During the pandemic, Wisconsin started allowing people who applied for emergency assistance, although not regular cash assistance, the option to project income for the next 30 days instead. Counting UI and economic impact payments as income for TANF eligibility could disqualify a significant number of people who still need more help paying bills and putting food on the table.
Even if a person is legally classified as a childless adult, they often support other people, including noncustodial children and elderly parents or other family members. States should at least temporarily expand TANF benefits for the duration of the economic downturn to those without custodial children who meet the income eligibility standards.
States should consider automatically enrolling families in cash assistance or other TANF benefits if their records are already on file with the state because of an application to another program that indicates they would be eligible.
Another alternative would be giving automatic qualification to anyone receiving similar benefits through programs such as SNAP or UI, with certain wage or benefit levels triggering access to TANF. Speeding up the processing of applications and distribution of benefits is important as families are increasingly being forced to decide between paying bills and eating.
Removing or suspending asset limits for TANF recipients would ease fears of losing benefits just because one has a small amount of money in savings. As of , 42 states and Washington, D. Additionally, half of states do not include a child support pass-through and disregard in their TANF programs.
More generally, no state should enact any policies that will result in smaller caseloads or fewer benefits for individual recipients during the coronavirus crisis. Tens of millions of people have had their livelihoods upended this year. Without bold action, large segments of the U. With unemployment likely to remain very high for at least the next several years —and the people most affected overwhelmingly being low-income workers, communities of color, and women —there is an urgent need to focus aid on those feeling the biggest impacts from the COVID pandemic and its economic fallout.
Without additional funding from the federal government, TANF does not have the capacity to get all of the aid to everyone who needs it. However, states can still use TANF in its current form and existing funds in much more effective ways than they presently are. States should be doing everything in their power to get help to those with the greatest need right now, and that must include reprioritizing TANF and MOE spending and changing eligibility rules to ensure that as many people in need receive as much assistance as possible.
To find the latest CAP resources on the coronavirus, visit our coronavirus resource page. Lily Roberts , Justin Schweitzer.
Justin Schweitzer. Areeba Haider. Colin Seeberger Director, Media Relations. Peter Gordon Director, Government Affairs. Madeline Shepherd Director, Government Affairs. This issue brief contains corrections. The recommendations set forth in this brief include: Increase the use and amount of several kinds of TANF benefits, particularly through unspent TANF reserves, with an emphasis on expanding and boosting direct cash assistance but also a focus on subsidized jobs, housing assistance, child care, other nonrecurrent short-term NRST benefits, and other technical changes.
Broaden eligibility for TANF by suspending all work and work-search requirements and sanctions; freezing lifetime use limits and automatically recertifying all recipients; increasing the income threshold and basing eligibility on expected income rather than previous income; allowing childless adults to sign up, at least during the crisis; and making other eligibility changes. Recommendations The creation of a new TANF Emergency Fund, as discussed in the first brief in this series, is not guaranteed and likely will not happen anytime soon.
Increase the use of all kinds of TANF benefits, with an emphasis on direct cash assistance At the end of September , the 50 states and Washington, D. Distribute TANF reserve funds where they are needed the most States right now should be committing to spending as much of their TANF reserves as necessary on basic cash assistance and other forms of direct aid for people in need during this public health and economic crisis.
Figure 1. Table 1. Subsidize jobs throughout the labor market For at least the next decade, annual gross domestic product is projected to be lower than it would have been if not for the pandemic—and the unemployment rate is projected to be higher. Support child care programs and subsidize child care costs A significant amount of TANF funds—16 percent in —already go toward child care, 36 and, as governors and mayors seek to reopen their economies, more people returning to work are going to need it.
Use other NRST benefits creatively Aside from housing and child care, NRST benefits can go toward vouchers or additional emergency cash assistance to help people afford to meet basic needs such as food, clothing, transportation, and sanitary products when other forms of assistance have not been fully sufficient. Consider making other technical changes As shown in Table 3, more than 30 states have adopted the safety protocol of waiving all in-person TANF eligibility interviews during the pandemic, either shifting to phone-only or suspending interviews altogether.
