TANF 101 Working Poor Families Project June 20, 2013 Elizabeth Lower-Basch Senior Policy Analyst

Temporary Assistance for Needy Families 2 TANF Block Grant and MOE TANF Assistance and Work Activities

“welfare reform” replaced AFDC with TANF. Fixed block grant ($16.5 billion a year) and maintenance of effort (MOE) requirement replaced uncapped matching funds  Value of block grant has fallen by > 30% due to inflation Block grant can be used for broad range of activities aimed at 4 goals of TANF: assistance to needy families, but also job preparation, work, marriage, reduction of out-of-wedlock pregnancies

Supports a range of activities:  Cash assistance and work programs  Child care, early education and youth programs  Emergency assistance and state EITCs  Child welfare Limited to “needy families” with children, but not just to families receiving cash assistance  States define income limits for “needy families”  Non-custodial parents, youth may be part of “families” 4

Can include wide range of state/local spending on low-income families Can include “third-party MOE” – nonprofits, employer costs related to subsidized employment Incentive to claim all possible spending  MOE requirement – 75 or 80 percent  Contingency Fund  “Excess” MOE can increase caseload reduction credit and therefore lower work participation rate target 5

6 Does not mean actual spending has increased GAO

Basic Assistance is a Smaller Part of TANF and MOE Spending 1997 Spending2011 Spending

8

Very low eligibility thresholds Up-front “diversion” programs and sanctions Time limits “Not worth it” 9 GAO estimates 87 percent of decline is due to non-participation by eligible families

10 Source: CRS, Trends in Welfare, Work, and the Economic Well-Being of Female-Headed Families with Children: (December 20, 2011).

12 countable activities – restrictions apply to counting of education and training Recipients must average 30 hours per week of work participation, 20 hours per week if single parent of child under 6 No partial credit Daily supervision and documentation requirements 11

Target rate is 50 % for all families, 90% for two parent families Actual rate has been about 30% for country as a whole States vary widely, but most states have “passed” due to caseload reduction credit, excess MOE States failing in FY 2009: California, DC, Guam, Maine, Missouri, Ohio, Oregon, and Puerto Rico 12

Technical changes with far-reaching impacts  Loss of caseload reduction credit (CRC)  States can not use “separate state programs”  Federal definitions of work activities  Increased requirements to verify and document actual hours of participation (not just scheduled) Pressure on states to focus on federally countable activities 13

Many States Used Additional State Spending to Meet WPR 14 Revised rules took effect in FY 2008 But, Recovery Act rules allowed states to use FY 2007 WPR for FYs 2009, 2010 and 2011 In many states, FY 2012 will be the first year under new rules. GAO T MOE+CRC+Work CRC + Work Work

15 WA WorkFirst Performance Chartbook Feb 2013

Improved reporting requirements Restrictions on what can be claimed  Third party MOE  Limits on definition of “needy”  Limits on use of funds for child welfare, pre-k, scholarships? Revised contingency fund  Focus on subsidized employment? Possibility of cuts to block grant?? 16

GAO report presents a range of options  Eliminate/cap caseload reduction credit  Eliminate “excess MOE” as part of CRC  Employment credit  Reduce documentation requirements  Add countable activities, or remove limitations on education and training  Replace work rate with outcome measures Waiver opportunity 17

18

Four categories of education and training: vocational education (12 month limit), job skills training, education related to employment, and satisfactory school attendance (teens) Up to 30% of recipients counted in rate can be in full-time education and training focused activities (voc ed training and satisfactory school attendance) Job skills training, education related to employment can only count when combined with 20 hours/week of “core activities” Basic education can count when embedded/integrated  HHS guidance discouraged sequential approach

Source: Congressional Research Service (CRS) based on data from the U.S. Department of Health and Human Services (HHS). * = Less than 0.05%.

21

Some states don’t think they should support education and training  Ideology: work not education  1990s JOBS evaluation is interpreted as “education doesn’t work” Some don’t think they can allow education and training  Federal limits on what can be counted  Concerns about documenting hours 22

23

24 CRS analysis of FY 2009 national TANF data

Minor teens (under age 18) must live in adult- supervised setting and attend school. Teen parents (under age 20) can be counted as engaged in work if they  maintain satisfactory attendance at secondary school or the equivalent during the month; or  participate in education directly related to employment for at least 20 hours per week CRS finds 42 percent of minor teens w/o HS degree counted this way, but only 10 percent of 19 year olds. 25

High intensity, with clear connection to workforce goals  Focus on credentials with economic payoff  Even participants with low basic skills start working on vocational skills quickly  “Stackable” credentials minimize tradeoff between short-term and long-term goals Addresses students’ overburdened lives  Supportive services  Flexible scheduling 26

27 Lesley Turner The Returns to Higher Education for Welfare Recipients: Evidence from Colorado

Up to 12 months of “vocational education” as stand- alone activity (for up to 30% of recipients in rate) After 12 months, can be counted as job skills training, education related to employment -- but only when combined with 20 hours/week of “core activities” (work or community service) All hours of participation must be documented One hour of homework can be counted per hour of class time

Document hours of participation in ways that do not burden, stigmatize students Minimize gaps in participation – either by reorganizing schedules, or adding wrap-around programs. Count work-study, internships, practicums, co- ops as subsidized employment or work experience, to preserve 12 months of full-time participation 29

States can allow non-countable activities  Some states have enough caseload decline that they don’t have to worry about WPR  States can use solely state funds (not MOE) Focus on outcomes  Get people into good jobs  Possibility of waivers 30

31 Success: Working an average of 30+ hours per week, or off cash assistance 3 years after baseline, but not if they left due to time limit, sanction

For more information: Elizabeth Lower-Basch th St, NW Suite 200 Washington, DC 20036