What We Know (and Don’t) About How DC Spends Its TANF Funds

January 19, 2017

Mayor Bowser and the DC Council will soon have to make a critical decision: What to do about the families that have reached the rigid time limit local law sets on participation in the Temporary Assistance for Needy Families program.

As I said before, a working group convened by the Mayor has recommended significant revisions to the law. They include both indefinite-term extensions for parents who are complying with requirements set for them and ongoing benefits for their children, no matter what.

This would be probably the single most important thing the District could do now to alleviate poverty. It arguably would save money too — in healthcare costs, for example, homeless services and special education for children who’d suffer brain damages due the high levels of stress that acute poverty can cause.

But sustaining TANF benefits beyond the point that federal block grant funds can be used for them won’t be cheap. So where will the money come from? No one, to my knowledge, has figured that out yet. And it’s certainly beyond my ken.

But it’s worthwhile, I think, to look at where the District’s TANF funds are going now. We have a partial answer from the Center on Budget and Policy Priorities, which publishes annual state-by-state analyses of TANF spending, based on reports states must submit to the U.S. Department of Health and Human Services.

The Center proceeds from the view that TANF has three core purposes—cash assistance, work activities and child care. These reflect a widely-shared view that the program should serve as a safety net and help parents get (and keep) jobs that will pay enough to make them more self-sufficient.

The District spent only 63.% of its TANF funds, i.e., its share of the block grant, plus local funds, on the core purposes in 2015.

This is relatively more than states as a whole spent. But it still leaves a lot of money to account for — about $99 million, assuming the reported total spending is right.*

Drilling down, we see that the District spent 26% of its TANF funds — roughly $70 million—on cash assistance.

An additional 14% — somewhat over $37 million — went for work activities, most if not all of this presumably to the organizations the District contracts with to provide services that help parents prepare for and find work.

Another 22% — a generously rounded $60 million — funded vouchers that subsidize child care for low-income families. These need not necessarily all be families in TANF. But TANF families are a top spending priority so long as parents fully participate in their required work activities.

The District used 7% of its TANF funds — nearly $18.7 million — for refunds from its Earned Income Tax Credit, i.e., money paid to workers whose allowable income tax claims exceeded their liabilities.

Needless to say (I hope), few of the recipients were TANF parents. As the name suggests, only people with income from work can claim it. They need not be poor or even nearly so. For example, a parent with two children remains eligible until she earns $45,000.

The EITC is nevertheless generally viewed as a powerful anti-poverty measure — in part because it puts money into people’s pockets and in part because it provides an added incentive to work. To this extent, it’s consistent with the over-arching purpose of TANF.

Those keeping track will note that we’ve got about $80 million left to account for — a larger percent than any core purpose received. It’s also a considerably larger percent left over than states as a whole reported.

The Center puts it all but administrative costs into an “other services” bucket. HHS allows states to report some spending as “other” too, but not spending on as many different things as could be left after what I’ve thus far itemized.

So where did the millions go? I asked the Department of Human Services and have thus far not received an answer. I’m hopeful, however, because looking at those “other” items in light of TANF families’ needs seems a useful exercise.

We — and the DC Council — could then better decide if each and every one of those unspecified programs and/or services should continue to receive a share of TANF funds if that means that core purposes don’t get enough.

And should they continue to receive them if the administration and Council then can’t find enough to extend a lifeline to all the at-risk TANF families?

* The Center reports that the District spent about $267 million in TANF funds. This is nearly $100 million more than its share of the block grant, plus the local funds it must spend. The Center accounts for $2 million as block grant funds left over from a prior year, but that obviously leaves more unaccounted for.

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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.


TANF Turns 20, Still Failing Poor Families

August 18, 2016

Next Monday is the 20th anniversary of Temporary Assistance for Needy Families. The celebration, if we should call it that, has already featured more than the customary annual bashing. And I plan more than that too.

But I do think it’s worth a fresh look at how poorly poor families with children have fared since TANF replaced welfare as we knew it — and why it’s done so little to help enrolled parents move on to steady, decent-paying work.

These two are closely related, of course. And the evidence for both dates back to some time around TANF’s fifth anniversary, when parents with minimal marketable skills and little or no work experience could no longer get jobs because the very tight labor market loosened up.

