The Temporary Assistance for Needy Families Block Grant: Issues for the 112th Congress

Gene Falk
Specialist in Social Policy

Under current law, the bulk of funding for the Temporary Assistance for Needy Families (TANF) block grant to the states expires at the end of 2011 (December 31, 2011). P.L. 112-35 provided a short-term (three-month) extension of the basic TANF block grant, healthy marriage and responsible fatherhood competitive grants, and mandatory child care grants for the first quarter of FY2012, which began on October 1, 2011. It did not provide funds for TANF supplemental grants.

The short-term extension of TANF defers major budget and policy decisions related to the block grant. Most federal TANF policy focuses on historical concerns related to cash assistance for needy families with children, which led to the 1996 welfare law 15 years ago. However, TANF has evolved into a funding stream that funds a wide range of economic aid and human services that address economic and social disadvantage for families with children. In FY2009, only 28% of all federal TANF and associated state dollars were used for basic monthly cash assistance. There is little information available for oversight and assessment of the non-cash uses of TANF and related state funds. In reauthorizing or extending TANF, Congress might consider the need for expanded data collection on activities other than cash assistance, as well as the need for a method that allows for the assessment of the effectiveness of TANF-funded programs and activities.

The recent recession was the first long and deep one since the enactment of the 1996 welfare law. TANF’s contingency fund, established in 1996 to provide extra grants during recessions, was exhausted in early FY2010. Congress created a $5 billion temporary Emergency Contingency Fund (ECF) for FY2009 and FY2010 that provided extra funding to help pay for increased cash assistance caseloads, short-term aid, and subsidized employment. The ECF expired on September 30, 2010. After December 2010, there are no additional contingency funds available for the remainder of FY2011. Congress might consider policy alternatives to provide states with extra funding during the next economic downturn.

A TANF-funded activity that was substantially expanded during the recent economic downturn was subsidized employment. The ECF provided $1.3 billion for subsidized employment for an estimated 262,500 slots during the lifetime of the fund. TANF-funded subsidized employment can be for those on the assistance rolls as well as other low-income parents, caretakers, or youth. Congress might consider ways to encourage states to continue subsidized employment activities, including providing dedicated funding for this activity and/or considering participation in subsidized employment for individuals not receiving ongoing assistance when assessing state TANF performance.

Additionally, most traditional welfare reform issues have focused on families headed by a single mother. Current law provides TANF grants to community-based organizations, for initiatives to promote both healthy marriage and responsible fatherhood. However, poor noncustodial fathers, like their poor single mother counterparts, tend to have low levels of educational attainment, weak attachment to work, and health barriers to employment. They might also have a criminal record. Congress might examine ways to expand TANF-funded work and employment services for disadvantaged noncustodial fathers.


Date of Report: October 11, 2011
Number of Pages: 27
Order Number: R41781
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Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws

Katelin P. Isaacs
Analyst in Income Security

This report analyzes several types of recent changes to state Unemployment Compensation (UC) programs. Three categories of UC state law issues are considered: (1) changes in the duration of state UC unemployment benefits; (2) changes in the maximum UC weekly benefit amount; and (3) the enactment into state law of two trigger options for the Extended Benefit (EB) program.

In 2011, several states enacted legislation to decrease the maximum number of weeks of regular state UC benefits. Until recently, all states paid at least up to 26 weeks of UC benefits to eligible, unemployed individuals. In 2011, however, six states passed legislation to decrease their maximum UC benefit durations. Arkansas, Missouri, and South Carolina have made state UC law changes that are already in effect. Michigan, Illinois, and Florida legislated state law changes that will be effective in January 2012.

Changes in UC benefit duration have consequences for the duration of federal unemployment benefits that may be available to unemployed workers. State UC benefit duration is an underlying factor in the calculation of duration for additional federal unemployment benefits. Thus, the reduction of the maximum duration of regular UC benefits reduces the number of weeks available to unemployed workers in the federal extended unemployment programs (including the Emergency Unemployment Compensation [EUC08] and EB).

States are temporarily prohibited from actively changing their methods of calculation for UC benefits if it would decrease weekly benefit amounts (under P.L. 111-205, as amended). Some states, however, make automatic adjustments to weekly benefit amounts under existing state law. Consequently, if these states experience certain conditions, such as a decrease in the average weekly wage used in the automatic adjustment calculation, their maximum weekly UC benefit amount may be decreased. Two states—New Jersey and Oklahoma—have recently experienced this type of reduction in their weekly UC benefit amounts. Such a benefit reduction also translates into reduced EUC08 and EB weekly benefit amounts as they are based upon the weekly benefit amount calculated by the regular state UC benefits.

