CHN: Reforming TANF – Proposals that Would Help (and Hurt) Recipients

On April 30, the House Ways and Means Subcommittee on Human Resources held a hearing on reforming the Temporary Assistance for Needy Families (TANF) program. Due for reauthorization in 2010, the TANF block grant has instead been extended several times, and its funding was last extended through September of this year. Testimony from Donna Pavetti, Vice President for Family Income Support at the Center on Budget and Policy Priorities, focused on how little TANF does to help families find work and escape poverty. She also provided evidence of the safety net’s important role in supporting and encouraging work, and outlined policy changes to improve TANF’s ability to reach families in need and improve their employment prospects. As Dr. Pavetti noted, the number of families helped by TANF has fallen dramatically since it was enacted in 1996, even as poverty has worsened. TANF also lifts far fewer children out of deep poverty (incomes below half of the poverty line) than its predecessor, Aid to Families with Dependent Children (AFDC), did. And despite the fact that one of the key reasons TANF was turned into a block grant was to give states greater flexibility in helping recipients find and maintain work so they would no longer need assistance, states actually spend little of their TANF funds to help improve recipients’ employability, instead sometimes using TANF funds to fill other budget holes. In highlighting changes to improve the program, Dr. Pavetti described requiring greater investments in work activities, incorporating subsidized employment programs for recipients who have been unable to find jobs, and simplifying the work and reporting requirements. Indi Dutta-Gupta and Kali Grant from the Project on Deep Poverty at the Georgetown Center on Poverty and Inequality also called for refocusing TANF on work in a piece posted on CHN’s blog.
The TANF hearing did suggest a bipartisan willingness to consider improvements to TANF to encourage states to help parents to find jobs and keep them. States now have more incentives to keep caseloads low than to provide work-related services. Witnesses invited by the Republican majority emphasized the need to reward states for good outcomes for families, and even supported more education to prepare parents for decent jobs.

Despite these encouraging signs, other recent policy proposals would hurt TANF recipients. On May 12, Senator David Vitter (R-LA) introduced a bill that would limit the amount of money TANF recipients could withdraw from ATMs each day using their Electronic Benefit Transfer (EBT) cards to just $25. Dubbed the “Welfare Abuse Prevention Act,” this legislation aims to extend to the federal level a provision of a state law recently passed in Kansas (the Kansas law would also reduce lifetime benefits from 48 to 36 months and further restrict where recipients could use the card). Both the Kansas law and the Vitter bill would harm TANF recipients, particularly those who don’t have a checking account or other bank accounts. Large numbers of TANF families now withdraw larger amounts in order to pay bills, including rent. Many ATMs only allow withdrawals in $20 increments, and ATM fees per transaction would eat up a part of what they are able to withdraw. A low daily limit on withdrawals would also mean more time and money spent traveling to and from ATMs more often when cash was needed. The Department of Health and Human Services’ Administration for Children and Families said they’d review Kansas’ cap to see if it violates the federal requirement that recipients “have adequate access to their cash assistance” and can withdraw money “with minimal fees or charges.”


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