Federalism at Work: The Temporary Assistance for Needy Families Program

In 1996, Congress and President Clinton took the bold step of partnering with the states to reform the nation’s welfare laws. Enacting the Temporary Assistance for Needy Family (TANF) program, federal legislators put their faith in the states to deliver people from a life of government dependency to one of self-sufficiency all with a limited federal pot of money. TANF was enacted when the United States economy was strong and unemployment was at a record low. The big question during its passage was how the program would work when unemployment was high and the economy sluggish. We now know. Unlike other safety net programs, during the recession, TANF rolls did not increase. As noted by Ron Haskins, one of the authors of TANF, “The idea that these moms are going to go into the labor force … that did not happen very much [during the great recession].”ⁱ

Prior to enactment of TANF, individuals in need received assistance through Aid to Families with Dependent Children (AFDC). This federal entitlement program provided cash benefits to low-income families. States had been authorized since in 1962 through section 115 of the Public Welfare Amendments of 1962 to seek waivers to some of AFDC’s requirements and until 1987 most waivers sought were related to program delivery.ⁱⁱ Beginning in the last 1980s, states began seeking waivers that would allow them to change the way recipients received benefits and in some cases, require recipients to work. It was from these innovations that TANF was born. It grew out of frustration within the states about the lack of flexibility provided by the federal law.

TANF is the quintessential example of federalism at work. It is a partnership between the states and the federal government capitalizing on state innovation and federal resources. The purpose of TANF is to increase the flexibility of states to:

1. ‘‘provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; “
2. “end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; “
3. “prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and “
4. “encourage the formation and maintenance of two-parent Families. (Public Law 104-193).”

States are given very broad leeway in determining how to meet those goals and how to use their federal grant funds. The original TANF law authorized $16.5 billion to be distributed among the 50 states and the District of Columbia. It should be noted that the authorization level has not been increased since the law’s enactment over 17 years ago nor is the block grant adjusted for inflation or changes in the cash welfare caseload. As such, it has lost 30% of its value to inflation from FY1997 through FY2012.ⁱⁱⁱ

In exchange for the federal funds, TANF requires states to engage 50% of all families and 90% of two-parent households in work activities. States are able to earn a ‘caseload reduction credit’ that reduces those percentages by either decreasing the number of individuals receiving TANF (the caseload) or exceeding their statutory Maintenance of Effort (MOE). The MOE requires states to maintain a consistent level of funding from one year to the next. In layman’s terms, if a state spends $1,000 on TANF one year, in the next year, the state cannot spend less than $1,000. States are required in total to contribute, from their own funds, at least $10.4 billion under a maintenance-of-effort (MOE) requirement. From 1997 to 2005, the base caseload was the caseload in FY1997; it was changed in 2005 to the 2005 caseload level because of the recession.^iv

Since enactment of TANF, particularly in the last few years, there has been significant debate around how states meet their workforce standards. In 2009, states achieved an all-family participate rate of 29.45% and a two-parent rate of 28.3% with eight states failing the all family-rate and seven states failing the two-parent rate.^v What accounts for lack of workforce placement? Many states have earned significant credits by exceeding their MOE and reducing their caseloads. Many states achieved the caseload reductions by removing two-parent households from TANF rolls and helping them through state-funded programs. In FY09, only 28 jurisdictions included two-parent families in either their TANF or MOE caseloads.^vi Additionally, recognizing that the country was in a sustained recession, in 2009, Congress allowed states to freeze their caseload reduction credits at pre-recession levels so that states were not penalized for an increase in rolls brought on by the economic downturn.

Congress has made several attempts at reforming TANF including an effort by the Bush administration to provide a “superwaiver” that would have allowed states to waive certain federal requirements in order to more easily integrate services offered by federal programs aimed at helping low-income families. The waiver would have allowed a state to waive parts of TANF, including the work participation requirements. Some form of the superwaiver was included in legislation passed by the House of Representatives three times while under Republican control in the 2000s and the Senate Finance Committee but never enacted. According to the Congressional Research Service, the waiver proposal would have had the effect of “allowing the TANF work participation standards to be waived.”^vii

In 2012, the Obama administration proposed allowing states to apply to waivers to the work requirements in order to innovate alternatives to moving individuals from welfare to work. The state goal of the initiative is to allow states to operate experimental, pilot, or demonstration projects to test “alternative and innovative strategies, policies and procedures that are designed to improve employment outcomes for needy families.

Republicans in Congress have expressed opposition to the President’s proposal to allow states to waive the work requirements on two grounds: 1. Waivers are not allowed under TANF and 2. Waiving the work requirements would undermine TANF and its goal of moving individuals from welfare to work. Legislation (H.R. 890) to prevent implementation of the administration’s policy passed House of Representatives on March 13, 2013. Given the near party-line vote in the House, it is unlikely the legislation will receive action in the Senate.^viii

Unfortunately, it seems that TANF, like many of today’s public policy issues, is caught up in political cross-fire and nothing more than a straight reauthorization is likely. However, this would be a lost opportunity. With the work requirements part of the public debate, Congress should seize the moment to have a thoughtful discussion about how to improve the program. The first part of that discussion should be a conversation with the nation’s governors whose states have been successfully implementing the program for nearly 20 years.

ⁱ http://inplainsight.nbcnews.com/_news/2013/08/21/20052531-people-think-everyone-who-is-poor-gets-welfare-and-its-just-not-true-how-the-myth-of-the-welfare-queen-died?lite 
ⁱⁱ Congressional Research Service “Temporary Assistance for Needy Families: Welfare Waivers,” page 92. Gene Falk March 7, 2013.
ⁱⁱⁱ Ibid. page 2.
^iv Congressional Research Service. “The Temporary Assistance for Needy Families Block Grant: FAQs,” page 15. March 18, 2013. Gene Falk.
^vIbid. page 14.
^vi Congressional Research Service “Temporary Assistance for Needy Families: Welfare Waivers,” page 13. Gene Falk March 7, 2013
^vii Ibid. page 6.