TANF 101

1. Elizabeth Lower-Basch Senior Policy Analyst TANF 101 Working Poor Families Project June 20, 2013

2. What is TANF? TANF Block Grant and MOE TANF Assistance and Work Activities Temporary Assistance for Needy Families

3. TANF: The Block Grant • 1996 “welfare reform” replaced AFDC with TANF. • Fixed block grant ($16.5 billion a year) and maintenance of effort (MOE) requirement replaced uncapped matching funds • Value of block grant has fallen by > 30% due to inflation • Block grant can be used for broad range of activities aimed at 4 goals of TANF: assistance to needy families, but also job preparation, work, marriage, reduction of out-of-wedlock pregnancies

4. Use of Funds • Supports a range of activities: • Cash assistance and work programs • Child care, early education and youth programs • Emergency assistance and state EITCs • Child welfare • Limited to “needy families” with children, but not just to families receiving cash assistance • States define income limits for “needy families” • Non-custodial parents, youth may be part of “families”

5. Maintenance of Effort • Can include wide range of state/local spending on low-income families • Can include “third-party MOE” – nonprofits, employer costs related to subsidized employment • Incentive to claim all possible spending • MOE requirement – 75 or 80 percent • Contingency Fund • “Excess” MOE can increase caseload reduction credit and therefore lower work participation rate target

6. Reported MOE is Rising Does not mean actual spending has increased GAO-13-431

7. Basic Assistance is a Smaller Part of TANF and MOE Spending 1997 Spending 2011 Spending

8. Assistance Caseloads Have Declined

9. Range of Reasons for Caseload Decline • Very low eligibility thresholds • Up-front “diversion” programs and sanctions • Time limits • “Not worth it” GAO estimates 87 percent of decline is due to non-participation by eligible families

10. Source: CRS, Trends in Welfare, Work, and the Economic Well-Being of Female-Headed Families with Children: 1987-2010 (December 20, 2011).

11. TANF Work Participation Rates 12 countable activities – restrictions apply to counting of education and training Recipients must average 30 hours per week of work participation, 20 hours per week if single parent of child under 6 No partial credit Daily supervision and documentation requirements

12. TANF Work Participation Rates Target rate is 50 % for all families, 90% for two parent families Actual rate has been about 30% for country as a whole 2000-2009 States vary widely, but most states have “passed” due to caseload reduction credit, excess MOE States failing in FY 2009: California, DC, Guam, Maine, Missouri, Ohio, Oregon, and Puerto Rico

13. Deficit Reduction Act of 2005 Increased Focus on WPR • Technical changes with far-reaching impacts • Loss of caseload reduction credit (CRC) • States can not use “separate state programs” • Federal definitions of work activities • Increased requirements to verify and document actual hours of participation (not just scheduled) • Pressure on states to focus on federally countable activities

14. Additional States at Risk Due to Tighter Rules for “Excess MOE” Many States Used Additional State Spending to Meet WPR • Revised rules took effect in FY 2008 • But, Recovery Act rules allowed states to use FY 2007 WPR for FYs 2009, 2010 and 2011 • In many states, FY 2012 will be the first year under new rules. MOE+CRC+Work CRC + Work Work GAO-11-880T

15. e.g. Washington State WA WorkFirst Performance Chartbook Feb 2013

16. Federal Threats and Opportunities: Use of Funds • Improved reporting requirements • Restrictions on what can be claimed • Third party MOE • Limits on definition of “needy” • Limits on use of funds for child welfare, pre-k, scholarships? • Revised contingency fund • Focus on subsidized employment? • Possibility of cuts to block grant??

17. Federal Threats and Opportunities:Work Requirements • GAO report presents a range of options • Eliminate/cap caseload reduction credit • Eliminate “excess MOE” as part of CRC • Employment credit • Reduce documentation requirements • Add countable activities, or remove limitations on education and training • Replace work rate with outcome measures • Waiver opportunity

18. TANF Education and Training

19. Limits on Education and Training • Four categories of education and training: vocational education (12 month limit), job skills training, education related to employment, and satisfactory school attendance (teens) • Up to 30% of recipients counted in rate can be in full-time education and training focused activities (voc ed training and satisfactory school attendance) • Job skills training, education related to employment can only count when combined with 20 hours/week of “core activities” • Basic education can count when embedded/integrated • HHS guidance discouraged sequential approach

20. Little Opportunity for Education and Training Source: Congressional Research Service (CRS) based on data from the U.S. Department of Health and Human Services (HHS). * = Less than 0.05%.

21. Most States Are Well Under 30% Cap

22. Why Work First? • Some states don’t think they should support education and training • Ideology: work not education • 1990s JOBS evaluation is interpreted as “education doesn’t work” • Some don’t think they can allow education and training • Federal limits on what can be counted • Concerns about documenting hours

23. False Choice between Education and Training and Jobs

24. More than Half of TANF Adults are Under Age 29 CRS analysis of FY 2009 national TANF data https://www.fas.org/sgp/crs/misc/R42768.pdf

25. TANF Rules for Young Adults • Minor teens (under age 18) must live in adult-supervised setting and attend school. • Teen parents (under age 20) can be counted as engaged in work if they • maintain satisfactory attendance at secondary school or the equivalent during the month; or • participate in education directly related to employment for at least 20 hours per week • CRS finds 42 percent of minor teens w/o HS degree counted this way, but only 10 percent of 19 year olds.

26. Not Your Parent’s Basic Education • High intensity, with clear connection to workforce goals • Focus on credentials with economic payoff • Even participants with low basic skills start working on vocational skills quickly • “Stackable” credentials minimize tradeoff between short-term and long-term goals • Addresses students’ overburdened lives • Supportive services • Flexible scheduling

27. TANF Recipients Benefit from Degrees Lesley Turner The Returns to Higher Education for Welfare Recipients: Evidence from Colorado

28. Counting Education Toward the TANF Participation Rate • Up to 12 months of “vocational education” as stand-alone activity (for up to 30% of recipients in rate) • After 12 months, can be counted as job skills training, education related to employment -- but only when combined with 20 hours/week of “core activities” (work or community service) • All hours of participation must be documented • One hour of homework can be counted per hour of class time

29. Strategies Document hours of participation in ways that do not burden, stigmatize students Minimize gaps in participation – either by reorganizing schedules, or adding wrap-around programs. Count work-study, internships, practicums, co-ops as subsidized employment or work experience, to preserve 12 months of full-time participation

30. Beyond the WPR • States can allow non-countable activities • Some states have enough caseload decline that they don’t have to worry about WPR • States can use solely state funds (not MOE) • Focus on outcomes • Get people into good jobs • Possibility of waivers

31. Minnesota Self-Support Index Success: Working an average of 30+ hours per week, or off cash assistance 3 years after baseline, but not if they left due to time limit, sanction

32. Thank You For more information: Elizabeth Lower-Basch elowerbasch@clasp.org 202 906-8013 www.clasp.org 1200 18thSt, NW Suite 200 Washington, DC 20036