Recipients of  assistance from these solely state-funded programs are not subject to  TANF requirements. 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. 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. 1.) Eligible families who did not participate in TANF generally had  relatively higher incomes and higher education levels than TANF families. 7.) 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. 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. Another reason is that TANF benefits are typically too low to raise  children in poverty above the federal poverty threshold. 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. 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. 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. We also reviewed relevant federal laws and  regulations.
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.