Temporary Assistance for Needy Families
Fewer Eligible Families Have Received Cash Assistance Since the 1990s, and the Recession's Impact on Caseloads Varies by State Gao ID: GAO-10-164 February 23, 2010Following sweeping changes made to federal welfare policy in 1996 with the creation of the Temporary Assistance for Needy Families (TANF) program, the number of needy families who received cash assistance fell by more than half to 1.7 million in 2008. Poverty among children also fell from about 21 percent in 1995 to about 16 percent in 2000, rising again to 19 percent in 2008. The current recession deepened in 2008, raising questions about state TANF programs' response to increased needs. GAO was asked to provide Congress with information on the (1) factors contributing to the decline in the number of families receiving assistance; (2) characteristics of participating and nonparticipating eligible families; (3) impact of higher participation in TANF cash assistance on child poverty; and (4) changes states are experiencing in caseloads and spending in the current recession. GAO's methodologies included using microsimulation analyses; reviewing relevant research and federal laws; interviewing TANF officials in 21 selected states; analyzing state cash assistance data; and interviewing researchers, federal officials, and other experts.
The decline in the number of poor families receiving cash assistance from 1995 to 2005 reflects declines in both the number of eligible families and in eligible families' participation. The strong economy of the 1990s, TANF's focus on work, and other factors contributed to increased family incomes and a decline in the number of eligible families. However, most of the caseload decline--about 87 percent--resulted from fewer eligible families participating in the program, perhaps in response to TANF work requirements, time limits, and sanction and diversion policies. Compared to TANF families, eligible nonparticipating families worked more and had higher incomes and educational levels. However, among eligible families who did not participate, 11 percent did not work, did not receive means-tested disability benefits, and had very low incomes. 800,000 fewer children would live in extreme poverty--below half the federal poverty threshold--if participation increased from 40 percent to 84 percent of eligible families, the level it reached in 1995, the year before TANF was created. While TANF benefits would generally increase incomes, higher participation would not significantly change the number of children in poverty overall, partly because many children in poverty are not poor enough to be eligible for TANF and because TANF cash benefits are typically low. From June 2008 to June 2009, the number of families receiving TANF cash assistance rose in 12 of the 21 states GAO surveyed, although the recession's impact on cash assistance caseloads varied by state. To offset higher costs of cash assistance, few states reported reducing TANF-related spending on family- and/or work-supports during this time period. Instead, states paid for increases by using funding sources such as 2009 emergency stimulus funds.
GAO-10-164, Temporary Assistance for Needy Families: Fewer Eligible Families Have Received Cash Assistance Since the 1990s, and the Recession's Impact on Caseloads Varies by State
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Report to the Chairman, Subcommittee on Income Security and Family
Support, Committee on Ways and Means, House of Representatives:
United States Government Accountability Office:
GAO:
February 2010:
Temporary Assistance For Needy Families:
Fewer Eligible Families Have Received Cash Assistance Since the 1990s,
and the Recession's Impact on Caseloads Varies by State:
GAO-10-164:
GAO Highlights:
Highlights of GAO-10-164, a report to the Chairman, Subcommittee on
Income Security and Family Support, Committee on Ways and Means, House
of Representatives.
Why GAO Did This Study:
Following sweeping changes made to federal welfare policy in 1996 with
the creation of the Temporary Assistance for Needy Families (TANF)
program, the number of needy families who received cash assistance
fell by more than half to 1.7 million in 2008. Poverty among children
also fell from about 21 percent in 1995 to about 16 percent in 2000,
rising again to 19 percent in 2008. The current recession deepened in
2008, raising questions about state TANF programs‘ response to
increased needs. GAO was asked to provide Congress with information on
the (1) factors contributing to the decline in the number of families
receiving assistance; (2) characteristics of participating and
nonparticipating eligible families; (3) impact of higher participation
in TANF cash assistance on child poverty; and (4) changes states are
experiencing in caseloads and spending in the current recession. GAO‘s
methodologies included using microsimulation analyses; reviewing
relevant research and federal laws; interviewing TANF officials in 21
selected states; analyzing state cash assistance data; and
interviewing researchers, federal officials, and other experts.
What GAO Found:
The decline in the number of poor families receiving cash assistance
from 1995 to 2005 reflects declines in both the number of eligible
families and in eligible families‘ participation. The strong economy
of the 1990s, TANF‘s focus on work, and other factors contributed to
increased family incomes and a decline in the number of eligible
families. However, most of the caseload decline”about 87 percent”
resulted from fewer eligible families participating in the program,
perhaps in response to TANF work requirements, time limits, and
sanction and diversion policies.
Compared to TANF families, eligible nonparticipating families worked
more and had higher incomes and educational levels. However, among
eligible families who did not participate, 11 percent did not work,
did not receive means-tested disability benefits, and had very low
incomes.
800,000 fewer children would live in extreme poverty”below half the
federal poverty threshold”if participation increased from 40 percent
to 84 percent of eligible families, the level it reached in 1995, the
year before TANF was created. While TANF benefits would generally
increase incomes, higher participation would not significantly change
the number of children in poverty overall, partly because many
children in poverty are not poor enough to be eligible for TANF and
because TANF cash benefits are typically low.
From June 2008 to June 2009, the number of families receiving TANF
cash assistance rose in 12 of the 21 states GAO surveyed, although the
recession‘s impact on cash assistance caseloads varied by state. To
offset higher costs of cash assistance, few states reported reducing
TANF-related spending on family- and/or work-supports during this time
period. Instead, states paid for increases by using funding sources
such as 2009 emergency stimulus funds.
Figure: Families Estimated as Eligible for and Participating in AFDC
or TANF Cash Assistance Programs, Monthly Average, by Calendar Year,
1995 through 2005:
[Refer to PDF for image: multiple line graph]
Year: 1995;
Eligible for AFDC or TANF Cash Assistance Programs: 5,690,000;
Participating in AFDC or TANF Cash Assistance Programs: 4,800,000;
Eligible, but not participating: 890,000.
Year: 1996;
Eligible for AFDC or TANF Cash Assistance Programs: 5,600,000;
Participating in AFDC or TANF Cash Assistance Programs: 4,430,000;
Eligible, but not participating: 1,170,000.
Year: 1997;
Eligible for AFDC or TANF Cash Assistance Programs: 5,400,000;
Participating in AFDC or TANF Cash Assistance Programs: 3,700,000;
Eligible, but not participating: 1,700,000.
Year: 1998;
Eligible for AFDC or TANF Cash Assistance Programs: 5,470,000;
Participating in AFDC or TANF Cash Assistance Programs: 3,050,000;
Eligible, but not participating: 2,465,000.
Year: 1999;
Eligible for AFDC or TANF Cash Assistance Programs: 5,070,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,650,000;
Eligible, but not participating: 2,405,000.
Year: 2000;
Eligible for AFDC or TANF Cash Assistance Programs: 4,440,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,300,000;
Eligible, but not participating: 1,140,000.
Year: 2001;
Eligible for AFDC or TANF Cash Assistance Programs: 4,560,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,190,000;
Eligible, but not participating: 2,370,000.
Year: 2002;
Eligible for AFDC or TANF Cash Assistance Programs: 4,550,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,190,000;
Eligible, but not participating: 2,360,000.
Year: 2003;
Eligible for AFDC or TANF Cash Assistance Programs: 4,770,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,180,000;
Eligible, but not participating: 2,590,000.
Year: 2004;
Eligible for AFDC or TANF Cash Assistance Programs: 5,220,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,190,000;
Eligible, but not participating: 3,030,000.
Year: 2005;
Eligible for AFDC or TANF Cash Assistance Programs: 5,270,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,130,000;
Eligible, but not participating: 3,140,000.
Source: GAO analysis of data from HHS's Indicators of Welfare
Dependence, based on the TRIM3 model.
[End of figure]
What GAO Recommends:
GAO is not making recommendations in this report. In its comments, the
Department of Health and Human Services noted that the report was
informative and did not disagree with GAO‘s findings. GAO also
addressed technical comments as appropriate.
View [hyperlink, http://www.gao.gov/products/GAO-10-164] or key
components. For more information, contact Kay E. Brown at (202) 512-
7215 or BrownKE@gao.gov.
[End of section]
Contents:
Letter:
Background:
Factors Contributing to the Decline in Cash Recipients Include
Declines in the Number of Eligible Families and in Eligible Families'
Participation:
Eligible Nonparticipating Families Generally Had Higher Incomes Than
TANF Recipients, but a Portion of Eligible Nonparticipants Had Very
Low Incomes:
Increased TANF Participation Would Reduce the Number of Children in
Extreme Poverty, but Would Not Significantly Change the Number in
Poverty:
In the Current Recession, Changes in Cash Assistance Caseloads Varied
Widely in States We Surveyed While Few States Reduced Spending for
Family and/or Work Supports:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Health and Human Services:
Appendix III: GAO Contact and Staff Acknowledgments:
Related GAO Reports:
Tables:
Table 1: Cash Assistance Caseload Changes and Unemployment Information
in Selected States, June 2008 through June 2009:
Table 2: Disposition of Spending for Family and/or Work Supports by
States That Increased Spending on Cash Assistance, Selected States,
June 2008 through June 2009:
Table 3: Sources of Funding Used by States to Offset Increased
Spending on TANF-related Cash Assistance, June 2008 through June 2009:
Figures:
Figure 1: Families Estimated as Eligible for and Participating in Cash
Assistance through the AFDC or TANF Cash Assistance Programs, Monthly
Average, by Calendar Year, 1995 through 2005:
Figure 2: Estimated Impact of Monthly TANF Cash Assistance Receipt on
the Net Income of a Working Parent Who Receives Other Supports:
Figure 3: TANF Cash Assistance: Estimates of Participating and
Eligible Nonparticipating Families in 2005, Annual Basis:
Figure 4: Estimated Median Annual Incomes of TANF-Eligible Families in
2005:
Figure 5: Receipt of Other Public Supports among Estimated TANF-
Eligible Families in 2005, Annual Basis:
Figure 6: Race and Ethnicity of Estimated TANF-Eligible Families in
2005, Annual Basis:
Figure 7: Family Structure of Estimated TANF-Eligible Families in
2005, Annual Basis:
Figure 8: Estimated Eligible Nonparticipating Families as a Share of
Total Eligible Families in 2005, Annual Basis:
Figure 9: Receipt of Other Public Supports among Estimated TANF-
Eligible Families in 2005, by Eligible Family Type, Annual Basis:
Figure 10: Estimated Impact of Monthly TANF Cash Assistance Receipt on
a Family in Extreme Poverty in Illinois in 2005: A Working Single
Parent with One or Two Children:
Figure 11: Estimated Impact of Monthly TANF Cash Assistance Receipt on
a Family in Poverty in Illinois in 2005: A Working Single Parent with
One or Two Children:
Figure 12: Percent Change in the Number of Families Receiving TANF
Cash Assistance, by State, June 2008 through June 2009:
Figure 13: For States with a Solely State-Funded Program, Percent
Change in the Number of Families Receiving Cash Assistance from TANF
and from TANF and Solely State-Funded Programs Combined, June 2008
through June 2009:
Abbreviations:
ACF: Administration for Children and Families:
AFDC: Aid to Families with Dependent Children:
ARRA: American Recovery and Reinvestment Act of 2009:
ASEC: Annual Social and Economic Supplement:
BLS: U.S. Bureau of Labor Statistics:
CCDF: Child Care and Development Fund:
CPS: Current Population Survey:
EITC: Earned Income Tax Credit:
HHS: Department of Health and Human Services:
MOE: maintenance of effort:
PRWORA: Personal Responsibility and Work Opportunity Reconciliation
Act of 1996:
SNAP: Supplemental Nutrition Assistance Program:
SSBG: Social Services Block Grant:
SSDI: Social Security Disability Insurance:
SSI: Supplemental Security Income:
SSP: separate state program:
TANF: Temporary Assistance for Needy Families:
TRIM3: Transfer Income Model, version 3:
UI: Unemployment Insurance:
WIC: Special Supplemental Nutrition Assistance Program for Women,
Infants, and Children:
United States Government Accountability Office:
Washington, DC 20548:
February 23, 2010:
The Honorable Jim McDermott:
Chairman:
Subcommittee on Income Security and Family Support:
Committee on Ways and Means:
House of Representatives:
Dear Mr. Chairman:
Following sweeping changes made to federal welfare policy in 1996 with
the creation of the Temporary Assistance for Needy Families (TANF)
program, the number of needy families receiving cash assistance fell
significantly, from 4.8 million families on average each month in
1995--just prior to the creation of TANF--to 1.7 million on average
each month in 2008.[Footnote 1] With the creation of TANF, welfare
changed from a program entitling eligible families to monthly cash
payments to a capped block grant that emphasized employment and work
supports for most adult participants who receive such assistance.
Since 1996, the decline in the number of families receiving cash
assistance has been cited as evidence of welfare reform's success in
reducing families' dependency on government benefits--a chief program
goal. The extent of the decline, however, was deeper and faster--
especially in the late 1990s--than analysts and others had
anticipated, and the number of low-income families who were eligible
for TANF cash assistance but who did not participate in the program
increased.
During this period, poverty among all children initially fell, from
about 21 percent in 1995 to about 16 percent in 2000--the lowest level
since the late 1970s, according to U.S. Census data. Poverty for all
children then rose thereafter until it reached 19 percent in 2008.
Most families receiving cash assistance are single mothers with
children, and children in such families have historically experienced
high rates of poverty. The recession that began in late 2007 deepened
nationally in 2008, putting additional pressures on families living in
poverty, especially families with children, who are particularly
vulnerable. The growing recession also raised questions about how
states, which provide cash assistance to families through TANF, would
address any increases in need.
In light of the decline in the number of low-income families who
receive cash assistance, especially given the current recession, you
asked us to examine what is known about the factors contributing to
this decline and its implications. More specifically, you asked us to
address the following questions:
1. What factors have contributed to the decline in families receiving
TANF cash assistance since the 1990s?
2. Among eligible families, how do the characteristics of families who
do not receive TANF cash assistance compare with families who do
receive TANF cash assistance?
3. How does the participation of eligible families in TANF affect the
number of children in extreme poverty and poverty?
4. In the current recession, what changes are states experiencing in
their cash assistance caseloads and what changes, if any, have states
made in their TANF-related spending to date to respond to any
increases?
To determine which factors contributed to the decline in caseload, we
conducted a literature review of relevant research; interviewed TANF
experts, as well as officials at the Department of Health and Human
Services (HHS); reviewed TANF caseload and other data; and reviewed
relevant federal laws and regulations. In conducting our literature
review, we searched various databases for peer-reviewed journals and
other publications; obtained recommendations from TANF researchers and
policy experts, including HHS officials; and reviewed policy and
research organization Web sites for relevant studies. We cited studies
that at least two social scientists had reviewed and assessed for the
adequacy of their methodologies. We also contracted with the Urban
Institute to conduct analyses--using the Transfer Income Model,
version 3, known as TRIM3--of changes in families' TANF eligibility
and receipt of TANF cash assistance.[Footnote 2] These analyses helped
us estimate the extent to which changes in eligibility rules under
TANF affected the number of families eligible for cash assistance
after welfare reform.[Footnote 3] For this analysis, we applied TANF
eligibility rules for 2005, including rules established by
states,[Footnote 4] to all families in 1995, which was the year prior
to welfare reform under the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (PRWORA).[Footnote 5] We also
contacted state-based social service and other organizations in
selected states regarding state TANF practices and policies that could
affect a family's decision to participate in the program.[Footnote 6]
To determine how TANF cash recipients compare to eligible
nonrecipients and to estimate the impact of TANF cash assistance on
child poverty and extreme poverty, we requested additional analyses
using TRIM3. For our analysis of the characteristics of cash
recipients and eligible nonrecipients, we used 2005 data, the most
recent publicly available TRIM3 data when we conducted our work. In
comparing the characteristics of cash recipients and eligible
nonrecipients, differences are statistically significant at the 95
percent confidence level unless otherwise noted. For our analysis of
the impact of higher rates of TANF cash assistance on child poverty
and extreme poverty, we compared data from 2005 to data from 1995, the
year prior to welfare reform. To determine how the number of families
receiving cash assistance changed and how states have changed their
use of block grant funds in response to the most recent recession, we
conducted semi-structured telephone interviews with TANF officials in
21 states and obtained the most recent data available on their cash
assistance caseloads. In analyzing caseload changes, we included
families receiving cash assistance through both federally funded TANF
block grants as well as through separate state programs (SSP), which
use state funds that count towards qualifying for the federal TANF
block grant and which are subject to certain federal TANF
requirements. In addition, we obtained data on cash assistance
caseloads that states funded through newer programs funded only by
states--known as "solely state-funded programs"--which are not subject
to federal work requirements or federal reporting. The 21 states we
selected had a range of child poverty rates, unemployment rates, cash
assistance caseloads, approaches to sanctions and monthly earnings
limits, and geographic diversity. Collectively these states represent
more than half the families receiving TANF cash assistance nationally.
