It ended the cash assistance program Aid to Families with Dependent Children (AFDC) and replaced it with the Temporary Assistance for Needy Families (TANF) block grant. The reduction of the number of families with children receiving cash assistance since the mid-1990s is perhaps the signature indicator used to propose that the 1996 welfare reform law was successful in reducing welfare dependency. In 1995, an estimated 17.6 million people received AFDC cash benefits at some time during the year. In 2012, 5.6 million people received TANF at some point in the year. Note that this is not a result of the 1996 welfare reform law. The size of the TANF cash assistance caseload is determined by both the size of the population eligible for assistance and the rate at which families "take up" that assistance. Post Welfare Reform: Caseload Trends

 Table 1 shows the cash assistance caseload and selected indicators of child poverty and work among single mothers for selected years, 1995 to 2012. The period from 1995 to 2000 saw rapid declines in the cash assistance caseload. The Rate of Receipt of TANF Cash among Eligible Persons

Was the caseload decline the result of stricter rules governing eligibility for TANF cash, or was it the result of a decline in the rate of take-up of benefits? In 1995, 82% of those eligible for AFDC received benefits. Table 2 shows selected characteristics of adults who were eligible for but did not receive cash assistance from AFDC in 1995 and TANF in 2000, 2007, and 2012. Thus, adults who were eligible for cash assistance but not receiving it were relatively disadvantaged based on the measures shown on the table, and became more so (more like those who traditionally received cash assistance) over the 1995 to 2012 period 

	Child Poverty

In 1995, there were 15.2 million children (21.6% of all children) living in families with pre-assistance money income below the poverty line; in 2012, the number stood at 15.8 million, which was again 21.6% of all children. The share of poor children in families actually receiving TANF fell faster than the share of poor children eligible for TANF cash. However, the rise in the number of children living in families with pre-TANF income in deep poverty over the 2000 to 2012 period did not fully offset the 1995 to 2000 decline; there were an estimated 1 million fewer children in families with pre-TANF income in deep poverty in 2012 than there were in 1995. Still, as shown in Table 4 , the decline in the percentage of children in TANF-eligible families who actually received benefits meant that an increasing number of children in deep poverty were in families without cash assistance. In 1995, the number of children in deep poverty who were eligible but not receiving cash assistance was 0.5 million. This number increased to 1.7 million in 2000, 2.1 million in 2007, and 3.1 million in 2012. However, the refundable tax credits have their limitations. Employment among single mothers increased. Child poverty increased, but the number of families receiving TANF cash assistance continued to decline. The drafters of the 1996 welfare reform law wanted TANF to be "temporary and provisional." However, TANF assistance was increasingly forgone or otherwise not received by those eligible for it, even amongst the poorest of families. TANF has a number of structural features that give states the incentive to have policies that seek to reduce caseloads, including the following:
Funding through a fixed block grant that provides each state a set amount of federal dollars each year, and the ability to use those funds on a wide range of benefits and services. TANF could be altered to lessen some of the incentives that states have to reduce caseloads. For example, states could be required to meet work participation standards through engaging recipients in work or activities, rather than permitting states to meet their standard either partially or fully through caseload reduction. Policymakers might also look outside of TANF, to altering existing programs. Alternatively, policymakers could look at different forms of aid, such as unconditional children's allowances or subsidized jobs, to provide ongoing support for needy families with children.
The reduction of the number of families with children receiving cash assistance since the mid-1990s is perhaps the signature indicator used to propose that the 1996 welfare reform law was successful in reducing welfare dependency. The law ended the cash assistance program for needy families with children, Aid to Families with Dependent Children (AFDC), and replaced it with the Temporary Assistance for Needy Families (TANF) block grant. TANF is a broad-based block grant that helps fund state cash assistance programs for needy families with children, but it also funds a wide range of benefits and services addressing both the effects and root causes of child poverty.
The cash assistance caseload declined particularly rapidly in the years immediately following enactment of the 1996 welfare reform law. In 1995, an estimated 17.6 million people received AFDC cash at some time during the year; by 2000, the number of people receiving cash assistance had declined to 7.9 million. The period from 1995 to 2000 also saw declines in child poverty and increased work among single mothers (who had headed most AFDC families). Following 2000, child poverty increased and work among single mothers declined somewhat. However, the cash assistance caseload continued to decline, reaching 5.7 million people in 2007 and increasing only slightly in response to the recent recession to 5.8 million people in 2012.
The decline in the cash assistance caseload generally resulted from fewer eligible people taking up TANF benefits. In 1995, 82% of those eligible for AFDC received assistance. The share of those eligible for TANF who received it fell to 47% in 2000, 34% in 2007, and 28% in 2012. While there were almost 12 million fewer individuals who received TANF in 2012 than received AFDC in 1995, the size of the population estimated as eligible to receive TANF in 2012 was 1.4 million persons lower than the population eligible for AFDC in 1995 (20.2 million versus 21.6 million).
Most of those eligible but not receiving AFDC or TANF were poor, with some in deep poverty (family incomes less than half the poverty threshold). Over the 1995 to 2012 period, an increasing number of adults who failed to take up benefits were non-workers and had no other workers in their families. The decline in the share of people eligible for cash assistance also meant that TANF had a smaller impact in ameliorating poverty—particularly among children in deep poverty—than did AFDC. In 2012, there were 3.1 million children in deep poverty that met TANF eligibility criteria but did not receive TANF assistance. The comparable number of children in deep poverty eligible for but not receiving AFDC in 1995 was 0.5 million. In 2012, TANF reduced the rate of deep poverty among children from 9.5% to 8.4%. In 1995, AFDC reduced the rate of deep poverty among children from 11.3% to 6.5%.
This analysis raises several policy questions, the key one being whether caseload reduction per se is an indicator of the success of welfare reform. The drafters of the 1996 welfare reform law wanted TANF to be "temporary and provisional." However, TANF assistance was increasingly forgone or otherwise not received by those eligible for it, even amongst the poorest of families. While low-income families receive other government benefits such as food assistance and (if they have earners) refundable tax credits, these benefits do not provide ongoing cash assistance to meet basic needs. TANF has a number of structural features that give states the incentive to have policies that seek to reduce caseloads. For example, its "work participation standards" can be met partially or wholly through caseload reduction rather than through engaging recipients in work or activities. TANF could be altered to lessen some of the incentives that states have to reduce caseloads. Policymakers might also look outside of TANF, to altering some existing programs or providing different forms of aid to provide ongoing support for needy families with children.