The text below is an excerpt from the complete document. Read the full
report in PDF format.
This brief, part of the Urban Institute's "Recession and Recover" series, examines how the TANF program (formerly AFDC) responds during a recession and how that response may differ in the current recession from its response in the past.
Changes to welfare have significantly curtailed the role
that the Temporary Assistance for Needy Families
(TANF) program can play in cushioning the current
recession. Historically, welfare caseloads rose during
recessions, lagging behind the increases in unemployment
(Council of Economic Advisers 1997). Unemployed
parents who were either not eligible for
unemployment insurance or who had exhausted these
benefits often turned to welfare for cash assistance. But
reforms in 1996 eliminated the individual entitlement to
welfare and, more recently, stricter work-participation
requirements were set. Most likely, Congress will need
to consider increasing program funds and relaxing the
work-participation requirements if this recession turns
out to be long and deep, as many predict.
TANF, like its predecessor, the Aid to Families with
Dependent Children (AFDC) program, offers the only
source of cash assistance to families
with children and very low incomes
that is not contingent on prior work
history. Before TANF took hold, all eligible
families were “entitled” to assistance.
Now, the federal government
provides states an annual block grant
fixed at about $17 billion to run their
TANF programs, and states must
maintain 80 percent of their prior
spending on programs that TANF
replaced.1 This new financing arrangement
also gave states enormous latitude
in program design.
TANF also initiated five-year lifetime
time limits on benefits paid through the
federal block grant, though states can
exempt up to 20 percent of the caseload
from this limit. States can pay benefits
beyond the time limit using their own
money. Finally, on pain of a financial
penalty, federal rules also require states
to show that at least half of the caseload
participates in work-related activities.
(End of excerpt. The entire
report is available in PDF format.)
Usage and reprints: Most publications may be downloaded free of charge from the web site and may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact firstname.lastname@example.org.
If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.
Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute.