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TANF Funding Guide - Helping Families Achieve Self-Sufficiency, A Guide on Funding Services for Children and Families through the TANF Program

Published: December 12, 1999
Temporary Assistance for Needy Families (TANF)
TANF Guidance
Policy Document
TANF Funding Guide

Executive Summary

Spurred on by the passage of the landmark welfare reform legislation -- the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 -- States have made tremendous progress toward the critical goal of moving families from welfare to work. More families are entering employment, earnings are up, and caseloads are down. The Temporary Assistance for Needy Families (TANF) program has given States new opportunities to develop and implement creative and innovative strategies and approaches to remove families from a cycle of dependency on public assistance and into work. For example, many are turning welfare offices into comprehensive service centers focused on work or changing policies so that work pays. However, in spite of some dramatic results, there are still individuals not working or in entry-level jobs, with incomes that are too low or too erratic to raise their families above poverty. Under TANF, States have the flexibility and resources to develop programs that reach all families, promote success at work, and convert welfare offices into job centers. The task of welfare reform is far from finished. We encourage States to take the critical next steps to ensure that all families get the essential supports they need to get a job, succeed at work, and move out of poverty. Some important areas for States and communities to address include:

  • Ensuring that families have sufficient food, medical coverage, quality, affordable child care, and reliable transportation that enables them to work;
  • Ensuring that custodial parents receive child support from noncustodial parents so they may pay their bills and adequately provide for their children;
  • Focusing on educational and training opportunities that improve wages and working conditions for low-income families;
  • Crafting services for families with special needs or multiple employment barriers that appropriately and effectively address their needs; and
  • Developing collaborative linkages among employers, local leaders and organizations, and faith-based and nonprofit community groups so as to combine their resources and talents to create jobs, support work, and make low-income neighborhoods more viable.

The TANF program provides extraordinary flexibility for funding a wide variety of employment and training activities, supportive services, and benefits that will enable clients to get a job, keep a job, and improve their economic circumstances. TANF funds are much more flexible than funds under the prior entitlement programs. So States should start with the assumption that they may use these funds in innovative ways to achieve the critical goals laid out in the TANF statute.As a general rule, States (or local governments and other agencies where decision-making has devolved from the State agency) must use the available funds for eligible, needy families with a child and for one of the four purposes of the TANF program:

  1. To provide assistance to needy families;
  2. To end dependence of needy parents by promoting job preparation, work and marriage;
  3. To prevent and reduce out-of-wedlock pregnancies; and
  4. To encourage the formation and maintenance of two-parent families.

States must use objective criteria for determining eligibility and benefits. However, they may decide the income and resource standards that they will use to determine eligibility, and they may set different financial eligibility criteria for different benefits or services. (For example, they could limit eligibility for cash assistance to families living below poverty, but provide supportive services like child care and transportation to working families with incomes up to 185% of poverty.) Further, since individuals do not have an entitlement to TANF benefits, States may elect to target benefits to families with incomes below their established eligibility guidelines.

States fund their TANF programs with a combination of Federal and State funds. While both are very flexible, the two sources of funds entail somewhat different rules and restrictions.

Federal TANF Funds. If States use Federal funds provided through their TANF block grants to provide "assistance," recipients are subject to work and participation requirements, a five-year time limit on Federal assistance, data reporting, and certain prohibitions. But these restrictions do not generally apply to other services and benefits that are not "assistance." Also, States have broad discretion to provide a wide range of benefits and services and to set different eligibility standards for the different types of benefits.

State "maintenance-of-effort" (MOE) funds. States must spend 80% of their historic level of spending (FY 1994) -- or 75% if they meet work participation requirements -- on "qualified State expenditures" to meet the basic MOE requirement. All MOE funds must be spent on TANF eligible families.

This guide suggests some of the many flexible ways States may expend their Federal TANF and State MOE funds to further the purposes of the TANF program. These examples are by no means exhaustive. They merely serve to illustrate a few of the possibilities that State and local agencies, State legislators, communities, community-based organizations, and advocates may consider when designing an array of benefits, services, and supports that will accomplish one of the four purposes of the TANF program. We hope that the principles and illustrations in this guidance will promote the design of creative and innovative programs that effectively address the needs of low-income families.

This guide is organized into seven sections:

Introduction provides some background information, explaining what progress has been made on welfare reform, what the funding situation is, the purposes of TANF, and the purpose of this guide.

Considerations in Deciding Whether A Use of Funds is Appropriate presents a list of factors which a State would consider in deciding what benefits and services to fund with Federal or State dollars.

Federal TANF Funds addresses the basic criteria that apply to the expenditure of the Federal block grant funds.

State Maintenance-of-Effort (MOE) Funds addresses the basic criteria for determining whether State expenditures would count as part of the minimum State financial contribution to the TANF program.

Appropriate Uses of Funds provides numerous examples of benefits and services that might be paid for with Federal TANF or State MOE funds.

Additional Considerations provides more detailed information about the potential implications of providing "assistance" and other kinds of benefits under the TANF program. It also provides more detailed information about what kinds of expenditures are allowable.

General Guidance and References identifies additional sources of information about the appropriate use of Federal and State funds. It also includes a chart summarizing the specific program requirements that would apply under different State program designs.

We hope that this guide will facilitate the development and sharing of creative ideas, and we invite States to send us information about successful strategies and innovative approaches. We will post them on our Internet page (www.acf.hhs.gov) so that everyone can benefit from this information. Also, we encourage contact with Regional Office or Central Office staff who are available to answer any fiscal or policy questions about strategies being considered.


The complete PDF file of the TANF Funding Guide - Helping Families Achieve Self-Sufficiency, A Guide on Funding Services for Children and Families through the TANF Program is available under "Download"