USING THE TANF EMERGENCY CONTINGENCY FUND IN ARRA TO HELP

POOR FAMILIES WITH CHILDREN

Select Committee on Federal Stabilization

FundsMarch 12, 2009

Celia Hagert, Senior Policy Analyst

The Federal TANF block grant

• The federal Temporary Assistance for Needy Families (TANF) block grant is a flexible funding stream for states to provide a wide range of services aimed at increasing family self-sufficiency through job preparation, work, and marriage

The Federal TANF block grant

• TANF block grant has provided Texas with $486 million annually since 1996.

• Texas has a “maintenance of effort” (MOE) requirement = $251.4 million.

• Our basic TANF block grant is the seventh-largest source of federal funds in the state budget.

The Federal TANF Block Grant• Texas uses TANF to provide cash assistance,

child care, and employment services to extremely poor families with children.

• Families that receive cash assistance are subject to time limits on federally funded benefits, work participation requirements, and parenting/conduct rules.

• Texas also uses the block grant to pay for child protective services and other programs across multiple state agencies.

• Only 6% of the federal block grant in FY09 is used to pay for cash assistance to poor families.

Federal TANF SpendingFederal TANF Spending (Budgeted 2009)

Eligibility determination7%

Cash assistance grants

6%

Employment services for welfare recipients

15%

Child care0%

Child protective services

34%

Foster care16%

State employee benefits

7%

All other15%

Eligibility determination

Cash assistance grants

Employment services for welfarerecipients

Child care

Child protective services

Foster care

State employee benefits

All other

Historical Federal TANF Spending

Texas' Use of Federal TANF Dollars

$-

$100

$200

$300

$400

$500

$600

$700

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

All other TANF

State employeebenefits

Foster care

Child protective svcs

Eligibility determination(incl TIERS)

Choices (job svcs) andSelf Sufficiency Fund

Child care subsidies

Cash welfare

Million $

Historical TANF caseloads

-

200,000

400,000

600,000

800,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Children Adults

1996 202,100 adults, 487,900 children2008 16,634 adults, 101,055 children

Texas Cash Assistance Caseloads

TANF in Texas• Caseload declines have occurred due to work

requirements, time limits, and strict penalties (“sanctions”) for not meeting program requirements

• Fewer than 112,000 Texans receive TANF cash assistance; over three-fourths (86%)are children.

• Net income cannot exceed $188 a month for a family of three to qualify.

• Recipients receive a monthly cash grant, child care, and employment services.

• The average monthly grant is $208 or less for a family of three.

TANF Funds in ARRA

• ARRA provides $52.7 million in supplemental TANF block grant funds to Texas in 2010.

• With these funds, there is a $108 million balance in not-yet-budgeted TANF federal TANF funds.

• ARRA also provides access to up to $243 million in a new TANF emergency contingency fund.

How the TANF Emergency Contingency Fund Works

• States are eligible to draw down additional TANF federal funds in 2009 and 2010, up to 50% of their base block grant over the 2-year period = $243 million.

• Funding is provided at a 20/80 state/federal match.

• Match is available for increased expenditures (using ’07 or ’08 as base year) in three areas: – monthly cash grants, – short-term, non-recurrent benefits, and – subsidized employment.

• To draw down the full $243 million, Texas would have to spend $60 million more in these areas.

How the TANF Emergency Contingency Fund Works

• One caveat: to qualify for match in first area (monthly cash grants cash grants), Texas TANF caseload must increase over 2007/8 levels.

• Since caseloads not expected to increase in Texas, state would not be eligible for reimbursement of increased cash grant costs.

• However, caseload increase requirement does NOT apply to increased spending in other two areas: short-term non-recurrent benefits and subsidized employment.

• Thus, emergency contingency fund could be used to provide TANF recipients with one-time boost in assistance, or to increase the opportunities for subsidized employment.

Potential Uses of Emergency Contingency Fund

• Increase “One-Time TANF” payment (existing $1,000 “diversion” payment to families who qualify for but choose not to get on TANF.

• Increase supplemental grandparent payment (currently $1,000/year to grandparents over 45 caring for children on TANF).

• Provide a one-time additional payment to everyone on TANF (such as by increasing the current $30 back-to-school payment)

• Provide more subsidized employment opportunities to TANF adults struggling to find work.

• HB 2625 by Rep. Naishtat increases one-time payments

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