Ninth Report to Congress

Executive Summary

In 1996, Congress created the Temporary Assistance for Needy Families (TANF) program.  This $16.5 billion a year block grant was enacted under the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which replaced the Aid to Families with Dependent Children (AFDC) and other related welfare programs.  Fostering self-sufficiency through work was a major goal of the 1996 reform, which required States and Territories to meet minimum levels of participation in work or work-related activities.  States were given significant flexibility in designing their own eligibility criteria and benefit rules, subject to Federal time limits and other restrictions.  The Deficit Reduction Act of 2005 (DRA) reauthorized the TANF program and directed the Department of Health and Human Services (HHS) to issue regulations specifying when an activity counts as one of the Federally listed work participation activities, establishing uniform reporting requirements and verification requirements for participation, and specifying circumstances under which a parent who resides with a child should be included in the work participation rates.

The TANF program continues to serve as one of the nation’s primary safety net programs for low-income families with children.  TANF helps foster healthy and economically secure households and communities for the well being and long-term success of children and families.  This work is crucial when the economy is strong, and becomes even more vital during hard economic times.  To reinforce the TANF program and help States respond to the needs of poor families during a time of economic downturn, the TANF Emergency Contingency Fund (known as the Emergency Fund) was established on February 17, 2009 by the American Recovery and Reinvestment Act (ARRA).

The Emergency Fund, established as Section 403(c) of the Social Security Act, provided up to $5 billion to help States, Territories, and Tribes in FY 2009 and FY 2010 that had an increase in assistance caseloads and basic assistance expenditures, or an increase in expenditures related to non-recurrent short-term benefits or subsidized employment.  In FY 2009, 18 States received Emergency Funds in one or more of these three categories, totaling almost $829 million in financial assistance to States.  More information about the Emergency Fund in FY 2009, including information on spending of Emergency Funds, can be found in Chapters 1, 2, and 3 of this report.  By the end of FY 2010, HHS had obligated the full $5 billion made available under the TANF Emergency Fund to 49 States, the District of Columbia, Puerto Rico, the Virgin Islands, and 24 Tribes.  Comprehensive information about the Emergency Fund covering both 2009 and 2010 can be found in Chapter 14 of this report.

In addition to providing information on the TANF Emergency Fund, this report covers the time frame of Fiscal Year (FY) 2007 through FY 2009 (or the most current information if 2009 is not available) and presents information regarding the characteristics and financial circumstances of TANF recipients, TANF caseloads and expenditures, work participation and earnings, TANF performance measures, interactions between TANF and child support collections, Federal efforts to support the formation and maintenance of two-parent families, data on out-of-wedlock births, and child poverty statistics.  The report also documents specific provisions of State TANF programs and summarizes current TANF research and evaluation.  Below is a short summary of each chapter in this report.

Caseload

TANF caseloads declined slightly throughout FY 2007 and continued to decline from the official start of the recession in December 2007 through July 2008.  TANF caseloads then began to rise.  From the low in July 2008 through September 2009, close to 199,000 families were added to the TANF rolls, representing an increase of 12 percent.

Child-only cases continued to comprise a large fraction of the total TANF caseload.  These are cases where no adult is included in the benefit calculation and only the children are aided.  In FY 2009, child-only cases represented 48.1 percent of the total TANF caseload.

The average cumulative months of TANF assistance received by families in FY 2009 was 37.3 months, consistent with the average length of TANF assistance in FY 2008 and up from 36.7 months in FY 2007.  Although up to 20 percent of families receiving Federally-funded TANF assistance can receive such assistance in excess of the Federal five-year lifetime assistance limit, only 6.6 percent of families were receiving assistance beyond the 60-month limitation.

Expenditures and Balances

In FY 2009, combined Federal and State expenditures for the TANF program and State Maintenance-of-Effort (MOE) expenditures totaled $30.6 billion, including $829 million from the TANF Emergency Fund created by ARRA in 2009.

