Urban Wire How to expand opportunity through a better TANF program
Heather Hahn
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Throughout June, Urban Institute scholars will offer evidence-based ideas for reducing poverty and increasing opportunity.

Reducing poverty and expanding opportunity for upward mobility are urgent matters for America’s children and families. But Temporary Assistance for Needy Families (TANF), the cash assistance program for the poorest families, reaches few of them. The program provides minimal material support and doesn’t help these families access meaningful work.

To help these most disadvantaged children and families reach their full potential, we should ensure that TANF is adequately funded, that those funds go to poor families, and that states have incentives and flexibility to promote a balance of work, family economic stability, and child well-being. We should make reducing poverty TANF’s clear purpose.

The block grant that funds TANF has remained unchanged since 1997, meaning that its real value has eroded by one-third. States spend most of the funds on things other than cash assistance and helping people access work and child care. TANF cash assistance reaches fewer than one in four poor families and fewer than one in three families eligible for assistance (including just 12 percent of families where both parents are eligible), although these figures vary by state.

And for the relatively few families who do receive TANF, the assistance may be their only source of cash for purchasing diapers, personal care products, and other basic necessities. Yet, the amount is minimal—less than $400 per month on average. These numbers reflect the incentives that come with a flexible and eroding block grant and without legal obligation for states to support poor families through cash or work. To better align TANF’s incentives with poverty reduction and better opportunity, we should shore up the block grant and direct funds to cash assistance or employment for poor families.

How can we help low-income parents find jobs? Despite federal rules’ emphasis on employment, the convoluted rules have unintentionally created disincentives for states to help the most disadvantaged families prepare for work.

A hallmark of the 1996 welfare reform was the flexibility it gave states to define the optimum welfare-to-work pathways, leaving the federal government to focus on the results, not the process. But in 2005, Congress created detailed rules that limited the hours parents could spend looking for or preparing for work and required states to document the exact number of hours that parents spend looking for jobs, among other onerous requirements.

These and other TANF policies and limited or complex connections with the workforce and child care subsidy systems create disincentives and barriers to truly meeting the complex needs of TANF families. In our research, state TANF administrators and frontline workers express frustration that current federal rules drive them to focus on paperwork and on steering parents to activities that meet state performance measures rather than those that help them find and keep employment.

To better help these families climb the ladder of opportunity, federal TANF performance measures should give states incentives to take a balanced approach to promoting work, family economic stability, and child well-being. States should have greater flexibility through reduced reporting requirements and fewer restrictions on specific client activities. At the same time, performance measures should focus more broadly on client outcomes. Coupling these changes with careful evaluation of state approaches could build evidence on TANF’s effectiveness in ultimately reducing poverty and enhancing opportunity.

Research Areas Social safety net
Tags Temporary Assistance for Needy Families (TANF) Economic well-being Wages and nonwage compensation Families with low incomes Mobility
Policy Centers Center on Labor, Human Services, and Population