Decline of TANF Caseloads Not the Result of Decreasing Poverty

Caseloads for Temporary Assistance for Needy Families (TANF), a safety net program designed to help families facing economic hardship meet basic needs, have declined sharply since 1995. Some policymakers have cited this decline as proof of the success of the 1996 welfare reform law.

However, a new report from the Center on Budget and Policy Priorities (CBPP) finds that these decreases in TANF enrollments nationwide were actually accompanied by overall increases in poverty.¹ According to the report, TANF enrollments decreased 58 percent between 1995 and 2010, but the number of families living in poverty increased by 17 percent during that same time period.

In 1996, before the implementation of “welfare reform,” 68 out of every 100 children living in poverty received cash assistance through the program—what the report calls a “TANF-to-poverty ratio” of 68. By 2010 the ratio was just 27. A low TANF-to-poverty ratio means that only a small share of families with children in need receives TANF cash assistance. In 2010, half of the states had a TANF-to-poverty ratio lower than 25.

In Kentucky, TANF cases declined 61 percent between 1995 and 2010, while the number of families with children in poverty declined only 5 percent. Over that fifteen year period, the TANF-to-poverty ratio in Kentucky dropped from 58 out of every 100 families in poverty receiving TANF cash assistance to 24.

According to the CBPP report, the weakening of TANF’s safety net role has devastating consequences for poor families—particularly for young children. Research shows that poverty hinders the performance of young children in school and shrinks their earnings as adults, among other negative impacts.²

While caseload declines in the late 1990s were largely a result of the strong economy, continued declines in the 2000s, when the economy faltered, were instead caused by the TANF program being structured in such a way that states are encouraged to cut benefits and remove recipients from its caseload. For instance, TANF’s primary performance measure for states is the “work participation rate”—the share of TANF recipients engaged in work activities; this measure actually discourages states from assisting those most in need (who lack education, skills, and/or work experience) because those recipients are less likely to find work. States are also rewarded for simply removing recipients from the TANF caseload regardless of their employment status.

In addition, the flexibility of TANF’s block grant structure has enabled the redirection of funds to uses other than cash assistance while inflation has eroded the value of the block grant by almost 30 percent since the program’s creation.

In order to bolster TANF’s role as a safety net program for low-income families, the CBPP report recommends that TANF replace the work participation rate with a new performance measure that rewards states for positive outcomes such as increasing employment or earnings or improving education and skills.³ The report also suggests that states be required to spend a minimum of their block grant on direct assistance for poor families, and that additional federal funding be made available through the program during difficult economic times to help families meet their basic needs.