Our analysis focused on the period between June 2008--6 months after
the official start of the current recession--and June 2009. We
assessed the data we received from TRIM3 and from state agencies for
data reliability. On the basis of these assessments, we concluded that
the data were sufficiently reliable for the purposes of our report. We
also provided our draft report to three external reviewers who have
conducted research and published on welfare reform issues and whose
work reflects a variety of approaches to this work. We incorporated
their comments as appropriate.
We conducted our work from November 2008 to February 2010 in
accordance with all sections of GAO's Quality Assurance Framework that
are relevant to our objectives. The framework requires that we plan
and perform the engagement to obtain sufficient and appropriate
evidence to meet our stated objectives and to discuss any limitations
in our work. We believe that the information and data obtained, and
the analysis conducted, provide a reasonable basis for any findings
and conclusions in this product.
Background:
TANF Goals, Structure, and Requirements:
The TANF program represented a significant departure from Aid to
Families with Dependent Children (AFDC), the federal welfare program
it replaced--in program goals, funding structure, and program
requirements. Under the TANF block grant program, created by PRWORA
and reauthorized in 2006,[Footnote 7] states receive federal funds to
design and operate their own welfare programs within federal
guidelines. In addition to providing cash benefits to eligible
families, as AFDC did, the TANF program, instead, focuses on, among
other things, ending the dependence of needy parents on government
benefits by promoting job preparation, work, and marriage. HHS
administers the TANF program, which provides states with up to about
$16.5 billion each year in TANF block grant funds. To qualify to
receive its portion of the available TANF funds, each state must
contribute a specified level of its own funds, which is referred to as
the state's maintenance of effort (MOE).[Footnote 8] In addition to
providing cash assistance, states may use these TANF and MOE funds to
finance a wide range of benefits, services, activities, or programs,
such as child care and other activities that further TANF program
goals.
In addition to the new goals and funding structure of the TANF
program, PRWORA established more stringent work requirements; credits
to states for reducing caseloads; time limits; and restrictions on
immigrant receipt of assistance.[Footnote 9] The act also established
that eligible families were no longer entitled to receive cash
assistance from states, as they had been under AFDC. States must
involve a minimum percentage of their adult TANF and MOE cash
assistance recipients in work activities for a required number of
hours each week.[Footnote 10] Under PRWORA, states are allowed to
reduce their required work participation rates by earning credit for
reducing their cash assistance caseloads.[Footnote 11] All states have
received such caseload reduction credits, thereby reducing the work
participation rate they must meet. The caseload reduction credit also
introduced an incentive for states to contain or reduce the number of
families receiving cash assistance, since states that fail to meet the
target work participation rates face financial penalties. To emphasize
the temporary nature of assistance, states must restrict most families
to a lifetime limit of 60 months of federally funded TANF cash
assistance, although states can implement shorter time limits.
[Footnote 12] A few states have chosen to terminate benefits only for
the adults in the family unit; otherwise benefits are terminated for
the entire family after the lifetime limit expires, although some
states may continue serving families using state funds. PRWORA also
limited the eligibility of immigrants for means-tested benefits--
including TANF--to those who have been in the country legally for 5
years.[Footnote 13] While federal law generally limits TANF cash
welfare to low-income families with either a child under the age of 18
(or under the age of 19 if the child is in school) or a pregnant
woman, states set their own eligibility limits and benefit levels for
cash recipients.
In designing and implementing their TANF programs, states focused more
than ever before on helping welfare recipients and other low-income
parents find jobs. Many states implemented work-focused programs that
stressed moving parents quickly into jobs and structured the benefits
to allow more parents to combine welfare and work. States use TANF and
MOE funds to provide child care subsidies, education and training, and
other services, for TANF cash recipients as well as other low-income
families. In addition, TANF funds are also transferred to the Child
Care and Development Fund (CCDF) to help fund subsidized child care
and to the Social Services Block Grant (SSBG) program to help fund
child welfare agencies. According to 2006 figures, TANF spending on
support services and transfers exceeded spending on cash assistance.
In fiscal year 2006, states spent approximately $10 billion on cash
assistance and $11 billion on support services and transfers.[Footnote
14]
States also imposed financial consequences, or sanctions, on families
that did not comply with TANF work or other requirements as well as
implemented strategies to divert families from cash assistance. States
have implemented partial sanctions, in which benefits are reduced, and
full-family sanctions, in which benefits are ended for the entire
family for a period of time or until compliance if an adult failed to
meet TANF program requirements. Often states increase the severity of
the sanction based on the number of times or the amount of time the
individual is noncompliant. As of July 2008, nearly all states had
policies ending cash benefits for the whole family or closing cases as
their most severe sanction for an adult's noncompliance with work
requirements.[Footnote 15] Many states have also implemented programs
or strategies intended to divert families from cash assistance. One
diversion strategy was to provide one-time, non-recurring benefits
instead of monthly TANF cash assistance to families who face temporary
hardships. Families who receive certain non-recurring short-term
benefits are not required to participate in federally mandated work
activities, and their receipt of these benefits does not count towards
the family's 60-month lifetime limit.
Cash assistance may be funded by the TANF block grant, MOE funds, or
state-only funds, and the source of the money determines which TANF
requirements apply to the recipient. With certain exceptions,
recipients of cash assistance funded by the TANF block grant are
subject to work participation requirements, the 60-month lifetime
limit on receipt of cash assistance, and immigration restrictions.
Some states provide cash assistance through SSP programs using MOE
funds. Recipients of cash assistance funded through SSPs are subject
to TANF work participation requirements, but not the time limits or
immigrant restrictions. SSP recipients began to be counted in the
calculation of the TANF work participation rate beginning in fiscal
year 2007 as a result of TANF reauthorization. In response to the
changes made in reauthorization, some states chose to provide cash
assistance funded with the state's own funds that are not counted
towards the MOE requirement. Recipients of assistance from these
solely state-funded programs are not subject to TANF requirements.
TANF and Recessions:
To help states in the event of an economic downturn, PRWORA created a
TANF contingency fund of up to $2 billion. To qualify for access to
the contingency fund, states must meet a test of economic need. In
addition, states may draw upon unused portions of their own federal
TANF grants from previous years--often referred to as carry-over or
reserve funds. Most recently, the American Recovery and Reinvestment
Act of 2009 (ARRA) made an additional $5 billion available to states
for fiscal years 2009 and 2010 through a new Emergency Contingency
Fund.[Footnote 16] This fund reimburses states for 80 percent of their
increased expenditures for cash assistance, provided there is also an
increase in caseload; non-recurrent short term benefits; or subsidized
employment in a quarter in fiscal year 2009 or fiscal year 2010, as
compared with the comparable quarter in fiscal year 2007 or fiscal
year 2008.
Poverty Measurement in the United States:
Poverty is measured in the United States using the federal poverty
threshold, which is calculated annually by the U.S. Census Bureau. The
threshold reflects estimates of the amount of money individuals and
families of various sizes need to purchase goods and services deemed
minimally adequate based on 1960s living standards, and is adjusted
each year using the consumer price index. Persons or families having
income below this amount are, for statistical purposes, considered to
be living in poverty. The poverty threshold varies by family size and
composition but does not vary by geographic location. Extreme or deep
poverty is defined as income below 50 percent of the federal poverty
threshold for a given family. For example, for a single parent with
two children the poverty threshold in 2008 was $17,346; for that
family type, the extreme poverty threshold was $8,673. Over the years,
the official Census measure of poverty has been criticized for, among
other things, not fully capturing the value of public supports and
benefits, such as SNAP or the Earned Income Tax Credit (EITC), and for
not considering health care and work-related costs.[Footnote 17] In
1995, a National Academy of Sciences panel recommended that changes be
made to the threshold to count noncash benefits, tax credits, and
taxes; deduct certain expenses from income such as child care and
transportation; and adjust income levels according to an area's cost
of living. In recent years, such noncash benefits and supports have
comprised larger portions of the assistance package for families with
low incomes.[Footnote 18] In response to these issues, several pieces
of legislation have been proposed to update the federal poverty
measure, although none has been passed as of the date of this report.
Poverty in the United States is also measured through the poverty
guidelines, which are published annually by HHS and are used by some
federal programs in determining the income eligibility of individuals
and families for need-based assistance.[Footnote 19] The poverty
guidelines are a simplified version of the Census poverty thresholds.
Although the guidelines reflect variations in family size, the poverty
guidelines--unlike the thresholds--do not reflect variations in the
age group of the family members. Alaska and Hawaii have higher federal
poverty guidelines than the rest of the country.
Factors Contributing to the Decline in Cash Recipients Include
Declines in the Number of Eligible Families and in Eligible Families'
Participation:
Since the 1990s, the decline in the number of families receiving cash
assistance reflects declines not only in the number of eligible
families but also in eligible families' participation in the program
in response to TANF policies.[Footnote 20] From 1995 to 2005, the
number of families who were eligible for cash assistance fell from
about 5.69 million families on average each month under AFDC to about
5.27 million families eligible on average each month under TANF--a
decline of about 420,000 families eligible for cash assistance
overall, according to our TRIM3 analysis.[Footnote 21] Factors that
contributed to the decline in the number of families eligible for TANF
cash assistance include families' higher incomes, which reflect TANF's
focus on work and the strong economy of the 1990s, and changes to
eligibility rules. However, a much larger portion of the caseload
decline from 1995 to 2005 reflects sharp declines in eligible
families' participation in the program. Research suggests that changes
in participation resulted from, among other things, the dynamics of
family decision-making in response to TANF policies, including
mandatory work activities, state diversion strategies, time limits,
and sanctions for non-compliance with work and other program
requirements.
Higher Employment Rates and Earnings Reduced the Number of Families
Eligible for Cash Assistance More than Changes in Eligibility Rules:
The requirement to engage in work activities in order to receive TANF
cash benefits changed the culture of cash assistance, leading more low-
income families towards employment and raising their earned incomes.
During this period of declining caseloads, labor force participation
increased among single mothers, the population most affected by TANF.
According to the Bureau of Labor Statistics (BLS), the labor-force
participation of single mothers with children rose from 58 percent in
1995-the year prior to the creation of TANF--to 71 percent in 2007,
with most of this increase occurring immediately following the passage
of PRWORA. In addition, as we noted in a 2005 report, most of the
parents who left cash welfare found employment, and some families who
left cash welfare were better off than they were on welfare.[Footnote
22] However, our report also found that earnings were typically low,
and many families who left cash welfare worked in unstable, low-wage
jobs with few benefits and advancement opportunities. A more recent
study found that, in general, former TANF recipients in three cities,
especially those who had left TANF prior to 2001, had higher
employment rates and average income levels than they had while they
were receiving TANF benefits. Although former recipients experienced
some declines in their employment rates and income levels after 2001,
both measures were nevertheless at the same level or higher in 2005
than in 1999.[Footnote 23]
Wage increases--due in part to increases in the minimum wage in 1996
and 1997 as well as the 1990s expansions in the Earned Income Tax
Credit (EITC)--contributed to the decline in the number of families
who were eligible for TANF cash assistance. Wages for low-wage workers
increased from 1994 to 2000. During these 6 years, the 10th percentile
of the hourly wage rate distribution rose 12.4 percent, in contrast to
declines in previous years, while the middle--the 50th percentile--
rose about 9 percent, based on numbers in a study by the Congressional
Budget Office.[Footnote 24] Expansions in the EITC for low-income
working families in effect provide a subsidy that increases the
incentive to work. A number of studies found that the EITC increased
labor-force participation among single women.[Footnote 25] According
to one study, as well as experts we interviewed, the EITC also played
an important role in the decline in the TANF caseload,[Footnote 26]
because higher incomes made families ineligible.
The strong economy of the late 1990s facilitated the movement towards
work by creating jobs and reducing unemployment, thereby reducing the
need for cash assistance.[Footnote 27] The annual U.S. unemployment
rate for workers ages 16 and over declined from 5.6 percent in 1995--
before TANF was created--to 4.0 percent in 2000, according to BLS
data. In the same period from 1995 to 2000, the annual unemployment
rate for single women with children fell from 16.6 percent in 1995, to
11.0 percent in 2000, according to BLS data. Starting in 2001, the
unemployment rate for single women rose for several years, reaching
15.1 percent in 2005. During this time, the number of TANF-eligible
families increased, while the participation rate remained stable or
fell. Researchers do not agree on the extent to which a strong economy
relative to TANF work requirements and other changes affected TANF
eligibility. Nevertheless several studies as well as experts we
interviewed agreed that the strong economy played a major role in the
decline, making it easier for single mothers and others to find jobs.
Changes to welfare eligibility rules that occurred under PRWORA, such
as time limits for receiving cash assistance and restrictions on
eligibility for legal immigrants, also contributed to the decline in
families' eligibility for cash assistance. However, we found that
these kinds of rules changes--by themselves--accounted for a small
portion of the caseload decline. Using the TRIM3 microsimulation
model, we applied certain 2005 TANF rules to the families estimated as
eligible for cash assistance in 1995 under AFDC.[Footnote 28]
According to our TRIM3 analysis, had 2005 TANF eligibility-related
rules on time limits and immigrant restrictions been in place in 1995,
1.6 percent fewer families overall would have been eligible for cash
assistance in 1995.[Footnote 29] We obtained similar results when we
applied a more comprehensive range of eligibility-related rules to the
1995 population. This more comprehensive analysis included--in
addition to rules on time limits and immigrant restrictions--rules for
two-parent families and teen parents; caps on benefits if a family's
size increases; and financial eligibility rules.[Footnote 30] These
rules varied in their impact on eligibility. Some rules contributed to
increases in the number of families who would have been eligible,
while other rules contributed to reductions in eligible families.
[Footnote 31] In this analysis, had this wider range of 2005 TANF
eligibility-related rules been in place in 1995, about 1 percent fewer
families overall would have been eligible for cash assistance.
Overall, although these analyses cannot definitively establish the
portion of the caseload change from 1995 to 2005 that was due solely
to a particular rule change, they suggest that the net effect was
small.[Footnote 32]
Following welfare reform, there was some concern that the number of
eligible families would decline because of competition among states to
make their policies more stringent and less attractive to low-income
families--such as by lowering the maximum income a family could earn
and still be eligible for TANF.[Footnote 33] However, from 1996 to
2006, very few states reduced their maximum cash assistance benefits
for a family of three--the money families receive if they have no
other income. A 2002 review analyzed a range of state policy changes
enacted by states, including policies on earned income and assets
disregards, work activities, and sanctions. The study found little
evidence that states competed to expand restrictive policies while
also decreasing policies to enhance access. Instead, it found that
states adopted both types of policies in varying combinations, leading
to substantial variation among the states.[Footnote 34]
Factors Affecting Eligible Families' Participation Played a Larger
Role in the Decline than Changes in Families' Eligibility:
While declines in the number of families eligible for cash assistance
accounted for some of the caseload decline, the preponderance of the
decline reflects changes in eligible families' participation in the
program. From 1995 to 2005, the number of families eligible for cash
assistance declined by about half a million families, but the decline
in the share of eligible families participating in AFDC/TANF cash
assistance has been dramatic--from about 84 percent of eligible
families receiving cash assistance in 1995 (4.8 million) to about 40
percent of eligible families in 2005 (2.13 million).[Footnote 35] In
that period, the number of eligible families who did not participate
in cash assistance climbed from an estimated 890,000 in 1995 under the
AFDC entitlement program to about 3.14 million eligible families in
2005 under the TANF cash assistance program, according to HHS data.
[Footnote 36] The change in the participation rate from 1995 to 2005
accounted for about 87 percent of the decline in cash recipients in
that period.[Footnote 37] (See figure 1.)
Figure 1: Families Estimated as Eligible for and Participating in Cash
Assistance through the AFDC or TANF Cash Assistance Programs, Monthly
Average, by Calendar Year, 1995 through 2005:
[Refer to PDF for image: multiple line graph]
Year: 1995;
Eligible for AFDC or TANF Cash Assistance Programs: 5,690,000;
Participating in AFDC or TANF Cash Assistance Programs: 4,800,000;
Eligible, but not participating: 890,000.
Year: 1996;
Eligible for AFDC or TANF Cash Assistance Programs: 5,600,000;
Participating in AFDC or TANF Cash Assistance Programs: 4,430,000;
Eligible, but not participating: 1,170,000.
Year: 1997;
Eligible for AFDC or TANF Cash Assistance Programs: 5,400,000;
Participating in AFDC or TANF Cash Assistance Programs: 3,700,000;
Eligible, but not participating: 1,700,000.
Year: 1998;
Eligible for AFDC or TANF Cash Assistance Programs: 5,470,000;
Participating in AFDC or TANF Cash Assistance Programs: 3,050,000;
Eligible, but not participating: 2,465,000.
Year: 1999;
Eligible for AFDC or TANF Cash Assistance Programs: 5,070,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,650,000;
Eligible, but not participating: 2,405,000.
Year: 2000;
Eligible for AFDC or TANF Cash Assistance Programs: 4,440,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,300,000;
Eligible, but not participating: 1,140,000.
