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Temporary Assistance for Needy Families (TANF) - Overview

This topic provides an overview of the federal Temporary Assistance for Needy Families (TANF) program, which replaced the former Aid to Families with Dependent Children (AFDC), Emergency Assistance (EA), and Job Opportunities and Basic Skills Training (JOBS) programs under Title IV of the Social Security Act.

You may read through the topic sequentially or jump to specific sections by using the links to sections of this topic below.

Links to Sections of this topic:

·                   General

·                   Highlights of TANF

·                           Work Requirements.

·                           Work Activities.

·                           Five-year time limit.

·                           State maintenance of effort requirements.

·                           Additional funding.

·                           Penalties.

·                           Personal employability plans.

·                           Teen parent requirements.

·                           State plans.

·                           Job subsidies.

·                           Waivers.

·                           Effective dates.

·                   Tribal Programs

·                   Additional Information

General

On August 22, 1996, "The Personal Responsibility and Work Opportunity Reconciliation Act of 1996" (P.L.104-193, also known as PRWORA) became law. This comprehensive, bipartisan legislation changed the nation's welfare system into one requiring work in exchange for time-limited cash assistance. It created the Temporary Assistance for Needy Families (TANF) program, which replaced the Aid to Families with Dependent Children (AFDC), Emergency Assistance (EA), and Job Opportunities and Basic Skills Training (JOBS) programs under Title IV of the Social Security Act. The law marked the end of federal entitlement to assistance.

In TANF, States and Territories operate programs, and Tribes have the option to run their own programs. States, Territories, and Tribes each receive a block grant allocation, and States must maintain a historical level of state spending known as maintenance of effort. The basic block grant amount covers cash benefits, administrative expenses, and services targeted to needy families.

The 1996 law offers states great flexibility in designing individual State TANF programs. Unless expressly provided under the statute, the Federal government may not regulate the conduct of States.

States may use TANF funds in any manner "reasonably calculated to accomplish the purposes of TANF." The purposes are: assisting needy families so that children can be cared for in their own homes; reducing dependency of needy parents by promoting job preparation, work, and marriage; preventing out-of-wedlock pregnancies, and encouraging the formation and maintenance of two-parent families.

Highlights of TANF

Work Requirements.

With few exceptions, recipients must work as soon as job ready, or no later than two years after coming on assistance. In FY1997, each State had to ensure that 25 percent of all families in the state were engaged in work activities. This percentage increased to 50 percent in fiscal year 2002. Minimum participation rates for two-parent families started at 75 percent in FY 1997 and increased to 90 percent. (If a State reduces its caseload, without restricting eligibility, it can receive a caseload reduction credit. This credit reduces the minimum participation rates the State must achieve.) During 1997 and 1998, single parents had to participate in work activities for at least 20 hours per week; by FY 2000, they had to participate at least 30 hours per week. Two-parent families had to participate in work activities for at least 35 or 55 hours per week, depending upon the circumstances.

Failure to participate in TANF work requirements can result in a reduction or a termination of TANF benefits to the family. However, States cannot penalize single custodial parents with a child under six for failing to meet work requirements if they cannot obtain child care. A State may exempt single parents with children under the age of one from the work requirements and disregard these individuals in the calculation of participation rates for up to twelve months.

When determining if a single custodial parent has a demonstrated inability to obtain needed child care for a child under six years of age, the State TANF agency, not the State Child Care Lead Agency, is responsible for establishing the criteria or definitions for a number of terms. These include:

·               Appropriate Child Care;

·               Reasonable Distance;

·               Unsuitability of Informal Child Care; and

·               Affordable Child Care Arrangements.

See the Child Care TANF Definitions topic for additional information and definitions used by your State.

Work Activities.

