The TANF program stands for Temporary Assistance for Needy Families and is administered by the U.S. Department of Health and Human Services (HHS) [i]. The Program is a joint federal and state program to support low-income families. States run the program under federal guidelines and goals. The federal portion of the program spent $16.5 billion in the fiscal year 2023 and $15.3 billion in the fiscal year 2022 [ii].
TANF Functions
TANF distributes cash to low-income families. But over the years, it has evolved into many diverse services to needy families as crafted by the states and approved by the federal government. These programs include work-related activities, child care, pregnancy prevention, and other educational and support activities. The pie chart to the right shows 2021 TANF spending by type of expenditure, which also includes state spending of $15.2 billion [iii]. TANF and its predecessor programs were the original welfare programs of the federal government (see history below). They paid cash to the poor. Now the cash portion (called Basic Assistance) has dropped to 25% of the program. Other “in-kind” services make up the bulk of the expenditures today.
Basic Assistance payments vary greatly by state. For example, for a single parent with one child, the maximum payment in Mississippi is $146 a month versus $862 a month in New Hampshire [iv]. Each state has its own formula and policies, approved under federal guidelines. They include considerations such as family size, family income, and work requirement goals.
Work requirements
Federal TANF guidelines include a work requirement described as follows by the Congressional Research Service: “TANF’s main federal work requirement is actually a performance measure that applies to the states, rather than individual recipients. States determine the work rules that apply to individual recipients. The TANF statute requires states to have 50% of their caseload meet standards of participation in work or activities—that is, a family member must be in specified activities for a minimum number of hours. There is a separate participation standard that applies to the two-parent portion of a state’s caseload, requiring 90% of the state’s two-parent caseload to meet participation standards [v].”
The national average TANF work participation rate peaked at 53% in 2017 and fell to 33.6% in 2021, in part due to the Covid Pandemic [vi]. Ten states did not meet the work requirement standards in 2021. The Congressional Research Service describes the situation as follows, “HHS, under the Trump Administration, said that it would exercise its authority to provide states with relief from the penalty for not meeting participation standards “to the maximum extent possible.” HHS has not revised this statement under the Biden Administration.”
Entire Welfare System
TANF is one of thirteen welfare programs. See how it fits in the entire system on the Welfare Programs Page.
TANF Improper Payments and Fraud
The Health and Human Services Agency has not estimated TANF’s improper payments. That is because the program is administered by the various states that distribute federal funds, and the states have not performed improper payment reviews. However, improper payments most likely total at least 9% of expenditures within the program, as discussed on the Welfare Fraud Page.
The complexity of the TANF Program makes the administration of the program expensive. Program management totals 11% of expenditures, as shown above.
History of the TANF Program
The TANF program was created in the 1996 welfare reform legislation and is the successor to Aid to Families with Dependent Children (AFDC). The AFDC program had become synonymous with the term welfare and TANF is often thought of in the same way. This website uses a broader definition of welfare to include any program that aims its benefits specifically at low-income Americans to advance their quality of life. But the narrower definition is still in use today in many circles and it refers only to the AFDC or TANF Programs.
AFDC History
The following history of the AFDC program was adapted from Wikipedia, AFDC [viii].
At the height of the great depression, the federal government passed the Social Security Act of 1935 to create social insurance for retirement and disability. The Act also had another provision that become the seed for welfare. It was just three pages long and was called Aid to Dependent Children. The stated purpose was to provide financial assistance to needy children. It did that for 15 years but still spent little by today’s welfare standards. Then in 1950, it was expanded to provide aid to the caretaker of the child. The Program became controversial because it focused on only one caretaker and not a married couple and births to unmarried mothers had risen from 14% in 1950 to 22% in 1960. The controversy of the unintended consequences of welfare has been with us ever since. The debate lead to the expansion of the program in 1961 to include two parents and the name was changed to AFDC – Aid to Families with Dependent Children.
Over the next 30 years, AFDC went through numerous changes to eligibility, benefit amounts, rules, and state coordination. For the most part over this time frame, states provided cash assistance to families with children, and the federal government paid half or more of all program costs. Federal spending was provided to states on an open-ended basis, meaning that funding was tied to the number of caseloads. Federal law mandated that states provide some level of cash assistance to eligible poor families, but states had broad discretion in setting the benefit levels.
Caseload Acceleration
Fueled in part by the increased number of welfare caseloads and the rate of non-marital births, AFDC came under more and more scrutiny. Critics of the Program argued that it was ineffective at reducing poverty, promoted dependency on the government, and encouraged behaviors detrimental to escaping from poverty. Beginning with President Ronald Reagan’s administration and continuing through the first few years of the Clinton administration, growing dissatisfaction with AFDC, particularly the rise in welfare caseloads, led an increasing number of states to seek waivers from AFDC rules to allow states to more stringently enforce work requirements for welfare recipients. A twenty-seven percent increase in caseloads between 1990 and 1994 accelerated the push by states to implement welfare reform.