Year: 2001;
Eligible for AFDC or TANF Cash Assistance Programs: 4,560,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,190,000;
Eligible, but not participating: 2,370,000.
Year: 2002;
Eligible for AFDC or TANF Cash Assistance Programs: 4,550,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,190,000;
Eligible, but not participating: 2,360,000.
Year: 2003;
Eligible for AFDC or TANF Cash Assistance Programs: 4,770,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,180,000;
Eligible, but not participating: 2,590,000.
Year: 2004;
Eligible for AFDC or TANF Cash Assistance Programs: 5,220,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,190,000;
Eligible, but not participating: 3,030,000.
Year: 2005;
Eligible for AFDC or TANF Cash Assistance Programs: 5,270,000;
Participating in AFDC or TANF Cash Assistance Programs: 2,130,000;
Eligible, but not participating: 3,140,000.
Source: GAO analysis of data from HHS's Indicators of Welfare
Dependence, based on the TRIM3 model.
[End of figure]
Research suggests that the dynamics of family decision-making in
relation to TANF work requirements, time limits, and other policies
have played a key role in the decline in the number of families
receiving cash assistance, and experts we interviewed agreed. The
decline in participation reflected changes in families' decisions
about whether to apply for TANF cash assistance in the first place,
and, for those who receive cash assistance, whether to continue or
leave the program, as well as responses to state policies such as
sanctions and diversion.
One of the most important factors affecting whether or not eligible
families participate is the requirement to participate in work
activities under TANF, according to research as well as the experts we
interviewed.[Footnote 38] To receive cash benefits, TANF recipients
must generally participate in work activities such as job search, job
skills training, and employment for a minimum number of hours per
week--with the hours varying depending on family type and the age of
the youngest child. Such mandated work activities under TANF have been
well studied, and according to a research synthesis conducted for HHS,
multiple studies have provided compelling evidence that these work
activities may cause declines in the caseload,[Footnote 39] as
families choose not to apply rather than be expected to fulfill the
work requirement or find it difficult to apply or continue
participation in the program. As we noted in an earlier report,
studies have shown that families who are eligible for TANF, including
cash recipients, often have characteristics that make employment
difficult, such as substance abuse, poor mental or physical health,
disability, low educational attainment, limited work experience,
limited English proficiency, low basic skills, or exposure to domestic
violence. Many recipients have two or more of these characteristics,
making it especially difficult for them to get and keep jobs.[Footnote
40]
Eligible families may also not participate in TANF because they view
the TANF application and eligibility determination process as too
burdensome and not worth the effort. With its focus on work and
temporary assistance, the TANF application process can include pre-
application interviews and assessments of employability. It can also
include non-work-related requirements for school attendance, meetings
and cooperation with other agencies, or fingerprinting. Some states
also added questions to cash assistance applications after 1996 on
assets, living situations, or household characteristics.[Footnote 41]
According to a 2003 study of low-income families, non-applicants who
visited a TANF office but chose not to apply cited as important
reasons for their decisions the effort, or "hassle" to do so, as well
as discouragement by a caseworker or poor treatment.[Footnote 42] Two
researchers we interviewed also emphasized that implementation
practices and procedures in local welfare offices affect
participation. Several legal and social service organizations that we
contacted in 21 states reported that, in their view, eligible families
do not participate in TANF partly because of their difficulties with
the application process. Additional difficulties they cited included
documentation requirements; literacy and language barriers, which
interfered with the completion of application forms; the number of
required trips to the TANF office; poor treatment by caseworkers; and
inconvenient business hours and/or locations of TANF offices.
Eligible families may also not apply for TANF cash assistance--or
complete the application process--because of state policies and
practices on diversion. As part of their process for assessing
eligibility for TANF cash assistance, nearly all states also have at
least one type of strategy for diverting applicants from cash
assistance, according to a 2008 report.[Footnote 43] Diversion
strategies states use include requiring applicants to complete a job
search, program orientation, or employment plan as a condition of
eligibility. Many states provide a one-time payment to families to
meet immediate needs--most often for applicants with a job or job
offer.[Footnote 44] In return for one-time cash assistance, states
usually initiate a period of TANF ineligibility that keeps families
off the caseload. Some research indicates that families who received
such one-time assistance are less likely to ever participate in TANF,
even if they remain eligible for assistance.[Footnote 45]
The 60-month lifetime limit for families established under PRWORA
represented a fundamental change to cash assistance, and this time
limit is generally viewed as contributing to the decline in families
receiving cash assistance as well. Nationally, many TANF households--
about 47 percent in fiscal year 2006--are not subject to federal or
state time limits because they are "child-only" cases in which a child
lives with a relative or families in which the parent is not eligible
for benefits. Time limits--which are shorter in some states than the
federal limit--make some families ineligible for TANF, but such limits
may also lead eligible families to consider alternatives if they think
they will need TANF cash benefits in the future. According to
researchers and other experts we interviewed, families may hold off on
applying for TANF--and "bank their time" for when they may have
greater needs. Research suggests that such banking of time occurs,
especially among families with young children who may be concerned
about how much time they would have left on welfare, and that it
contributes to the decline in the use of cash assistance.[Footnote 46]
An additional element is that the value of TANF cash benefits--which
are determined by states--has fallen over time, which could affect
families' participation. Our TRIM3 analysis estimates that average
cash benefits under 2005 rules were 17 percent lower than they were
under 1995 rules.[Footnote 47] This reduction occurred because cash
benefit levels in many states have not been updated or kept pace with
inflation--24 states had maximum cash benefits set at the same levels
in 2006 as in 1996, and 6 states had maximum cash benefit levels that
were lower than in 1996. Several legal and social service providers in
21 states we contacted agreed that low benefit levels contributed to
the non-participation of eligible families. In 2006, the maximum cash
benefit levels among the states ranged from $170 per month to $723 per
month for a family of three,[Footnote 48] while the median for all
states was $396 per month for a family of three--less than a third of
the poverty threshold for this type of family.
Another factor that may affect family decisions is that the TANF cash
welfare system is no longer the main "gateway" into other supports and
services, as AFDC was. PRWORA severed the link between cash assistance
and Medicaid benefits for health care. As a result, post-PRWORA, TANF
recipient families are not automatically eligible to receive Medicaid
benefits. Independent of TANF, low-income families who are not
eligible for Medicaid can also apply for benefits under the State
Children's Health Insurance Program, which was established in 1997 to
cover additional low-income children. Child care subsidies were
consolidated under PRWORA for low-income families, and families do not
need TANF as a gateway to these subsidies. Although SNAP (formerly
food stamps) was available to low-income families before TANF was
created, federal legislation after PRWORA created options for states
to simplify application and eligibility determination processes and
increase enrollment in SNAP. Some researchers have suggested that
families may decide to take up other supports and benefits in lieu of
TANF, partly because they do not entail requirements such as regular
visits by social workers and are not subject to time limits, among
other reasons.
A related issue is that some families may be less inclined to take up
TANF cash assistance because participation in TANF could reduce their
benefits from other programs, leaving them with little, if any, net
increase in family resources. TANF cash assistance is counted as cash
income by some other assistance programs. As a result, having a higher
income because of TANF could reduce a family's benefits from SNAP or
increase the amount the family must pay for subsidized child care or
housing.[Footnote 49] Most families who receive TANF benefits would
see increases in their annual net income. However, the greater the
number of other supports a TANF family receives, the smaller the
relative increase in annual net income that they gain from
participating in TANF. According to our estimates--using Illinois, the
state with the median maximum TANF cash benefit, as an example--if a
single parent with two children received child support; tax credits;
SNAP benefits; benefits under the Special Supplemental Nutrition
Program for Women, Infants, and Children (WIC), a federal nutritional
program; and a housing subsidy in addition to having monthly earnings,
the family would have an overall monthly net income of $1,743-or an
annual net income of about $20,916.[Footnote 50] If the family also
received TANF cash benefits of $185 monthly, adjustments to the other
benefits they received would result in a $53 net increase. (See figure
2.)
Figure 2: Estimated Impact of Monthly TANF Cash Assistance Receipt on
the Net Income of a Working Parent Who Receives Other Supports:
[Refer to PDF for image: horizontal bar graph]
Single parent with two children, Without TANF:
Monthly earnings: $632;
Child support payment income: $100;
Net taxes (including federal EITC and tax credits): $213;
Other non-cash benefits (SNAP, WIC, and Housing Subsidy): $798:
- SNAP: $263;
- WIC: $39;
- Housing subsidy: $496;
Monthly TANF cash assistance payments: 0;
Total: $1,743.
Single parent with two children, With TANF:
Monthly earnings: $632;
Child support payment income: $50;
Net taxes (including federal EITC and tax credits): $213;
Other non-cash benefits (SNAP, WIC, and Housing Subsidy): $716:
- SNAP: $222;
- WIC: $39;
- Housing subsidy: $455;
Monthly TANF cash assistance payments: $185;
Total: $1,796.
Source: GAO analysis of TRIM3 microsimulation model data.
Note: Each family was assumed to have one working adult, earning $632
per month. This is the median earnings of TANF families containing one
adult and two children, according to our analysis of 2005
participants. It is also the amount one would earn by working 18 hours
per week at the Illinois minimum wage of $8 per hour.
[End of figure]
Although few families receive as many benefits and supports as in this
example, we found in another analysis we conducted using TRIM3 that an
estimated 19 percent of families receiving four types of supports--in
addition to TANF cash benefits--would see their net income rise by the
full amount that they gained from participating in TANF, but 17
percent of these families would actually lose annual net income.
[Footnote 51] Whether families gain or lose net income may reflect the
choice of supports, families' demographics and income, relevant state
rules, and level of benefits.
Finally, according to some studies as well as researchers we
interviewed, full sanctions for families' noncompliance--those that
cut off all benefits for a period of time--are associated with
declines in the number of families receiving cash assistance, although
more research is needed to validate this association.[Footnote 52]
Eligible families who receive cash assistance but do not comply with
TANF program requirements may face financial consequences, or
sanctions.[Footnote 53] Under state sanction policies, families may
lose all or part of their TANF cash benefits, and possibly other
public benefits as well, if they do not comply with TANF's work and
other requirements.[Footnote 54] In addition to being sanctioned for
noncompliance with work activities, TANF families may also be
sanctioned for failing to comply with behavioral requirements, such as
obtaining drug treatment, cooperating with establishing paternity, or
ensuring that children are immunized and attend school. In one study,
TANF recipients who reported having been sanctioned cited missing an
appointment or failing to file required paperwork as the most common
reasons for their loss of benefits.[Footnote 55] Such work and
behavioral requirements may be particularly challenging for families
with physical or mental impairments.[Footnote 56] As we noted in an
earlier GAO report, impairments were relatively common among TANF
recipients, and, while recipients with impairments may sometimes be
exempted from work requirements and time limits, they may be at risk
of having their benefits reduced or terminated through sanctions.
[Footnote 57]
Overall, according to researchers and other experts we interviewed,
there is a general consensus that these factors--including TANF
policies, the strong economy, and family decision-making processes--
played a role in contributing to the decline in the number of families
receiving TANF cash assistance. However, there is not agreement on the
relative weight of each factor. This is partly because many policy
changes were implemented around the same time period that TANF was
created--such as increases in the minimum wage, expansions of the
EITC, and the de-linking of Medicaid from cash welfare--and are
difficult to isolate from each other and from the economic climate. It
is also because several of these factors have moved in the same
direction--such as TANF, with its emphasis on work, initially being
implemented during a strong economy when more low-wage jobs were
available--so it is hard to disentangle their effects.[Footnote 58]
Furthermore, as we have discussed, TANF policies--including mandatory
work activities, state diversion strategies, time limits, and
sanctions for non-compliance with work and other program requirements--
can influence participation, including family decisions about whether
to apply, remain on cash assistance, or leave.
Eligible Nonparticipating Families Generally Had Higher Incomes Than
TANF Recipients, but a Portion of Eligible Nonparticipants Had Very
Low Incomes:
Although they are similar in many ways, families participating in TANF
and eligible nonparticipating families differed in their incomes,
education, and use of other public supports in 2005, according to our
TRIM3 analysis.[Footnote 59] Eligible families who did not participate
in TANF generally had relatively higher incomes and higher education
levels than TANF families. However, among eligible nonparticipants, 11
percent of nonparticipating families did not work or receive
Supplemental Security Income (SSI)--a cash assistance program for
people with disabilities. This subgroup of nonparticipating families
also had very low incomes compared with other nonparticipants, and a
larger portion of them received SNAP and subsidized housing.
Although Similar in Many Ways, Participating and Eligible
Nonparticipating Families Differed in Income, Education, and Use of
Other Public Supports:
According to our TRIM3 analysis, an estimated 6.6 million families
were eligible for TANF cash assistance for at least 1 month in 2005.
Of those families, 2.66 million, or 40 percent, were estimated to have
ever received TANF cash assistance during the year.[Footnote 60] (See
figure 3.)
Figure 3: TANF Cash Assistance: Estimates of Participating and
Eligible Nonparticipating Families in 2005, Annual Basis:
[Refer to PDF for image: pie-chart]
Participants: 40% (2.66 million);
Eligible nonparticipants: 60% (3.97 million).
Source: GAO analysis of TRIM3 microsimulation model data.
Note: The estimates for the number of participants and eligible
nonparticipants in this analysis are different from those used in
figure 1 (which shows trends from 1995-2005 in participating and
eligible nonparticipating families) because HHS estimates in the 2008
Indicators of Welfare Dependence reflect estimates for an average
month, by calendar year and include estimates for family units in the
U.S. territories and units that consist solely of a pregnant woman,
while our eligibility estimates reflect annual estimates and do not
include these units. Both estimates are based on the TRIM3
microsimulation.
[End of figure]
While all families who were eligible to receive TANF cash assistance
in 2005 had low incomes, about the same proportions of both
participants and eligible nonparticipants (44 percent compared to 41
percent) were headed by an adult without earnings,[Footnote 61] and
hardships such as not having enough to eat were common among families
in poverty.[Footnote 62]
However, eligible families who did not participate in TANF cash
assistance had relatively higher incomes than TANF recipients.
[Footnote 63] Overall, nonparticipating eligible families had median
incomes about $5,000 higher than TANF families. According to our
estimates, in 2005 the median annual income for eligible
nonparticipating families was roughly $15,000 compared to $9,600
annually for families receiving TANF. (See figure 4.)
Figure 4: Estimated Median Annual Incomes of TANF-Eligible Families in
2005:
[Refer to PDF for image: horizontal bar graph]
Families participating in TANF:
Median annual income: $9,606.
Eligible families not participating in TANF:
Median annual income: $15,000.
Source: GAO analysis of TRIM3 microsimulation model data.
Note: Income is defined here as all gross cash income except for means-
tested benefits. In order to be consistent with the Census Bureau's
standard poverty methodology, each family's income is calculated based
on all related persons living in the household. Consequently, both the
primary family and the related subfamily are considered to have the
same income. This is not the case for determining TANF eligibility,
however. For example, a 20-year-old parent living with her parents
would be considered as having the same income as her parents for the
purposes of this figure. However, for purposes of TANF eligibility,
only the 20-year-old parent's income is considered.
[End of figure]
Eligible families who did not participate in the TANF cash assistance
program also had higher rates of full-time employment (44 percent)
compared to TANF cash recipients (33 percent) and lower rates of work-
limiting disabilities (11 percent) compared to TANF recipients (18
percent). While approximately the same proportion of both groups--less
than 10 percent--had income from an unmarried partner, the median
amount contributed by that partner was considerably greater in the
eligible nonparticipating families.
Eligible families who did not participate in TANF generally had higher
education levels than TANF families. Eligible adults not receiving
TANF were more likely to have graduated from high school than adults
receiving TANF cash assistance (40 percent compared to 33 percent). A
larger proportion of nonparticipating families also had some education
beyond high school (36 percent compared to 32 percent).
In addition, eligible families who did not participate in TANF cash
assistance were much less likely to receive SNAP benefits than TANF
cash recipients, and eligible nonparticipants were also less likely to
receive subsidized housing and child care subsidies. According to our
estimates, 59 percent of eligible families who did not participate in
TANF received SNAP in 2005 compared to 88 percent of TANF families.
[Footnote 64]
Similarly, our estimates show that 13 percent of eligible families not
participating in TANF received subsidized housing compared to 22
percent of TANF participants. The differences in the two groups'
receipt of subsidized child care were not as large, with 8 percent of
eligible families not participating in TANF receiving child care
subsidized by CCDF compared to 11 percent of TANF participants.
[Footnote 65] (See figure 5.)
Figure 5: Receipt of Other Public Supports among Estimated TANF-
Eligible Families in 2005, Annual Basis:
[Refer to PDF for image: multiple vertical bar graph]
SNAP:
Families participating in TANF: 88%;
Eligible for TANF, but not participating in TANF: 59%.
Subsidized housing:
Families participating in TANF: 22%;
Eligible for TANF, but not participating in TANF: 13%.
CCDF-subsidized child care:
Families participating in TANF: 11%;
Eligible for TANF, but not participating in TANF: 8%.
