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Friday, April 12, 2013

The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements

Gene Falk
Specialist in Social Policy

The Temporary Assistance for Needy Families (TANF) block grant provides federal grants to the 50 states, the District of Columbia, American Indian tribes, and the territories for a wide range of benefits, services, and activities. It is best known for helping states pay for cash welfare for needy families with children, but it funds a wide array of additional activities. TANF was created in the 1996 welfare reform law (P.L. 104-193). Current law funds TANF through September 30, 2013.

TANF provides a basic block grant of $16.5 billion. It also requires states to contribute in the aggregate from their own funds at least $10.4 billion for benefits and services to needy families with children—this is known as the maintenance-of-effort (MOE) requirement. States may use TANF and MOE funds in any manner “reasonably calculated” to achieve TANF’s statutory purpose. This purpose is to increase state flexibility to achieve four goals: (1) provide assistance to needy families with children so that they can live in their own homes or the homes of relatives; (2) end dependence of needy parents on government benefits through work, job preparation, and marriage; (3) reduce out-of-wedlock pregnancies; and (4) promote the formation and maintenance of two-parent families.

Though TANF is a block grant, there are some strings attached to states’ use of funds. Most TANF requirements apply to families receiving cash assistance (essentially cash welfare). Families must be financially needy and have a minor child to qualify for assistance; states determine the exact financial eligibility rules and benefit amounts. Some families have eligible children but the adults who care for their children are ineligible for aid. These are termed “childonly” families because benefits are paid only on behalf of the children.

TANF work requirements generally apply to families with an adult recipient (excluding most child-only families). States must meet TANF work participation standards or risk a reduction in their block grant. The law sets standards stipulating that at least 50% of all families and 90% of two-parent families must be “engaged in work,” but these statutory standards are reduced by credits for caseload reduction and state spending in excess of what is required under the TANF MOE. These credits and the effective (after credit) participation targets vary by state and year. Activities countable toward a family being counted as “engaged in work” are focused on employment or working off the cash benefit, or are intended to rapidly attach welfare recipients to the workforce; education and training is countable, but limited.

Federal TANF funds may not be used for a family with an adult who has received assistance for 60 months. This is the five-year time limit on welfare receipt. However, up to 20% of the caseload may be extended beyond the five years for reason of “hardship,” with hardship defined by the states. Additionally, states may use funds that they must spend to meet the TANF MOE to aid families beyond five years.

TANF work participation rules and time limits do not apply to families receiving benefits and services not considered “assistance.” Such benefits and services include child care, transportation aid, state earned income tax credits for working families, activities to reduce out-of-wedlock pregnancies, activities to promote marriage and two-parent families, and activities to help families that have experienced or are “at risk” of child abuse and neglect.

Date of Report: April 2, 2013
Number of Pages: 28
Order Number: RL32748
Price: $29.95

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