Activities that count towards a State's participation rates are: unsubsidized or subsidized employment, on-the-job training, work experience, community service, job search, vocational training, job skills training related to work, or education directly related to work; satisfactory secondary school attendance; and providing child care services to individuals who are participating in community service. However, no more than 12 months of vocational training, no more than six total weeks of job search, and no more than four consecutive weeks of job search may count. Further, effective in FY 2000, no more than 30 percent of those meeting the participation rates may count toward the work requirement on the basis of participation in vocational training or by being a teen parent in secondary school.

Five-year time limit.

Families with an adult who has received Federally-funded assistance for a total of five years (or less at state option) are not eligible for cash aid under the TANF program. States may extend assistance beyond 60 months to up to 20 percent of their caseload. They may also elect to provide assistance to families beyond 60 months using State-only funds, or they may provide services to families that reach the time limit using Social Services Block Grants.

State maintenance of effort requirements.

The TANF block grant program has an annual cost-sharing requirement, referred to as "maintenance of effort," or "MOE." Every fiscal year each State must spend a certain minimum amount of its own money to help eligible families in ways that are consistent with the purposes of the TANF program. The required MOE amount is based on an "applicable percentage" of the State's (nonfederal) expenditures on AFDC and the AFDC-related programs in 1994. The applicable percentage depends on whether the State meets its minimum work participation rate requirements for that fiscal year. A State that does not meet the required minimum work participation rate requirements must spend at least 80 percent of the amount it spent in 1994. A State that meets its minimum work participation rate requirements must spend at least 75 percent of the amount it spent in 1994.

In addition to the federal TANF block grant funding, needy States with economic problems may request Federal funds from the Contingency Fund. The Contingency Fund has a more rigorous MOE requirement.

Additional funding:

·          Bonuses to reward high performance and reduce out-of-wedlock births. Through FY 2003, $1 billion is available to states for high performance bonuses for achieving program goals, such as moving welfare recipients into jobs. There is a separate $100 million annual appropriation for bonuses to the 5 States that have the greatest success in reducing their of out-of-wedlock birth rates, while also reducing their abortion rates.

·          Contingency fund, supplemental grants, and loans. There is a contingency fund of $2 billion available over five years to States experiencing economic downturns. There are a separate $800 million fund available over 4 years to provide supplemental grants for States with high population growth and historically low welfare spending and a $1.7 billion Federal loan fund.

Penalties:

The Department of Health and Human Services (HHS) may reduce a State's block grant if it fails to do any of the following:

·          Satisfy work requirements. A penalty of 5 percent accrues in the first year. The penalty amount increases 2 percent per year for each consecutive failure. The penalty is adjusted based on degree of failure. The maximum penalty is 21 percent.

·          Comply with five-year limit on assistance. Failure to comply results in a 5 percent penalty.

·          Meet the state's basic maintenance of effort requirements. The penalty is based on the amount of the State's under-spending. The state also loses its Welfare-to-Work funds.

·          Meet the State's Contingency Fund MOE requirement. The penalty is a reduction of the State's Federal TANF grant by the amount of Contingency Funds received and not remitted.

·          Reduce recipient grants for refusing to participate in work activities without good cause. A penalty of between 1 percent and 5 percent is assessed based on the degree of noncompliance.

·          Maintain assistance when a single custodial parent with a child under six cannot obtain child care. Failure to comply results in a penalty of 5 percent.

·          Submit required data reports. A penalty of 4 percent accrues.

·          Comply with paternity establishment and child support enforcement requirements. Failure to comply results in a penalty of up to 5 percent.

·          Participate in the Income and Eligibility Verification System. A penalty of up to 2 percent accrues.

·          Repay a federal loan on time. The penalty will be based on the amount unpaid.

·          Use funds appropriately. Misuse of funds can result in States being penalized for the amount misused. If this misuse is found to be intentional, an additional penalty of 5 percent will be assessed.

·          Replace federal penalty reductions with additional state funds. This provision results in a penalty of up to 2 percent and requires States to contribute State funds to make up for any reductions in Federal funds due to penalties.

