Let's Talk TANF: Congress on the Verge of Reauthorizing TANF

The federal budget for fiscal year 2006 (October 2005 to September 2006), to be resolved in a “budget reconciliation” bill scheduled for a vote in the House on February 1, would reauthorize the Temporary Assistance for Needy Families (TANF) and child care subsidy programs while adding $1 billion to the annual child care block grant for the next five years. Taken as a whole, the changes are not good for the people who use these programs. The changes are particularly unfair for Illinois, and urging House members to vote “no” on the reconciliation bill is well worth the effort.(See John Bouman’s “Perspective,” in this issue).

Main Changes

The reconciliation bill contains a number of changes in the TANF program. Three of the most important are these:

Under current law, states must have at least certain percentages of their TANF caseloads engaged in employment or approved “work activities” or else face substantial penalties. This work participation rate, however, is reduced by the amount that the state’s caseload has been reduced since 1994. The work participation rate is 50 percent, but in Illinois the caseload reduction credit is so large that the required work participation rate is even smaller than the federally prescribed percentage. This has allowed Illinois’s TANF families to engage at least temporarily in activities other than employment or work; such activities might be attending college or caring for a disabled family member. Under the reconciliation bill, the work participation rate is still 50 percent, but the caseload reduction credit will now be based on 2005. Last year was the low ebb of the Illinois caseload. If Illinois’s work participation rate is based on that caseload, Illinois cannot take advantage of its caseload reduction credit.

Currently states may create separate programs for people for whom TANF is not an appropriate program. States may count the state funds in these programs toward their “maintenance of effort” requirement in TANF (as a condition of receiving the federal TANF block grant, states must promise to maintain their own spending on programs with similar purposes for low-income families). Under the reconciliation bill, the TANF work requirements and work participation rate will apply to these separate state programs. How much this will affect Illinois is not clear yet.

The reconciliation bill requires the federal TANF agency to produce by June 30, 2006, binding regulations, including rules about how states will document the work activities of recipients. While this requirement is not necessarily harmful, it makes for a substantial difference from 1996, when TANF was passed. At that time the states were free for almost two years to implement the program according to their best reading of the statute and informal guidance from the federal agency. Because final rules were not published until 1998, states had time to make the transition to any necessary changes. The implementation of the changes in the reconciliation bill will be on a much faster track, and the federal agency will have much less experience to guide it in drafting the rules.

On funding, the reconciliation bill flat-funds the TANF block grant and allots an increase of $1 billion over the entire next five years for the child care and development block grant. This is far short of what is needed just to provide child care for the expected increase in TANF recipients engaging in the newly required work activities. This increase fails to keep pace with inflation for the families currently receiving subsidies. It is nowhere near the needed amount to provide subsidies to families eligible for but not currently receiving them.

Opposing but Getting Ready to Implement the Bill

The reconciliation bill is far short of what Illinois families need to succeed in the workforce, progress economically, and address periods of family crisis. It is particularly unfair to Illinois. It pins the caseload reduction credit to 2005, a year when Illinois’s historically low caseload led the nation. All the states that lagged behind will be able to get caseload reduction credits. Although Illinois did precisely what the existing TANF law required, Illinois will be penalized. Illinois also has an exemplary child care subsidy program helping hundreds of thousands work and progress economically. Under the reconciliation bill, Illinois will need to devote more state dollars simply to avoid compensating for the cuts in federal funds.

Illinois has some choices. The state knows what is necessary to help people work and to provide fair and promising opportunities. If the bill passes, Illinois has to be ready to implement it in the most productive way. Illinois should get to work immediately to devise implementation choices that will promote better outcomes for families.

For more information, contact John Bouman.