In 1996, Temporary Assistance for Needy Families (TANF) program was created and replaced Aid to Families with Dependent Children (commonly called "welfare"). Since then, the program has substantially decreased in size but remains one of the nation’s primary economic security and stability programs for low-income families with children.
The Office of Family Assistance (OFA) within the Administration for Children and Families (ACF)/ U.S. Department of Health and Human Services (HHS) is charged with administering the annual $16.5 billion TANF block grant, which is distributed to states, tribes, and territories (STT). TANF’s $16.5 billion constitutes one third of ACF’s total budget. The total funding level and how much each grantee gets hasn’t changed or been adjusted for inflation since 1996.
Before 1996, welfare rules were set by the federal government and assistance was mostly in the form of cash assistance. The goals of the 1996 reform were basically to give states the power to decide eligibility and administer the programs themselves, to make the assistance temporary, and to mandate work requirements for recipients. Four purposes for the TANF program were outlined in the legislation:
- Provide assistance to needy families so that children can be cared for in their own homes or in the homes of relatives
- End the dependence of needy parents by promoting job preparation, work, and marriage
- Prevent and reduce the incidence of out-of-wedlock pregnancies
- Encourage the formation and maintenance of two-parent families
States can use their money for a wide variety of programs and services as long as they tie back somehow to one of those four purposes. Funding commonly goes to programs such as child welfare offices, marriage classes, job training, and scholarships. Over time, more TANF spent on programs and less on cash assistance. Now, less than a quarter of the $16.5 billion is distributed to families as cash assistance and less than one million families receive cash assistance each month.
In order to receive their full federal block grant, states must meet a maintenance-of-effort (MOE) requirement, which means they must maintain state expenditures for “eligible families” to receive benefits and services related to TANF purposes in an amount equal to a percentage of historic levels. The federal government's contribution of $16.5 billion plus the state’s MOEs total approximately $30 billion annually.
For more background about the TANF program and how the money is used, listen to this six part Marketplace podcast series.