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Understanding Today’s Welfare System and Opportunities for Innovation

Throughout the US, TANF (welfare) funding is a critical resource for serving low-income families. Did you know it can do far more than provide basic cash assistance? TANF is a flexible resource that allows communities to be innovative and meet a wide range of needs to help families achieve economic security. Although TANF is no longer an entitlement program and the fund is effectively shrinking each year, TANF services can, in fact, go beyond basic cash assistance to fund a variety of “supportive services”. TANF supportive services help families address challenges in achieving long term self-sufficiency and include child care support, technical training, and job coaching. Agencies and organizations can provide a diverse array of supportive services under TANF as long as they ensure the service can be reasonably calculated to meet one of TANF’s four purpose areas.

 

Welfare 101 ~ TANF

Already familiar with TANF? Skip this section! Curious to know the basics? Here we go:

Temporary Assistance for Needy Families (TANF) is known as the principal safety net for low-income families. It’s a federal funding stream, but each state gets to decide how they want to use it. Remember all of the press coverage around “the end of welfare as we know it” during the Clinton administration? That was when TANF was created, as an alternative to the previous welfare system (known as AFDC – Aid to Families with Dependent Children). What was the biggest difference between the old way of doing welfare and the new way? It’s pretty big: recipients are no longer guaranteed welfare benefits based on eligibility. ((http://www.policyalmanac.org/social_welfare/welfare.shtml))  Instead, TANF has requirements and incentives to get welfare recipients into employment opportunities.

There are many other differences as well. TANF funding doesn’t increase over time – it stays the same regardless of inflation. This means that in real dollars TANF is shrinking each year!

TANF also allows each state to decide what they want to do with their TANF funding, resulting in over 50 different models for welfare. Some states, like Colorado, even allow each county to decide what they want to do with their TANF funding – 80% of Colorado’s TANF funds go straight to the counties! This flexibility can be a good thing, allowing for each community to meet their unique needs. But it can also be confusing, for recipients and the public agencies trying to implement TANF programs.

In fact, TANF is often referred to as a very “grey” funding stream because of its relative flexibility compared with other government funding sources. This flexibility allows for innovation and creativity in the use of TANF to better support low income families. Let’s talk more about how that flexibility plays out in the real world.

 

Going beyond cash assistance

We usually think about “welfare” as giving money to low income families – and TANF does that through its Basic Cash Assistance program. Eligibility for Basic Cash Assistance is 30% of the federal poverty level, which is approximately $24,817 for a family of three. But, these monthly basic cash assistance allocations are often not enough to meet a family’s overall self-sufficiency needs and are time limited as well.

Fortunately, TANF was designed to go beyond cash assistance – it can fund services and programs that support families in many other ways (called “supportive services”). TANF can fund expanding child care support, skill building, health benefits, case management, job coaching, education and technical training, domestic violence services, housing and vehicle repairs, etc. All of these services are critical for low-income individuals to gain the skills and resources they need to be successful in the job market, get off basic cash assistance and, ultimately, achieve long-term self-sufficiency for themselves and their families.

 

TANF Innovations

TANF is flexible because the primary guidance provided on the federal level is that programs and services supported with TANF funding must be reasonably calculated to meet one of the four TANF purpose areas. The purpose areas are: 1)Providing assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; 2)Ending the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; 3)Preventing and reducing the incidence of out-of-wedlock pregnancies and establishing annual numerical goals for preventing and reducing the incidence of these pregnancies; and 4) Encouraging the formation and maintenance of two-parent families. Because these purpose areas can be very broadly interpreted, TANF can support an array of support services that transcend basic cash assistance.

Examples of innovative TANF Supportive Services include:

  • Upgrading the software or hardware needs of the computer lab of a community based organization that provides computer classes for TANF eligible adults so that they can increase their marketability to potential employers;
  • Training TANF eligible adults as child care providers in a community where there is inadequate child care support and there is a market need for trained certified, child care providers;
  • Opening a food bank that provides groceries to needy families in the community; and
  • Providing educational and skill building opportunities for TANF eligible mothers at the local community college.

 

TANF in 2012 ~ Statewide and Federal Budget Realities

While TANF is a critical component in ensuring a strong safety net for low income families across the nation, its inability to respond to inflation has had an impact. TANF funding for the states has stayed at the same level since 1996. Colorado, for example, annually receives $149,626,000 in TANF Block Grant funding. However, when TANF was created, supplemental grants were provided to a number of states that had been disproportionally impacted by their funding levels remaining fixed at 1996 levels despite a substantial growth in need. While TANF’s federal authorization was extended to September 30, 2012 – this extension legislation failed to fund the $319 million a year in TANF supplemental grants that had been provided since 1996 to 17 states with either high child poverty rates or high population growth.

Colorado, as a result of its high population growth, is one of the 17 states that did not receive its TANF Supplemental grant (resulting in an annual loss of 13.5 million in funding). According to the Colorado Counties, Inc. February 6, 2012 Legislative report, “Over the past three years, the number of families receiving assistance from Colorado’s TANF program has increased 69% – from 9,322 in July 2008 to 15,718 in June 2011. This significant increase has occurred while funding has remained static”. ((http://www.ccionline.org/repository//Documents/2012%20Legislative%20Reports/2-6-12%20Leg%20Report.pdf))  With the loss of the supplemental grant, Colorado’s overall TANF funding has actually decreased at a time when many Colorado families have been hit hard by the economy. If TANF is the primary safety net for low-income families, it needs to more responsive to families impacted by the economic downturn. States have a role in ensuring that TANF remains an effective safety net. The 17 states that did not receive supplemental grants, for example, should demonstrate to our representatives in Congress the value of these grants in helping respond to an increase in need.