State
Maintenance of Effort Requirements.
The TANF block grant program has an annual cost-sharing requirement,
referred to as "maintenance of effort," or "MOE." Every
fiscal year each state must spend a certain minimum amount of its own money
to help eligible families in ways that are consistent with the purposes of
the TANF program. The required MOE amount is based on an "applicable percentage" of the state's (nonfederal)
expenditures on AFDC and the AFDC-related programs in 1994. The applicable
percentage depends on whether the state meets its minimum work participation
rate requirements for that fiscal year. A state that does not meet the required
minimum work participation rate requirements must spend at least 80 percent
of the amount it spent in 1994. A state that meets its minimum work participation
rate requirements must spend at least 75 percent of the amount it spent in
1994.
In
addition to the federal TANF block grant funding, needy states with economic
problems may request federal funds from the Contingency Fund. The Contingency
Fund has a more rigorous MOE requirement.
Program
Funding. Building on the success of the 1996
welfare reform program, the FY 2004 budget follows the framework proposed
in the President’s FY 2003 budget request which includes reauthorization of
PRWORA. The reauthorization maintains
current program funding levels for the following activities: Family Assistance
Grants to States, Tribes and Territories; Matching Grants to Territories;
and Tribal Work Programs. Authority
for both the Contingency Fund and Supplemental Grants for Population Increases
would be reinstated. In addition, a
new TANF Research, Demonstration, and Technical Assistance program which will
include promotion of family formation and healthy two-parent marriage activities
would be established, as well as a new matching grant program focused on marriage
promotion. Finally, the Bonus to Reward
High Performance States would be re-focused to provide for bonuses on employment
achievement. The President’s appropriation
request for this account assumes passage of pending legislation included in
the President’s FY 2004 request.
Penalties. The Department of Health and Human Services
(HHS) may reduce a state's block grant if it fails to do any of the following:
- Satisfy work requirements. A penalty of 5 percent accrues
in the first year. The penalty amount increases 2 percent per year for each
consecutive failure. The penalty is adjusted based on degree of failure.
The maximum penalty is 21 percent.
- Comply with five-year limit on
assistance.
Failure to comply results in a 5 percent penalty.
- Meet the state's basic maintenance
of effort requirements. The penalty is based on the amount of the state's under-spending.
The state also loses its Welfare-to-Work funds.
- Meet the state's Contingency
Fund MOE requirement. The penalty is a reduction of the state's federal TANF grant by
the amount of Contingency Funds received and not remitted.
- Reduce recipient grants for refusing
to participate in work activities without good cause. A penalty of between 1 percent
and 5 percent is assessed based on the degree of noncompliance.
- Maintain assistance when a single
custodial parent with a child under six cannot obtain child care. Failure to comply results in
a penalty of 5 percent.
- Submit required data reports. A penalty of 4 percent accrues.
- Comply with paternity establishment
and child support enforcement requirements. Failure to comply results in
a penalty of up to 5 percent.
- Participate in the Income and
Eligibility Verification System. A penalty of up to 2 percent accrues.
- Repay a federal loan on time. The penalty will be based on
the amount unpaid.
- Use funds appropriately. Misuse of funds can result in
states being penalized for the amount misused. If this misuse is found to
be intentional, an additional penalty of 5 percent will be assessed.
- Replace federal penalty reductions
with additional state funds. This provision results in a penalty of up to
2 percent and requires states to contribute state funds to make up for any
reductions in federal funds due to penalties.
The
total penalty assessed against a state in given year may not exceed 25 percent
of a state's block grant allotment. In some situations, states may avoid penalties:
(1) if they demonstrate that they had reasonable cause for failing to meet
the program requirements; or (2) if they develop a corrective compliance plan,
receive approval of their plan, and correct or discontinue the violation.
Personal
Employability Plans. States must make an initial assessment of a recipient's skills.
States may develop personal responsibility plans for each recipient to identify
the education, training, and job placement services needed to move into the
workforce.
Teen
Parent Live-at-Home and Stay-in-School Requirement.
Unmarried minor parents must participate in educational and training activities
and live with a responsible adult or in an adult-supervised setting in order
to receive assistance. States are responsible for assisting in locating adult-supervised
settings for teens who cannot live at home.
State
Plans. HHS reviews state plans for completeness only. States must
allow for a 45-day comment period on the state plan by local governments and
private organizations and consult with them. The state plan must have "objective
criteria" for eligibility and benefits that are "fair" and
"equitable." The plan must explain appeal rights.
Job
Subsidies. The law allows states to create jobs by taking money that
is now used for welfare checks and using it to create community service jobs,
provide income subsidies, or provide hiring incentives for potential employers.
Waivers. States that received approval for welfare reform waivers
before January
1,1997,
have the option to operate their cash assistance program under some or all
of these waivers, until the waivers expire.
Effective
Dates. When PRWORA was enacted states had until July 1, 1997, to submit state plans and begin implementing TANF, although
they had the option to implement earlier. In order for states to remain “eligible,”,
i.e., continue to qualify to receive funding under TANF, states will need
to submit TANF renewal plans during the applicable 27-month period described
in section 402 of the Social Security Act. Thus, state plans remain effective for about
3 years. States may chose to submit
TANF renewal plans before their funding period expires, however this will
move up the time for the next renewal of the state’s eligibility status. Only
“eligible states” may receive a TANF block grant.
HHS
published final regulations covering the state TANF programs on April 12, 1999. These regulations took effect October 1, 2000.
Tribal Programs
Federally-recognized
Indian tribes may apply directly to HHS to operate a TANF block grant program.
Eligible tribes include the federally-recognized tribes in the lower 48 states
and 13 designated entities in Alaska (i.e., the 12 Alaska Native regional non-profit associations
and Matlakatla). TANF allotments for Indian tribes
are based upon previous state expenditures of federal dollars in AFDC, Emergency
Assistance (EA), and JOBS on tribal members in fiscal year 1994. Tribal TANF
programs could be implemented as early as July 1, 1997. Like states, Indian tribes can use their TANF funding in
any manner reasonably calculated to accomplish the purposes of TANF. They
have broad flexibility to determine eligibility, method of assistance, and
benefit levels. Unlike state plans, the federal government approves tribal
plans. Tribes and HHS must reach agreement on time limits, work requirements,
and minimum participation rates.
In
addition to authorizing tribes to administer TANF, PRWORA replaced the former
tribal JOBS Program with the Native Employment Works (NEW) Program. The NEW
Program provides funding for tribes and inter-tribal consortia to design and
administer tribal work activities that meet the unique employment and training
needs of their populations while allowing tribes and states to provide other
TANF services.
HHS
published final regulations for the tribal TANF and NEW programs on February 18, 2000.
Back to Top
|