Weakness in the Safety Net – TANF

In a recent blog post, I explored how new poverty data demonstrate the necessity of maintaining important safety net programs. Social Security, the federal Earned Income Tax Credit, and SNAP (food stamps) have played an important role in keeping millions out of poverty and lessening the severity of poverty for millions more. However, another important part of the safety net, Temporary Assistance for Needy Families (TANF – the program that replaced welfare in 1996), has been less effective during these difficult economic times. TANF provides block grants to states to fund cash assistance, work supports, and other services for low-income children and parents. This post will begin to explore how and why TANF has failed to respond to a continuing economic crisis for women and families.

All indicators suggest that there is rising need for TANF benefits:

• Increased poverty:
  
  • The rate of extreme poverty among women last year was the highest since the Census Bureau began recording this figure 22 years ago, rising from 5.9 percent in 2009 to 6.3 percent in 2010.
  • Among women who head families, 40.7 percent lived in poverty in 2010 (up from 38.5 percent in 2009).
  • The child poverty rate — already high at 20.7 percent in 2009 — jumped to 22.0 percent last year. More than half of poor children lived in female-headed families in 2010. Close to half (44.9 percent) of the 16.4 million children in poverty lived in extreme poverty in 2010, with family incomes less than half of the federal poverty line.
• High unemployment:
  
  • Unemployment has remained high since the recession officially ended in June 2009. Average annual unemployment for the labor force as a whole was actually higher in 2010 than 2009, rising to 9.6 percent from 9.3 percent. Single mothers have had a particularly difficult time finding jobs: during the so-called recovery (June 2009 – August 2011), their unemployment rate has increased from 11.7 to 11.9 percent.
• Rise in SNAP (food stamp) benefits:
  
  • From December 2007 to December 2009, the number of SNAP cases increased by 43 percent while TANF cases only increased by 13 percent. SNAP funding, unlike the block grant system used to fund TANF, automatically expands to meet increased need. SNAP numbers continue to rise; in the later months of 2011, the number of families receiving benefits has risen above 21 million. The number of families receiving benefits through TANF and related state sponsored programs is only about 1.9 million.

Despite increasing need for government assistance in the worst economic crisis since the Great Depression, TANF has failed to keep pace in both the percentage of poor families served and the level of benefits received. In 1994-95, before welfare reform, the AFDC program (TANF’s predecessor) served 75 families for every 100 families with children in poverty. In 2008-2009, only 28 families with children participated in TANF for every 100 families in poverty. This isn’t because of lack of effort on the part of needy families: over half of the applications for TANF assistance in 2010 were denied. For those families who receive them, TANF benefits fall far short of meeting basic needs. In July 2010, TANF benefits for a family of three were less than half of the poverty line in all states.  In Mississippi, TANF benefits were only 11 percent of the poverty line; 29 states had benefits below 30 percent of the poverty line.

Why is TANF failing to keep up with economic realities?

• Funding from the federal government does not keep up with inflation, much less increased need: TANF operates through a federal block grant to the states. The basic TANF block grant has been set at $16.6 billion since it was established in 1996. The real value of the block grant has fallen by about 28 percent.
• The work participation rate makes it hard for states to help those who need it most during periods of high unemployment: Half of work-eligible families receiving assistance under TANF must be engaged in work-related activity for at least 30 hours a week (or 20 hours a week for single-parents with young children). The numbers are higher for two-parent families: 90 percent must be engaged in work, usually for 35 hours per week. States rely primarily on recipients’ unsubsidized employment to reach these targets, so when unemployment is high it is hard for states to meet their goals without decreasing their caseload. States are discouraged from allowing families to participate in activities that don’t count fully toward the work participation rate – such as substance abuse and basic literacy – even though they might do more to help them escape poverty. The work participation rate also gives states an incentive to continue to provide cash assistance to the most employable families even though families with greater barriers to employment would benefit most from cash assistance.
• Cash-strapped states are diverting funds away from cash assistance, cutting benefits, and tightening eligibility: Because TANF funds can be used for more than just cash assistance, states have diverted federal funds previously used to provide cash assistance to child care, child welfare, homeless assistance, and teen pregnancy prevention programs in order to reduce the amount of state funds needed for those programs. The share of total expenditures for cash assistance dropped from 73 percent of expenditures in 1997 to 39 percent in 2009. Once the funds are shifted away from cash assistance, it is hard to reclaim them even when the need for assistance increases dramatically. State budget shortfalls have only made matters worse. States are now cutting already low benefits and instituting shorter and more restrictive time limits in what can only be understood as a response to fiscal pressures.

Despite the clear need for more federal funding for TANF, the House and Senate just passed a short-term TANF extension bill, which the President is expected to sign, that provides lower levels of funding through December, because funding for TANF supplemental grants was not included. While this extension may be all that is politically feasible at the moment, I hope that when our leaders are ready to work to improve TANF, they can learn from TANF’s inadequate response to the recession and slow recovery.