State TANF Spending Raises Red Flags As Republicans (Again) Ponder New Block Grants

January 17, 2017

The latest reports on Temporary Assistance for Needy Family’s spending are a timely reminder of what happens when states receive insufficient federal funds and a lot of flexibility in what they can do with them.

Basically, we expect TANF to do two things — serve as a safety net for poor families with children and enable the parents to get jobs that pay enough to make them more self-sufficient. Not necessarily enough to cover all their family’s basic needs, but at least enough to make cash benefits unnecessary.

The Center on Budget and Policy Priorities, which analyzes the annual spending reports, translates these expectations into three core purposes — cash assistance, work activities and child care.

The last of these supports the second in that it frees parents to participate in a job training program and/or other activities that will prepare them for work, look for a job and, in the best of cases, actually work for pay.

The latest analysis, for 2015, gives us new numbers that tell the same old story. States, as a whole, spent barely more than half their share of the federal block grant, plus the funds they must spend to get it on these core purposes.

The remainder went for all sorts of things — some closely linked to a core purpose, e.g., Head Start and Pre-K, some to programs and services that don’t benefit only poor families, e.g., child welfare.

States may have used TANF funds to expand such programs, the Center says. In other cases, they merely used them cover rising costs — or even to replace what they’d been spending out of their own funds.

What they invested in core purposes varied enormously. For example, seven states spent less than 10% of their TANF funds on cash assistance, while eleven spent more than 30%.

Twenty-eight states spent less than 10% on work activities and related supports, e.g., transportation. Only five topped 20%. And twenty states spent less than 10% on child care. while nine spent more than 30%.

One might think that states spent less on one core purpose so they could spend more on another. Not altogether so. Two states — Arizona and Texas — spent less than 10% on each of the core activities.

We know how Arizona managed to free up so much of its TANF funds for other purposes. By 2015 it had cut its TANF time limit three times, kicking families out of its program after they’d participated for 24 months. That’s 36 months less than the time limit on their using federal funds for all participating families.

Arizona has since cut its time limit to a mere 12 months, gaining even more funds to cover budget shortfalls — a predictable need because the state has been cutting taxes for years.

The state realized further savings by reducing cash benefits below the low level paid when TANF replaced welfare as we knew it. The maximum a parent with two children can get now is $202 a month — about 12% of the federal poverty line.

An extreme case perhaps, but not altogether unique. The Center reports that Louisiana spent only 11% of its TANF funds on core purposes. Its very low cash benefits — $230 a month for a three-person family — went to only four of every one hundred poor families in the state.

Tempting as it is to trash on these states (and some others), the fault lies with the federal law, which permits states to economize at the expense of their very poor residents.

In a way, it virtually forces them to do this by holding the block grant at the same funding level as when TANF was created in 1996. It’s lost more than a third of its real-dollar value since. So states that want to do the right thing would have to spend far more of their own funds than the partial match the law requires.

We don’t see that in the spending figures. We instead see that states have used TANF as a slush fund — the term that a prolific conservative critic of the program recently used to rebut claims that welfare reform succeeded.

That claim is hardly new. It’s survived a barrage of evidence to the contrary. That’s because proponents in our Congress don’t actually seek to strengthen the safety net and put very poor people on a pathway to steady, decent-paying work.

Nor, for that matter, do they aim to give states flexibility so that they can develop more effective ways to do this. One need only recall the outcries from the right when the Department of Health and Human Services invited states to request waivers in order to test alternatives to the regular TANF work activity rules.

The House Republicans’ block-granting plans are all about cutting federal spending on non-defense programs, especially those that make up our safety net.

This is why we’re bracing for legislation to block grant SNAP and/or Medicaid. Republicans need to find significant savings as offsets for the tax cuts they’ve promised, plus those they’ll achieve by eliminating the Affordable Care Act.

TANF is a harbinger of things to come — unless supporters can galvanize grassroots opposition. This seems to me doable, though difficult.

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Not Much Spent to Move Families From Welfare to Work

April 20, 2015

Nothing new in the big picture we get from the Center on Budget and Policy Priorities’ update on how states spend their Temporary Assistance for Needy Families funds. But even the same-old is timely, both because of what’s going on at the federal level and because we’ve got things brewing here in the District of Columbia.

I’m going to split these into two posts because the pressing issues are as different as the proclivities of the majorities in the Capitol building and those of the leaders in the city its dome looms over.

State spending and the federal policy implications first.

As you may know, Republicans on Capitol Hill — and conservatives they listen to — still view TANF as the model anti-poverty program. Time limits, rigid work requirements, lots of state flexibility and an ever-diminishing fraction of the federal budget. What’s not, for them, to like?

So we see another House budget plan that would convert both Medicaid and SNAP (the food stamp program) to block grants somewhat like TANF. States would get a fixed amount of funding, no matter what befalls their economies or drives up needs for other reasons. They would have the flexibility to reduce benefits and/or further restrict eligibility so as to manage with what they get.

States have had such flexibility — and then some — since welfare as we knew it ended in 1996. And they’ve received the same dollar amount in block-grant funds ever since.

Most of us, I think believe TANF should do two main things. It should provide a safety net for poor families with children. And it should help the parents get to the point where they can earn enough to pay for their families’ needs.

Yet states spent, on average, 28% of their TANF funds* on cash assistance in 2013, the latest year the U.S. Department of Health and Human Services has reported figures for. Even states that spent higher percents provided benefits too low to lift a family of three out of deep poverty, i.e., above 50% of the federal poverty line.

More remarkably, states spent, on average, just 8% of their TANF funds on work activities and supports to make participating in these activities possible, e.g., childcare subsidies, transportation.

