Can TANF Reauthorization Hold States Accountable?

More than 20 years since the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the original goal of state flexibility in the Temporary Assistance for Needy Families (TANF) program remains relevant and essential. Last month, the House Ways and Means Committee passed a bill reauthorizing TANF that reinforced this objective while aiming to fix a number of existing problems.

While the reauthorizing legislation shows that lawmakers are serious about improving TANF, it tips the balance too much to states. Congress can fix this by better holding states accountable for implementing work requirements and ensuring that TANF participants move toward employment. Achieving this will address problems with TANF while reinforcing the existing aspects that work.

Giving states flexibility to operate temporary cash assistance and employment programs for low-income parents was transformative in 1996, and remains so today. When measured properly, income-based poverty for children dropped by one-third since the late 1990s, and research suggests that extreme poverty is almost non-existent for children in the United States. Although debate remains over the specific policy contributions, the literature is clear that TANF played at least some role, either by moving recipients into employment directly or by making assistance less attractive than employment and the EITC.

But in the past 20 years problems with TANF also emerged. In some cases, TANF gave states too much flexibility and they never developed the robust assistance and work programs that were envisioned. In other instances, too little flexibility was provided, requiring that states spend time and resources counting hours rather than helping people find employment.

The reauthorization bill fixes some of these problematic features, but it must go one step further. Financial penalties for failing to engage TANF participants in work activities are needed, as well as some restrictions on what states can count as work. With these changes, reauthorization will better balance state flexibility with federal oversight and strengthen the work provisions in TANF.

Critical to the success of TANF is the requirement that states engage participants in work activities. It sets clear expectations that assistance is to be temporary and that work is the best path out of poverty. Currently, the federal government holds states accountable by requiring that they engage 50% of their TANF caseload in specific work activities for a specified number of hours or risk financial penalty.

But two problems exist: Exceptions are allowed that result in many states not having to engage any recipients in work programs at all, and for those that still have work requirements not enough flexibility in work activities is provided to allow them to help the hardest to serve.

Recognizing these problems, the House reauthorization bill moves away from the 50 percent work participation requirement, instead holding states accountable for achieving outcomes. Proposed outcome measures include the percentage of ex-TANF participants employed 6 and 12 months after leaving the program, and the median earnings of those individuals.

Outcome measures focus attention on how well participants do once they leave TANF, solving one problem, but introducing others. Developing targets that impose accountability equally across states is extremely difficult, and outcome measures do little to ensure that current recipients are engaged in work activities.

To have confidence in the system (especially one that carries financial penalties), states must feel that targets are fair. Yet, it would take years to develop an analytic approach that ensures fairness, mainly because the data needed to make adjustments either currently do not exist or are inconsistent across states. Add to that the reality that TANF operates differently in each state, and identifying unbiased targets becomes increasingly difficult.

Beyond concerns about outcome measures, questions about how seriously states will take the work provisions for existing participants remain. The reauthorization bill imposes a 100% engagement requirement, where states are expected to place all work-eligible TANF recipients in some type of work activity. But states are allowed to define activities (with oversight from the federal agency) and they would not be financially penalized if they fall below full engagement.

The reauthorization bill makes a number of positive changes to TANF. But eliminating the ability of states to define work activities, setting an engagement target for each state, and imposing financial penalties for missing it would allay remaining concerns about states not being held accountable enough. Combined with penalties for failing to meet outcome measures, states will be given flexibility but also held accountable for engaging TANF recipients in services and ensuring that those services are effective.

Angela Rachidi is a research fellow in poverty studies at the American Enterprise Institute.