The Republican Proposal for TANF Reauthorization

An Analysis Prepared by Mary Anderson Cooper, National Council of Churches, April 2002

On February 26 President Bush released his proposal for reauthorization of the Temporary Assistance to Needy Families program. Speaking at a Catholic church in Washington DC, the President announced that his Administration

…will pursue four important goals to continue transforming welfare in the lives of those that it helped. We will strengthen work requirements. We must promote strong families. We will give states more flexibility and we will show compassion to those in need.

A close reading of the Administration proposal suggests that, while it does contain some positive features, it leaves much to be desired, particularly with regard to being "compassionate to those in need.

House Republican leaders and the Republican Governors have generally endorsed the President’s proposal, although the Republicans on the House Ways and Means Committee have proposed some adjustments.

In 1996 Congress passed legislation that dramatically altered the nation’s welfare system, ending a 60-year-old entitlement to cash assistance for low-income families with children by creating in its place a more restricted program. Known as Temporary Assistance to Needy Families (TANF), the new program featured a "work first" approach to benefits, requiring all but the most disabled adult participants to be employed within two years of enrolling for cash benefits, regardless of their family situations. The legislation also set a lifetime limit on participation in TANF by adults at 60 months.

TANF provided a block grant to the states, at a total of $16.5 billion per year, a figure based on caseloads in the previous entitlement program as of 1994. It was enacted as part of a budget reduction measure and it did, indeed, reduce the budget substantially - in small part by reducing caseloads through terminating benefits for those who did not comply with program requirements, but to a greater extent by ending food stamp and cash assistance benefits for legal immigrants and some handicapped people and sharply curtailing food stamps for childless unemployed adults. (Congress subsequently reinstated some of these benefits for children and handicapped people.)

The law’s purposes were to:

…(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (4) encourage the formation and maintenance of two-parent families.

There was no reference to reducing poverty or to improving child well-being, despite the emphasis on family structure.

Current law requires states to ensure that 50% of all families that include an adult and receive TANF benefits are engaged in work or work-related activities for 30 hours per week. The President’s plan would increase the participation rate to 70% by 2007, and increase the number of hours worked to 40 per week. Under current law, 20 hours of the 30-hour work requirement have to be spent in employment, on-the-job training, or workfare (uncompensated work assigned by localities through which recipients "work off" their benefits). The remaining ten hours can be spent in a variety of related activities leading to employment, such as education and drug or alcohol rehabilitation. The President’s proposal would raise the mandated work hours to 24 of 40 and sharply limit the activities that are acceptable for the remaining 16 hours.

The President also proposes to eliminate the Caseload Reduction Credit, a current provision allowing states that reduce their caseloads to cut their participation rates by the number of percentage points that corresponds to their caseload reduction. Thus, if a state has reduced its caseload by 20% since 1996, its participation rate drops by 20 points from 50% to 30%. Many states now have mandated participation rates well below 50%.

The Republican leaders of the Ways and Means Committee, which has primary jurisdiction over TANF in the House of Representatives, have proposed a slight change in this Administration proposal, in response to protests from state welfare officials. The Committee proposal would keep the Caseload Reduction Credit but in a form that is less generous to states. It would limit the caseload reductions considered in dropping participation rates to those that have occurred in the last three years, when there have been fewer departures from the rolls than there were at first. This, coupled with the President’s proposal to increase the state participation rate to 70%, would leave states with a significant mandate to put a large proportion of their welfare caseloads to work.

Although the recent recession appears to be winding down, unemployment is still at 5.7%, it’s highest rate in several years. The Administration’s increased work requirements, coupled with the elimination of the Caseload Reduction Credit, will greatly increase the number of people forced to seek employment at a time when the only jobs for which they qualify are in short supply. With the softening of the economy, many recently hired TANF leavers have again become unemployed and have begun to return to TANF.

