New Welfare Law: Comparison of the New Block Grant Program with Aid to Families with Dependent Children

Publication Date: October 1997

Publisher: Library of Congress. Congressional Research Service

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Research Area: Social conditions

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Abstract:

This report compares the block grant program of Temporary Assistance for Needy Families (TANF), enacted on August 22, 1996 (P.L. 104-193) and amended on August 5, 1997 (P.L. 105-33), with the former program of Aid to Families with Dependent Children (AFDC). The 1996 law replaced the 61-year-old AFDC program and its education, work, and training program, called JOBS, with capped block grants to states. It imposes a general 5-year time limit on duration of TANF benefits and requires work in order to receive benefits after 2 years. To receive full grants, states must achieve certain work participation rates: 30% of all TANF families in FY 1998 (25% in FY1997, transition year) and 75% of two-parent TANF families in both years. These minimums (to be reduced when caseloads fall below the FY1995 level) increase to 50% of all families by FY2002 and 90% of two-parent families by FY1999. In contrast, JOBS required participation by about 9% of all cases in FY1995. Unlike JOBS, TANF sharply limits educational activities that may count toward a state’s work participation rate.

AFDC entitled states to unlimited federal reimbursement at varying “matching” rates for state-set benefits and administration, Emergency Assistance, and child care for AFDC recipients and ex-recipients, and to capped matching funds for JOBS and “at-risk” child care (for low-income families not on welfare). Federal spending for these commitments totaled about $17.4 billion in FY1995. In contrast, TANF provides a fixed block grant based on recent federal funding for AFDC, JOBS, and EA ($16.5 billion yearly through FY2002) plus an average of $2.3 billion annually in a new child care block grant (for about half of the child care funds, States must provide matching funds). The Act also provides five kinds of extra TANF funds: supplemental grants for above-average population growth and below-average federal welfare spending per poor person; contingency funds — matching grants for periods of high and rising unemployment or increasing food stamp caseloads; a bonus for reducing the number of out-of-wedlock births and the abortion rate; a performance bonus, based on goals of TANF; and, added by P.L. 105-33, for two years only, welfare-to-work grant funds.

Ineligible for TANF: Unwed mothers under 18 unless they live with an adult relative or in another adult-supervised arrangement; unwed mothers under 18 without a high school diploma whose youngest child is 12 weeks old unless they attend school; persons convicted of a drug-related felony occurring after August 22, 1996. Under TANF, decide what categories of children to aid. AFDC required states to aid all families with children in a class eligible under federal rules unless their income was above state-set limits. TANF disallows any claim of entitlement to cash aid. To receive a full grant, a state must spend yearly on behalf of TANF-eligible families a sum of its own funds equal to a specified percentage of what it spent in FY1994 on the replaced programs, its “historic” level. The required spending level is 75%, but 80% if a state fails work participation minimums. At the 75% level, required state funding would total about $10.4 billion annually; for this calculation, states may count spending on families no longer eligible for TANF because of the time limit. The Act took effect July 1, 1997, at latest, but states may continue waivers approved before enactment.