Where Did All the Welfare Money Go?

September 17, 2012

We all know that Republican policymakers view Temporary Assistance for Needy Families as a resounding success.

Look, they say, at how caseloads fell after Congress ended welfare as we knew it — and President Clinton signed off on the deal. We should turn more programs into block grants like TANF — Medicaid and SNAP (the food stamp program) for starters.

Caseloads did indeed fall. And they barely rose when the Great Recession set in.

Only 27% of poor parents with children got any TANF cash benefits in 2010 — 41% fewer than the year TANF was born.

And those benefits were woefully paltry — for a family of three, less than 30% of the federal poverty line in all but eight states.

A new analysis by the Center on Budget and Policy Priorities tells us why.

It’s not just because Congress has never increased the block grant funds states get as the federal government’s share, thus letting them lose at least 28% of their value.

Nor because Congress cut — and then wiped out — supplemental grants that some states had always received to compensate for ways the block grant formula short-changed them.

It’s because states are spending large chunks of their block grant funds and/or the funds they’ve got to put up as a partial match* on programs that aren’t only — or even mainly — for TANF families.

In other words, because they’re creatively exercising the much-vaunted flexibility that block grants like TANF provide.

Last year, for example, states spent, on average, only 29% of their TANF funds on cash assistance.

Another 9.4% went for services that help move families from welfare to work, e.g., education, job training, transportation assistance.

Child care subsidies accounted for another 17%. They too help move families from welfare to work, but they don’t necessarily go only to TANF and former TANF families.

What about the rest of the money?

Well, some of it paid for states’ refundable Earned Income Tax Credit, some for programs to promote marriage and discourage out-of-wedlock births and some for other legally-authorized purposes, e.g., programs states had spent money on before TANF was created.

The expenditures “authorized under prior law” don’t have to meet any of the goals Congress established for TANF. Many states, for example, claim child welfare spending as part of their match, though their programs rightly address child neglect and abuse at all income levels.

States also, CBPP reports, have claimed spending on their pre-K programs and on higher education grants for students with incomes way above the TANF eligibility level.

Such spending apparently gets lumped into an “other non-assistance” spending category in their reports to the U.S. Department of Health and Human Services.

Child welfare services may get reported this way, as may various other services, e.g., for domestic violence, mental health and substance abuse, payments to third parties for food assistance and/or shelter.

Bottom line is that states have been using TANF funds to replace funds they’d previously budgeted for these diverse purposes — or would have had to budget, using funds from other sources.

This, of course, frees up funds for other programs that have nothing whatever to do with the safety net or helping low-income families toward self-sufficiency.

There’s lots of variation among states, however. CBPP provides summaries for each and the District of Columbia.

So we learn that, in 2011, the District spent:

  • No more of its TANF funds on cash assistance than it did 10 years before — $67 million. True level funding, i.e., with adjustments for inflation, would have called for somewhat over $85 million.
  • Just $1 million more on work-related activities — again, as compared to 2001. This means about $6.2 million less when we account for inflation.
  • $5 million more on child care, but less in inflation adjusted dollars.

Spending in all these categories declined as a percent of the District’s total TANF spending. The biggest drop was for cash assistance — down by 9%.

Contrariwise, both the percent and absolute dollar value of the combined AUPL/non-assistance category jumped — from $4 million (2%) to $39 million (15%).

Sure would like to know where that money went.

* Under federal rules, states may count third-party spending, both cash and in-kind, as part of their maintenance of effort, i.e., their required match. Thirteen states did in 2011, CBPP’s end-year for spending comparisons.

NOTE: I have made a few wording changes in this post to correct for a misinterpretation of CBPP’s figures on the District’s TANF spending.


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