TANF funds can be spent on “assistance” and “non-assistance.”  “Assistance” includes payments directed at ongoing, basic needs.  These amounts also include expenditures previously permitted under the AFDC program and allowed to continue under TANF (such as certain expenditures for children involved in foster care or the juvenile justice system).  “Non-assistance” includes child care, transportation assistance and other supports for those who are employed, non-recurrent short-term benefits, Individual Development Accounts, refundable earned income tax credits, work subsidies to employers, and services such as education and training, case management, job search, and counseling.  In FY 2009, total Federal and State TANF expenditures on “assistance” amounted to $10.8 billion, compared with $19.7 billion spent on “non-assistance.”

States can transfer up to 30 percent of their TANF block grant into the Child Care and Development Fund (CCDF) or the Social Services Block Grant (SSBG).  In FY 2009, States transferred $1.7 billion into the CCDF and $1.2 billion into the SSBG.

At the beginning of FY 2009, States reported having about $3.2 billion in unspent TANF funds from prior unliquidated or unobligated balances.  By the end of FY 2009, almost $2.1 billion remained unobligated and just under $1.6 billion remained unliquidated.  States may reserve unobligated Federal funds for use in future fiscal years.

Work Participation Rates

Work participation rates measure the degree to which families receiving assistance in TANF and SSPs are engaged in work activities specified under Federal law.  TANF requires that States meet two separate minimum work participation standards each year, one for all families and another for two-parent families.  In FY 2009, an average of 29.4 percent of combined TANF and SSP families with a work-eligible individual subject to work requirements met the Federal all-family work participation standards by participating in qualified activities for an average of at least 30 hours per week for the month, or 20 hours per week for single-parent families with a child under age six. This is consistent with the FY 2008 rate and represents a 0.3 percentage point decline from the FY 2007 rate of 29.7 percent.  From FY 2008 to FY 2009, the all-families work participation rate increased in 23 States.

An additional 15.6 percent of TANF families with work-eligible individuals had some hours of participation, but did not attain sufficient hours to qualify toward the work rate.  States reported zero hours of participation in qualified activities for 54.6 percent of families, although many participated in non-qualifying activities or were not reported as having any hours of participation because they did not have sufficient hours to count toward the rate.  This is 1.5 percentage points lower than in FY 2008.

Jurisdictions can receive a credit against work participation standards for caseload reductions since FY 2005.  In FY 2009, the all-families nominal minimum participation standard requirement was 50 percent, and the two-parent families nominal minimum participation standard was 90 percent.  However, due to caseload reductions since 2005, including caseload adjustments due to excess maintenance-of-effort (MOE) spending, the all-families adjusted standard was lower than 50 percent for all States and Territories except Guam and South Dakota.

Work and Earnings

This chapter presents data on overall employment and earnings among certain groups as well as information related to TANF recipients.  In FY 2009, 54.6 percent of all single mothers with children under 18 that had income below 200 percent of poverty were employed.

Overall, earnings in female-headed families remain higher than in 1996 despite various shifts in the economic climate since TANF’s enactment, although they are below the peak in earnings for low-income female-headed families in 2000.  For the one-fifth of single-mother families with the lowest income, the average annual earnings of single mother families (including those with and without earnings) was $2,651 in 2009, above the average of $2,174 in 1996 and below the peak of $3,687 in 2000 (in 2009 dollars).

The percentage of adult TANF assistance recipients who were working in subsidized or unsubsidized jobs was 23.0 percent in FY 2009.  State-reported data show that the average monthly earnings of those employed while receiving TANF assistance was $809 in FY 2009.

TANF Performance Measures

HHS is required under Section 413(d) of the Social Security Act to annually measure and rank State performance in moving TANF recipients into private sector employment.  Beginning with performance year FY 2001, the Administration for Children and Families (ACF) has calculated State job entry, job retention and earnings gains rates based on matching monthly listings of adult TANF recipients against the quarterly wage files on the National Directory of New Hires.  ACF continues to use this data source for measuring employment among TANF recipients, though these rates are affected by economic and demographic factors and State eligibility rules as well as State performance.

Child Support Collections

Custodial parents receiving TANF are required to cooperate with child support enforcement efforts.  In FY 2009, there were 15.8 million child support cases.  The vast majority of child support services are provided to families that are not receiving TANF or foster care benefits..  Cases in which the children were formerly receiving TANF or foster care benefits and cases in which children have never received such assistance shared an equal portion of the FY 2009 caseload (each were 43 percent).  There were 2.2 million child support cases in which the child was currently receiving these forms of  assistance in FY 2009, accounting for 14 percent of the total caseload.