Finally, there are various optional EB trigger components—authorized under permanent federal law (P.L. 91-373, as amended) and temporary federal law (P.L. 111-312 and P.L. 111-5, as amended)—that states may opt to enact under their state UC laws. Currently, 11 states have adopted an optional trigger for the EB program, based on a state’s total unemployment rate (TUR), into permanent state law. An additional 28 states have enacted this EB TUR trigger temporarily, linking its expiration to the expiration of the temporary 100% federal financing of the EB program under federal law (P.L. 111-5, as amended). Thirty-four states have adopted a three-year lookback for this optional TUR trigger (temporarily authorized under P.L. 111-312) to continue to meet the trigger criteria and continue to pay EB benefits. In general, only states who have enacted at least one of these EB trigger options (i.e., the TUR trigger or the three-year lookback) are currently able to pay EB benefits.

Overall, these three changes to state UC laws and programs have consequences for the availability, duration, and amount of unemployment benefits. This report describes these changes and analyzes their consequences for UC, EUC08, and EB benefits. It will be updated, as needed, to reflect any additional state UC changes.


Date of Report: October 20, 2011
Number of Pages: 19
Order Number: R41859
Price: $29.95

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Antipoverty Effects of Unemployment Insurance

Thomas Gabe
Specialist in Social Policy

Julie M. Whittaker
Specialist in Income Security

This report examines the antipoverty effects of unemployment insurance benefits over the past recession and through the beginning of the economic recovery. The analysis highlights the impact of the additional and expanded unemployment insurance (UI) benefits available to unemployed workers through the American Recovery and Reinvestment Act (ARRA, P.L. 111-5) and the Emergency Unemployment Compensation (EUC08) program (Title IV of P.L. 110-252). In 2010, approximately 66% of all unemployed individuals were receiving UI benefits and thus were directly impacted by legislative changes to the UI system. UI benefits appear to have a large poverty-reducing effect among unemployed workers who receive them. Given the extended length of unemployment among jobless workers, the additional weeks of UI benefits beyond the regular program’s 26-week limit appear to have had an especially important effect in poverty reduction.

Estimates presented in this report are based on Congressional Research Service (CRS) analysis of 24 years of data from the U.S. Census Bureau’s Annual Social and Economic Supplement to the Current Population Survey (CPS/ASEC), administered from 1988 to 2011. The period examined includes the three most recent economic recessions.

This report contributes to recent research on the antipoverty effects of unemployment insurance in several ways. Its period of analysis allows comparisons across the three most recent recessions. The report includes estimates of the effects on the poverty rate for the unemployed, for those receiving UI, and for families that report at least one family member receiving UI. It also estimates how much of reported UI benefits went directly to decreasing family poverty levels.

This report’s analysis shows that UI benefits appear to reduce the incidence of poverty significantly among the population that receives them. The UI benefits’ poverty reduction effects appear to be especially important during and immediately after recessions. The analysis also finds that there was a markedly higher impact on poverty in 2010 than in the previous two recessionary periods. The estimated antipoverty effects of UI benefits in 2010 were about twice that of two previous peak years of unemployment—1993 and 2003. 

•         In 2010, over one-quarter (27.5%) of unemployed people who received UI benefits would have been considered poor prior to taking UI benefits into account; after counting UI benefits, their poverty rate decreased by over half, to 12.5%. 

•         UI receipt affects not only the poverty status of the person receiving the benefit, but the poverty status of all related family members, as well. In 2010, while an estimated 12.4 million people reported UI receipt during the year, an additional 19.4 million family members lived with the 12.4 million receiving the benefit. Consequently, UI receipt in 2010 affected the income status of some 31.9 million persons. 

•         The poverty rate for persons in families who received unemployment benefits in both 2009 and 2010 was approximately half of what it would have been without those unemployment benefits. 

•         In 2010, UI benefits lifted an estimated 3.2 million people out of poverty, of which well over one quarter (26.8%, 861,000) were children living with a family member who received UI benefits.

Date of Report: October 7, 2011
Number of Pages: 44
Order Number: R41777
Price: $29.95

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Unemployment Insurance: Legislative Issues in the 112th Congress

Katelin P. Isaacs
Analyst in Income Security

Julie M. Whittaker
Specialist in Income Security

The 112th Congress may consider a number of issues related to currently available unemployment insurance programs: Unemployment Compensation (UC), the temporary Emergency Unemployment Compensation (EUC08), and Extended Benefits (EB). With the national unemployment rate predicted to remain high into next year, the increased demand for regular and extended unemployment benefits will continue. At the same time, the authorization for several key unemployment insurance provisions is temporary and will end in the next year. For instance, the EUC08 program, which currently provides the bulk of extended unemployment benefits, is scheduled to expire the week ending on or before January 3, 2012. The 100% federal financing of the EB program will expire on January 4, 2012. In addition, a temporary 0.2% federal unemployment tax (FUTA) surtax expired at the end of June 2011.

The 112th Congress faces these upcoming expirations as well as other likely unemployment insurance policy issues, including unemployment insurance financing. In addition, recent policy discussions have focused on the appropriate length of unemployment benefits. This discussion includes consideration of whether additional weeks of unemployment benefits—the creation of a tier V of the EUC08 program, for instance—is warranted.