Table 3. Suspend all work and work-search requirements and sanctions Unemployed workers should not be faulted and penalized for a seriously contracted job market and the unsafe working conditions caused by the pandemic. Table 4. Freeze lifetime use limits and recertification determinations States are bound by federal law to set lifetime use limits for receiving cash assistance from federal TANF funds, 73 with some small exceptions, at no longer than 60 months.
Table 5. Increase the TANF income threshold and base eligibility on expected income For the duration of this economic downturn, the maximum eligible income should be raised to at least percent of the federal poverty line. Table 6. The expenditure reporting system in place for FY did not have enough information to categorize much of this spending properly.
However, the Department of Health and Human Services HHS implemented a new reporting system for FY and later years that will permit a better characterization of spending in the "other" category. Figure 5. For a tabular presentation of those data, see Table B The TANF funding level, both nationally and for each state, is rooted in what states spent in the early to mids in the pre-TANF programs that were focused on cash assistance for needy families with children.
The welfare reform law contemplated no adjustments for changes that have been made to those funding levels since the enactment of TANF. Addressing any of TANF's financing issues would be done in the context of the current federal budget environment and rules that govern the congressional budget process.
Though TANF law says that its benefits and services are not entitlements to individuals, the amount of block grant funding is set in authorizing law the Social Security Act and thus represents an entitlement to the states. Thus, in the federal budget process, TANF is considered "mandatory" spending. Mandatory spending is subject to "pay-as-you-go" rules.
These rules would require legislation to increase spending for TANF to be offset by corresponding decreases in other mandatory spending programs or through increases in revenue.
In congressional budgeting, spending increases or decreases are measured relative to a current law budget baseline that is computed under the rules of the Budget Act. Like the block grant itself, the baseline for future years contemplates no changes to this funding amount due to changes in circumstances e.
However, these rules differ from those of mandatory programs that provide direct benefits for individuals. The baselines for those programs are based on estimates of their caseloads families, individuals served and benefit amounts. In addition, the TANF baseline differs from those computed for discretionary grant programs in that they generally are provided an annual adjustment for inflation.
Under current budget rules, total discretionary programs are subject to a statutory cap and the baseline for discretionary spending is limited to the cap. Over time, price inflation reduces the purchasing power of a dollar. Figure 6. As discussed in " The Budget Baseline and TANF ," adjusting the basic block grant for inflation would be viewed as increased spending under the current congressional budget rules.
The relevant population depends on opinions about whether TANF should be focused on providing benefits and services to the cash assistance population; whether the current size of the cash assistance caseload is indicative of meeting the needs of the population eligible for TANF cash assistance; or whether TANF should be viewed as a block grant to address child poverty more broadly. This report examines inflation-adjusted TANF funding relative to the following three populations:. Figure 7 shows TANF basic funding per family receiving cash assistance, eligible for cash assistance, and with children and in poverty for , , and In the late s, the cash assistance caseload, the number of families eligible for cash assistance, and the number of poor families with children all declined sufficiently to more than offset the effects of inflation.
That is, even adjusted for inflation, states had more resources per family in than in under any of the three measures. However, the circumstances in the post period differed substantially from those in TANF's early years. Child poverty increased during the s, with some of the increase occurring even before the deep recession. The number of families estimated as eligible for TANF cash assistance rose together with child poverty. Yet the TANF cash assistance caseload continued to decline, albeit at a slower pace than it did in the late s.
The figure shows that by any of these three measures, basic TANF funding per cash assistance family declined from to However, in basic TANF funding per family receiving cash assistance remained above that of For the other two measures, TANF funding per family had declined sufficiently by so that its inflation-adjusted value was below that of Figure 7. Basic funding per family eligible for cash assistance in was projected, based on the percentage of families eligible for TANF actually receiving benefits in and the actual TANF cash assistance family in In addition to the total basic block grant being based on the early to mids levels, each state's funding is also based on what it received in federal grants in TANF's predecessor programs during this period.
