Download the entire Issue Guide in PDF format ![Adobe Acrobat [PDF]](../../icons_nav/pdf_sm.gif)
Posted October 2003
Temporary Assistance for Needy Families (TANF) replaced Aid for Families with Dependent Children (AFDC) in 1996.
In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, commonly referred to as “welfare reform.” Replacing AFDC with TANF marked a significant change in welfare law. AFDC was a 61-year-old cash assistance program that was passed in 1935 as part of the Social Security Act. TANF is a block grant which requires work in exchange for time-limited assistance. Block grants are lump sum funds allocated to states by the federal government.
States set income eligibility levels for TANF.
Individual states, not the federal government, set income eligibility levels for TANF. The one requirement put forth by the federal government is that TANF funds be used for families with children. Women make up around 90% of TANF’s adult caseload, the vast majority of which are single mothers. Some states may provide certain services—like child care—for working poor families whose income is just above the TANF eligibility cutoff. However, due to massive budget shortfalls, many states have cut work support subsidies for families with incomes above the TANF eligibility levels.
Immigrants are eligible for TANF on a limited basis.
The passage of welfare reform brought dramatic changes in services for immigrant families. Current law states that families who entered the country before August 22, 1996 may immediately receive services, while those who entered after this date may only receive services once they’ve been in the United States for five years. In May 2002, the nutrition title in the Farm Bill restored food stamp benefits for all immigrant children (as of October 2003) no matter what their date of entry to the United States.
There’s one important caveat to the issue of immigrant eligibility for TANF: under current law, the income of an immigrant’s sponsor can be deemed to be the immigrant’s income. Not only does this provision make the radical assumption that a sponsor’s income is accessible to the immigrant, it also effectively boosts the income of many immigrants, thereby making them ineligible for TANF.
TANF requires that 50% of welfare recipients spend 30 hours in “work-related” activities each week.
Current welfare law says that states must have 50% of their TANF caseloads involved in “work-related activities” (also referred to as “countable” or “allowable” activities) for 30 hours each week. The first 20 of the 30 hours must be spent in “core activities,” which can include community service, on-the-job training, subsidized or unsubsidized employment, job search and readiness activities (up to six weeks per year) and vocational education (states may only have 30% of their caseload in vocational education at any one time, and individuals may only participate in these activities for a total of 12 months). Many advocates are pushing hard to expand the list of allowable activities to include post-secondary education and drug and alcohol treatment.
The 10 additional hours can be spent in any of the “core activities” listed above or in education or training activities directly related to a job. Those without a high school degree may spend those 10 hours completing their degree or earning a GED.
The “universal engagement” provision under TANF requires that individuals must be involved in work-related activities within two years of receiving welfare assistance.
The caseload reduction credit allows states to have fewer than 50% of their caseloads in work-related activities.
Under the “caseload reduction credit,” states with declining caseloads can have less than 50% of welfare recipients in work-related activities. For example, if a state’s welfare rolls have declined by 5%, then they are only required to have 45% of their caseload working. Many worry that the credit encourages states to push welfare recipients into any job, regardless of its quality, salary and suitability for the individual. It’s important to note, however, that despite the credit, most states report that well over half of their recipients are working.
Some states do not have to follow federal TANF guidelines.
When TANF was passed in 1996, several states were exempted from the program. The requirements were only waived for states that had effective programs already in place. States currently operating under a waiver include: Hawaii, Kansas, Massachusetts, Montana, Nebraska, Oregon, South Carolina, Tennessee, and Virginia. Six other states had waivers that expired in 2002.
There is a five-year lifetime limit for receipt of TANF.
Under current law, welfare recipients may only receive assistance for a maximum of 60 months in their lifetime. However, states may use federal money to extend this lifetime limit for up to 20% of their caseload. Exemptions may be provided for individuals with disabilities, victims of domestic violence, residents of high unemployment areas and those caring for young children. Twenty-eight states have time limits that exceed 60 months, 20 have shorter time limits, and two states have no time limits at all.
Many individuals receive some form of support, like child care assistance, while they are working. In many states, these supports are counted against the 60-month limit for TANF assistance. Most advocates for the working poor believe that such services should not be counted against this time limit, since the individual is working while receiving the assistance.
For each of the last six years, the federal government has provided $16.5 billion for TANF programs.
Since the passage of welfare reform in 1996, the federal government has provided $16.5 billion annually for TANF services to the states. Because these funding levels are not adjusted for inflation, the real value of TANF funding dropped by more than 11% between 1997 and 2001. In 2001, states spent $18.5 billion on TANF services, since then-declining caseloads left extra dollars from previous years that states could access. Some of these dollars went to individuals who were not TANF recipients—for example, those whose income put them just above the program’s eligibility level. Such surplus dollars are now a thing of the past—most states are struggling with massive budget shortfalls and TANF caseloads are now beginning to increase. The entire law, including TANF funding levels, was set to be reauthorized in September 2002, but has instead been extended in its current form through September 30, 2003 (see below).
Many TANF recipients experience one or more “barriers to employment.”
Many TANF recipients have “barriers to employment,” which make it difficult for them to obtain and maintain jobs. Common barriers include low skill levels, lack of reliable transportation, unaffordable child care, domestic violence, limited English proficiency, inadequate housing, and physical or mental health problems.
