The Recovery Act also made two additional funding modifications to  TANF, as well as a temporary modification to the caseload reduction  credit. National Work Participation Rates Changed Little after DRA, and States’ Rates Reflected Both Recipients’ Work Participation and States’ Policy Choices

Nationally, the proportion of families receiving TANF cash assistance who  met their individual work requirements by participating in one of 12 work  activities for a minimum number of hours each week changed little after  DRA, as did the types of work activities in which they most frequently  participated. For example, among families that met their work requirements,  the majority participated in unsubsidized employment in the years both  before and after DRA. State and Local Off Reported That the Economic Recess Decreased TANF Resources and Challenge TANF Service Delivery

Due to the economic recession, many states have faced large budget  deficits in 2009 and 2010 that have required states to make difficult budget  decisions about the use of state resources for TANF programs. Most States Have Applied for Recovery Act TANF Funds, Which They Are Using Primarily to Maintain Their Programs

In response to the recent economic recession, the Recovery Act’s $5  billion Emergency Contingency Fund for state TANF programs has  provided additional federal funding to qualifying state TANF programs that  have had increases in the number of families receiving cash assistance or  in two specific types of expenditures. Some states have also used Recovery Act TANF funds to expand existing  or create new programs or services for low-income families, including  short-term, nonrecurrent benefits and subsidized employment positions. While most  states reported that HHS assistance with applying for and utilizing  Recovery Act TANF funds had been useful, some expressed frustration  with the amount of time it had taken to receive guidance and responses to  questions. Finally, states also reported concerns about the expiration date for the  Emergency Contingency Fund, which is currently September 30, 2010. Key contributors to this report are listed in  appendix V.

Appendix I: Objectives, Scope, and Methodology

To obtain information about changes to state Temporary Assistance for  Needy Families (TANF) programs after the Deficit Reduction Act of 2005  (DRA), economic recession, and the American Recovery and  Reinvestment Act of 2009 (Recovery Act), we  reviewed available TANF data from the U.S. Department of Health and  Human Services (HHS), including the number of families receiving TANF  cash assistance, work participation rates, federal and state expenditures,  and states’ applications for the Emergency Contingency Fund for state  TANF programs;    conducted a nationwide survey of state TANF administrators;    visited three states and selected localities within each state and  interviewed officials administering TANF; interviewed officials from HHS and reviewed pertinent federal laws,  regulations, and agency guidance; and interviewed researchers knowledgeable about TANF from a range of  organizations. The survey included questions about:  changes made to TANF programs and policies since DRA, challenges  related to complying with DRA, cash assistance programs funded with  solely state funds, use of the Emergency Contingency Fund for state TANF  programs, changes to TANF service delivery related to the economic  recession, and HHS assistance to states after DRA and the Recovery Act. Appendix II: Numbers of TANF Families Meeting Work Requirements in Recent Years

Appendix III: Factors Affecting States’ Ability to Meet Work Participation Rates

As discussed in this report, each state’s ability to meet the required work  participation rates reflects not only the number of its TANF families  sufficiently engaged in countable work activities, but also changes in the  number of families receiving TANF cash assistance in the state, and the  state’s policy choices that (1) lower their required work participation  rates, (2) keep working families in the calculation of their rates, and (3)  remove certain families from the calculation of these rates.
Why GAO Did This Study

The Deficit Reduction Act of 2005 (DRA) reauthorized the Temporary Assistance for Needy Families (TANF) block grant and made modifications expected to strengthen work requirements for families receiving cash assistance through state TANF programs. Both the U.S. Department of Health and Human Services (HHS) and states were required to take steps to implement these changes. Work participation rates, or the proportion of families receiving TANF cash assistance that participated in work activities, are the key performance measure HHS uses to assess state TANF programs. In response to the economic recession that began in 2007, the American Recovery and Reinvestment Act of 2009 (Recovery Act), provided additional TANF funding to eligible states and made additional modifications to TANF. GAO examined (1) How did DRA affect state TANF programs, including work participation rates? (2) How has the recent economic recession affected state TANF programs? (3) How did the Recovery Act affect state TANF programs? To address these questions, GAO analyzed federal TANF data, as well as relevant federal laws, regulations, and guidance; interviewed HHS officials; surveyed all state TANF administrators; and conducted site visits to meet with state and local officials in Florida, Ohio, and Oregon. GAO is not making recommendations in this report.

What GAO Found

Nationally, TANF work participation rates changed little after DRA was enacted, though states' rates reflect both recipients' work participation and states' policy choices. Although federal law generally requires that a minimum of 50 percent of families receiving TANF cash assistance in each state participate in work activities, both before and after DRA, about one-third of TANF families nationwide met their work requirements. However, after DRA, many states were able to meet federally required work participation rates because of additional factors. For example, 29 states funded cash assistance for certain families that may be less likely to meet the work requirements with state dollars unconnected to the TANF program, as this removed these families from the rate calculation. Further, DRA required other changes to state TANF programs, and states reported challenges with some of DRA's changes to the TANF work rules, such as verifying participants' actual work hours. From the beginning of the economic recession, in December 2007, to September 2009, the number of families receiving TANF cash assistance, particularly two-parent families, increased in the majority of states but went down in others. At the same time, many states have faced budget deficits and difficult decisions about the use of state resources for TANF programs. Thirty-one states reported that budget constraints led to changes in local TANF service delivery, such as reductions in available services and the number of staff. Forty-six states have applied for the Recovery Act's Emergency Contingency Fund for state TANF programs since it was made available in 2009. More states reported using these funds to maintain their TANF programs rather than expand or create programs and services. Some states reported challenges accessing the funds. For example, some expressed frustration with the amount of time it has taken to receive guidance and responses to questions from HHS, particularly related to qualifying subsidized employment and short-term, nonrecurrent benefit expenditures. State officials also expressed concern about the September 30, 2010, expiration date for the Recovery Act TANF funds.