As the debt ceiling crisis looms, negotiations are increasingly likely to include Republican demands to tighten work requirements in state Temporary Assistance to Needy Families (TANF) programs, which provide cash assistance to families in poverty.
Each state runs its own TANF program with considerable discretion over who is eligible and how exactly states spend the funds they receive from a federal block grant. To hold states accountable and ensure they meet the goal of moving families from welfare to work, the federal government mandates that states meet certain work participation goals among TANF beneficiaries. Republican proposals for restoring work requirements are aimed at states rather than directly at families.
The TANF provisions in Speaker McCarthy’s Limit, Save, and Grow Act would change how states calculate what is called their work participation rate (WPR) for beneficiaries. As part of the 1996 welfare reforms under President Bill Clinton, the federal government began requiring states to meet a target where 50 percent of single parents and 90 percent of married parents receiving cash assistance were engaged in at least 30 hours of “work activities” each week (the target is only 20 hours for parents with young children). Eligible work activities include subsidized or unsubsidized employment, community service, vocational training, and job readiness programs.
Work activities sound fine on paper. Still, case workers and beneficiaries alike often complain that they end up spending more time tracking countable hours to comply with these requirements – filling out paperwork and checking boxes – than engaging in the sort of integrated casework focused on ensuring access to family services, intensive job-search assistance, and job training reflecting local employer demands that has proved to be more helpful in getting families back on their feet. It is unclear whether chasing countable hours leads to permanent employment that allows families to leave welfare for good.
The 1996 reforms also included a caseload reduction credit (CRC) that allowed states to reduce their WPR target if they could show they were reducing caseloads over time. The idea was that states should not be penalized for making progress on reducing welfare rolls – a core goal of the reforms. In 2021, only six states were held to a 50 percent WPR standard. The majority use CRCs to get a lower standard, including those with 0 percent standards.
Republicans are targeting what they see as three loopholes that allow states to dodge the full 50 percent standard. The first would update the baseline year for which states can receive credit for declining caseloads to 2022. It was initially set at 1995 levels, but because caseloads declined quickly after 1996, few states were held to the 50 percent standard. Congress reset it in 2005, but states quickly found other ways to reduce their WPR standards.
These are the other two loopholes Republicans want to close. One of these is provisions allowing states to “buy down” their WPR standard by increasing state spending beyond federal requirements. The other is so-called “small check” schemes where states increase the number of TANF beneficiaries meeting work requirements by sending $10 or $20 monthly checks to already working parents receiving other benefits.
If Republicans are successful, states might finally be subject to WPR much closer to 50 percent. Still, there are reasons to doubt that these changes will lead to any meaningful increase in employment among families in poverty. First of all, states are surprisingly creative in finding new loopholes. The “small check” and “buy down” schemes that emerged after the 2005 reforms are a case in point. States will likely find new ways to reduce their WPR standard or inflate the portion of families meeting work activities requirements. Moving some families to solely state-funded programs not subject to federal requirements, for example, would help states reduce TANF caseloads and receive credit for it.
Why are states so keen to take evasive maneuvers? Are they trying to avoid accountability or stymie efforts to make TANF beneficiaries self-sufficient? Hardly. The vast majority of caseworkers and families are both invested in moving from stigmatized welfare to dignified work. The reality is that the changes would recreate impossible federal standards that states simply can’t meet at current funding levels. So instead they’d have to get creative.
Even the much-touted welfare-to-work pilot programs that led to the 1996 reforms could not achieve the rates of work participation that states would be held to under the current Republican proposal. The Congressional Budget Office recently identified several programs and supports that can meaningfully increase employment, but the best options are costly.
Increasing childcare subsidies, for example, would increase employment among single parents but comes with an annual $3 billion price tag. We also know integrated casework that goes beyond the “checking boxes” casework incentivized by federal standards increases employment – if properly funded. Meeting federal standards would be an uphill struggle under the best of circumstances. It becomes impossible after nearly three decades of declining federal support for TANF supports and services.
The $16.5 billion TANF block introduced in 1996 was not designed to keep up with inflation or population growth. As a result, the real value of federal funding has declined by almost 50 percent over time. Republicans are asking states to do more than ever with less than ever. Until Congress begins matching tighter federal mandates with additional financial support for states, expect them to continue evading WPR standards and make little headway on Republicans’ goal of moving more families from welfare to work.
Instead, states will respond to this unfunded mandate by creatively finding new ways to reduce caseloads on paper so they can claim that caseload reduction credit. Whether they do it by moving some families off TANF into other solely state-funded programs or deterring and disqualifying families by burying them under onerous new paperwork requirements, the results will be the same: work requirements done this way will fail to work.
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