SSI:
Families participating in TANF: 22%;
Eligible for TANF, but not participating in TANF: 18%.
Any one of these public supports:
Families participating in TANF: 91%;
Eligible for TANF, but not participating in TANF: 66%.
Source: GAO analysis of TRIM3 microsimulation model data.
Note: In this figure, the SSI column reflects the SSI participation of
individuals in the family unit. While there is no federal prohibition
against receiving both TANF and SSI, individuals who receive SSI do
not qualify for TANF in nearly all states. Other members who are not
receiving SSI would continue to be eligible for TANF. Only child care
subsidies funded by the Child Care and Development Fund are captured
in these figures, and SSI is the only cash benefit besides TANF that
is simulated by TRIM3.
[End of figure]
According to our TRIM3 analyses, a greater proportion of eligible
nonparticipating families were White and a smaller proportion were
Black than for TANF cash recipients, while there were not significant
differences with other racial groups. (See figure 6.)
Figure 6: Race and Ethnicity of Estimated TANF-Eligible Families in
2005, Annual Basis:
[Refer to PDF for image: multiple vertical bar graph]
Race of head of household: White;
Families participating in TANF: 35%;
Eligible for TANF, but not participating: 46%.
Race of head of household: Black;
Families participating in TANF: 32%;
Eligible for TANF, but not participating: 23%.
Race of head of household: Asian[A];
Families participating in TANF: 3%;
Eligible for TANF, but not participating: 3%.
Race of head of household: Hispanic[A];
Families participating in TANF: 26%;
Eligible for TANF, but not participating: 24%.
Race of head of household: Other[A];
Families participating in TANF: 3%;
Eligible for TANF, but not participating: 4%.
Source: GAO analysis of TRIM3 microsimulation model data.
[A] Values for TANF participants and nonparticipants are not
statistically different from each other at the 95% confidence level.
[End of figure]
A greater proportion of eligible families who did not receive TANF in
2005 were married than TANF families (27 percent compared to 16
percent) and a smaller proportion of eligible non-recipients were
headed by a single mother (50 percent compared to 61 percent),
according to our analysis. (See figure 7.)
Figure 7: Family Structure of Estimated TANF-Eligible Families in
2005, Annual Basis:
[Refer to PDF for image: multiple vertical bar graph]
Family type: Single mother;
Families participating in TANF: 61%;
Eligible for TANF, but not participating: 50%.
Family type: Married;
Families participating in TANF: 16%;
Eligible for TANF, but not participating: 27%.
Family type: No parents[A] (Guardians only);
Families participating in TANF: 13%;
Eligible for TANF, but not participating: 13%.
Family type: Single father[A];
Families participating in TANF: 7%;
Eligible for TANF, but not participating: 7%.
Family type: Single teen parent[A];
Families participating in TANF: 3%;
Eligible for TANF, but not participating: 3%.
Source: GAO analysis of TRIM3 microsimulation model data.
[A] Values for TANF participants and nonparticipants are not
statistically significantly different from each other.
[End of figure]
Among Eligible Nonparticipants in 2005, a Portion of Families Did Not
Work and Had Very Low Incomes, but Received Public Supports:
While many eligible families who did not participate in TANF had
higher incomes than families on TANF, a portion of nonparticipating
families had very low incomes. According to our estimates, of the
nearly 4 million families who were eligible for TANF cash assistance
for 1 or more months in 2005 but did not participate that year,
732,000 were neither working nor receiving Supplemental Security
Income (SSI), a cash assistance program for people with disabilities.
This subgroup of more disadvantaged nonparticipants accounted for 11
percent of all families who were eligible for TANF cash assistance in
2005, according to our TRIM3 analysis.[Footnote 66] (See figure 8.)
Figure 8: Estimated Eligible Nonparticipating Families as a Share of
Total Eligible Families in 2005, Annual Basis:
[Refer to PDF for image: pie-chart]
Participating in TANF: 40% (2.7 million);
Not participating in TANF, but employed or receiving SSI: 49% (3.2
million);
Not participating in TANF, not employed, and not receiving SSI: 11%
(732,000).
Source: GAO analysis of TRIM3 microsimulation model data.
Note: In this figure, SSI receipt refers to the SSI participation of
individuals in the family unit. While there is no federal prohibition
against receiving both TANF and SSI, individuals who receive SSI do
not qualify for TANF in nearly all states. Other family members who
are not receiving SSI would continue to be eligible for TANF. SSI is
the only cash benefit besides TANF that is simulated by TRIM3.
[End of figure]
This subgroup of nonparticipating eligible families also had very low
incomes.[Footnote 67] The median annual income for eligible families
who were not working or receiving TANF or SSI was $7,020--compared to
$16,316 for other eligible nonparticipating families--an amount equal
to about 45 percent of the federal poverty threshold for a family
consisting of one adult and two children. The median income for this
subgroup of eligible nonparticipants was also lower than the median
income for TANF cash recipients.
Twelve percent of this subgroup of families was also headed by a
parent who reported having a work-limiting disability--similar to
other nonparticipants.[Footnote 68] Families in this subgroup also had
low levels of education, with 70 percent having a high school
education or less compared with 63 percent for other nonparticipants.
This subgroup of eligible nonparticipating families who were not
working and not receiving SSI were slightly more likely than other
nonparticipants to be receiving SNAP and public housing, with 63
percent receiving SNAP and 18 percent receiving subsidized public
housing. However, they were less likely than other nonparticipants to
receive child care subsidies. They were similar to other
nonparticipants in that they generally received public supports at
lower rates than TANF families. (See figure 9.)
Figure 9: Receipt of Other Public Supports among Estimated TANF-
Eligible Families in 2005, by Eligible Family Type, Annual Basis:
[Refer to PDF for image: multiple vertical bar graph]
Percent of families participating:
SNAP:
Families participating in TANF: 88%;
Eligible for TANF, but not participating in TANF: 58%;
Not participating in TANF, not employed, and not receiving SSI: 63%.
Subsidized housing:
Families participating in TANF: 22%;
Eligible for TANF, but not participating in TANF: 12%;
Not participating in TANF, not employed, and not receiving SSI: 18%.
CCDF-subsidized child care:
Families participating in TANF: 11%;
Eligible for TANF, but not participating in TANF: 9%;
Not participating in TANF, not employed, and not receiving SSI: 4%.
SSI:
Families participating in TANF: 22%;
Eligible for TANF, but not participating in TANF: 22%;
Not participating in TANF, not employed, and not receiving SSI: n/a.
Any one of these public supports:
Families participating in TANF: 91%;
Eligible for TANF, but not participating in TANF: 66%;
Not participating in TANF, not employed, and not receiving SSI: 66%.
Source: GAO analysis of TRIM3 microsimulation model data.
Note: In this figure, the SSI column reflects the SSI participation of
individuals in the family unit. While there is no federal prohibition
against receiving both TANF and SSI, individuals who receive SSI do
not qualify for TANF in nearly all states. Other members who are not
receiving SSI would continue to be eligible for TANF. Only child care
subsidies funded by the Child Care and Development Fund are captured
in these figures, and SSI is the only cash benefit besides TANF that
is simulated by TRIM3.
[End of figure]
Increased TANF Participation Would Reduce the Number of Children in
Extreme Poverty, but Would Not Significantly Change the Number in
Poverty:
Fewer Children Would Be in Extreme Poverty If TANF Participation
Increased:
Increased TANF participation would reduce the number of children in
extreme poverty--those below half the poverty threshold--according to
our analyses.[Footnote 69] According to our TRIM3 analysis, an
estimated 4.8 million children were in extreme poverty for at least
one month in 2005.[Footnote 70] If the percent of eligible families
participating in TANF in 2005 was 84 percent--the rate of
participation in AFDC in 1995--rather than about 40 percent--800,000
fewer children would have been in extreme poverty.[Footnote 71] This
higher participation would reduce the share of children in extreme
poverty by close to 17 percent because the gain in income from TANF
benefits would raise some families' incomes above the extreme poverty
threshold.[Footnote 72] The median income for families with children
in extreme poverty in 2005 was $5,400. If TANF participation were
higher, families in extreme poverty would have median incomes of
$5,964--10 percent higher on average.[Footnote 73] For those families
who would gain TANF cash assistance at the 1995 participation rate,
the average increase in TANF annual income is estimated to be $2,554
per family.
According to our estimates--using Illinois, the state with the median
maximum TANF benefit, as an example--a TANF-eligible family in extreme
poverty, consisting of a working single parent with two children that
applied for and received cash assistance, would gain enough in TANF
benefits to be just above the extreme poverty threshold.[Footnote 74]
In this scenario, this family has estimated monthly earnings of $346,
which is roughly half the median for families participating in TANF.
[Footnote 75] Before receiving TANF cash assistance, this family has
an estimated income of $446 per month, including child support, which
would provide an income equal to 34 percent of the poverty threshold.
After receiving TANF, this family's income would increase to $676 per
month-equal to 52 percent of poverty.[Footnote 76] A family with one
child would similarly benefit. (See figure 10.)
Figure 10: Estimated Impact of Monthly TANF Cash Assistance Receipt on
a Family in Extreme Poverty in Illinois in 2005: A Working Single
Parent with One or Two Children:
[Refer to PDF for image: horizontal bar graph]
Single parent with one child:
Without TANF:
Monthly earnings: $346;
Child support payment income: $100;
Monthly TANF cash assistance: None;
Extreme poverty threshold: $561;
Gap: $115.
With TANF:
Monthly earnings: $346;
Child support payment income: $50;
Monthly TANF cash assistance: $176;
Extreme poverty threshold: $561;
Surplus: $11.
Single parent with two children:
Without TANF:
Monthly earnings: $346;
Child support payment income: $100;
Monthly TANF cash assistance: None;
Extreme poverty threshold: $656;
Gap: $210.
With TANF:
Monthly earnings: $346;
Child support payment income: $50;
Monthly TANF cash assistance: $280;
Extreme poverty threshold: $656;
Surplus: $20.
Source: GAO analysis of TRIM3 microsimulation model data.
Note: The $346 in estimated monthly earnings is roughly half the
median for families receiving TANF cash assistance.
[End of figure]
However, some families would remain in extreme poverty even with TANF
benefits--those with no earned income or with low earned incomes who
receive the maximum cash benefit in their state. For example, in
Illinois, a single parent with two children who had no earned income
would receive $396 per month in TANF benefits--an amount that would be
$260 below the extreme poverty threshold for that type of family.
If More Eligible Families Participated in TANF, the Number of Children
in Poverty Would Not Significantly Change:
Although the median income of eligible families would rise if TANF
participation increased, neither the number of children in poverty nor
the poverty rate would significantly change if families who were
eligible for TANF cash assistance in 2005 participated at the higher
1995 rate.[Footnote 77] Nearly all of the estimated 3.3 million
families in our TRIM3 analysis who would gain TANF benefits at the
higher 1995 participation rate would experience an increase in their
annual net income. However, these benefits would not be enough to lift
a significant portion of them above the poverty threshold.[Footnote 78]
One reason for this is that many children in poverty are not eligible
for TANF, since the majority of states set their TANF eligibility
standards at less than half of the federal poverty guidelines.
[Footnote 79] States have the flexibility to determine how high or low
to set their eligibility standards relative to the federal poverty
guidelines. For example, in Alabama, a family of three must have
earnings below $269 per month to be eligible for TANF cash assistance--
an income that represents about 19 percent of the poverty guideline
for this family size in 2006. Alabama has the lowest income
eligibility threshold.[Footnote 80] In 2006, 56 percent of children in
poverty lived in states that set their eligibility standards for TANF
cash assistance below half of the federal poverty guidelines. Because
of this, increasing TANF participation would not affect child poverty
among children in states with very low eligibility standards.
Another reason is that TANF benefits are typically too low to raise
children in poverty above the federal poverty threshold. These
benefits range from $170 per month in Mississippi to $723 per month in
California for a family of three.[Footnote 81] The median income for
all families in poverty in 2005 was approximately $10,500. If TANF
participation were higher, families in poverty would have median
incomes of about $11,100. This income is below the federal poverty
threshold for a family of three.[Footnote 82] According to our
estimates, TANF-eligible families consisting of one working adult and
one or two children in Illinois--the state that has the median maximum
TANF benefit--would still be in poverty after receiving TANF cash
assistance.[Footnote 83] In this example, prior to participating in
TANF, the income of the family with one child would fall $390 short of
the federal poverty threshold and the income of the family with two
children would fall $579 below poverty. After receiving TANF cash
assistance, the incomes of both types of families would rise, but not
enough to reach the poverty threshold. (See figure 11.)
Figure 11: Estimated Impact of Monthly TANF Cash Assistance Receipt on
a Family in Poverty in Illinois in 2005: A Working Single Parent with
One or Two Children:
[Refer to PDF for image: horizontal bar graph]
Single parent with one child:
Without TANF:
Monthly earnings: $632;
Child support payment income: $100;
Monthly TANF cash assistance: None;
Extreme poverty threshold: $1,122;
Gap: $390.
With TANF:
Monthly earnings: $632;
Child support payment income: $50;
Monthly TANF cash assistance: $81;
Extreme poverty threshold: $561;
Gap: $359.
Single parent with two children:
Without TANF:
Monthly earnings: $632;
Child support payment income: $100;
Monthly TANF cash assistance: None;
Extreme poverty threshold: $1,311;
Gap: $579.
With TANF:
Monthly earnings: $632;
Child support payment income: $50;
Monthly TANF cash assistance: $185;
Extreme poverty threshold: $1,311;
Gap: $444.
Source: GAO analysis of TRIM3 microsimulation model data.
[End of figure]
Finally, higher TANF participation would not significantly affect
child poverty because some TANF families already have incomes above
the federal poverty threshold. As of 2005, seven states have policies
that allow a family of three with an income just above the federal
poverty threshold to retain their TANF eligibility for at least 2
months. These states are Alaska, California, Connecticut, Delaware,
Hawaii, Texas, and Virginia. In these states higher TANF participation
could result in more families above poverty receiving benefits, which
would not result in a reduction of the poverty rate. Twenty-eight
percent of all children in poverty and 35 percent of children
receiving cash assistance lived in these states in 2005.
In the Current Recession, Changes in Cash Assistance Caseloads Varied
Widely in States We Surveyed While Few States Reduced Spending for
Family and/or Work Supports:
TANF and Solely State-Funded Cash Assistance Caseloads Increased to
Varying Degrees in the Majority of States We Surveyed:
Between June 2008--6 months after the start of the current recession--
and June 2009, the number of families receiving TANF cash assistance
increased in 12 of the 21 states we reviewed, decreased in 6 states
and remained relatively unchanged in 3 states, according to state-
provided data.[Footnote 84] The magnitude of these caseload changes,
however, varied widely across states. For instance, over the same time
period, the number of families receiving TANF cash assistance
increased by 22 percent in Nevada and decreased by 9 percent in Texas.
(See figure 12.)
Figure 12: Percent Change in the Number of Families Receiving TANF
Cash Assistance, by State, June 2008 through June 2009:
[Refer to PDF for image: map of the United States]
Arizona: 7% increase;
California: 12% increase;
Colorado: 15% increase;
District of Columbia: 19% increase;
Florida: 14% increase;
Georgia: 3% decrease;
Illinois: 2% increase;
Iowa: 7% increase;
Massachusetts: 3% decrease;
Michigan: 3% decrease;
Mississippi: 1% decrease;
Nevada: 22% increase;
New Hampshire: 38% increase;
New Jersey: 3% decrease;
New York: 1% decrease;
North Carolina: 10% increase;
Ohio: 17% increase;
Pennsylvania: 1% increase;
Rhode Island: 10% decrease;
Texas: 9% decrease;
Washington: 18% increase;
Other states were not surveyed.
Source: GAO analysis of state-provided data.
[End of figure]
During the current recession, more of the states we surveyed[Footnote
85] saw increases in the number of two-parent families receiving cash
assistance than in the number of single-parent families or child-only
cases.[Footnote 86] Between June 2008 and June 2009, the number of two-
parent families receiving cash assistance increased in 17 of the
states we surveyed, while the number of single-parent families
increased in 15 states and the number of child-only cases increased in
12 states. The median percent change in the number of two-parent
families receiving cash assistance was an increase of 27 percent--far
more than for other types of eligible families. While the number of
two-parent families as a portion of all families receiving assistance
was small, the increase in this population of cash assistance
recipients is notable because they are the least common type of
recipient group. Further, several state officials and representatives
of social service organizations noted the increase in two-parent
families associated with the current recession, which, according to
unemployment data, has had a greater impact on men than women and
might result in the need for two-parent families to seek assistance.