Large disparities among states, as you might imagine. Yet every state spent at least some funds on programs not exclusively — or even primarily — for TANF-eligible families, e.g., child welfare services, Earned Income Tax Credit refunds, early childhood education.

However worthy these may be, states seem to be using their flexibility to shore them up at the expense of essential supports and services for TANF families. A dozen states spent at least half their TANF funds this way.

In short, a “cautionary tale,” as CBPP calls this prime example of the block-granting approach to safety-net programs.

* Here and throughout this post, TANF funds include federal block grant funds and what states claimed as their maintenance of effort, i.e. what they spent of their own funds and, in some cases, funds that nonprofits spent on any of the program’s four major goals.


Congressman Paul Ryan Previews His Anti-Poverty Agenda

January 21, 2014

Congressman Paul Ryan wants to rebrand himself as a big thinker on poverty issues — and show a skeptical American public that the Republican party truly cares about low-income people.

He’s promised a comprehensive anti-poverty agenda to replace the efforts launched with President Johnson’s War on Poverty, to which he gives “a failing grade.”

He’s been visiting projects in inner-city neighborhoods, accompanied by Robert Woodson, the conservative founder and president of the Center for Neighborhood Enterprise. He’s been talking with experts at like-minded think tanks.

The agenda is yet to come. But we got something of a preview last week when he spoke at the Brookings Institution’s Social Mobility Summit.

Ryan said he “could already hear howls of protest from certain corners.” So I’ll refrain, as best I can, and try to summarize what seem to be major planks of the framework for his agenda-in-process.

Poverty is not just deprivation, but “a form of isolation.” This is Ryan’s major take on poverty in America. He goes at it from various angles — all linked to adverse government impacts.

On the one hand, “taxes take people out of the workforce” because employers would hire more people if their taxes were lower and people would “work that extra hour.” These people, one notes, are in the workforce.

On the other hand, government programs are partly responsible for cutting poor people off from education, work and family. Here Ryan is borrowing from Brookings research that’s become a well-worn conservative recipe for avoiding poverty — finish high school, get a full-time job, marry, then (and only then) have children.

But while the recipe comes close to blaming poor people for irresponsible choices, Ryan blames the federal government. It’s “walling them up in a massive quarantine,” he says.

Government anti-poverty programs create a “poverty trap.” We have a “hodgepodge” of programs created to solve different problems at different times, Ryan observes.

And they create disincentives to earning more, he says, because they result in “high marginal tax rates” — economist-speak for what a household loses in benefits, as well as the higher taxes it pays when its income increases.

The result of income cut-offs for benefits is also sometimes referred to as the “cliff effect” — a problem that’s getting attention from experts across the political spectrum.

Some government programs mitigate the cliff effect. The Earned Income Tax Credit, for example, phases out rather than abruptly ending. Ryan likes this. The health insurance subsidies provided by the Affordable Care Act also phase out. Well, we know what Ryan thinks of the ACA.

Whether, as he says, the high marginal tax rates discourage work is a more complex issue than he acknowledges.

Economist Eugene Steuerle, whom he cites, told interested House subcommittees that studies have produced “mixed and ambiguous” results, but that he believes the extra income often outweighs the tax effect. Indeed, “some people may work more to generate the same net income.”

A better poverty plan would reflect two principles — simplicity and standards. Simplicity means “consolidation,” i.e., block-granting of some sort.

Ryan is intrigued by the UK’s new Universal Credit, which will replace six benefits for low-income working-age people with a single monthly cash payment and also smooth out the cliff. It’s going through “a rough patch,” he acknowledges, apparently referring to technical rollout problems.

It’s also already subject to what the Guardian calls “stealth cuts,” i.e., a three-year freeze on the amount recipients can earn before their credit starts phasing out. But it’s unfair, at this point, to say that’s why Ryan’s interested.

On the other hand, we’ve got his proposed block grants for SNAP and Medicaid, which make it hard to believe that his evolving plans “have nothing to do with a line on a spreadsheet,” as he claims.

Standards refer to work requirements, which Ryan apparently believes lead to work — “the shortest route back into society.” Also, I think, to time limits, since federal assistance should be an “onramp — a quick drive back into the hustle and bustle of life.” Note the isolation theme again.

The model Ryan likes — wouldn’t you know it? — is the Temporary Assistance for Needy Families program.

As Republicans often do, he cites results — not wholly attributable to TANF — from the late 1990s. Caseloads shrank as more welfare mothers entered the workforce. The child poverty rate declined.

But single-mother employment rates have since dropped. And single mothers who were working in 2011 earned, on average, a bit over $400 a week. The child poverty rate is higher than it was in 2000.

The most significant lasting outcome of welfare “reform” is the caseload cut — from 68% of poor families with children when it was enacted to 27% in 2010.

Only local communities can solve the problem. This isn’t a new message. I remarked on it when the House Budget Committee, which Ryan chairs, issued its latest annual plan.

Ryan made the implications clearer, however. Government, he said, has “crowded out civil society.” It’s told people that poverty isn’t their problem — and by implication, we’ve believed it.

This is a curious view of what goes on in communities today. We have scads of faith-based and other nonprofits that provide food, shelter, clothing, training, health care and more to people in need.

They depend in part on donations — in both time and money — from people who quite clearly believe that poverty is their problem. The organizations are also, in some cases, the way that government anti-poverty funds are translated into services.

And they’re the source of new solutions. The Housing First model for addressing chronic homelessness is an example — though not, one I think, that conforms to Ryan’s standards.

Ryan says that the only way to solve the problem of poverty is “face to face.” If this means that he will not only meet with, but learn from the people who’d be affected by his plan-in-the-making, then it may be a whole lot different from what he previewed last week.

I’ll reserve further howls till we see it.