Financing Temporary Assistance for Needy Families

Financing Temporary Assistance for Needy Families

Introduction

The Temporary Assistance for Needy Families (TANF) block grant was created in 1996 through welfare reform legislation to completely replace the Aid to Families with Dependent Children program, the major federal cash assistance program. Passed during the Clinton Administration, TANF was heralded as “the end to welfare as we know it” by linking benefits to work and allowing the states more flexibility in program administration. As a block grant program, the federal government provides base funding and sets general program guidelines. States, in turn, are responsible for designing the program for their needs within federal guidelines, fronting some of the financing, and administering the program as a whole. Therefore, the TANF program is different in each state, leading to an appreciable difference in caseloads, regulations, and funding.

AFDC and the 1996 Welfare Reform Law

Prior to the TANF program, cash assistance to families with children was provided through the Aid to Families with Dependent Children (AFDC) program. AFDC was created through the Social Security Act of 1935 as a federal grant program for states to fund cash assistance to families with children under the age of 16 in which a parent had died, been absent from the home, or were incapacitated. Initially, the aim of such assistance was targeted toward widows with children so that they could devote more time to taking care of their children.  With the Social Security Amendments of 1939 providing Social Security survivors’ benefits, AFDC recipients changed from largely widows to female-headed households in which the father was absent either through divorce or separation. During the Kennedy Administration, families with children in which one or both parents were unemployed became eligible for assistance, although these families had to be registered for job placement services. By the 1970s, work became required for both parents receiving cash assistance and the first work program, Work Incentive (WIN), was created. The Family Support Act of 1988 ended WIN and replaced it with Job Opportunities and Basic Skills (JOBS) which supported education, job training, and immediate employment. Work requirements tightened, exempting only single parents with a child under 3 years old. By the time TANF was created in 1996, AFDC already had work requirements in place; TANF was thus a step in the process toward a strictly welfare-to-work system. TANF was created through the 1996 Personal Responsibility and Work Opportunity Act as a fulfillment of President Clinton’s campaign promise to end the current welfare system and the Republican majority’s Contract with America. Several policy windows opened during the mid-1990s: a growing concern about dependency on welfare from the public, a president and Congress in agreement about changing the welfare system, and a growing economy in which cash assistance was seen as less necessary.