While many of these two-parent families received assistance through
their state's TANF program, about 20 percent of these families
received assistance through their state's solely state-funded
programs. Most of these programs also grew to varying degrees during
the recession. Of the states we contacted, 13 maintained solely state-
funded programs during the time period we examined and 9 of these
experienced caseload increases between June 2008 and June 2009. These
increases ranged from a 2 percent increase in the District of Columbia
to a 10-fold increase in Colorado.[Footnote 87] Some state officials
we surveyed explained that their assessment of their ability to meet
federal work participation rates determined which families would be
served through the solely state-funded program.[Footnote 88]
Specifically, officials in the 13 states with solely state-funded
programs explained that these programs, in whole or part, served two-
parent families because the state was concerned that it would not be
able to meet the federally established 90 percent work participation
rate for two-parent families. In seven of the states with a solely
state-funded program, the state's entire two-parent family caseload
was served through this program. In a few states, solely state-funded
programs also served families with disabilities who similarly may have
been unable to meet mandatory work participation rates, particularly
requirements for a minimum number of hours in a work activity,
according to state officials.
In order to understand more fully the extent to which families are
receiving cash assistance in the current recession, including those
families who are in solely state-funded programs in caseloads provides
a more comprehensive picture of these changes.[Footnote 89] Because
these programs are funded only by states and are not counted toward
state maintenance-of-effort requirements, HHS lacks authority to
require that their caseload data be reported to HHS, according to HHS
officials. In some states, including families from these solely state-
funded programs in the state's total cash assistance caseload provided
a more accurate picture of increases or decreases in states' programs
in the current recession.[Footnote 90] For instance, in Colorado, the
number of families receiving TANF cash assistance increased by 15
percent. However, the solely state-funded program experienced a large
amount of growth, and overall the state's cash assistance caseload
increased by more than 33 percent. In Rhode Island, the number of
families receiving TANF cash assistance decreased by 10 percent.
However, in October 2008 the state discontinued benefits to children
it had been serving through the solely state-funded program whose
parents had received 5 years of assistance, so overall the state's
cash assistance caseload decreased by more than 20 percent. In other
states, including the solely state-funded caseload reveals a more
modest degree of change than the TANF caseload might indicate. For
example, New Hampshire eliminated part of its solely state-funded
program due to budget concerns and moved families receiving benefits
into the TANF program. As a result, the number of families receiving
TANF cash assistance increased by almost 38 percent, while overall the
state's cash assistance caseload increased by a substantial, but more
modest, 23 percent. (See figure 13.)
Figure 13: For States with a Solely State-Funded Program, Percent
Change in the Number of Families Receiving Cash Assistance from TANF
and from TANF and Solely State-Funded Programs Combined, June 2008
through June 2009:
[Refer to PDF for image: multiple vertical bar graph]
Percentage of families:
State: Colorado;
TANF and SSP: 14.9%;
TANF, SSP, and SSF: 33.3%.
State: District of Columbia;
TANF and SSP: 19.3%;
TANF, SSP, and SSF: 8.4%.
State: Georgia;
TANF and SSP: -2.5%;
TANF, SSP, and SSF: -2.5%.
State: Illinois;
TANF and SSP: 1.6%;
TANF, SSP, and SSF: 3.8%.
State: Massachusetts;
TANF and SSP: -2.9%;
TANF, SSP, and SSF: -1.9%.
State: Michigan;
TANF and SSP: -3.0%;
TANF, SSP, and SSF: -1.7%.
State: Mississippi;
TANF and SSP: -0.8%;
TANF, SSP, and SSF: -0.8%.
State: New Hampshire;
TANF and SSP: 37.9%;
TANF, SSP, and SSF: 23.4%.
State: New Jersey;
TANF and SSP: -2.7%;
TANF, SSP, and SSF: -2.6%.
State: New York;
TANF and SSP: -1.1%;
TANF, SSP, and SSF: -0.3%.
State: Pennsylvania;
TANF and SSP: 0.8%;
TANF, SSP, and SSF: 0.7%.
State: Rhode Island;
TANF and SSP: -10.4%;
TANF, SSP, and SSF: -21.3%.
State: Texas;
TANF and SSP: -8.9%;
TANF, SSP, and SSF: =8.5%.
Source: GAO analysis of state-provided data.
[End of figure]
In the time period we examined, there was no clear association between
the change in the number of families receiving cash assistance in a
state and either the unemployment rate or the change in unemployment
rate in that state. (See table 1.) For instance, Illinois, the
District of Columbia, Florida, and Georgia all had unemployment rates
of between 10 and 11 percent in June 2009. However, caseloads
increased 4 percentage points in Illinois, 8 percentage points in the
District of Columbia, and 14 percentage points in Florida, and
decreased 3 percentage points in Georgia, between June 2008 and June
2009. Similarly, both New Jersey and Washington experienced a 4
percentage point increase in unemployment rates between June 2008 and
June 2009. However, caseloads decreased 3 percentage points in New
Jersey and increased 18 percentage points in Washington over the same
period of time. This does not mean that there is no relationship
between unemployment and cash assistance caseloads, but rather that
unemployment is one of many factors--including the state's eligibility
and asset limits, the state's application process, and other state-
specific program characteristics--that may affect a state's caseload.
Table 1: Cash Assistance Caseload Changes and Unemployment Information
in Selected States, June 2008 through June 2009:
State: Arizona;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 7.25%;
Unemployment rate June 2009: 8.7%;
Change in unemployment rate June 2008 to June 2009: 3.2%.
State: California;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 11.51%;
Unemployment rate June 2009: 11.6%;
Change in unemployment rate June 2008 to June 2009: 4.5%.
State: Colorado;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 33.29%;
Unemployment rate June 2009: 7.6%;
Change in unemployment rate June 2008 to June 2009: 2.8%.
State: District of Columbia;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 8.44%;
Unemployment rate June 2009: 10.9%;
Change in unemployment rate June 2008 to June 2009: 4.1%.
State: Florida;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 14.25%;
Unemployment rate June 2009: 10.7%;
Change in unemployment rate June 2008 to June 2009: 4.7%.
State: Georgia;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -2.50%;
Unemployment rate June 2009: 10.1%;
Change in unemployment rate June 2008 to June 2009: 4.0%.
State: Illinois;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 3.82%;
Unemployment rate June 2009: 10.3%;
Change in unemployment rate June 2008 to June 2009: 3.7%.
State: Iowa;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 6.65%;
Unemployment rate June 2009: 6.2%;
Change in unemployment rate June 2008 to June 2009: 2.1%.
State: Massachusetts;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -1.91%;
Unemployment rate June 2009: 8.6%;
Change in unemployment rate June 2008 to June 2009: 3.5%.
State: Michigan;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -1.71%;
Unemployment rate June 2009: 15.2%;
Change in unemployment rate June 2008 to June 2009: 7.1%.
State: Mississippi;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -0.83%;
Unemployment rate June 2009: 9.1%;
Change in unemployment rate June 2008 to June 2009: 2.2%.
State: Nevada;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 21.66%;
Unemployment rate June 2009: 11.9%;
Change in unemployment rate June 2008 to June 2009: 5.5%.
State: New Hampshire;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 23.39%;
Unemployment rate June 2009: 6.8%;
Change in unemployment rate June 2008 to June 2009: 3.1%.
State: New Jersey;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -2.61%;
Unemployment rate June 2009: 9.2%;
Change in unemployment rate June 2008 to June 2009: 4.0%.
State: New York;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -0.28%;
Unemployment rate June 2009: 8.7%;
Change in unemployment rate June 2008 to June 2009: 3.4%.
State: North Carolina;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 9.96%;
Unemployment rate June 2009: 11.0%;
Change in unemployment rate June 2008 to June 2009: 4.9%.
State: Ohio;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 16.54%;
Unemployment rate June 2009: 11.1%;
Change in unemployment rate June 2008 to June 2009: 4.7%.
State: Pennsylvania;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 0.68%;
Unemployment rate June 2009: 8.4%;
Change in unemployment rate June 2008 to June 2009: 3.1%.
State: Rhode Island;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -21.27%;
Unemployment rate June 2009: 12.4%;
Change in unemployment rate June 2008 to June 2009: 4.7%.
State: Texas;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: -8.51%;
Unemployment rate June 2009: 7.5%;
Change in unemployment rate June 2008 to June 2009: 2.7%.
State: Washington;
Percent change in caseload (TANF+ SSP+ solely state-funded programs)
June 2008 to June 2009: 17.76%;
Unemployment rate June 2009: 9.2%;
Change in unemployment rate June 2008 to June 2009: 4.0%.
Source: GAO analysis of state-provided data and data from U.S. Bureau
of Labor Statistics.
[End of table]
Since June 2009, state and local fiscal conditions have continued to
deteriorate, and the effect of the changes in the economic climate on
TANF and solely state-funded cash assistance programs is unknown. For
example, the impact of expiring extensions of unemployment insurance
(UI) on state caseloads is hard to predict. Officials from eight
states believed that the number of families receiving cash assistance
in their states had not increased, or had not increased as much as
might have been expected, because families were still collecting UI
benefits.[Footnote 91] If jobs are still not available when UI
benefits end, these families may turn to TANF for cash assistance.
However, two experts we interviewed questioned the extent to which UI
has lessened or delayed the need for cash assistance. Eligibility for
UI is generally conditional on meeting certain state-imposed
qualifications, including having a minimum amount of wages and
employment over a defined period of time as well as having become
unemployed for good cause under state law. According to two experts we
interviewed, many TANF-eligible single-mothers would not likely meet
the criteria for receipt. Still, UI benefit extensions may be delaying
the need for cash assistance for some two-parent families that do
qualify for UI benefits.
Few States We Surveyed Reduced Spending on Family and Work Supports
during the Current Recession to Offset Increased Spending on Cash
Assistance:
Few states we surveyed reported that they had reduced TANF block grant
and MOE spending for family and work supports, such as child care and
subsidized employment programs, to offset increased expenditures for
growth in their cash assistance caseloads.[Footnote 92] When a state's
spending on cash assistance increases, it has several options to
address this need for additional resources. The state can use reserve
funds, if available, to defray costs; use state funds to augment the
TANF program; access the TANF contingency fund; access the Emergency
Contingency Fund created under ARRA; shift resources from work support
programs; or cut services. In a previous GAO report, we found that
when cash assistance caseloads and related spending increased in the
states we reviewed, there was an associated contraction in the
spending for other forms of aid and services.[Footnote 93] However, we
did not observe this trend in the time period we explored. According
to state officials, 11 of the 21 states we surveyed increased spending
on cash assistance between June 2008 and June 2009. Of these 11
states, 7 either maintained or increased the amount of TANF-related
spending for family and work supports--including child-care subsidies,
transportation subsidies, subsidized employment, CCDF, and SSBG. The
remaining four states reduced spending for family and/or work supports
to offset the cost of increased spending on cash assistance.[Footnote
94] However, in three of the seven states that did not make cuts to
family and/or work supports, officials offered that they expected
there would be cuts in TANF-related spending for these services in the
near future because of state budget and resource constraints
associated with their growing caseloads. (See table 2.)
Table 2: Disposition of Spending for Family and/or Work Supports by
States That Increased Spending on Cash Assistance, Selected States,
June 2008 through June 2009:
State: California;
Cut TANF-related spending for family and/or work supports.
State: Colorado;
Maintained or increased TANF-related spending for family and/or work
supports.
State: District of Columbia;
Maintained or increased TANF-related spending for family and/or work
supports.
State: Florida;
Maintained or increased TANF-related spending for family and/or work
supports.
State: Illinois;
Maintained or increased TANF-related spending for family and/or work
supports.
State: Iowa;
Maintained or increased TANF-related spending for family and/or work
supports.
State: Massachusetts;
Cut TANF-related spending for family and/or work supports.
State: Nevada;
Maintained or increased TANF-related spending for family and/or work
supports.
State: New Hampshire;
Maintained or increased TANF-related spending for family and/or work
supports.
State: Ohio;
Cut TANF-related spending for family and/or work supports.
State: Washington;
Cut TANF-related spending for family and/or work supports.
Source: Interviews with state officials.
Note: Of the 21 states we surveyed, 10 states did not increase
spending on TANF-related cash assistance in this time frame. These
states were Arizona, Georgia, Michigan, Mississippi, New Jersey, New
York, North Carolina, Pennsylvania, Rhode Island, and Texas.
[End of table]
States that increased spending on cash assistance while maintaining or
increasing TANF-related spending for family and/or work supports did
so by spending reserve funds, accessing the TANF Contingency Fund,
accessing the ARRA Emergency Contingency Fund, or a combination of the
three. (See table 3.) Under PRWORA, states can save portions of their
TANF block grant to use in the future for cash assistance to families.
According to state officials, four of the seven states accessed these
reserve or carry-over funds accumulated from previous years to
increase cash assistance expenditures and maintain or increase
expenditures on the family supports. Officials in one of these states,
though, told us that projections show that it will have expended all
of its reserve funds within the next 2 years.
Table 3: Sources of Funding Used by States to Offset Increased
Spending on TANF-related Cash Assistance, June 2008 through June 2009:
State: California[A];
Used Reserve Fund: [Empty];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Colorado;
Used Reserve Fund: [Check];
Used TANF Contingency Fund: [Check];
Used Emergency Contingency Fund: [Check].
State: District of Columbia;
Used Reserve Fund: [Check];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Florida;
Used Reserve Fund: [Empty];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Illinois;
Used Reserve Fund: [Empty];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Iowa;
Used Reserve Fund: [Check];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Massachusetts[A];
Used Reserve Fund: [Empty];
Used TANF Contingency Fund: [Check];
Used Emergency Contingency Fund: [Check].
State: Nevada;
Used Reserve Fund: [Check];
Used TANF Contingency Fund: [Check];
Used Emergency Contingency Fund: [Check].
State: New Hampshire;
Used Reserve Fund: [Empty];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Ohio[A];
Used Reserve Fund: [Check];
Used TANF Contingency Fund: [Empty];
Used Emergency Contingency Fund: [Check].
State: Washington[A];
Used Reserve Fund: [Check];
Used TANF Contingency Fund: [Check];
Used Emergency Contingency Fund: [Check].
Source: Interviews with state officials and HHS-provided documentation.
Note: Of the 21 states we surveyed, 10 states did not increase
spending on TANF-related cash assistance in this time frame. These
states were Arizona, Georgia, Michigan, Mississippi, New Jersey, New
York, North Carolina, Pennsylvania, Rhode Island, and Texas.
[A] This table also includes the four states that cut TANF-related
spending for family and/or work supports in this time frame--
California, Massachusetts, Ohio, and Washington.
[End of table]
Until recently, states may also have been eligible to use the TANF
Contingency Fund, but these funds are now depleted. Of the seven
states in our survey that increased spending on cash assistance while
maintaining TANF-related spending on family and work supports, all
seven were eligible to apply for access to the Contingency Fund,
according to HHS, and in fiscal year 2009, two of these states had
drawn money from this fund. At the end of the fiscal year in September
2009, there was about $212 million left in the contingency fund. For
the first quarter of the 2010 fiscal year, New York had applied for
more than half the remaining sum, according to state officials.
Anticipating the exhaustion of the Contingency Fund, officials from
one state we surveyed questioned the state's ability to continue
funding their TANF programs at current levels. According to HHS
officials, final payments from the TANF Contingency Fund were
distributed in December 2009.
In addition, states used or planned to use money drawn from the
Emergency Contingency Fund created by ARRA to allow them to increase
spending on cash assistance without cutting TANF-related spending for
family and work supports. According to HHS data, as of October 2009,
all 21 of the states we surveyed applied for money from the Emergency
Contingency Fund, including all 7 of the states that increased
spending on cash assistance but did not reduce TANF-related spending
for family and work supports.[Footnote 95] Most states we surveyed
that had applied for Emergency Contingency Funds plan to use them to
cover the growing number of families receiving cash assistance,
according to state officials. In addition, officials in some states
told us that these funds may allow them to continue providing family
and work supports at the current level and expand subsidized
employment programs.[Footnote 96] However, one state official
explained that caseloads and spending could increase or remain high
beyond fiscal year 2010, the time when Emergency Contingency Funds
will no longer be available to supplement funding.
Agency Comments and Our Evaluation:
We provided a draft of this report to HHS for its review, and a copy
of the agency's written response is in appendix II. In its comments,
HHS said that the report was informative and did not disagree with our
findings. HHS noted that the report provided useful insights into a
range of factors that help account for declines in TANF participation,
the extent to which increased participation in TANF among eligible
families could reduce the severity of poverty, and the challenges
facing states as they respond to increased need during the economic
downturn. The agency also noted several useful areas for additional
work, for example, on the extent and nature of disability among
eligible nonparticipants and how participation may change over the
course of the recession. With regard to our finding on the
characteristics of participants and nonparticipants, HHS suggested
that more could be learned by examining subgroups of nonparticipants
rather than examining nonparticipants broadly as a group. The agency
also suggested that we discuss our findings about nonparticipants in
the context of the research literature on this subject. Our study was
designed to describe the characteristics of both participants and
eligible nonparticipants, as requested, and we further identified the
characteristics of one important subgroup of nonparticipating eligible
families. While we agree that further analyses of subgroups of
nonparticipants could be useful, conducting such analyses was beyond
the scope of our engagement. Finally, HHS also provided technical
comments on the draft, and in response to these comments, we made
changes where appropriate.
We also provided the draft report to external reviewers with expertise
in welfare reform and TANF and incorporated their comments as
appropriate.