Federal law requires families that receive TANF cash assistance to assign their rights to child support to the State.  States can then decide what portion, if any, of child support collections to transfer back to TANF families as unearned income and how much of that income should be considered during benefit and eligibility calculations.

Formation and Maintenance of Two-Parent Families

The $150 million Healthy Marriage and Responsible Fatherhood Grants program, established by the Deficit Reduction Act in 2005, encompasses the Healthy Marriage Initiative, the Responsible Fatherhood Initiative, the National Responsible Fatherhood Capacity-Building Initiative (NRFCBI) program, the Fatherhood Community Access (FCA) Program, and also includes grantee evaluation, training, and technical assistance.

HHS funded projects to deliver healthy marriage education and services in one or more of eight allowable activities specified in the authorizing legislation as well as awarded competitive grants for responsible fatherhood programs.  In FY 2009, there were 118 Federally funded healthy marriage grantees and 96 Federally funded responsible fatherhood grantees.

The National Responsible Fatherhood Capacity-Building Initiative (NRFCBI) identifies and provides assistance to local community-based fatherhood organizations to expand their programs. HHS has also invested in the Fatherhood Community Access (FCA) Program, which funds programs that support healthy marriage activities, promote responsible parenting, and foster economic stability.

Out-of-Wedlock Births

The TANF statute (Section 413(e) of the Social Security Act) requires HHS to rank States based on a ratio of the total number of out-of-wedlock births in TANF families to the total number of births in TANF families, and also to show the net changes in the ratios between the current year and the previous year.  Among the general U.S. population, the proportion of all births that were out-of-wedlock rose to 40.6 percent in 2008 (the most recent year with final data available from the National Center for Health Statistics at the Centers for Disease Control and Prevention), compared with 39.7 percent in 2007.  Based on the final births data for 2008, the National Center for Health Statistics (NCHS) data show that the birth rate for unmarried women aged 15-44 years increased slightly in 2008 to 52.5 births per 1,000 women, an increase of less than one percent from a rate of 52.3 in 2007.

Child Poverty and TANF

The 2009 child poverty rate was 20.7 percent, up 1.7 percentage points from the prior year, and above the 1996 level of 20.5 percent and up from the 2000 low of 16.2 percent.  The African-American child poverty rate was 35.4 percent in 2009 compared with 39.9 percent in 1996 and the Hispanic child poverty rate was 33.1 percent in 2009 down from 40.3 percent in 1996.

If a State experiences an increase in its child poverty rate of five percent or more and determines that this occurred as a result of the TANF program(s) in the State, it must submit and implement a corrective action plan to reduce the State’s child poverty rate.  To date, no State has been required to submit a corrective action plan or any additional information for these child poverty assessment periods.

Characteristics and Financial Circumstances of Individuals and Families Receiving TANF Assistance

The average monthly number of families receiving TANF assistance was 1,726,560 in FY 2009.  The estimated average monthly number of TANF individuals receiving TANF assistance  was 973,580 adults and 3,067,764  children.  The average monthly number of  families receiving TANF increased in 40 States and reflects an overall six percent increase from 1,629,345 families in FY 2008.

Since 2004, the percentage of TANF families that are headed by an African-American has slowly decreased while the percentage of TANF families that are Hispanic has increased.  In FY 2009, African-American families comprised 33 percent of TANF families, white families comprised 31 percent of TANF families, and Hispanic families comprised 29 percent of TANF families. In FY 2009, the average number of persons in TANF families was 2.3, including an average of 1.8 recipient children.  One in two recipient families had only one child.  Less than eight percent of families had more than three children.

Monthly cash payments to TANF families averaged $324 for one child, $408 for two children, $496 for three children, and $592 for four or more children in FY 2009.  Some TANF families who were not employed received other forms of assistance such as child care, transportation and other supportive services.

In FY 2009, about 17 percent of TANF families had non-TANF income.  The average monthly amount of non-TANF income for those with non-TANF income was $683 per family.  Twelve percent of all TANF families had earned income with an average monthly amount of $822, while six percent of the TANF families had unearned income with an average monthly amount of $322.

