As a result, the share of  child-only cases in the overall TANF caseload increased from about 35  percent to about half. Cases in  which the parents were ineligible due to immigration status almost  doubled and increased from 11 percent of the TANF child-only caseload  in fiscal year 2000 to 19 percent in fiscal year 2008 (see fig. 4) as states shifted spending to purposes other than cash assistance,  which is allowed under the law. Because  states are primarily required to report data to HHS on families receiving  TANF cash assistance but not other forms of assistance, gaps exist in the  information gathered at the federal level to understand who TANF funds  are serving and services provided, and to ensure state accountability. When we first reported on these data limitations to this  Subcommittee in 2002, we noted that state flexibility to use TANF funds  in creative ways to help low-income families has resulted in many families  being served who are not captured in the data reported to the federal  government. However, before DRA, concerns had been raised  about the consistency and comparability of states’ work participation rates and the underlying data on TANF families participating in work activiti Although DRA was generally expected to strengthen TANF work  requirements and improve the reliability of work participation data and  program integrity by implementing federal definitions of work activities  and participation verification requirements, the proportion of families  receiving TANF cash assistance who participated in work activities for the  required number of hours each week changed little after DRA, as did the  types of work activities in which they most frequently participated. Although fewer than 50 percent of all families receiving TANF cash  assistance participated in work activities for the required number of hours  both before and after DRA, many states have been able to meet their  work participation rate requirements because of various policy and  funding options allowed in federal law and regulations. Specifically,  factors that influenced states’ work participation rates included not only  the number of families receiving TANF cash assistance who participated  in work activities, but also  1.  decreases in the number of families receiving TANF cash assistance,  2.  state spending on TANF-related services beyond what is required,  3.  state policies that allow working families to continue receiving TANF  4.  state policies that provide nonworking families cash assistance  outside of the TANF program. Specifically, decreases  in the numbers of families receiving TANF cash assistance over a  specified time period are accounted for in each state’s caseload reduction  credit, which essentially then lowers the states’ required work  participation rate from 50 percent. For example, in fiscal year 2009, 38 of the 45 states  that met their required work participation rates for all TANF families did so  in part because of their caseload declines (see fig.5). However, while states’ caseload reduction credits before DRA were  based primarily on their caseload declines, after DRA, states’ spending of  their own funds on TANF-related services also became a factor in some  states’ credits. Specifically, states are required to spend a certain amount  of their funds every year in order to receive their federal TANF block  grants. In addition, as before DRA, states have continued to take advantage of  the various policy and funding options available to increase their TANF  work participation rates. Appendix I: How a State’s Work Participation Rate Is Calculated When It Claims State Expenditures in Excess of Its Requirement

	Federal law allows states to apply for caseload reduction credits, which decrease their required work participation rates.
Why GAO Did This Study

The Temporary Assistance for Needy Families (TANF) program, created in 1996, is one of the key federal funding streams provided to states to assist low-income families. A critical aspect of TANF has been its focus on employment and self-sufficiency, and the primary means to measure state efforts in this area has been TANF's work participation requirements. When the Deficit Reduction Act of 2005 (DRA) reauthorized TANF, it also made changes that were generally expected to strengthen these work requirements. Given the impending extension or reauthorization of TANF, this testimony primarily draws on previous GAO work to focus on (1) how the welfare caseload and related spending have changed since TANF was created and (2) how states have met work participation rates since DRA. To address these issues, in work conducted from August 2009 to May 2010, GAO analyzed state data reported to the Department of Health and Human Services (HHS); surveyed state TANF administrators in 50 states and the District of Columbia; conducted site visits to Florida, Ohio, and Oregon, selected to provide geographic diversity and variation in TANF program characteristics; and reviewed relevant federal laws, regulations, and research. In July 2011, GAO updated this work by analyzing state data reported to HHS since that time. In addition, GAO gathered information on caseload changes through its forthcoming work on TANF child-only cases.

What GAO Found

Between fiscal years 1997 and 2008, the total number of families receiving welfare cash assistance decreased by almost 50 percent. At the same time, there have also been changes in the types of families receiving cash assistance. Specifically, child-only cases--in which the children alone receive benefits--increased from about 35 percent of the overall TANF caseload in 2000 to about half in 2008. As the number of families receiving TANF cash assistance declined, state spending shifted to support purposes other than cash assistance, which is allowed under the law. However, because states are primarily required to report data to HHS on families receiving cash assistance and not on families receiving other forms of aid funded by TANF, this shift in spending has left gaps in the information gathered at the federal level to understand who TANF funds are serving and ensure state accountability. Nationally, the proportion of TANF families who met their work requirements changed little after DRA was enacted, and many states have been able to meet their work participation rate requirements because of various policy and funding options allowed in federal law and regulations. 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 these requirements. Nonetheless, many states have been able to meet their required work participation rates because of policy and funding options. For example, states receive a caseload reduction credit, which generally decreases each state's required work participation rate by the same percentage that state caseloads decreased over a specified time period. States can further add to their credits, and decrease their required work rates, by spending their own funds on TANF-related services beyond the amount that is required to receive federal TANF funds. In fiscal year 2009, 7 states met their rates because 50 percent or more of their TANF families participated in work activities for the required number of hours. However, when states' caseload decreases and additional spending were included in the calculation of state caseload reduction credits, 38 other states were also able to meet their required work participation rates in that year.