As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report
to the Secretary of Health and Human Services, appropriate
congressional committees, and other interested parties. The report is
also available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-7215 or brownke@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix IV.
Sincerely yours,
Signed by:
Kay E. Brown:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
We designed our study to provide information on (1) the factors that
contributed to the decline in families receiving TANF cash assistance
since the 1990s, (2) how the characteristics of eligible families who
participate in TANF compare to eligible families who do not receive
TANF cash assistance, (3) how the participation of eligible families
in TANF affects the number of children in extreme poverty and poverty,
and (4) the changes states are experiencing in the number of families
receiving cash assistance in the current recession and what changes,
if any, states have made in their TANF-related spending to respond to
any increases.
Overall, to address these objectives, we contracted with the Urban
Institute for analyses using the Transfer Income Model, version 3--a
microsimulation model known as TRIM3--which simulates major
governmental tax, transfer, and health programs, including TANF;
[Footnote 97] reviewed literature and relevant federal laws and
regulations; interviewed TANF experts and officials at HHS;
interviewed state TANF officials in 21 selected states and obtained
state TANF data; and contacted state-based social services
organizations in the selected states.
We conducted our work from November 2008 to February 2010 in
accordance with all sections of GAO's Quality Assurance Framework that
are relevant to our objectives. The framework requires that we plan
and perform the engagement to obtain sufficient and appropriate
evidence to meet our stated objectives and to discuss any limitations
in our work. We believe that the information and data obtained, and
the analysis conducted, provide a reasonable basis for any findings
and conclusions in this product.
Analyses Using the Transfer Income Model, Version 3 (TRIM3):
To identify factors contributing to the caseload decline (for question
1), compare the characteristics of TANF participants and non-
participants (for question 2), and analyze the impact of TANF
participation on child poverty and extreme poverty (for question 3),
we contracted with the Urban Institute for analyses--using the
Transfer Income Model, version 3, known as TRIM3. TRIM3 is maintained
and developed at the Urban Institute under primary funding from HHS,
Office of the Assistant Secretary for Planning and Evaluation. TRIM3
simulates major governmental tax, transfer, and health programs,
including TANF. TRIM3 can be used to estimate the effect of rule
changes, such as restrictions on eligibility for legal immigrants, on
the number of eligible families; compare the income and other
characteristics of participating and nonparticipating families; and
estimate the effect of higher TANF participation rates on child
poverty and extreme child poverty, with incomes below 50 percent of
the federal poverty level. Using TRIM3 for these analyses required our
input on assumptions and/or interpretations about economic behavior
and about the rules governing federal programs. Therefore, the
conclusions presented in this report are attributable only to GAO.
The TRIM3 microsimulation model was used to estimate the number of
families who would be eligible for TANF and the amount of their
potential benefits. The model simulates the process a caseworker would
go through to determine eligibility based on each family's state of
residence, household composition, income, and other factors. TRIM3
relies on the Annual Social and Economic Supplement (ASEC) to the
Current Population Survey (CPS), as well as information from the
Welfare Rules Database, to simulate eligibility based on state
specific program rules and information on income and other eligibility
criteria.
The model was also used to estimate the number of families who
participate in the TANF program. While the ASEC includes information
on whether a family received TANF, the benefit is substantially under-
reported. Among TANF-eligible families who did not report receipt of
TANF, a family's likelihood of TANF participation is estimated based
on the family's demographic characteristics and the level of potential
benefit. Simulated participation decisions are aligned to bring the
simulated caseload acceptably close to the actual caseload in overall
size and by key characteristics. TRIM3 does not model certain aspects
of program eligibility, such as sanctions from failing to comply with
work rules or child support rules, diversion strategies, or adherence
to behavioral requirements such as school attendance and
immunizations. The fact that TRIM3 does not model sanctions means that
the model may overestimate eligibility and underestimate participation
rates.
In this study, we used both "baseline" simulations and "alternative"
simulations of TANF cash assistance. TRIM3 baseline simulations are
simulations that apply the actual policies that were in place in a
particular year to the CPS survey data for that year. In a baseline
simulation, the initially-estimated probabilities of participation are
modified in order to bring the size and characteristics of the
simulated caseload sufficiently close to the size and characteristics
of the actual caseload in that year. We used TRIM3 baseline estimates
for TANF cash assistance for our analyses of the characteristics of
participants and nonparticipants in 2005, and as the point of
comparison for the alternative simulations--using 1995 participation
rates--for our analyses of the effect of TANF 2005 rules on the 1995
AFDC population and our analyses of TANF participation on child
poverty.
Our TRIM3 analyses are based on data from 2005 because it was the most
recent publicly available data when we conducted our work. We chose
1995 as a comparison year partly because it was the year prior to the
creation of TANF under PRWORA. Researchers at the Urban Institute also
advised us that 1996 data was not likely to be reliable because of
data system transitions from the prior program, AFDC, to TANF.
Furthermore, Urban Institute researchers told us they could not use
1996 data to analyze the impact of PRWORA rules on families'
eligibility because non-citizens' legal status (e.g., whether legal
permanent resident, undocumented, refugee, or temporary resident) had
not been imputed for that year's data. Given these technical
limitations, we agreed that 1995 data was best and that it also
provided a 10-year spread for comparison.
To provide insight into the impact of the immigrant restrictions, time
limits, and other PRWORA rules on TANF eligibility, we applied the
PRWORA changes to the 1995 caseload data, assuming that the rules had
been imposed 10 years before they were actually imposed. In cases of
state options with regard to policies, states were assumed to make the
same choices as they made in 2005. It is important to note that this
type of analysis cannot definitively establish the portion of caseload
change from 1995 to 2005 that is due solely to a particular rules
change, due to the potential inter-relationships between rules,
population characteristics, and participation behavior.
To compare the characteristics of eligible families who participate in
TANF to eligible families who do not receive TANF cash assistance, we
analyzed differences in demographic characteristics, such as race,
age, family type; income differences, such as median income and
poverty status; and the receipt of other public supports such as SNAP,
subsidized child care, or subsidized housing. For this analysis we
used 2005 data, the most recent available. Estimates in this analysis
are based on annual data, so as to capture longer term characteristics
of these families, and the distribution of the annual caseload by some
characteristics could be different from the distribution of the
monthly-snapshot caseload. When looking at income differences between
groups, we compared all gross cash income, such as earnings and child
support, and excluded means-tested benefits such as TANF or
Supplemental Security Income (SSI), a cash assistance program for low-
income people who are elderly or who have disabilities. We also
examined the characteristics of a subgroup of eligible nonparticipants
who during the year were neither working nor receiving SSI. In
comparing the characteristics of participants and nonparticipants,
differences are statistically significant at the 95 percent confidence
level unless otherwise noted.
To estimate how the participation of eligible families in TANF affects
the number of children in extreme poverty and poverty, we imposed the
1995 AFDC participation rate of 84 percent on the 2005 population. To
do this, we started from each family's probability of participation as
produced by TRIM3's baseline simulation--the result of the statistical
equation, adjusted by adjustment factors established during the
baseline alignment process--but we applied an additional across-the-
board adjustment factor to increase each family's probability of
participation. This has the effect of bringing in the "next most
likely" families until the desired participation rate is reached. Some
families are technically eligible for TANF but are financially better
off without taking TANF, due to the fact that the amount of child
support that would be retained by the state exceeds the TANF benefit
they would receive. These families were simulated to remain
nonparticipants; all the new TANF participants were selected from
families who would receive more in TANF than they would lose in child
support income.
To estimate the impact of TANF receipt on examples of families in
extreme poverty and poverty, we chose Illinois because it is the state
with the median TANF benefit. Earnings for families in poverty were
set at $632 per month. This is the median earnings of TANF families
containing one adult and two children, according to our analysis of
2005 participants. It is also the amount one would earn by working 18
hours per week at the Illinois minimum wage of $8 per hour. Earnings
for families in extreme poverty were set at $346, based on the
assumption that families in extreme poverty work 10 hours a week at
the Illinois minimum wage of $8 per hour, and about half of median
earnings of TANF families containing one adult and two children.
We assessed the reliability of the TRIM3 modeling procedures by
reviewing extensive documentation on the TRIM3 model and input data
sources, having several conversations with staff from the Urban
Institute who were responsible for the work provided under our
contract, reviewing the Urban Institute's internal quality control
procedures, and having extensive discussions about the underlying
assumptions used in specifying the models. We identified data
limitations in the CPS that we reconciled with the Urban Institute
through meetings and acquiring additional documentation. In addition
to the estimates presented in the report, the Urban Institute
calculated standard errors and performed statistical tests of
significance for all estimates and pairwise comparisons. We verified
that those calculations were correct by reviewing the CPS technical
documentation. We evaluated other TRIM3 estimates, particularly those
illustrating hypothetical scenarios, on the basis of substantive
significance rather than statistical significance. To this end, we
considered the size and direction of the effect rather than whether
the statistic differed from zero to assess the validity of the
estimate. We determined that none of the data limitations or modeling
assumptions affected or compromised the analysis for this report and
the data are considered to be sufficiently reliable for our purposes.
Review of Literature and Legislation:
To analyze the factors that contributed to the decline in families
receiving TANF cash assistance since the 1990s, we conducted a review
of relevant literature by researchers by obtaining recommendations for
studies from internal GAO and external TANF researchers and policy
experts, including HHS officials; searching various databases for peer-
reviewed journal articles and other publications; and reviewing policy
and research organization websites for relevant studies. We used the
relevant research to analyze the factors researchers have identified
as contributing to the declining number of families receiving cash
assistance. At least two social scientists or statisticians with
specialized training in the evaluation of research methodology
reviewed each study to assess its methodology. Our conclusions about
the factors contributing to the decline in the number of cash
recipients are based, in part, on our assessment of the evidence
presented in these studies. We also reviewed relevant federal laws and
regulations. We did not conduct a legal analysis of state laws of
state cash assistance programs for this report. As noted elsewhere,
references to state laws or rules were based on the Welfare Rules
Database, which is maintained at the Urban Institute under HHS/ACF
funding and is used by the TRIM3 model in its simulations.
Interviews with Researchers and Policy Analysts:
We also interviewed researchers and policy analysts at academic
centers and other organizations to obtain their perspectives on
factors that contributed to the decline in cash assistance caseloads
since the 1990s and any information they may have had on state
experiences during the current recession. In selecting experts for our
interviews, we sought researchers and organizations who have conducted
work on welfare issues and who could provide us with a range of
perspectives. We interviewed TANF researchers and officials at the
Department of Health and Human Services (HHS) as well as researchers
and policy analysts at the American Enterprise Institute for Public
Policy Research, The Brookings Institution, Center on Budget and
Policy Priorities, Center for Law and Social Policy, Congressional
Research Service, Johns Hopkins University, Mathematica Policy
Research, Inc., the Urban Institute, and the University of Michigan
(National Poverty Center).[Footnote 98] We also interviewed officials
at the American Public Human Services Association, the National
Conference of State Legislatures, and the National Governors
Association.
Interviews with State Officials:
To determine if and how the number of families receiving cash
assistance and the use of TANF-related funds have changed during the
current recession, we conducted semi-structured telephone interviews
with TANF officials in 21 states and obtained data on their TANF
programs, and where applicable, SSPs and solely state-funded programs.
In addition, we reviewed TANF data on the number of families receiving
cash assistance and other administrative data available through HHS.
We pre-tested our questions in California, Iowa, New York, and Rhode
Island. In our interviews, we asked questions about changes in the
number of families receiving cash assistance, in the uses of the TANF
block grant and MOE funds, and in other polices that might affect the
number of applicants or recipients. We also asked about state's plans
for use of ARRA stimulus funding.
The 21 states we selected to interview represent a range of child
poverty rates, unemployment rates, cash assistance caseloads,
approaches to sanctions and monthly earnings limits, and geographic
diversity. Collectively these states represent more than half the
families receiving TANF cash assistance nationally. Our analysis
focused on the period between June 2008 and June 2009, beginning 6
months after the official start of the current recession. The 21
states included in our analysis were: Arizona, California, Colorado,
Florida, Georgia, Illinois, Iowa, Massachusetts, Michigan,
Mississippi, New Hampshire, New Jersey, New York, Nevada, North
Carolina, Ohio, Pennsylvania, Rhode Island, Texas, Washington, and the
District of Columbia.[Footnote 99]
Analysis of Caseload Data:
We collected data on the number of families receiving cash assistance
from June 2008 and June 2009 for the 21 states we selected. This
includes federal TANF data as well as data from separate state
programs and solely state-funded programs for states that had such
programs.[Footnote 100] We analyzed these data for changes in the
number of families receiving cash assistance as well as the types of
families receiving cash assistance.
We assessed the reliability of data obtained through our 21 state
agency surveys by asking questions on the survey that helped us gauge
the agency's processes and procedures for collecting and maintaining
data of reasonable quality and reliability. We asked questions
pertaining to data entry procedures, training, edit checks, written
documentation of procedures, supervisory or other internal and
external reviews of data, and known limitations of the data. The
answers were analyzed for concerns and states were re-contacted as
necessary to gain clarity about the concern and assess the degree to
which the concern would limit data quality. We determined that none of
these concerns or limitations affected or compromised the data
submitted for this review and the data are considered to be
sufficiently reliable for our purposes.
State-Based Social Service Organizations:
To understand why eligible families may not participate in TANF and to
learn more about families' experiences with the TANF application
process, we contacted state-level social service and other
organizations in selected states regarding state TANF practices and
policies. To identify state-level organizations that could provide the
perspective of families on the experience of applying for and
receiving cash aid, we requested the names and contact information
from TANF officials that we interviewed in 21 states. In these
interviews, we asked officials to identify state-level organizations
in their states that could address issues such as application
processes, benefit levels, and sanctions as they affect families. In
some cases, these social services groups referred us to alternative
organizations for our review, and in those cases we contacted these
additional organizations. In one case, we identified and contacted a
state-level service provider organization for a state that did not
provide us with a contact initially. We e-mailed questions to the
organizations we identified in these ways to obtain their perspective
on possible reasons why eligible families would not participate in
TANF, the ability of families to navigate the application process in
their state, and other issues. We obtained written responses to these
questions from state organizations and used them in this report solely
for illustrative purposes.
[End of section]
Appendix II: Comments from the Department of Health and Human Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
January 28, 2010:
Kay Brown, Director:
Education, Workforce, and Income Security Issues:
Government Accountability Office:
441 G Street NW:
Washington, DC 20548:
Dear Ms. Brown:
Enclosed are the Department's comments on the U.S. Government
Accountability Office's (GAO) draft report entitled: "Temporary
Assistance for Needy Families: Fewer Eligible Families Have Received
Cash Assistance Since the 1990s, but Numbers are Rising in the Current
Recession" (GA0-10-164).
The Department appreciates the opportunity to review and comment on
this report before its publication.
Sincerely,
Signed by:
Andrea Palm:
Acting Assistant Secretary for Legislation:
Enclosure:
[End of letter]
General Comments Of The Department Of Health And Human Services On The
Government Accountability Office's (GAO) Draft Report Entitled.
"Temporary Assistance For Needy Families: Fewer Eligible Families Have
Received Cash Assistance Since The 1990s, But Numbers Are Rising In
The Current Recession" (GAO-10-164):
The Department appreciates the opportunity to comment on the
Government Accountability Office (GAO) draft report.
Overall, the language in the report should reflect the shift in focus
of the Temporary Assistance for Needy Families (TANF) program to
helping recipients into employment, rather than welfare. Given that it
is over a dozen years since the Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA) was enacted and States have
long since fundamentally reshaped their programs, GAO should
incorporate that shift into how it discusses the program. Despite the
fact that the Supplemental Nutrition Assistance Program (formerly Food
Stamps) issues near-cash rather than cash benefits, it is closer to a
"traditional" welfare program than TANF is now.
The report provides useful insights into a range of factors that help
account for declines in TANF participation, the extent to which
increased participation among eligible families could reduce the
severity of poverty, and the challenges facing States as States
respond to increased need during the economic downturn. HHS provided
detailed comments to GAO on this draft report in a meeting and we
highlight the following points:
First, it is helpful to understand that the decline in the number of
families receiving TANF assistance is partially due to a decline in
the number of eligible families, but principally due to reduced
participation among eligible families. Through this report and
additional work, ACF seeks to understand better why the share of
eligible families participating in the program fell from 84 percent in
1995 to 40 percent in 2005. ACF appreciates that a set of factors are
involved, including increased work-related requirements, increased use
of sanctions and diversion policies, continuing declines in the value
of basic assistance in many States, and family choices. ACF also
appreciates that it is difficult to isolate the independent effect of
a particular rule when the reduction in participation may be due to an
interaction between the rule and family choice and capacity. At the
same time, ACF hopes that additional work can help refine
understanding of the sharp drop in participation among eligible
families, and inform what has happened to participation among eligible
families since 2005.
