12 Years into TANF: Now What? A Discussion of the Current System and What Must Change Liz Schott and Danilo Trisi California Symposium on Poverty Sacramento, California October 15, 2009

Brief History of TANF: The Early Years Dramatic caseload declines Increased employment of single mothers –Share with job rose from 62% to 73% Drop in poverty, context of strong economy, expanded work supports –Increased child care funding, EITC expansion, SCHIP, child support collection improvement

Brief History of TANF: The Early Years States had “excess” TANF dollars due to sharp and quick caseload declines –States found other programs in state budget for using TANF or MOE funds and/or built reserves State flexibility to design work programs –Heavy “Work-First” approach used –Work participation rate not so big an issue because of caseload decline and state flexibility

Brief History of TANF: The Middle Years Caseload decline continued despite 2001 downturn in economy Employment of single mothers lost 1/3 of gains and child poverty rose Work program innovation stalled in many states amidst reauthorization delays Funding continuing to be used in range of state programs; reserves dwindling

Recent and Current Phase: DRA and the aftermath DRA made work rates effectively higher and harder for states to meet –Program changes often more about meeting work rates than improving outcomes –States respond to DRA with technical and structural changes and harsher program requirements TANF caseloads continued to decline (by another 20% for )

Less than 1/3 of TANF/MOE Funds are Spent on Cash Assistance

Recent and Current Phase: Response during Recession State fiscal shortfalls led to proposed cuts to TANF programs; some did not happen (yet) –ARRA Emergency Fund helped support increased assistance costs and reduced state incentives to cut basic assistance TANF response to recession is slow and late and varied across states

In 2008 Child Poverty Reached Highest Level Since 1997 Source: Census Bureau

Percent of Children Below Half the Poverty Line Official Measure Source: Census Bureau

Steps from Official Poverty to NAS Measure in CBPP Analysis Numbers (and Percentages) in Poverty, 2005 CBPP analysis of CPS. Medical and work expenditures are from formulas supplied by Census and BLS staff. Thresholds are what Census refers to as the “MIT-GA-CE” version of the NAS thresholds. Geographic adjustment and housing assistance values calculated using HUD FMRs. “Stable” unmarried partners are those present in household 12 months earlier.

Children Below Half the Poverty Line Before and After Considering Family’s Mean-Tested Benefit

Children Below Half the Poverty Line Before and After Considering TANF Source: CBPP analysis of the Current Population Survey; additional data from HHS TRIM model.

Children Below Half the Poverty Line Before and After Considering TANF

Children Lifted Above Deep Poverty by Major Means-Tested Benefits, 1995 & 2005

Participation in AFDC/TANF by Families that Meet Program Eligibility Requirements, Source: U.S. Department of Health and Human Services, Indicators of Welfare Dependence, 2005

Ratio of TANF Child Recipients to Poor Children: 1996 and 2006

By State, Ratio of TANF Child Recipients to Poor Children: 1996 and 2006 Number of states whose ratio of TANF child recipients to poor children was…

Source: CBPP calculations of 1996, 2001, and 2004 Survey of Income and Program Participation. Disconnected Single Mothers and Their Children,

Nationwide Responsiveness of TANF and Food Stamps to the Recession Percent Increase March March 2009 Note: This graph is based on data we collected for 44 states + DC.

California Responsiveness of TANF and Food Stamps to the Recession Percent Increase March March 2009

By State, Responsiveness of TANF and Food Stamps to the Recession Between March March 2009, number of states whose caseloads… Note: This graph is based on data we collected for 44 states + DC.

Caseload Decline Often Serves as Measure of Success in TANF

The Structure of TANF Contributes to the Push for Caseload Decline Fixed federal funding –declining in real dollars by nearly 30% Work Participation Rate –Lowering the denominator (e.g. caseload) is a way to achieve higher rate of participation –Caseload reduction credit: same amount of credit whether family is employed or disconnected Political and ideological environment also big part of the push for caseload decline

What Next? How to Change TANF? How to make TANF more effective as a safety net for families? How to make TANF a more effective work program? Are we measuring the right things? –“If you don’t measure the right thing, you don’t do the right thing.” (Joseph Stiglitz, NY Times) How to use any new federal dollars?

How to make TANF More Effective as a Safety Net? TANF structure gives states incentives for serving fewer families, not more families –ARRA TANF Emergency Fund is exception Could we add a performance measure whereby states are evaluated on how effective TANF is in providing a safety net for poor families? What specific achievement to measure? What are the consequences for poor performance?

How make TANF More Effective as a Safety Net? (cont.) Possible measures could include: –Take up rates: What share of poor children (or of a proxy group) are served by TANF cash aid? –Measuring extent to which TANF reduces poverty, deep poverty, or poverty gap? Considerations include: –What measure could a state or county monitor in real (or near real) time, and impact? –How to minimize administrative tracking burden?

How to Make TANF a More Effective Work Program? States are measured on a very narrow set of activities that increasingly drives program design and limits state flexibility States do not get credit for many activities –Limited credit for education or addressing barriers –No partial credit even if substantial effort Resulting program focus often does not serve those with disabilities or other barriers well

How to Make TANF a More Effective Work Program? (cont.) How to measure outcomes over time and whether family is on aid or exits? –Eliminate caseload reduction credit? How to improve measure of engagement of current recipients in work-related activities? How to increase (restore) state flexibility for program innovation? Should states be able to use different measures of progress for families with disabilities?

How Should Any New Money be Allocated? New federal dollars will be limited, hard to get Use new funds for specific initiatives rather than simply increase block grant amount? –Limit new money to certain poverty-alleviation activities? –Use new money as reward rather than adding penalties? Consider how to distribute new dollars –Allocate based on # of children in poverty?