Yet some leading Republican policymakers seem invincibly ignorant, as Catholic theology terms it, or willfully so, since they’re still proposing safety net program overhauls based on the TANF model.

A summary then of where things stand now — not for them, but for you who might advocate for a better TANF program, both nationwide and in your state (or would-be state if you live in the District of Columbia).

Fewer Poor Families Aided

The Center on Budget and Policy Priorities — my main source here, as often for TANF data — shows what’s happened to poor families and their children in several different ways.

We see, for example, that TANF served only a third as many families in 2014 as the program it replaced did in its last year.

We’re reminded that TANF enrollment barely grew during the Great Recession, while SNAP (the food stamp program) responded well to the large increase in households without the income jobs had provided.

Families With Benefits Still in Deep Poverty

CBPP also updates figures on cash assistance — basically, still shrinking as a percent of the federal poverty line, though some states and the District have increased benefits.

The maximum for a three-person family leaves it in deep poverty, i.e., below half the FPL, no matter where it lives.

Adjusting for inflation — and thus purchasing power — benefits have shrunk in all but three states. They’ve lost more than 30% of their value in nearly half.

These figures, recall, are based on the maximum a three-person family can receive. Very poor families may receive less because the parents — and necessarily their children — have been punished with benefits cuts.

The District has made three across-the-board cuts for families that have participated in TANF for 60 months or more. A three-person family up against the rigid time limit now receives $154 a month — 9% of the FPL.

Little Spent to Move Families From Welfare to Work

The assumption behind CBPP’s analyses (and others) is that TANF is supposed to reduce poverty among families with children. That’s not among the purposes the law specifies, however much it should.

But it does name reducing dependency. This means, among other things, enabling parents to get jobs that pay at least enough to push their families over the income eligibility threshold for their state’s TANF program.

The law requires states to have a set percent of parents engaged in “countable” work-related activities for a set number of hours each month. But states can spend whatever they choose on programs and services to prepare parents for work and help them find it.

They, by and large, choose to spend very little — on average, 6.5% of their block grant share, plus the funds they must spend to get it. This is even less than what they spent the year before.

They spent, on average, an additional 16.9% on subsidized child care — obviously a necessity for most parents who must participate in programs to ready them for gainful work.

But those childcare funds may not have benefited only TANF families, current or former. States may transfer up to 30% of their TANF funds to the Child Care and Development Block Grant.

They may use that block grant’s funds, plus (again) what they must spend to get them to subsidize child care for families with incomes up to 85% of the median for all families of the same size.

Needless to say (I trust), that’s a whole lot more income than any TANF family can have. Probably more than most who’ve moved into the workforce too.

A Lot Spent to Shore Up Other Programs

Child care is only one — and not the best — example of how states have used the flexibility TANF law gives them to fund programs and services that don’t help only poor families.

In 2015, states, on average, spent more than half their block grant, plus their own required share on things other than cash benefits, work activities and child care.

An average of 8.1% went for refunds from states’ own Earned Income Tax Credits — arguably a legitimate anti-poverty expenditure. But about a third shored up programs that have nothing to do with work or help for parents who don’t have it.

In some cases, CBPP says, they’ve used their TANF funds to replace what they’d previously spent — or would have had to spend — for programs that may benefit poor families, but not them exclusively, e.g., child welfare services, pre-K.

Much More to This Story

This post, simple as it seems, was hard for me to write because the simple kept getting swamped in exceptions, explanations, etc.

On the one hand, the summary figures obscure wide variations among states. You can see some of them in the CBPP analyses I’ve linked to and in this core-purpose spending map from HHS.

On the other hand — and what you can’t see — is that the federal law gives states more perverse incentives to cut their caseloads than the flexibility to use TANF as a slush fund, e.g., a way to avoid penalties for not meeting their work activity targets.

At the same time, it effectively deters them from letting parents pursue a work activity that would lift a goodly number of families out of poverty — participation in a postsecondary education program for long enough to get a degree or specialized certificate.

And, as I’ve written, who knows how often, Congress has put the squeeze on all states by funding the block grant at the same dollar level for what’s now 20 years. It’s now lost a third of its real-dollar value.

