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How a Republican plan to fix cash assistance welfare falls short

There’s a fundamental flaw in Republicans’ proposal to reform TANF, the nation’s main cash assistance welfare.

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TANF offers child care services and cash assistance to families.
Spencer Platt/Getty Images

Republicans have an idea to fix the Bill Clinton-era welfare program: make sure federal funding actually goes to giving the most vulnerable families cash assistance and work opportunities.

Experts say this is the right direction, especially for a program that states have increasingly cannibalized to pay for things like private college scholarships and dating workshops, but there are serious problems with how these ideas are executed.

Temporary Assistance for Needy Families (TANF) was a centerpiece of Clinton’s major bipartisan 1996 welfare reform package; those reforms added work requirements and fundamentally adjusted how the program’s funding worked, giving money to states in a lump sum and allowing the states to allocate their funding as they saw need.

In the early years, Clinton’s TANF reforms were extremely popular. But over the past decade, poverty experts and politicians on both sides of the aisle have reached consensus that TANF no longer works, largely because states, without any clear-cut federal requirements, stopped using the money for the safety net programs as they were supposed to, and work requirements have kicked people off the federal rolls.

This week, the House Ways and Means Committee marked up a GOP bill to reauthorize TANF, which expires in September, proposing changes that in theory would ensure states use the money allocated for the program as intended. These reforms include directing states how to spend federal dollars on cash assistance and work, and mandating that only truly impoverished families receive benefits. They’re also changing the name of the program from TANF to JOBS.

“Many states have strayed from the intent of the reforms under that law, and lost sight of what this program was intended to do,” Republicans wrote in the summary of their reform package.

But the numbers suggest they are falling far short of allocating enough resources to make substantial change. The program is direly underfunded, and the Republican proposal keeps the funding at the same levels they were in 1996 — not even adjusted for inflation — which has accounted for a 40 percent loss in value in the program.

In other words, “they are going in the right direction,” James Ziliak, the director for University of Kentucky’s Center for Poverty Research, said, but they aren’t stopping the bleeding.

The Republican welfare proposal to reform TANF, explained

Currently, the federal government caps funding for TANF at $16.5 billion and has a $2 billion contingency fund if the economy goes into recession. If states spend some of their own money on programs for needy families, they can receive a chunk of this fund in a lump sum, or block grant.

States are largely free to operate the program as they wish, as long as they meet four relatively vague general principles: They have to encourage work, job training, and marriage; prevent and reduce out-of-wedlock pregnancies, provide child care services; and encourage two-parent families. States also have to institute work requirements.

The result has been a weakened program that’s unresponsive to the ups and downs of the economy and has served fewer and fewer people in poverty, with states allocating significant portions of the funds toward areas outside the core requirements.

The GOP proposal does the following:

  • It requires states spend 25 percent of their federal and state TANF funds on programs and activities that give families basic assistance and work opportunities. Only five states don’t currently spend 25 percent. Raising that threshold to 35 percent, for example, would impact 30 states, according to LaDonna Pavetti, a policy expert with the Center on Budget and Policy Priorities.
  • It restricts all TANF benefits to families living below 200 percent of the poverty line. Current law limits the benefits to “needy families,” but allows states to define “needy,” which at times means people living at more than 200 percent of the poverty line.
  • The proposal would eliminate the contingency fund and reallocate that money toward child care services. This would in effect leave states without any federal recourse to fund TANF if the economy took a downturn.
  • The proposal changes how states’ performance is measured, focusing on work performance instead of work participation. In other words, to maintain funding, states have to meet state-by-state targets based on recipients finding and keeping jobs, their earnings, and their attainment of a high school diploma.
  • To make sure that the programs receiving federal funding meet federal quality standards, the bill stops states from directly spending federal TANF dollars on child care or child welfare. Instead, they can transfer 50 percent of their federal funds to federal programs that fill these needs.

Equally as important, however, is what this bill does not do: The proposal would keep funding for TANF block grants at the same level it’s maintained since 1996. They are not even adjusting it for inflation, which CBPP estimates accounts for a 40 percent loss in value in the program. The number of poor children has remained roughly the same since the program’s inception. Republicans say TANF doesn’t need any more money — the money just needs to be used more efficiently, and for the right reasons.

While some of these reforms in theory push states to direct federal dollars to the core mission of TANF, in practice, they impact very few states because most states are doing these things already. And some of the changes that are welcomed by both parties — like how states measure their performance — have higher administrative costs, which, without additional resources, would have to be covered by the state.

“When you have a fixed pot of money that’s eroded over time, you will only have winners and losers,” Pavetti said.

To actually fix TANF, the GOP bill needs to go a lot further

There’s no question that TANF is serving fewer and fewer people. The program’s caseload dropped by more than 60 percent in the past two decades, even when poverty worsened.

Much of this is attributed to the rigidity of a block grant. Unlike other federal programs, a block grant doesn’t fluctuate based on how the economy is doing — it’s fixed. The Brookings Institution’s Kathryn Edin and H. Luke Shaefer write:

Why is TANF failing to live up to its charge? Partly because it takes the form of a federal block grant to the states, who are therefore incentivized to keep the TANF rolls down. In some states, TANF dollars are siphoned off to cover services that states would have paid for anyway, such as child welfare systems.

“The fact that the block grant has decreased 40 percent ... it’s really hard for me to imagine that these reforms would make up for that,” Ziliak said. “I just don’t see that happening. It’s not as though inflation is stopping. It’s going to grow over time. It’s a moving target.”

The Republican proposal moves money around within that block grant, meaning some services will get more money and others less. So far, Democrats haven’t supported this proposal for that reason, saying it doesn’t allocate enough resources for child care services or other programs.

“This bill represents a missed opportunity for our committee to help struggling parents get good jobs and lift their families into the middle class,” Rep. Richard Neal (D-MA), the ranking Democrat on the Ways and Means Committee, said Thursday. He and his Democratic colleagues have their own proposal, which would invest $1 billion in job training for parents.

Republicans say the need for more TANF funding is a “myth,” Rob Damschen, the Ways and Means Committee Republican spokesperson, told Vox.

But when asked to lay out how the bill’s proposed changes would offset the rate of inflation, he said simply that there are other welfare programs outside of TANF to help the nation’s poorest families.

“It would be misguided to view TANF in isolation. It’s one of over 80 programs spending over $1 trillion per year on services and benefits for low-income families,” Damschen said.

In other words, it doesn’t.