This report provides a brief overview of the three unemployment insurance programs—UC, EUC08, and EB—that may currently pay benefits to eligible unemployed workers. It summarizes unemployment insurance legislation in the previous (111th) Congress. This report also discusses relevant legislation introduced in the 112th Congress; specifically, H.R. 1745, S. 386, H.R. 650, H.R. 589, H.R. 1663, H.R. 235, S. 310, H.R. 569, H.R. 2001, H.R. 2120, H.R. 2137, H.R. 2731, H.R. 2806, H.R. 2868, H.R. 2832, a proposal outlined in the President’s Budget Proposal FY2012, as well as the President’s American Jobs Act of 2011 proposal (introduced in Congress as S. 1549, H.R. 12, and S. 1660). This report also discusses the implications to the UI programs in H.R. 2693, S.Amdt. 581 to S. 1323, and P.L. 112-25.


Date of Report: October 18, 2011
Number of Pages: 21
Order Number: R41662
Price: $29.95

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Fannie Mae and Freddie Mac

Title: Fannie Mae and Freddie Mac

The federal government has invested more than $150 billion in Fannie Mae and Freddie Mac, two congressionally chartered companies that buy residential mortgages.

The continuing conservatorship of Fannie Mae and Freddie Mac at a time of uncertainty in the housing, mortgage, and financial markets has raised doubts about the future of these enterprises, which are chartered by Congress as government-sponsored enterprises (GSEs) and whose debts are widely believed to be implicitly guaranteed by the federal government.

Estimates of the total cost to the federal government use different baselines and vary widely. The FHFA estimates that Treasury is likely to purchase $221 billion-$363 billion of senior preferred stock by the end of 2013. The Congressional Budget Office estimates the budget cost for 2011-2020 to be $53 billion. Standard & Poor’s has estimated the cost at $280 billion plus $405 billion to create a replacement system.

Once Treasury’s support for Fannie Mae and Freddie Mac ends, sometime after 2012, the GSEs will be challenged to pay the 10% annual cash dividend contained in their contracts. The enterprises could instead pay a 12% annual senior preferred stock dividend indefinitely.

In August 2011, Standard & Poor’s downgraded the debt of the federal government, Fannie Mae, and Freddie Mac. To date, there is no evidence that this has increased mortgage interest rates, but the impact may take longer to occur or to be detected.

Date of Compendium: October 12, 2011
Number of Pages: 150
Order Number: IS40298
Price: $49.95 (Subscribers to Congressional Research Report newsletter pay $29.97)

Small Business Administration HUBZone Program

Robert Jay Dilger
Senior Specialist in American National Government

The Small Business Administration (SBA) administers several programs to support small businesses, including the Historically Underutilized Business Zone Empowerment Contracting (HUBZone) program. The HUBZone program is a small business federal contracting assistance program “whose primary objective is job creation and increasing capital investment in distressed communities.” It provides participating small businesses located in areas with low income, high poverty rates, or high unemployment rates with contracting opportunities in the form of “setasides,” sole-source awards, and price-evaluation preferences.

In FY2010, the federal government awarded contracts valued at $12.7 billion to HUBZone certified businesses, with about $3.6 billion of that amount awarded through the HUBZone program. The program’s FY2010 administrative cost was just under $17.0 million. Its FY2011 appropriation is $2.2 million, with the additional cost of administering the program provided by the SBA’s appropriation for general administrative expenses.

Congressional interest in the HUBZone program has increased in recent years, primarily due to U.S. Government Accountability Office (GAO) reports of fraud in the program. Some Members have called for the program’s termination. Others have recommended that the SBA continue its efforts to improve its administration of the program, especially its efforts to prevent fraud.

This report examines the arguments presented both for and against targeting assistance to geographic areas with specified characteristics, such as low income, high poverty, or high unemployment, as opposed to providing assistance to people or businesses with specified characteristics. It then assesses the arguments presented both for and against the creation and continuation of the HUBZone program, starting with the arguments presented during consideration of P.L. 105-135, the HUBZone Act of 1997 (Title VI of the Small Business Reauthorization Act of 1997), which authorized the program.

The report also discusses the HUBZone program’s structure and operation, focusing on the definitions of HUBZone areas and HUBZone small businesses and the program’s performance relative to federal contracting goals. The report includes an analysis of (1) the SBA’s administration of the program, (2) the SBA’s performance measures, and (3) the potential effect of the 2010 decennial census on which areas qualify as a HUBZone. The SBA has estimated that up to half of the currently certified HUBZone small businesses may be affected by the release of economic data from the 2010 decennial census.

This report also examines congressional action on P.L. 111-240, the Small Business Jobs Act of 2010, which amended the Small Business Act to remove certain language that had prompted federal courts and GAO to find that HUBZone set-asides have “precedence” over other small business set-asides. It also discusses H.R. 2131, the Protect HUBZones Act of 2011, and S. 633, the Small Business Contracting Fraud Prevention Act of 2011, which would extend for three years HUBZone eligibility for firms that lose their HUBZone eligibility due to the release of 2010 decennial census economic data. S. 633 would also require the SBA to implement several GAO recommendations designed to improve the SBA’s administration of the program.


Date of Report: October 20, 2011
Number of Pages: 33
Order Number: R41268
Price: $29.95

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