In short, it’s well past time to reform welfare reform. Perhaps we’ll have something real to celebrate next year.

 


DC TANF Program Short-Changed Core Purposes

April 23, 2015

My last post focused on the “cautionary tale” we can find in how states spent their Temporary Assistance for Needy Families funds. Now here, as promised, is what we learn about the District of Columbia’s TANF spending.*

The figures are somewhat dated, but they’re still relevant to decisions the DC Council must make as it works on the Mayor’s proposed budget for the upcoming fiscal year.

The District reported $254 million spent on TANF in 2013. Twenty-three percent went for cash assistance. This is a tad higher than the percent reported for 2012. But a family of three was still left at 26% of the federal poverty line. And that’s about where it is now, unless it’s one of the 6,300 families whose benefits have been cut three times already.

They’ll get zero, come October if the Council doesn’t approve the Mayor’s proposal to give them a one-year reprieve. Even if it does, our three-person family will have to get along somehow on $156 a month — roughly 9% of the current FPL.

The Bowser administration justifies the reprieve on the basis of continuing weaknesses in the employment component of the District’s TANF program.

I’ve previously reported the results of an audit that focused on outcomes for the parents facing benefit cut-offs who were actually referred to a contractor for job training and/or help in finding a job. Not encouraging.

But there are two other parts to this story. One is that some parents have had to wait for nearly a year to get those job-related services. This may be in part because the Gray administration froze additional funds for them.

And that’s perhaps because the Department of Human Services didn’t spend all the TANF employment funds in its budget, according to the new director. We certainly see what seems to be under-spending in the Center on Budget and Policy Priorities report I’m using here.

Only 15% of TANF funds spent on work-related activities in 2013. And even this was a marked improvement over 2012, when only 7% went for what surely ought to be a top priority for a TANF program.

At the same time, the District spent an unusually low percent of its TANF funds on administration and systems — 2%, as compared to a nationwide 7%.

This matters because the DC Council enacted exemptions from the benefits phase-out for families facing specified hardships, i.e., difficulties, beyond the usual, that parents would face trying to support themselves and their kids.

One, added for the current year, would temporarily stop the time clock for mothers with infants to care for. But the department hasn’t actually granted this exemption. The reason, we’re told, is that it doesn’t have the computer capacity to suspend time-counting for the moms and their babies.

I personally believe that the TANF time limits merit rethinking altogether. DHS itself is looking into a policy that would convert the one-time hardship exemptions for at least some of the designated families and perhaps others into hardship extensions, as federal law has always allowed.

But that’s not even on the drawing board yet. The proposed reprieve is on the Council’s must-decide agenda.

A rollback of the benefits cuts should be too, given what we know about job training waiting lists — and the many months families had to wait for the assessments used to decide what training and/or other services they should get to give them a reasonable chance of success in the workplace.

Beyond these obviously urgent issues, the Council should, I think, take a hard look at how DHS spends its TANF dollars. In 2013, the department spent nearly as much on “non-assistance” as on work activities. What’s in this catch-all category is a mystery. Not the department’s fault, but rather a flaw in the U.S. Department of Health and Human Services’ reporting format.

The new DHS director, unlike her predecessor, shared a break-out of TANF spending with parties interested enough to have attended a recent briefing. Some money here, some there, some someplace else.

I doubt the Council has ever delved into the dispersal of TANF funds. Every dollar may support something worthwhile. But the mechanism is hardly responsible — let alone transparent — budgeting.

And it inevitably diverts funds from cash support for very poor families and from work-related services that can help the parents get to the point where they can pay for their families needs.

These, I think most of us view as core purposes of the TANF program. And both the CBPP report and everything else we know suggests they’re being shorted.

* The TANF funds spent include the District’s federal block grant share and what it claimed as its maintenance of effort, i.e., what it spent of its own funds, plus funds that some nonprofits spent on at least on of the program’s four major goals.

UPDATE: Shortly after I finished this post, I learned of a petition the Fair Budget Coalition has created to drum up Council support for the proposed reprieve. Some on the Council, I’m told, are in need of persuasion. So I hope those of you who are District residents will sign. You’ll find the petition here.


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.