Over this timeframe, many states received waivers to adopt various welfare-to-work rules. As a result, many types of mandatory welfare-to-work programs were evaluated in the early 1990s. While reviews of such programs found that almost all programs led to significant increases in employment and reductions in welfare rolls, there was little evidence that income among former welfare recipients had increased. In effect, increases in earnings from jobs were offset by losses in public income, leading many to conclude that these programs had no anti-poverty effects. However, the findings that welfare-to-work programs did have an impact in reducing dependence on government increased support among policymakers for moving welfare recipients into employment.
TANF History
The following history of the TANF program was adapted from Wikipedia, TANF [ix].
In 1992, as a presidential candidate, Bill Clinton pledged to “end welfare as we know it” by requiring families receiving welfare to work after two years (See Poverty Quotes Page). In 1994, Clinton introduced a welfare reform proposal that would provide job training coupled with time limits and subsidized jobs for those having difficulty finding work. However, it was defeated in Congress. Later that year, when Republicans attained a Congressional majority, the focus shifted toward the Republican proposal, led by the speaker of the House Newt Gingrich, to end entitlements to assistance, repeal AFDC and instead provide states with block grants. The debates in Congress about welfare reform centered around five themes:
* Reforming Welfare to Promote Work and Time Limits
* Reducing Projected Spending
* Promoting Parental Responsibility
* Addressing Out-of-Wedlock Birth
* Promoting Devolution (provide more power and authority to states)
1996 Reform
After the Senate voted 74-24 and the House voted 256-170 in favor of welfare reform legislation, formally known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Clinton signed the bill into law on August 22, 1996. PRWORA replaced AFDC with TANF and dramatically changed the way the federal government and states determine eligibility and provide aid for needy families.
Under TANF, states qualify for block grants. The funding for these block grants is fixed and the amount each state receives is based on the level of federal contributions to the state for the AFDC program. In 1994, states were required to maintain their spending for welfare programs at 80 percent of their 1994 spending levels, with a reduction to 75 percent if states meet other work-participation requirements. States were given greater flexibility in deciding how they spend funds as long as they meet the provisions of TANF described above.
Impact of TANF Reform
Discussions about the effectiveness of TANF by policymakers and proponents of welfare reform have centered on the rapid decline in the number of families in TANF since the reform went into effect. Indeed, if measured by the reduction in caseloads, TANF has been a success. Between 1996 and 2000, the number of welfare recipients plunged by 6.5 million, or 53% nationally (see graph below). Furthermore, the number of caseloads was lower in 2000 than at any time since 1969, and the percentage of persons receiving public assistance was the lowest on record. More. In 2012 HHS proposed to allow states more flexibility in the implementation of the work requirement under TANF amid much controversy.
While much has been written, analyzed, and learned from AFDC and TANF, the program today is a small part of the welfare landscape representing 3% of federal spending on welfare. Supporters of reform argue that the work requirement dropped caseloads, put people to work, decreased the number of people in poverty, and saved the government billions. Critics argue that reform hurt the poor because individuals could not find jobs, were forced out of the program, and sought help elsewhere, including other federal programs.
TANF expenditures over the years
The graph to the right shows TANF and AFDC expenditures per year adjusted for the impacts of inflation (stated in 2022 dollars) [x].
Reduction in costs since 1996 is due to the 1996 welfare reform act discussed above.
TANF caseloads over the years
The following graphs show the number of families (caseloads) and individuals participating in the AFDC and TANF programs over the last 50 years. The drop beginning in 1996 is due to the welfare reform act discussed above [vii].
[i] For a description of the TANF program and related data, see the U.S. Department of Health and Human Services. Office of Family Assistance. Temporary Assistance to Needy Families (TANF). [Internet]. Retrieved August 2, 2023. Available here.
[ii] USGovernmentSpending.com [Internet]. Total for Temporary Assistance for Needy Families. Retrieved March 15, 2024. Available here.
[iii] Calculated from: U.S. Department of Health and Human Services. Office of Family Assistance. Temporary Assistance to Needy Families (TANF). Reports and Data. TANF Financial Data – FY 2021. Table A-3. [Internet]. Retrieved August 1, 2023. Available here.
[iv] Congressional Research Service. The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions. Updated February 27, 2023. Figure 3. Available here.
[v] Ibid. Page 8.
[vi] Ibid. Figure 4.
[vii] Ibid. Table A-1.
[viii] Wikipedia, AFDC [Internet]. Retrieved August 1, 2023. Available here.
[ix] Wikipedia, TANF [Internet]. Retrieved August 1, 2023. Available here.
[x] Data from USGovernmentSpending.com [Internet]. See methodology of inflation adjustment on the web page, Poverty and Spending Over the Years.