As discussed in " The Law: "Freezing" Historical Funding Levels in the Basic TANF Block Grant ," when the law was enacted there were differences among the states in terms of funding per family receiving assistance or per poor child. The block grant froze these historical state differences in the current allocation of federal TANF funds.
If the basic TANF block grant was altered to base state funding on poor children equal grants per poor child rather than historical expenditures, the allocation among the states would be very different.
States that have lower than national average grants per poor child under the current formula would be the states with funding increases, and those with higher than national average grants per poor child would experience funding decreases.
Thus, there would be a regional pattern to the reallocation of funding: typically, states in the South would have their grants increased, and California and those in the Northeast and Midwest would experience funding decreases.
Figure 8 shows this regional pattern, and provides information on the percentage change from the current allocation that would occur with a reallocation of funds based on equal grants per poor child child poverty in The District of Columbia would be the jurisdiction with the largest decrease in block grant funding, with a cut of For dollar allocations under equal grants per poor child and comparison with current law, see Table C Figure 8.
Notes: Poverty allocations based on poverty counts under the "official" definition of poverty. A tabular display of this information, as well as dollar allocations, can be found in Table C During the consideration of the welfare reform law, the fixed basic grant under TANF led to concerns that funding might be inadequate during economic downturns.
TANF law includes two provisions to address such concerns: reserve funds and a "contingency fund. TANF law permits states to "reserve" unused basic block grant funds; for example, saving funds during periods of economic growth to have extra funding available during recessions. However, at the end of FY, unspent funds were at their lowest inflation-adjusted level in the history of the block grant. As shown in the figure, states accumulated unspent funds in the early years of the block grant.
However, the value of unspent funds declined after FY Figure 9. States would need to meet criteria of economic need in order to access the fund.
The criteria of economic need are 1 a three-month average state unemployment rate of at least 6. As shown in the figure, the contingency fund often has not behaved as a countercyclical source of extra TANF funds. The fund was little used before FY Grants did not increase together with the unemployment rate during the recession. States generally did not sufficiently increase their own spending, criteria required to access this fund, during that recession.
Figure Beginning in , grants did increase with the more severe recession of In fact, the fund was exhausted in early FY It was the ECF—and not the regular contingency fund—that provided the bulk of extra TANF funding in response to the recent severe recession.
SNAP caseloads are projected to remain above those levels for the indefinite future. Therefore, the TANF contingency fund may continue to spend most of its annual appropriations into the future despite the economic recovery. There are some implications of the potential lack of a counter-cyclical funding source for TANF. During the past recession, state government budgets were stressed, with many states cutting back on spending to meet balanced budget requirements.
When the ECF expired at the end of FY, a number of states reduced their benefits and tightened eligibility for cash assistance. Congress could opt to redesign the TANF contingency fund so that it would be more responsive to changes in economic conditions than the current contingency fund. That is, it could create a fund that would spend less than is currently projected during good economic times, and would provide a higher level of funding in case the economy falls into recession.
Though a fund to provide extra grants during recessions might help TANF respond to future economic downturns, there are a number of difficulties in developing such a fund. Each recession is different—and there is no guarantee that a program that would have been responsive in past recessions will be responsive in future recessions.
The uses of TANF grants by states to fund a wide range of benefits and services—some well outside the scope of benefits and services related to families receiving cash assistance—have raised some fundamental questions about the TANF block grant. State organizations, in general, have argued in favor of retaining the flexibility of the TANF block grant.
However, a number of considerations are raised by any potential changes in TANF funding, including the following:. These different perspectives lead policymakers to fundamental questions about TANF and its goals in conjunction with addressing its financing issues. The TANF basic block grant state family assistance grant provides each state a grant based on its peak funding during the early to-mid s. The formula provided that each state receive the greatest of.
