Spotlight Exclusives

Serious TANF Reform is Long Overdue

LaDonna Pavetti, Center on Budget and Policy Priorities LaDonna Pavetti, Center on Budget and Policy Priorities, posted on

This commentary is part two of a two-part series about updating the Temporary Assistance for Needy Families (TANF) program. Last week, we featured a perspective from Robert Doar of the American Enterprise Institute.

The Temporary Assistance for Needy Families block grant, created in 1996 as part of a major overhaul of the nation’s cash welfare system which passed Congress with bipartisan support and was signed into law by President Clinton who had pledged to “end welfare as we know it,” has long been the subject of significant debate. These discussions resurfaced this July, when the House Ways and Means Committee submitted a draft discussion TANF bill that would make several modifications to the program, although it now appears that opposition to the draft bill may mean that TANF gets extended for another year without any improvements.

This is unfortunate since TANF has been due for reauthorization since 2010, and this marks the first serious reauthorization attempt in 10 years. Though the bill doesn’t go far enough, it provides a reasonable starting point for improving a program that reaches few poor families and does very little to help them move out of poverty.

States have long complained that the complexity and rigidity of TANF’s rules on what activities count toward a state’s required work rate for TANF recipients hinder their ability to operate effective work programs. The bill makes a number of changes that could encourage states to run more effective programs, if they were to take advantage of the additional flexibility it would provide.

For example, the bill places participation in education and training programs nearly on par with other activities such as job search and unpaid work experience. This represents a welcome shift from the “work-first” approach that denies TANF recipients the opportunity to improve their skills or education. The bill could go further in this area by eliminating the current cap (set at 30 percent of a state’s participants) that can participate in education and training. In an economy where the majority of jobs now require some post-secondary education, a work-first approach is entirely inconsistent with reducing poverty (which the bill would establish as an additional goal for TANF).

States also would benefit from provisions that make it easier for recipients to combine job search with other activities, create a new job readiness category to capture activities such as mental health and substance abuse treatment, and provide some credit when a recipient partially participates. These changes could encourage states to develop multiple pathways to work that recognize the diverse needs of TANF recipients.

The bill makes some changes to the TANF work participation rate, but keeps this flawed measure of state performance largely intact.  States would still be required to engage 50 percent of TANF recipients in work activities, but they would no longer be able to offset this requirement with a “caseload reduction credit” that rewards states for serving fewer and fewer people. Paired with other changes, this could be a step in the right direction, but it means that states will now have to engage more recipients in work activities without any new resources. This could create a greater incentive for states to restrict access to TANF for families with the greatest employment barriers.

The only way to remove the disincentive for states to serve families in need is to add a new measure that holds states accountable for serving such families. One possible measure is the TANF-to-poverty ratio, which compares the number of families receiving TANF cash assistance to the number of poor families and uses readily available state data. States could be held accountable for reaching a specific target such as providing TANF-funded cash assistance to 25 families for every 100 families in poverty. Or they could be required to improve their current performance by a certain amount each year until reaching a specified level.

In addition, the bill would hold states accountable for the first time for measuring employment and earnings for families that leave TANF. Most states do not collect this data and have no idea how recipients fare when they leave the TANF rolls. Although some of the details as laid out in the bill are problematic – and it would be better to replace the work participation requirement with an outcome measure – holding states responsible for what happens after people leave TANF is a positive change that should have been made long ago.

Accountability measures, however, only have teeth if some consequence is attached to them. The bill would require states to boost their state spending if they fail to meet the 50 percent work participation target. This is a much more sensible penalty structure than the current practice of cutting a state’s block grant amount. The same approach should apply to states that fail to meet their negotiated targets for the outcome and access measures.

A key flaw of the TANF block grant system is that the permissible uses of the funds are so broad that states spread them across many areas of the budget. TANF reauthorization provides a key opportunity to reclaim some of those funds—one the bill fails to take advantage of. Requiring states to spend a specific share of their TANF resources on the program’s core purposes is essential for improving TANF work and cash assistance programs.  Unless this change is made, states are likely to continue to do very little to help TANF recipients find and maintain better jobs and, as a result, few recipients are likely to escape poverty.

TANF reform is long overdue. A generation of children has grown up under the current, seriously flawed TANF structure; we should move forward expeditiously to ensure that the next generation has access to a more robust TANF that reaches more families in need and provides more meaningful education, training, and work opportunities to give families a reasonable chance of escaping poverty.

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LaDonna Pavetti is the vice president for family income support policy at the Center on Budget and Policy Priorities.

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