Second, it is also helpful to understand that most eligible families
who do not participate in TANF have higher incomes than TANF families,
but that a group of eligible nonparticipants has lower income than
TANF recipient families. It would be particularly valuable to
understand better the reasons for nonparticipation among the
nonparticipating families with very low incomes. Because the universe
of nonparticipating families appears to be comprised of subgroups, of
which some seem less disadvantaged and others more disadvantaged than
participating families, that more can be learned by looking at the
subgroups rather than, for example, data relating to the median or the
majority among nonparticipating families. ACF also recommends that GAO
situate its findings about nonparticipating families within the
research literature that already exists on this topic.
Third, it is notable to see that if TANF participation among eligibles
in 2005 was as high as it had been in 1995, extreme poverty would have
been lower among families with children, and the severity of poverty
for those remaining extremely poor would have been reduced. At the
same time, most of the extreme poverty among children would have
continued, and there would have been little change in the poverty rate
itself. Thus, in addition to concerns about participation levels, this
suggests the importance of increased attention to strategies for
improving employment outcomes among those families with the most
serious employment baniers. It would be particularly helpful to
understand better the employment histories, experiences, and
limitations among eligible nonparticipants with very low income. It
would also be helpful to do additional work to understand better the
extent and nature of disability among eligible nonparticipants.
Finally, ACF appreciated learning that among those States facing
increased assistance costs, the Federal Contingency Rind and Emergency
Contingency Fund have played important roles in helping a set of
States respond to increased needs without cutting expenditures for
child care and other work-related costs. This analysis covers a
limited period of time, between June 2003 and June 2009, and it will
ultimately be important to understand better how assistance
participation changes over the course of the downturn, and the role of
these Contingency Funds over an extended period as a vehicle for
helping States address needs during a downturn.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
Contact:
Kay E. Brown, Director (202) 512-7215 or brownke@gao.gov:
Acknowledgments:
Heather McCallum Hahn, Assistant Director; Kathryn A. Larin, Assistant
Director; and Deborah A. Signer, Analyst-in-Charge, managed this
assignment and made significant contributions to all aspects of this
report. Hedieh Rahmanou Fusfield and Jessica R. Wintfeld, Analysts,
also made important contributions to this report. Katya Melkote
assisted with data collection and analysis, and Susannah Compton and
James Bennett provided writing and graphics assistance. In addition,
Susan Offutt, Chief Economist, and Max Sawicky provided assistance
with economic aspects of this study; Shana B. Wallace and Monique B.
Williams provided design and methodological assistance; Russell C.
Burnett provided additional methodological assistance; and Alexander
G. Galuten provided legal assistance.
[End of section]
Related GAO Reports:
Poverty in America: Consequences for Individuals and the Economy.
[hyperlink, http://www.gao.gov/products/GAO-07-343T]. Washington,
D.C.: January 24, 2007.
Welfare Reform: Better Information Needed to Understand Trends in
States' Uses of the TANF Block Grant. [hyperlink,
http://www.gao.gov/products/GAO-06-414]. Washington, D.C.: March 3,
2006.
Welfare Reform: More Information Needed to Assess Promising Strategies
to Increase Parents' Incomes. [hyperlink,
http://www.gao.gov/products/GAO-06-108]. Washington, D.C.: December 2,
2005.
Welfare Reform: HHS Should Exercise Oversight to Help Ensure TANF Work
Participation Is Measured Consistently across States. [hyperlink,
http://www.gao.gov/products/GAO-05-821]. Washington, D.C.: August 19,
2005.
Means-Tested Programs: Information on Program Access Can Be an
Important Management Tool. [hyperlink,
http://www.gao.gov/products/GAO-05-221]. Washington, D.C.: April 11,
2005.
TANF AND SSI: Opportunities Exist to Help People with Impairments
Become More Self-Sufficient. [hyperlink,
http://www.gao.gov/products/GAO-04-878]. Washington, D.C.: September
15, 2004.
Welfare Reform: Information on Changing Labor Market and State Fiscal
Conditions. [hyperlink, http://www.gao.gov/products/GAO-03-977].
Washington, D.C.: July 15, 2003.
Welfare Reform: Former TANF Recipients with Impairments Less Likely to
Be Employed and More Likely to Receive Federal Supports. [hyperlink,
http://www.gao.gov/products/GAO-03-210]. Washington, D.C.: December 6,
2002.
Welfare Reform: Outcomes for TANF Recipients with Impairments.
[hyperlink, http://www.gao.gov/products/GAO-02-884]. Washington, D.C.:
July 8, 2002.
Welfare Reform: With TANF Flexibility, States Vary in How They
Implement Work Requirements and Time Limits. [hyperlink,
http://www.gao.gov/products/GAO-02-770]. Washington, D.C.: July 5,
2002.
Welfare Reform: States Provide TANF-Funded Work Support Services to
Many Low-Income Families Who Do Not Receive Cash Assistance.
[hyperlink, http://www.gao.gov/products/GAO-02-615T]. Washington,
D.C.: April 10, 2002.
Welfare Reform: States Are Using TANF Flexibility to Adapt Work
Requirements and Time Limits to Meet State and Local Needs.
[hyperlink, http://www.gao.gov/products/GAO-02-501T]. Washington,
D.C.: March 7, 2002.
Welfare Reform: Progress in Meeting Work-Focused TANF Goals.
[hyperlink, http://www.gao.gov/products/GAO-01-522T]. Washington,
D.C.: March 15, 2001.
Welfare Reform: Moving Hard-to-Employ Recipients into the Workforce.
[hyperlink, http://www.gao.gov/products/GAO-01-368]. Washington, D.C.:
March 15, 2001.
Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is
Limited. [hyperlink, http://www.gao.gov/products/GAO-01-181].
Washington, D.C.: December 29, 2000.
[End of section]
Footnotes:
[1] These data are from the Department of Health and Human Services
(HHS) for the average monthly caseload for families receiving cash
assistance in calendar years 1995 and 2008.
[2] TRIM3 is maintained and developed at the Urban Institute under
primary funding from HHS, Office of the Assistant Secretary for
Planning and Evaluation. Using TRIM3 for these analyses required our
input on assumptions and/or interpretations about economic behavior
and the rules governing federal programs. Therefore, the conclusions
presented in this report are attributable only to GAO.
[3] Throughout this report, welfare reform refers to the creation of
TANF through the enactment of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (PRWORA).
[4] GAO did not conduct a legal analysis of state laws or requirements
for state cash assistance programs. The TRIM3 model uses the U.S.
Census Bureau's Current Population Survey (CPS) and the Welfare Rules
Database (maintained at the Urban Institute under HHS funding) to
simulate eligibility based on state-specific program rules and
information on income and other eligibility criteria. The Welfare
Rules Database provides a longitudinal account of the changes in
welfare rules in all 50 states and the District of Columbia.
[5] Pub. L. No. 104-193 (1996). Although the total cash assistance
caseload peaked in 1994 at 5.03 million families (average monthly
numbers for calendar year 1994), we chose 1995 as a comparison year
partly because it was the year before welfare reform. For a more
detailed explanation of why 1995 was chosen as a comparison year, as
well as further details about other aspects of our methodology in this
report, see appendix I.
[6] To identify state-level organizations that could provide the
perspective of families on applying for and receiving TANF cash
assistance, we requested the names and contact information from TANF
officials that we interviewed in 21 states. For more information on
our objectives, scope, and methodology, see appendix I. (For
information on how we selected states for telephone interviews of TANF
administrators, see the description of our methodology for obtaining
information on state caseload changes in the current recession.)
[7] Pub. L. No. 109-171 (2006).
[8] The state's MOE amount is based on a percentage of expenditures
made by the state in fiscal year 1994 on some of TANF's predecessor
programs. 42 U.S.C. § 609(a)(7).
[9] For work requirements, see 42 U.S.C. § 607. For time limits, see
42 U.S.C. § 608(a)(7). For restrictions on immigrant receipt of
assistance, see Pub. L. No. 104-193, Title IV (1996).
[10] 42 U.S.C. § 607. For a state to meet its work participation rate,
50 percent of all families--minus its caseload reduction credit--must
participate in a work activity for an average of 30 or more hours per
week. Similarly, 90 percent of two-parent families must participate in
a work activity for a minimum of 35 hours per week in order for a
state to meet its work participation rate. States may exempt adults
and minors from work requirements for reasons such as having a child
under the age of 1 year. Families without adult recipients--known as
child-only cases--are also sometimes exempt from work requirements and
time limits. Nationally, in fiscal year 2006, about 47 percent of TANF
households were "child-only" cases, such as those in which the parent
is an ineligible noncitizen, or is disabled and receiving disability
insurance.
[11] To receive credit, caseload reductions must be for reasons other
than a state changing its eligibility requirements. 42 U.S.C. §
607(b)(3)(B). In addition, during TANF reauthorization in 2006, the
base year for calculating the caseload reduction credit was changed
from fiscal year 1995 to fiscal year 2005. Since the caseload was
lower in all states in 2005 than in 1995, the credit received was also
smaller. As a result, since TANF reauthorization, states have likely
had to meet a higher work participation rate than required in previous
years.
[12] States can exempt recipients from the 60-month limit on federally
funded TANF assistance in cases that involve hardship or domestic
violence. 42 U.S.C. § 608(a)(7)(C). It is up to each state to define
hardship, and states can extend this exemption to no more than 20
percent of their TANF caseload.
[13] Means-tested programs are restricted to families or individuals
who meet specified financial requirements and certain other
eligibility criteria established for each program. Nonfinancial
requirements may restrict eligibility to specified categories of
beneficiaries, such as pregnant women, children, or individuals with
disabilities. TANF, Medicaid, and the Supplemental Nutrition
Assistance Program (SNAP) are examples of means-tested programs.
[14] Figures include federal TANF and state MOE spending.
[15] Gretchen Rowe and Mary Murphy, The Urban Institute, Welfare Rules
Databook: State TANF Policies as of July 2008 (Washington, D.C.:
August 2009).
[16] Pub. L. No. 111-5, § 2101 (2009).
[17] The estimates presented in this report are based on the official
federal measure of poverty.
[18] GAO, Poverty in America: Economic Research Shows Adverse Impacts
on Health Status and Other Social Conditions as well as the Economic
Growth Rate, [hyperlink, http://www.gao.gov/products/GAO-07-344]
(Washington, D.C.: January 2007).
[19] HHS updates the poverty guidelines at least annually as required
by 42 U.S.C. § 9902(2) and publishes the guidelines in the Federal
Register. See, e.g., 74 Fed. Reg. 4199 (Jan.23, 2009).
[20] This discussion focuses on cash assistance programs under TANF
and not on services and other supports for low-income families that
are also funded through TANF funds. As we noted in 2002 testimony,
TANF caseload data do not provide a complete picture of the number of
families receiving benefits and services through TANF. GAO, Welfare
Reform: States Provide TANF-Funded Work Support Services to Many Low-
Income Families Who Do Not Receive Cash Assistance, GAO-02-615T
(Washington, D.C.: Apr. 10, 2002).
[21] These are average monthly estimates from HHS's Indicators of
Welfare Dependence: Annual Report to Congress for 2008 (Washington,
D.C.: 2008), based on analyses using the TRIM3 microsimulation model.
[22] GAO, Welfare Reform: More Information Needed to Assess Promising
Strategies to Increase Parents' Incomes, [hyperlink,
http://www.gao.gov/products/GAO-06-108] (Washington, D.C.: December
2005).
[23] Bianca Frogner, Robert Moffitt, and David Ribar, Income,
Employment, and Welfare Receipt After Welfare Reform: 1999-2005
Evidence from the Three-City Study, Johns Hopkins University, Working
Paper 09-02 (May 2009).
[24] Congressional Budget Office, Changes in Low-Wage Labor Markets
Between 1979 and 2005 (Washington, D.C.: December 2006).
[25] See Rebecca M. Blank, "Evaluating Welfare Reform in the United
States," Journal of Economic Literature (December 2002).
[26] Jeffrey Grogger, "The Effects of Time Limits, the EITC, and Other
Policy Changes on Welfare Use, Work, and Income Among Female-Headed
Families," The Review of Economics and Statistics (May 2003).
[27] GAO, Welfare Reform: Better Information Needed to Understand
Trends in States' Uses of the TANF Block Grant, [hyperlink,
http://www.gao.gov/products/GAO-06-414] (Washington, D.C.: March 2006)
and GAO, Welfare Reform: More Information Needed to Assess Promising
Strategies to Increase Parents' Incomes, [hyperlink,
http://www.gao.gov/products/GAO-06-108] (Washington, D.C.: December
2005).
[28] TRIM3 does not model certain aspects of program eligibility, such
as sanctions from a family's failure to comply with work rules or
child support rules. It also does not model state diversion strategies
such as the use of one-time, non-recurring benefits, or families'
behavioral responses to TANF program rules, such as staying off TANF
to conserve eligibility for time-limited assistance.
[29] These estimates are based on analyses conducted for our study by
the Urban Institute, using the TRIM3 microsimulation model; they
reflect averaged monthly estimates by calendar year. For this TRIM3
analysis, to apply rules on time limits and immigrant restrictions
from PRWORA on the 1995 data, we assumed that the rules were actually
changed 10 years prior to the timing of the actual legislation-in
August 1986--so that the analysis would be able to identify families
who would be affected by federal and state TANF time limits and
immigrant restrictions. We also assumed that states would make the
same choices about time limits in this hypothetical 1995 world that
they made in 2005, such as using shorter time limits, or providing
extensions and exemptions.
[30] The 2005 TANF rules used in this expanded TRIM 3 analysis
included rules on immigrant restrictions; time limits; eligibility
rules for two-parent families and teen parents; caps on benefits if
family size increases; 2005 asset limits; and other financial rules,
such as those for disregarding a certain amount of earned income in
determining eligibility--called earned income disregards--and income
tests. Because TRIM3 incorporates information from states through the
Urban Institute's Welfare Rules Database--an HHS-funded database
maintained at the Urban Institute--this analysis reflects variations
in state rules as well as federal rules in these areas. The overall
results mask variations at the state level. In some states, the 2005
rules would increase eligibility, while in other states the 2005 rules
would decrease eligibility.
[31] For example, according to our TRIM3 analysis, 2005 rules that
increased the number of eligible families included those concerning
the eligibility of two-parent units, which are more generous than the
1995 AFDC rules, and rules on the use of earned income disregards,
which may enable some families to be eligible under 2005 rules who
would not have been in 1995. On the other hand, rules that reduced the
number of eligible families included time limits and income
eligibility thresholds that were not adjusted for inflation, according
to our TRIM3 analysis.
[32] The analysis cannot be definitive because of the potential
interrelationships among program rules; changes in the population
(such as the incidence of single-parent families) and in families'
economic circumstances; and behavioral issues such as families'
responses to program requirements, such as whether to apply for TANF.
[33] Some observers believed that families would move to other states
take advantage of state policies that were more generous, and that
states would attempt to offset this possibility of increased caseloads
by competing to have policies more stringent than neighboring states.
[34] Thomas Gais and R. Kent Weaver, State Policy Choices Under
Welfare Reform, Brookings Policy Brief No. 21 (Washington, D.C.: April
2002).
[35] This analysis of the share of eligible and participating families
is based on trend data for an average month by calendar year in HHS's
Indicators of Welfare Dependence: Annual Report to Congress, 2008
(Washington, D.C.: 2008), which uses TRIM3 to model estimates of the
TANF participation rate. In reporting participants, the data includes
families receiving cash assistance through both TANF and separate
state programs (SSP) using state MOE funds. As noted earlier, TRIM3
does not model certain aspects of program eligibility, such as
sanctions from a family's failure to comply with work rules or child
support rules. It also does not model state diversion strategies such
as the use of one-time, non-recurring benefits, or families'
behavioral responses to TANF program rules, such as staying off TANF
to conserve eligibility for time-limited assistance.
[36] This TANF participation rate is within the range experienced by
other non-entitlement programs. In a previous report, we found that
participation in non-entitlement programs--including TANF--ranged from
less than 10 percent to about 50 percent, while participation in
entitlement programs such as SNAP (formerly known as food stamps)--
designed to support all those who apply and qualify--was higher,
ranging from 50 percent to more than 70 percent. See GAO, Means-Tested
Programs: Information on Program Access Can Be an Important Management
Tool, [hyperlink, http://www.gao.gov/products/GAO-05-221] (Washington,
D.C.: Mar. 11, 2005).
[37] Declines in eligibility and in participation are not necessarily
mutually exclusive and may interact. For example, policies such as
time limits can affect a family's eligibility for cash assistance but
it can also affect decisions about when or whether to apply for
assistance, depending on a family's circumstances.
[38] Not all TANF families are subject to work requirements. TANF law
allows states to exclude single custodial parents caring for a child
under the age of 1, for example. Families without adult recipients--
child-only cases--are sometimes exempt from work requirements and time
limits. States also have the option to consider some parents not "work
eligible," such as those on SSI or Social Security Disability
Insurance.
[39] Jeffrey Grogger et al., Consequences of Welfare Reform: A
Research Synthesis, RAND Labor and Population Program. Prepared for
the Administration for Children and Families, U.S. Department of
Health and Human Services (July 2002).