In addition, because the economy has been so healthy until recently, those TANF recipients who could be employed with relative ease are already working. Most of those who remain on the rolls do not work because they face serious barriers to employment, such as mental illness, drug or alcohol dependency, or lack of marketable skills. Their problems are the hardest ones to solve, and the Administration proposes no additional funding to assist them. Treatment for substance abuse and rehabilitation could count toward meeting the work requirement, but only for three months in any two years, under the Bush plan. Most experts agree that these programs require far more time to be effective.

It is not clear how the Administration plans to meet this goal. The President would divert $300 million annually from other parts of TANF to subsidize state and local programs on pre-marital education and counseling and to provide bonuses for state efforts to promote healthy marriages. Grants to states would include $40 million in Fiscal Year 2002 and $73 million in FY2003 for abstinence education. Attempts to reduce out-of-wedlock births under current law have had no significant impact.

The religious community supports efforts to help non-custodial parents play a greater role in the lives of their children, especially through education and job training programs that would help such parents become financially stable so they can contribute to the support of their children. New funding is needed for such programs. They should not be financed by taking money away from the basic TANF grant that supports recipient families so minimally.

One positive provision for children is the proposal to give states incentives to pass through to families more of the funds collected through the Child Support Enforcement Program. Currently funds retrieved from non-custodial parents go almost entirely to the states to reimburse them for welfare costs. Some non-custodial parents avoid paying child support because they know the money does not go to their children. If they could be assured that the funds they provided would, indeed, help their own children, they might be more willing to cooperate.

Far less helpful to needy families, however, is the Administration’s proposal to hold funding for the Child Care Development Block Grant at its current inadequate level of $4.8 billion per year. One of the greatest obstacles to employment for TANF recipients is the absence of an adequate supply of safe, quality, affordable child care. Many providers are, themselves, TANF recipients or have recently left TANF, yet the salaries are so low that they have no hope of bettering their situations even though they provide a vital service. Family life cannot be strengthened if safe and appropriate care is not available for the children of working parents.

Speaking at the National Governor’s Association the day before he released his TANF proposal, President Bush said that state flexibility would be the key to TANF’s success; but his plan places on states an unfunded mandate to increase work participation while eliminating the incentive to do so and providing no additional resources. The Governors asked for increased funding and reduced work requirements, pointing out that they have difficulty meeting the existing ones. The Governors have also asked for authority to broaden the range of activities that count as work. Instead, the President proposes to limit those activities severely.

Some Governors want more flexibility with regard to the length of time people are allowed to receive TANF, a request the President denied. Finally, the states want the option to restore welfare benefits to legal immigrants, while the President was willing to propose only that benefits be restored for those who have been in the country for five years or more.

The religious community, in its Call to Poverty Reduction in the Context of Reauthorization of Temporary Assistance to Needy Families (TANF), calls for greater flexibility for states in exempting from time limits for TANF eligibility people who are complying with all program requirements regarding work but still need financial aid and those whose ability to work is hampered by multiple barriers. The religious community also advocates restoration of benefits to legal immigrants without the five-year ineligibility period proposed by the President.

The President proposes to hold funding for TANF at the 1994 level, a decrease of 13% in purchasing power since 1996. He proposes no increased resources for child care or any other aspect of TANF, except marriage promotion. He would reduce the options available for people who are trying to comply with work requirements, and he not allow those seeking treatment and rehabilitation for addictions to stay in programs long enough to be significantly helped. Although he would allow legal immigrants to receive TANF and Food Stamps after they have been resident in the US for five years, he offers them no opportunity for their first few years, generally the time of greatest need.

Twenty-five national religious bodies, including the National Council of Churches and many of its member communions, have issued A Call to Poverty Reduction in the Context of Reauthorization of Temporary Assistance to Needy Families (TANF), a statement describing principles that must guide a TANF program that would effectively reducing poverty. Evaluated by those principles, the Bush TANF proposal falls far short.