Such barriers are very common and have been documented by several organizations. For example, the Manpower Demonstration Research Project found that 32% of welfare recipients report fair or poor health, and between 15% and 30% of welfare recipients are victims of domestic violence (Goldberg 2002).
Several possible improvements to current law would address these barriers to employment.
One important way that such barriers could be addressed is by allowing “barrier removal activities” to count as “allowable work activities” under TANF. Such activities could include substance abuse counseling, post-secondary education, mental health counseling, and English-as-a-second-language classes (Goldberg 2002).
Additionally, providing welfare recipients with important support services when they return to work will increase the likelihood that they will maintain jobs, increase their incomes, and pull themselves out of poverty in the long run. Child care and health care are among the most crucial support services. Those who receive employer-provided health care are 2.6 times more likely to remain employed after two years than those who have no health insurance. And those who receive child care subsidies are twice as likely to remain employed after two years as those who do not receive such assistance (Boushey 2002).
Welfare reform coincided with the economic boom of the mid- and late-1990s.
Experts disagree on whether or not welfare reform has been a success. However, one thing is clear: the timing of welfare reform benefited those who were cycling off of welfare thanks to the strong labor market. The boom of the mid- and late-1990s brought about lower unemployment and higher wages for low-income workers. This led many to declare welfare reform a success; however, many of those cycling off of welfare and heading into the workforce continued to experience great difficulty in making ends meet. With average wages around $7 per hour, many families faced significant hardships in the areas of food security, housing, inadequate child care, and insufficient access to housing (Boushey and Gundersen). Overall, wages did increase and more jobs were available for former welfare recipients, but while many families experienced income boosts that pulled them above the poverty line, most didn’t experience enough of a boost to make ends meet.
Today’s weak economy is having significant negative impacts on welfare leavers.
While the strong economy of the 1990s benefited former welfare recipients, the weak labor market of the last couple of years has had significant negative impacts on this same group. Unemployment is up among low-income single mothers, earnings have declined, and the safety net that was once in place to catch these women has been disappearing. The jobless rate for low-income single mothers averaged 12.3% in 2002, more than twice the national average. And real annual earnings have fallen by $343 for this group, which has also decreased the benefit they receive from the Earned Income Tax Credit (Chapman and Bernstein 2003). At the same time, many states are cutting funding for work supports like child care and transportation subsidies. New research suggests that low-income women are not receiving unemployment insurance at an adequate rate (Boushey and Wenger 2003).
Welfare reauthorization—slated to occur in September 2002—is still pending in Congress.
Although TANF was slated to be reauthorized in September 2002, Congress was unable to pass a reauthorization bill. As a result, the law has been extended in its original form through several “continuing resolutions.” A continuing resolution allows ongoing activities for a specific program, generally set at the previous year’s funding level, for a specified period of time.
While Congress was unable to come to agreement on a TANF reauthorization bill, there has been legislative action in both houses of Congress on the issue of welfare reform over the past year. In 2002, the House passed a bill that would have increased the work requirement from 30 to 40 hours without providing additional funding for child care. In early 2003, President Bush introduced a proposal that is nearly identical to the 2002-passed House bill. And once again, in February 2003, the House recycled and once again passed its bill from 2002.
The Senate has not yet taken up the issue this year. However, in 2002, the Senate Finance Committee passed a reauthorization bill that did not increase the work requirement, restored some Medicaid benefits for pregnant immigrants and children, allowed some welfare recipients to keep their health insurance, and increased child care spending. The bill never made it to the full Senate floor, since it was clear that they could not come to agreement on spending levels for child care. The funding level in the bill was $5.5 billion (an increase of $1 billion); many Democrats believed the level ought to have been around $11.5 billion.
Both Democrats and Republicans have said that TANF reauthorization is a priority for the 108th Congress.
Sources:
Bernstein, Jared, and Dean Baker. 2003. The Benefits of Full Employment: When Markets Work for People. Washington, D.C.: Economic Policy Institute.
Boushey, Heather, and Bethney Gundersen. 2001. When Work Just Isn’t Enough: Measuring Hardships Faced by Families Before and After Moving From Welfare to Work.
Washington, D.C.: Economic Policy Institute.
Boushey, Heather. 2002. Staying Employed After Welfare: Work Supports and Job Quality Vital to Employment Tenure and Wage Growth. Washington, D.C.: Economic Policy Institute.
Boushey, Heather, and Jeff Wenger. 2003. "In the Policy Nexus: Unemployment Insurance Eligibility Before and After Welfare Reform." Forthcoming working paper. Washington, D.C.: Economic Policy Institute.
Chapman, Jeff, and Jared Bernstein. 2003. Falling Through the Safety Net: Low-Income Single Mothers in the Jobless Recovery. Washington, D.C.: Economic Policy Institute.
Coven, Martha. 2003. An Introduction to TANF. Washington, D.C.: Center on Budget and Policy Priorities.
Goldberg, Heidi. 2002. Improving the TANF Program Outcomes for Families with Barriers to Employment. Washington, D.C.: Center on Budget and Policy Priorities.
National Immigration Law Center. 2002. Guide to Immigrant Eligibility for Federal Programs, Fourth Edition. Los Angeles, Calif.: National Immigration Law Center.
Posted on October 31, 2003
Download the entire Issue Guide in PDF format
Email this page