Tribal TANF

By the close of FY 2009, 63 Tribal TANF plans were approved to operate on behalf of 298 Tribes, Alaska Native villages, and the non-reservation American Indian/Alaskan Native populations of 121 counties.  Of the 12,927 families receiving assistance in Tribal programs  reported in FY 2008 (the most recent year for which detailed data is available), 7,267, or 56.2 percent were single parent families and 3,596 or 27.8 percent were child-only cases.  American Indian and Alaska Native families not served by Tribal TANF programs continue to be served by State TANF programs.  State governments in FY 2008 provided assistance to about 21,000 American Indian families.

The full-year (not prorated) amount of grants allocated/approved for the 63 approved Tribal TANF programs was $181,697,029.  The amount of the approved grants is based on American Indian families served under State AFDC programs in FY 1994 in the Tribal grantee's service area.

Seventy-eight Indian Tribes, Alaska Native organizations, and Tribal consortia operated Native Employment Works (NEW) programs during Program Year (PY) 2008-2009 (July 1, 2008 — June 30, 2009).  The most frequently provided NEW program work activities were classroom training/education, job search/job placement, and work experience.  The most frequently provided supportive and job retention services were transportation assistance services.

NEW programs coordinated education, training, work experience, job search, and job referral with other Tribal programs and with local educational institutions and employers.  They provided intensive case management, behavioral, health, and financial management counseling, and life skills training.  Many Tribes with NEW programs located training, employment, and social services in “one-stop” centers where staff assessed clients’ needs and then provided targeted activities and services to meet those needs.  Information/resource/technology centers and learning centers containing resource materials, classrooms, and computer labs provided job preparation and job search services, including individual needs assessments, case management, and classroom instruction.

Specific Provisions of State Programs

The tables in Chapter XII were derived from information collected in the “Welfare Rules Databook:  State TANF Policies as of July 2009,” published by the Urban Institute with funding by HHS’ Administration for Children and Families and HHS’ Assistant Secretary for Planning and Evaluation.  These tables include State-by-State information on benefit levels, work requirements, waiver rules, eligibility and benefit determination, sanction policies, cash diversion programs, time limits, domestic violence provisions, and family cap policies.

TANF Research and Evaluation

HHS’ TANF research and evaluation agenda has two main goals:  (1) to contribute to the success of TANF programs by providing timely, reliable data to inform policy and program design and management, especially at the State and local levels where much of the decision-making takes place; and (2) to inform the nation of the effects of policies and programs on low-income children, families, communities, and the nation as a whole.  Major new reports include new research regarding the Employment Retention and Advancement Project, various projects exploring effective strategies for serving the hard-to-employ, an updated report on the composition of the TANF caseload and TANF leavers, research examining implementation and operations of TANF after the Deficit Reduction Act of 2005, and an evaluation of healthy marriage and responsible fatherhood programs.

TANF Emergency Fund

The American Recovery and Reinvestment Act of 2009, signed by President Barack Obama on February 17, 2009, established the TANF Emergency Contingency Fund (Emergency Fund) for States, Territories, and Tribes administering the TANF program.  The Emergency Fund provided up to $5 billion to reimburse TANF jurisdictions in FY 2009 and FY 2010 that had an increase in assistance caseloads or in certain types of expenditures.

HHS obligated all $5 billion appropriated for the Emergency Fund to 49 States (Wyoming did not submit an application for funding), the District of Columbia, Puerto Rico, the Virgin Islands, and 24 Tribes; this includes $1.6 billion for basic assistance, over $2 billion for non-recurrent short-term benefits, and over $1.3 billion for subsidized employment.  A major accomplishment of the Emergency Fund was its role in putting people to work by creating much-needed subsidized jobs.

States have used the $1.3 billion for subsidized employment to support a wide range of employment programs, including transitional jobs, summer job programs for low-income youth, and supported work programs for individuals with disabilities or other barriers to employment. A survey of State officials by the Center on Budget and Policy Priorities indicated that States placed approximately 260,000 unemployed individuals in subsidized jobs funded in whole or in part by the Emergency Fund, including over 138,000 youth.