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Thursday, March 28, 2013

Temporary Assistance for Needy Families: Welfare Waivers

Gene Falk
Specialist in Social Policy

The Department of Health and Human Services (HHS) announced that it is willing to waive certain federal work participation standards under the Temporary Assistance for Needy Families (TANF) block grant to permit states to experiment with “alternative and innovative strategies, policies, and procedures that are designed to improve employment outcomes for needy families.” HHS announced this initiative on July 12, 2012.

The major provision that HHS would waive is the numerical performance standards that states must meet or risk being penalized through a reduction in their TANF block grant. TANF statute provides that 50% of all families and 90% of two-parent families included in a participation rate are required to be engaged in work, though few states have ever faced the full standard because this percentage is reduced for certain credits. For all years from FY2002 through FY2006 and in FY2008 and FY2009, the majority of states had an effective (after-credit) TANF work participation standard of 25% or less. In FY2009, 22 states had their 50% all family standards reduced to 0% because of these credits. Additionally, many states have avoided the two-parent standard altogether by assisting that portion of their caseload with state funds not subject to TANF work standards.

To be considered engaged in work under the TANF standard, a family must either be working or in specified welfare-to-work activities for a minimum number of hours per week. Preemployment activities such as job search, rehabilitative activities, and education count for a limited period of time or under limited circumstances. Though these counting rules do not apply directly to individual recipients, they may influence how a state designs its welfare-to-work program. States that allow participation in activities that cannot be counted (e.g., job search or education in excess of their limits) do not receive credit for that participation and potentially risk failing the work standard.

The new waivers would permit states to have welfare-to-work initiatives assessed using different measures than the TANF work participation rate. Thus, states could test alternative welfare-towork approaches by engaging recipients in activities currently not countable without risk of losing block grant funds. States would have to apply for waivers, which must be approved by HHS and the Office of Management and Budget (OMB). States would also be required to monitor performance measures and evaluate the alternative welfare-to-work program. HHS also indicated it might waive some requirements that apply to states for verifying work activities. As of February 27, 2013, no state had requested a waiver.

H.R. 890 as passed by the House on March 13, 2013, would prohibit the Secretary of HHS from issuing any waivers of TANF work participation standards, and would rescind any waivers granted prior to enactment. The bill also included an extension of TANF funding through December 31, 2013.

The legislative authority cited by HHS to grant waivers in public assistance programs dates back to 1962, although the new initiative would allow the first new waivers to test welfare-to-work strategies in more than 15 years. “Waivers” have historically been important in welfare reform, and TANF let states continue their pre-1996 waivers until their expiration. The last such waiver expired in 2007.

Date of Report: March 14, 2013
Number of Pages: 33
Order Number: R42627
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