	Background

The TANF block grant was created by the Personal Responsibility and  Work Opportunity Reconciliation Act of 1996 (PRWORA) and was  designed to give states the flexibility to provide both traditional welfare  cash assistance benefits as well as a variety of other benefits and  services to meet the needs of low-income families and children. States  have responsibility for designing, implementing, and administering their  welfare programs to comply with federal guidelines, as defined by federal  law and HHS that oversees state TANF programs at the federal level. 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: decreases in the number of families receiving TANF cash assistance  (not due to program eligibility changes) that provide a state credit  toward meeting its rates ,   state spending on TANF-related services beyond what is required that  also provides a state credit toward meeting its rates,   state policies that allow working families to continue receiving TANF  cash assistance, helping a state to increase its rate, and   state policies that provide nonworking families cash assistance  outside of the TANF program. States Rely on TANF Flexibility to Provide a Broad Array of Services

While the focus is often on TANF’s role in cash assistance, it plays a  significant role in states’ budgets for other programs and services for low- income families, as allowed under TANF. In fact, in fiscal year  2011, federal TANF and state expenditures for purposes other than cash  assistance totaled 71 percent of all expenditures. Many states have used TANF to fund  child welfare services because, although TANF funding is a capped block  grant, it is a relatively flexible funding source. Concluding Observations

The federal-state TANF partnership makes significant resources available  to address poverty in the lives of families with children. With these  resources, TANF has provided a basic safety net to many families,  triggered a focus on work in the nation’s welfare offices while helping  many parents step into jobs, and provided states flexibility to help families  in ways they believe will help prevent dependence on public assistance  and improve the lives of children. At the same time, it does raise questions about the strength and breadth  of the TANF safety net. The emphasis on work participation rates as a measure of program  performance has helped change the culture of state welfare programs to  focus on moving families into employment, but weaknesses in the  measure undercut its effectiveness. Are the work participation rates  providing the right incentive to states to engage parents, including those   difficult to serve, and help them achieve self-sufficiency? However, we do not have enough  information about the use of these funds to determine whether this  flexibility is resulting in the most efficient and effective strategies at this  time of scarce government resources and great need among the nation’s  low-income families.
Why GAO Did This Study

This hearing is on combating poverty and understanding new challenges for families. The testimony focuses on the role of the Temporary Assistance for Needy Families (TANF) block grant in helping low-income families with children. As you know, the federal government significantly changed federal welfare policy in 1996 when it created TANF, a $16.5 billion annual block grant provided to states to operate their own welfare programs within federal guidelines. States are also required to maintain a specified level of their own spending to receive TANF funds. Over the past 15 years, the federal government and states have spent a total of $406 billion for TANF, about 60 percent of which were federal funds. This federal-state partnership has undergone multiple program and fiscal changes, including a dramatic drop in the number of families receiving monthly cash assistance benefits, as well as two economic recessions. According to the Bureau of the Census, poverty among children fell from about 21 percent in 1995 to about 16 percent in 2000, rising again to 22 percent in 2010. Examining TANFs past performance can help shed light on the challenges facing low-income families and the role of the federal government in combating poverty.
This testimonybased primarily on reports issued by GAO from 2010 to 2012 on TANF and related issueswill focus on TANFs performance in three areas: (1) as a cash safety net for families in need, (2) as a welfare-to-work program that promotes employment, and (3) as a funding source for various services that address families needs.

What GAO Found

The federal-state TANF partnership makes significant resources available to address poverty in the lives of families with children. With these resources, TANF has provided a basic safety net to many families and helped many parents step into jobs. At the same time, there are questions about the strength and breadth of the TANF safety net. Many eligible familiessome of whom have very low incomesare not receiving TANF cash assistance. Regarding TANF as a welfare-to-work program, the emphasis on work participation rates as a measure of state program performance has helped change the culture of state welfare programs to focus on moving families into employment. However, features of the work participation rates as currently implemented undercut their effectiveness as a way to encourage states to engage parents, including those difficult to serve, and help them achieve self-sufficiency. Finally, states have used TANF funds to support a variety of programs other than cash assistance as allowed by law. Yet, we do not know enough about this spending or whether this flexibility is resulting in the most efficient and effective use of funds at this time.