Table A Annualized federal share of expenditures in predecessor programs in the first three quarters of FY As the figure clearly shows, there are immense disparities across states in the block grants received per low-income child.
Thus, the actual funding disparities across states, shown by adding the upper and lower sections of the bars in figure 1 , are actually much greater-more than a six-to-one disparity between the highest and lowest ten states.
There is little justification for the dramatically uneven levels of funding per low-income child, especially because the federal government provides fewer dollars to poorer states.
However, it is much more difficult to come up with an acceptable resolution of the problem. Defenders of the status quo argue that reopening the allocation formula could destroy political consensus on TANF and lead to lower overall funding levels.
Indeed, a formula fight helped to delay Senate consideration of welfare reform legislation in The reallocation fight would be particularly intense if it involved a zero-sum game in which richer states lost money so that poorer states could get more. The simplest change in allocation would be to gradually adjust the funding formula to give more money to states with low federal funding per low-income child.
But even with a lengthy phase-in, such zero-sum funding changes would be opposed by large and powerful states that would lose money. In short, changing the current allocation would be problematic unless all states are at least protected against a drop in the nominal value of their current allocation.
But in a time of tight budgets, a major increase in funds is also difficult. Because the supplemental grant is not assumed to be included in the budget baseline, renewing it for and beyond will require offsetting savings or new revenues. Far more effective in filling the gap would be increasing the current TANF block grant for inflation since , on top of restoring supplemental grant funding and devoting the entire amount to increasing benefits in low-grant states.
See Figure 2. A less expensive strategy for partially equalizing revenues across states would be to preserve nominal grant levels for richer states, while using future inflation adjustments to the TANF block grant if Congress enacts them primarily to bring grants for low-grant states closer to the national median or average. However, so long as inflation rates remain low, it would take many years for inflation adjustments alone to make a substantial impact on low-grant states.
Moreover, it is unlikely that the entirety of an inflation adjustment could be used in this way for more than a few years. Even if additional funding can be found for states with low TANF grants, additional problems exist. Two in particular are notable. First, any approach to filling the gap between low-grant and high-grant states will give almost one-third of the money to Texas, a very large state with a very low TANF grant. Concentrating such a high percentage of the gains on one state might be politically problematic.
Second, Congress would have to decide whether states receiving the funding boost would be required to increase their own spending levels to qualify for the money. Legislators from richer states would undoubtedly argue that it is not fair that they have to maintain their spending efforts at relatively high levels while poorer states get more money with no additional effort over their already very low spending levels. But it is not clear that low-grant states would be willing to spend more of their own money.
After all, the reason that TANF grants are so low now in these states is that under the AFDC program, they were very reluctant to spend their own funds on poor families. Politicians will be tempted to simply ignore the TANF allocation formula or reinstate the supplemental grant in its old form to avoid these political problems. Given the magnitude of the funding disparities, and the limitations they impose on the capacity of low-income states to provide adequate benefits and employment services to their citizens, retaining the current formula would be an unfortunate outcome.
Nevertheless the law includes several provisions that are intended to help states that run into problems during recessions. First, states can carry over unspent TANF funds to future years. Moreover, to qualify for contingency funds, states have to boost their own spending from 75 percent to percent of the level, despite the fact that states often cannot find such additional funds during a recession.
Critics of these arrangements argue that states will have difficulty maintaining both increased cash assistance and needed work support commitments during a recession. While a number of states have carried over TANF funds from the good economic times of the late s, they have been reluctant to carry over too much because of signals from Congress that they would lose the funds if they did not use them.
Moreover, states are unlikely to borrow funds from the federal government when facing a budget squeeze.
One option currently under discussion for dealing with a recession is improvement of the contingency fund, with changes in eligibility criteria and the state spending requirement to make it more accessible for states.
Blank for an extended discussion of options for dealing with recessions.
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