The total penalty assessed against a State in given year may not exceed 25 percent of a State's block grant allotment. In some situations, States may avoid penalties: (1) if they demonstrate that they had reasonable cause for failing to meet the program requirements; or (2) if they develop a corrective compliance plan, receive approval of their plan, and correct or discontinue the violation.

Personal employability plans.

States must make an initial assessment of a recipient's skills. States may develop personal responsibility plans for each recipient to identify the education, training, and job placement services needed to move into the workforce.

Teen parent live-at-home and stay-in-school requirement.

Unmarried minor parents must participate in educational and training activities and live with a responsible adult or in an adult-supervised setting in order to receive assistance. States are responsible for assisting in locating adult-supervised settings for teens who cannot live at home.

State plans.

HHS reviews State plans for completeness only. States must allow for a 45-day comment period on the state plan by local governments and private organizations and consult with them. The State plan must have "objective criteria" for eligibility and benefits that are "fair" and "equitable." The plan must explain appeal rights.

Job subsidies.

The law allows States to create jobs by taking money that is now used for welfare checks and using it to create community service jobs, provide income subsidies, or provide hiring incentives for potential employers.

Waivers.

States that received approval for welfare reform waivers before January 1,1997, have the option to operate their cash assistance program under some or all of these waivers, until the waivers expire.

Effective dates.

States had until July 1, 1997, to submit State plans and begin implementing TANF, although they had the option to implement earlier.

HHS published final regulations covering the State TANF programs on April 12, 1999. These regulations took effect October 1, 2000.

Tribal Programs

Federally-recognized Indian tribes may apply directly to HHS to operate a TANF block grant program. Eligible tribes include the Federally-recognized tribes in the lower 48 states and 13 designated entities in Alaska (i.e., the 12 Alaska Native regional non-profit associations and Matlakatla). TANF allotments for Indian tribes are based upon previous state expenditures of federal dollars in AFDC, Emergency Assistance (EA), and JOBS on tribal members in fiscal year 1994. Tribal TANF programs could be implemented as early as July 1, 1997.

Like States, Indian tribes can use their TANF funding in any manner reasonably calculated to accomplish the purposes of TANF. They have broad flexibility to determine eligibility, method of assistance, and benefit levels. Unlike State plans, the Federal government approves tribal plans. Tribes and HHS must reach agreement on time limits, work requirements, and minimum participation rates.

In addition to authorizing tribes to administer TANF, PRWORA replaced the former tribal JOBS Program with the Native Employment Works (NEW) Program. The NEW Program provides funding for tribes and inter-tribal consortia to design and administer tribal work activities that meet the unique employment and training needs of their populations while allowing tribes and States to provide other TANF services.

HHS published final regulations for the tribal TANF and NEW programs on February 18, 2000.

Extensive information and links to other sources about the Tribal TANF program may be found at the U.S. Department of Health & Human Services, Division of Tribal Services website at:
http://www.acf.hhs.gov/programs/dts/

Additional information:

The entire text of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) may be found at:
http://thomas.loc.gov/cgi-bin/query/z?c104:H.R.3734.ENR:

Extensive information about TANF, including links to implementing regulations, additional rules, reauthorization, reports, provisions of each State's TANF plans, etc. may be found at the U.S. Department of Health & Human Services, Office of Family Assistance website at:
http://www.acf.dhhs.gov/programs/ofa/

If you are working and receiving TANF payments or have low income and assets, you may be eligible for a TANF or demonstration project IDA. Read about IDAs, starting with the topic Individual Development Account (IDA) - Overview.

See also:

For a guide to the terminology used to describe various aspects of the TANF program see the TANF Glossary section.

Many States have adopted unique names for their TANF program, which may be found in the Names Of State TANF Programs topic.

A table showing which States have IDAs and for what purposes they may be used can be found in the topic Individual Development Account (IDA) - State Differences.

Source:

U.S. Department of Health & Human Services, Administration for Children & Families, at:
http://www.acf.dhhs.gov/news/facts/tanf.html

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