[40] GAO, Welfare Reform: Moving Hard-to-Employ Recipients Into the
Workforce, [hyperlink, http://www.gao.gov/products/GAO-01-368]
(Washington, D.C.: March 2001).
[41] Abt Associates Inc., Study of the TANF Application Process, Final
Report, Volume 1: Survey of States, Prepared for Department of Health
and Human Services, Administration for Children and Families Office of
Planning, Research and Evaluation (April 2003).
[42] Robert Moffit, "The Role of Nonfinancial Factors in Exit and
Entry in the TANF Program," The Journal of Human Resources, Vol. 38
(2003).
[43] Rosenberg et al., A Study of States' TANF Diversion Programs.
Final Report, Mathematica Policy Research Institute (Dec. 8, 2008).
[44] States' diversion strategies are determined by the states and not
federal law. In most states, they are also considered "non-assistance"
and, because of this, states can use them to provide temporary
assistance without being affected by federal work requirements for
states. Most states also do not count one-time payments toward the
federal 60-month lifetime limit. States also have incentives for
controlling or reducing their TANF caseloads because they are required
to meet federal work participation rates for providing cash assistance
to families when they use federal or MOE funds.
[45] Andrea Hetling et al., "Do Welfare Avoidance Grants Prevent Cash
Assistance?" Social Service Review, University of Chicago (December
2007).
[46] Grogger et al. (July 2002).
[47] This analysis is based on TRIM3 estimates in which we applied all
2005 TANF rules, with dollars deflated to 1995, to the 1995 cash
assistance population, and compared potential aggregate cash benefits
to that population under the 2005 rules with deflated dollars to the
potential aggregate benefits to that population under the 1995 rules.
The overall results of this analysis mask variations at the state
level. Some states show small increases in potential aggregate
benefits under the 2005 rules, while the majority of states show
reductions of various magnitudes.
[48] These maximum benefit levels are for the continental United
States.
[49] In some cases, the receipt of TANF can also work in the opposite
direction, increasing the other benefit (e.g., exempting TANF
recipients from having to pay a co-payment for child care). For the
purpose of this discussion, we are including non-cash supports such as
SNAP as part of net income. However, in discussing poverty among
children, we exclude non-cash supports, so as to be consistent with
the federal definition of poverty.
[50] The maximum TANF benefit, which varies by state, refers to the
highest amount of cash benefits that a state pays to a family per
month. Here we are referring to the median of this cash payment across
the states.
[51] This TRIM3 analysis uses a slightly different benefit mix than in
the Illinois example. In this analysis, the four benefits are child
support retained by the family, CCDF child care subsidies, SNAP
(formerly food stamps), and a housing subsidy. The net income includes
all cash income (including TANF and any child support retained by the
family), plus the value of SNAP and the value of housing subsidy, plus
refundable tax credits, minus income tax and payroll tax liability,
and minus child care expenses. Using calendar year 2005 Current
Population Survey data, this analysis examined the families estimated
to begin receiving TANF for at least part of the year if participation
was at the same rate as in 1995-about 3.3 million families.
[52] See Grogger et al. (2002); LaDonna Pavetti, et al., Review of
Sanction Policies and Research Studies: Final Literature Review,
Mathematica Policy Research, Inc. (Washington, D.C.: Mar. 10, 2003),
and Jacob Alex Klerman and Caroline Danielson, Why Did the Welfare
Caseload Decline? RAND Labor and Population Working Paper (June 2004).
[53] Federal law requires a reduction or termination in benefit if a
family does not comply with work requirements, but states determine
the specific sanction policies for failing to comply with work
requirements. 42 U.S.C. § 607(e)(1).
[54] In a 2000 report, we estimated that far more families have their
benefits reduced because of rules violations than have their benefits
cut off. GAO, Welfare Reform: State Sanctions Policies and Number of
Families Affected, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-00-44] (Washington, D.C.: Mar.
31, 2000).
[55] Andrew Cherlin et al., "Operating within the Rules: Welfare
Recipients' Experiences with Sanctions and Case Closings," Social
Service Review, University of Chicago (September 2002).
[56] By impairments, we mean both mental and physical conditions. For
instance, impairments could be physical conditions that hinder
movement or require a cane or other mobility device, cognitive
impairments, or mental conditions such as chronic depression.
[57] GAO, Welfare Reform: Former TANF Recipients with Impairments Less
Likely to be Employed and More Likely to Receive Federal Supports,
[hyperlink, http://www.gao.gov/products/GAO-03-210] (Washington, D.C.:
December 2002).
[58] A September 2009 report similarly noted that declines in the TANF
cash assistance caseload were likely attributable to factors that are
not easy to disentangle. See LaDonna Pavetti et al., Understanding
Temporary Assistance for Needy Families Caseloads After Passage of the
Deficit Reduction Act of 2005, Final Report, Mathematica Policy
Research, Inc.(Washington, D.C.: Sept. 21, 2009).
[59] In this section, whenever we discuss eligible participating and
nonparticipating families, we mean those simulated (estimated) by the
TRIM3 micreosimulation model to be eligible participants and
nonparticipants. TRIM3 relies on the Annual Social and Economic
Supplements (ASEC) to the Current Population Survey, as well as
information from the Urban Institute's Welfare Rules Database to
estimate eligibility based on state specific program rules and
information on income and other eligibility criteria. The most recent
data available were for 2005. In this section, estimates cited are on
an annual basis. Any family that contains a TANF unit that was
simulated by TRIM3 to receive benefits during any month of the year is
considered to be participating in TANF, and each family receiving or
eligible for TANF is counted once. In comparing the characteristics of
TANF participants and eligible nonparticipants, differences are
statistically significant at the 95 percent confidence level unless
otherwise noted. See appendix I for details.
[60] The total number of families in this analysis for 2005 is an
annual estimate based on the TRIM3 model for families who were ever
eligible for or ever received TANF cash assistance in that year. This
estimate is larger than the HHS estimates used in figure 1, which are
estimated monthly averages for each calendar year, primarily because
the annual estimate casts a "bigger net" in identifying families who
were ever eligible for or received TANF in a particular year. In
addition, HHS estimates used in figure 1--from the 2008 Indicators of
Welfare Dependence--include estimates for family units in the U.S.
territories and units that consist solely of a pregnant woman, while
our eligibility estimates do not include these units. Both estimates
are based on the TRIM3 microsimulation model. Finally, the 1995
baseline used in this analysis is not the originally-run 1995
baseline, which was created in 1997. Instead, it was rerun for this
analysis using the most recent version of the TRIM3 TANF module, in
order to take advantage of corrections and improvements in methods. As
noted earlier in this report, the total number of needy families
receiving cash assistance in 2008--1.7 million--is monthly average
caseload data from HHS for that year, and not estimates of cash
recipients based on TRIM3.
[61] In this analysis, the term adult without earnings refers to
adults in the eligible TANF unit. In comparing the characteristics of
participants and nonparticipants, data cited are statistically
significant to the 95 percent confidence level unless otherwise noted.
[62] See Mark Nord, et al., Household Food Security in the United
States, 2008, U.S. Dept. of Agriculture, Economic Research Service
(Washington, D.C.: November 2009). We were not able to identify
studies on hardships distinguishing between TANF recipients and non-
recipients.
[63] When we analyzed median incomes, median income was based on all
related persons living in the household, not solely the eligible TANF
unit. In this analysis, the distinction between participants and
nonparticipants reflects one point in time--the year 2005.
Nonparticipating eligible families may at some time apply for cash
assistance, and TANF families may also leave cash assistance for
personal or other reasons, such as being sanctioned for noncompliance.
[64] Families are counted as receiving a particular type of income or
benefit if at least one person in the family is simulated by TRIM3 to
be receiving that type of income or benefit at any point during the
year.
[65] Only child care subsidies funded by CCDF are captured by TRIM3.
These estimates do not reflect families receiving child care subsidies
from other sources of funding.
[66] A considerable body of work discusses such families, who are
often described as "disconnected" from the workforce. In addition to
[hyperlink, http://www.gao.gov/products/GAO-01-368] and [hyperlink,
http://www.gao.gov/products/GAO-03-210], see, for example, Rebecca
Blank and Brian Kovak, The Growing Problem of Disconnected Single
Mothers (Ann Arbor, Mich.: University of Michigan, National Poverty
Center Working Paper Series #07-28, revised January 2008), and Sheila
R. Zedlewski, et al., Families Coping without Earnings or Government
Cash Assistance (Washington, D.C.: The Urban Institute, February 2003).
[67] While there is no federal prohibition against receiving both TANF
and SSI, individuals who receive SSI do not qualify for TANF in nearly
all states. However, other family members who do not receive SSI would
continue to be eligible for TANF.
[68] SSI is the only disability-related cash assistance program
simulated by TRIM3. Some families may receive disability-related
payments from other programs the model does not simulate, such as
Workers Compensation. In an earlier report, we found that families who
left TANF cash assistance who had impairments were more likely than
leavers without impairments to report having no income--from personal
earnings, household earnings, or SSI benefits--in their first month
after exiting TANF. See [hyperlink,
http://www.gao.gov/products/GAO-03-210].
[69] In this section, whenever we discuss eligible participating and
nonparticipating families, we mean those simulated (estimated) by the
TRIM3 model to be eligible participants and nonparticipants. See
appendix I for details.
[70] This estimate for the number of children in extreme poverty is an
annual figure.
[71] To impose the 1995 AFDC participation rate of 84 percent on the
2005 population, we started from each family's probability of
participation as produced by TRIM3's baseline simulation. We applied
an additional across-the-board adjustment factor to increase each
family's probability of participation until the desired participation
rate was reached. For this high participation rate scenario, we did
not modify cash benefit levels. We kept the population and the TANF
rules, including monthly benefit levels, at their 2005 levels. At this
higher participation rate, we estimated that 4.0 million children in
the United States would have been in extreme poverty in 2005.
[72] A substantial portion of TANF-eligible families was in extreme
poverty in 2005. According to our TRIM3 analysis, at least 35 percent
of families who were eligible for TANF in at least one month of 2005--
but who did not participate in the program--were in extreme poverty.
Not all children who are in extreme poverty live in families that are
eligible for TANF, because of varying eligibility standards for TANF
among the states.
[73] The median income of families in extreme poverty includes
eligible families who are not participating in TANF as well as those
who are. Therefore, the income gained due to TANF cash assistance is
averaged across all families in extreme poverty.
[74] Earnings are based on the assumption that families in extreme
poverty work 10 hours a week at the Illinois minimum wage of $8 per
hour, roughly half of median earnings of TANF families containing one
adult and two children according to our analysis of 2005 TANF
participants. Families participating in the TANF program must assign
their rights to child support to the state and do not receive the full
amount of child support paid by the absent parent.
[75] The income figures in this analysis of extreme poverty differ
from the income figures in the previous analysis discussing the 11
percent of nonparticipating families who were not employed and not
receiving SSI. The income figures in the previous analysis were based
on a small subset of TANF-eligible, but nonparticipating families in
2005. The estimates we use in discussing the impact of increased TANF
participation on poverty represent potential earnings for two types of
TANF-eligible families in extreme poverty--a single parent with one
child and a single parent with two children.
[76] The effect of the EITC and non-cash benefits such as SNAP and
housing subsidies are not presented in these calculations because they
are not included in the official measure of poverty.
[77] According to our TRIM3 analysis, an estimated 12.5 million
children were in poverty in 2005. Although reducing child poverty is
not a formal goal of the TANF program, TANF cash assistance is
designed for low-income families, and TANF recipient families
typically have incomes below poverty.
[78] Some families may not see a net increase in their annual income
by the full amount of the TANF benefit because other programs such as
SNAP count TANF benefits in determining income eligibility, as
discussed earlier in this report.
[79] Published by HHS, the poverty guidelines are used for determining
the income eligibility of individuals and families for need-based
assistance in some federal programs. Although the guidelines reflect
variations in family size, the poverty guidelines--unlike the poverty
thresholds--do not reflect variations in the age group of the family
members.
[80] Income eligibility thresholds incorporate monthly earnings limits
and limits on assets and depend on a number of different factors
associated with a family's circumstances.
[81] This range represents the continental United States. Alaska and
Hawaii have higher federal poverty guidelines than the rest of the
country.
[82] The median income of families in poverty includes families who
are not participating in TANF as well as those who are. Therefore, the
income gained by TANF cash assistance is averaged across all families
in poverty.
[83] Each family was assumed to have one working adult, earning $632
per month. This is the median earnings of TANF families containing one
adult and two children according to our analysis of 2005 participants.
It is also the amount one would earn by working 18 hours per week at
the Illinois minimum wage of $8 per hour. Families participating in
the TANF program must assign their rights to child support to the
state and do not receive the full amount of child support paid by the
absent parent.
[84] In this discussion of caseload changes during the recession, the
TANF caseload numbers include participants in states' separate state
programs (SSP), which are funded with state MOE dollars.
[85] Pennsylvania and Rhode Island could not provide comparable
caseload numbers for this analysis.
[86] Child-only cases are those in which there is no adult recipient
of assistance. There are four main categories of "child-only" cases:
(1) the parent is disabled and receiving SSI; (2) the parent is a
noncitizen and therefore ineligible; (3) the child is living with a
nonparent relative; and (4) the parent has been sanctioned and removed
from cash assistance for failing to comply with program requirements,
and the family's benefit has been correspondingly reduced. Guardians
in child-only cases are not subject to work requirements.
[87] The three states in which the solely state-funded program's
caseload declined were New Jersey, where the TANF caseload also
declined and at roughly the same rate; New Hampshire, which eliminated
a portion of its solely state-funded program because of state budget
constraints; and Rhode Island, which discontinued benefits to children
whose parents had reached their time limit in October 2008 and
eliminated the program as of June 2009. The caseloads for solely state-
funded programs in Mississippi and Pennsylvania remained relatively
unchanged. For the purposes of this report, we refer to the District
of Columbia as a state.
[88] Prior to the reauthorization of TANF in 2006, states had used
SSPs for this purpose. However, after reauthorization, SSP/MOE-funded
programs became subject to TANF requirements and recipients were
subject to the same work participation requirements as TANF recipients.
[89] Analyses of cash assistance caseload data for 2005 in the
previous three sections of this report provide a comprehensive
characterization of the cash assistance caseload because they reflect
both TANF cash assistance and SSP caseload data combined for 2005.
Solely state-funded programs were not implemented until fiscal year
2007.
[90] Omitting solely state-funded families in calculating the number
of families receiving cash assistance could lead to underestimating
the extent of caseload growth or overestimating the extent of caseload
decline.
[91] Unemployment benefits had been extended, in some states, to 79
weeks. UI recipients often cannot qualify for TANF until their UI
benefits have been fully expended, since monthly UI benefits often
exceed the maximum income that states allow to be eligible for TANF.
[92] TANF block grant and MOE spending are two components of federal,
state, and local spending on a range of programs aimed at serving low-
income and needy populations. In this section, we will refer to them
collectively as TANF-related spending.
[93] GAO, Welfare Reform: Better Information Needed to Understand
Trends in States' Uses of the TANF Block Grant, [hyperlink,
http://www.gao.gov/products/GAO-06-414] (Washington, D.C.: March 2006).
[94] Of the four states that reduced TANF-related spending for family
and/or work supports, one cut spending for child care and three made
cuts to employment-related programs.
[95] Six of these states applied for Emergency Contingency Fund on the
basis of increases in cash assistance spending due to caseload
increases. One of these states also applied because of spending
increases for non-recurring benefits and two applied because of
spending increases for subsidized employment.
[96] One state said that TANF-related spending on certain family and
work supports, particularly child care, may decrease in the coming
year because additional ARRA funds are available for this specific
purpose. Using ARRA child care funds would free up TANF funds to
address increases in families receiving cash assistance in this state.
[97] The TRIM3 model uses the U.S. Census Bureau's Current Population
Survey (CPS) and the Welfare Rules Database (maintained at the Urban
Institute under HHS funding) to simulate eligibility based on state-
specific program rules and information on income and other eligibility
criteria. The Welfare Rules Database provides a longitudinal account
of the changes in welfare rules in all 50 states and the District of
Columbia. The database organizes the detailed information on welfare
rules across states, time, and geographic areas within states and
different types of assistance units. Caseworker manuals and state
regulations provide the data from 1997 to the present, while AFDC
State Plans and Waiver Terms and Conditions provide the data for years
prior to 1997. GAO did not conduct a legal analysis of state laws or
requirements for state cash assistance programs.
[98] After we initiated our interviews, the researcher who was
affiliated with the American Enterprise Institute moved to the
University of Maryland (School of Public Policy).
[99] For the purposes of this report, we refer to the District of
Columbia as a state.
[100] Prior to the 2006 reauthorization of TANF, the families served
by SSPs were not subject to TANF work requirements. During that time,
SSPs often served families that states believed were unable to meet
mandatory work requirements, such as parents with disabilities. This
was changed in reauthorization, when families in these programs became
subject to federal TANF work requirements.
[101] For information on how we selected states for telephone
interviews of TANF administrators, see the description of our
methodology for obtaining information on state caseload changes in the
current recession.
[End of section]
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