Temporary Assistance for Needy Families (TANF) Block Grant: A Primer

The Temporary Assistance for Needy Families (TANF) block grant provides federal grants to the 50 states, District of Columbia, and territories (collectively, “states”), as well as Indian tribes. TANF helps fund state-run programs of cash assistance for needy families with children, known historically as welfare programs. However, TANF is not a program focused solely on cash assistance, but a broad-purpose block grant that helps fund a wide range of benefits and services for both cash assistance and non-cash benefit families. These benefits and services include employment and training, child care assistance, short-term economic aid, state refundable tax credits, services for children at risk for removal from the home because of neglect or abuse, pre-kindergarten programs, and programs for youth. P.L. 119-75 funds TANF through December 31, 2026. TANF was created in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA, P.L. 104-193), also known as the 1996 welfare reform law. That law ended the New Deal program that provided dedicated federal funds for cash assistance for needy families with children (Aid to Families with Dependent Children [AFDC]) and related programs. Though created nearly 30 years ago, TANF financing remains rooted in the amount of funding that was provided in the pre-PRWORA programs in the early to mid-1990s. TANF is funded by both federal and nonfederal dollars. Both the TANF basic block grant and the minimum amount of nonfederal dollars that must be spent are based on expenditures in the pre-PRWORA programs in the early to mid-1990s. In the mid-1990s, the number of families receiving cash assistance reached its historical peak (5.1 million in March 1994). TANF funding levels have not been adjusted for post-1996 circumstances, including inflation, shifts in state populations, or changes in those eligible for or receiving cash assistance. TANF policy focuses on the policy concerns around cash assistance for needy families that led to the enactment of PRWORA. These concerns included that cash assistance might provide disincentives to work and marriage, leading to long-term dependency on government benefits. The major requirements affecting families receiving assistance are the following: work requirements, most notably performance standards that states must meet and a requirement that states sanction a family with an adult recipient that refuses to work; child support requirements that mandate cooperation in establishing support orders and assigning (legally turning over the right to) child support received on behalf of the family to the state; and a five-year time limit on assistance paid from federal grants to families with children that have an adult or minor child head of household. States determine how these requirements apply to individual families receiving assistance. Federal law contains no rules regarding the dollar amount that makes a family needy or the benefits paid to needy families. Thus, states determine the financial eligibility rules for and the maximum cash assistance benefits paid to families. In July 2023, maximum monthly cash assistance for a single parent with two children ranged from $204 (Arkansas) to $1,243 (New Hampshire) per month. There is a regional pattern to the maximum benefits, with comparatively lower benefits in the South. Under TANF, the decline in the number of families receiving assistance was coincident with a shift in spending toward the broader range of benefits, services, and activities that may be financed under the broad block grant. In FY1995, 71% of all expenditures in the pre-TANF program were on assistance. In FY2023, 26% of all TANF spending was on assistance. There are few TANF requirements and no performance standards around TANF benefits and services that are not assistance, which now represent (nationally) the majority of TANF expenditures.