January 27, 2021

States Can Use TANF Diversion Payments to Provide Critical Support to Families in Crisis

Families are facing widespread economic hardship because of the ongoing COVID-19 crisis. Workers with low incomes have lost their jobs at three times the rate of workers with higher wages, and many have lost employer-sponsored health insurance. Many families are also facing food insecurity and having trouble paying rent or mortgages. On top of all this, working families with children are having trouble finding child care arrangements for younger children and supporting remote or hybrid schooling for school-age children.

One way that some state governments are meeting the needs of families facing these challenges is through diversion payments funded by the Temporary Assistance for Needy Families (TANF) program.

TANF provides monthly cash assistance (also referred to as welfare) to low-income families with children. Because TANF is a federal block grant, states have the flexibility to use the federal funds in various ways. Many states use a portion of the program’s funds to provide short-term diversion benefits that may help families weather a temporary crisis without enrolling to receive regular monthly benefits.

A formal diversion program diverts eligible applicants or recipients from receiving ongoing TANF benefits by providing a lump-sum cash payment. Diversion is one type of payment in a category of benefits called nonrecurrent, short-term (NRST) benefits. States can provide NRST benefits to any family with a specific need or in a crisis situation if the payments are not ongoing and are not provided for more than four months. States can issue NRST benefits for a variety of uses, including emergency assistance to pay rent, utilities, and other housing-related costs; short-term food assistance; mental health and substance abuse treatment; domestic violence services; and vehicle repair.

TANF diversion programs are one tool states can use to help support families during the COVID-19 pandemic. Tracking these programs and understanding how they operate can help policymakers ensure more families get the relief they need.

Which states had diversion programs before the COVID-19 pandemic?

Generally, states provide diversion benefits to families to alleviate short-term problems that interfere with either keeping or finding employment. Before the pandemic, most states (31 states and the District of Columbia) had formal diversion programs that could be used or modified to help families affected by the pandemic.

Formal TANF diversion programs in 2019

How state diversion programs work

States have different methods for determining the maximum diversion payment. Some states pay a multiple of the maximum monthly benefit for the family’s size, others provide a fixed benefit amount, and others still determine payments on a case-by-case basis. The methods used to determine the diversion payment result in different benefit amounts by state. For example, in New Jersey, the maximum total diversion payment is $750 for a family of three, and in Colorado, the maximum amount is $2,500, regardless of family size.

In some states, if a family receives diversion benefits, they are ineligible to receive regular TANF benefits for a certain period. In some states with a period of ineligibility, the family is ineligible for a set number of months (up to 12), and in other states, the length of ineligibility depends on how many months of benefits the family received as a diversion payment. Additionally, some states count a family’s diversion benefits toward the TANF time limit. In California, whether the diversion payment counts toward the time limit depends on whether the family applies for regular TANF benefits during or immediately following their diversion benefit.

Tracking state diversion policies supports ongoing decisions

Diversion programs are one tool state policymakers can use to help provide quick cash relief to families. Many states had such programs in place before the pandemic, but not all. The newly updated Welfare Rules Database tracks state diversion and other TANF policy variations across the 50 states and District of Columbia and provides accessible, detailed information on how states provide cash assistance under the TANF program. As we continue to collect updates and track changes in state TANF policies, the database will include the policy changes states are making in response to the COVID-19 pandemic.

Before the pandemic, TANF diversion programs provided flexible support that helped many families during an emergency. During a crisis like COVID-19, states without such programs could consider adding them to their toolboxes.

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