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Thursday, October 13, 2011

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 FY2011 (September 30, 2011). President Obama’s FY2012 budget proposes that TANF funding be extended at least through the end of FY2012. H.R. 2943, which received final congressional approval on September 23, 2011, would extend TANF for three months. It would extend funding for the basic block grant, healthy marriage and responsible fatherhood competitive grants, and mandatory child care grants through December 31, 2011. It would not fund TANF supplemental grants, which expired on June 30, 2011.

The proposed short-term extension of TANF would defer 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: September 26, 2011
Number of Pages: 28
Order Number: R41781
Price: $29.95

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