And, despite the severity of the most recent recession, this success has endured. The number of families receiving cash assistance from the TANF program has fallen more than 60 percent since 1996 to roughly 3.8 million today--a decrease of more than 10 million since 1994. The vast majority of these individuals are working at some point during the year.
However, because eligibility is based on financial need, many low-income families who could benefit from TANF's support services are excluded. For example, a family of three earning up to $18,000 would be eligible for TANF benefits, but if their total income exceeded $36,000 they would not be eligible. A family with an annual income of $50,000 would have its eligibility determined by applying for benefits, which they would be unlikely to do unless they were experiencing a hardship and needed the money immediately.
There are also signs that TANF may be having negative effects on certain populations. Research has shown that parents who rely exclusively on TANF are more likely to experience mental health problems and abuse drugs and alcohol than those who work but still require assistance. Children of single mothers who receive TANF are more likely to suffer developmental delays and be placed in special education classes than children whose mothers work.
Finally, TANF limits the amount of time families can receive benefits.
TANF financial assistance was provided to around 437,000 adults and 1.6 million children. There were around 512,000 child-only households (those in which no adult received TANF cash assistance) in an average month, accounting for 55.8 percent of the overall TANF caseload. The largest percentage of children living in a household without an adult receiving TANF income was 8.4 percent of all children in foster care.
The number of families affected by poverty who received help from TANF increased from 2018 to 2019. In 2019, there were about 5 million poor families with at least one member receiving aid, out of a total family caseload of 10.5 million.
Almost half of all families receiving TANF assistance had annual incomes above the federal poverty level. However, nearly one in five families lived below the poverty line, including 14 percent of families with children.
Among families with incomes below 200 percent of the federal poverty level, almost one in four children were living in a househearthousing.
We may argue that TANF has been a success based on 20 years of program performance. While a healthy economy and an enlarged Earned Income Tax Credit surely aided, studies that isolate the impact of welfare reform discover that TANF alone improved employment and incomes. When Congress reauthorized the program in 2005, it extended the life of TANF for five more years at $16.5 billion.
Even before TANF was enacted, only about one in seven families with a working age member received cash assistance. By contrast, after TANF was passed, nearly four in ten families with a working-age member received benefits. The vast majority of recipients are parents or children. In fact, among low-income families with working-age members, TANF participation increased from 17 to 21 percent between 1996 and 2006.
TANF's goal is to help needy families avoid poverty by giving them money for essential expenses like food, housing, utilities, child care, health care, and transportation. If they meet certain work requirements, poor parents can also save some of their income for future needs or use the money to purchase goods or services from private employers.
Parents can receive TANF payments in two ways: directly through a state agency called a "tribal organization" or indirectly through a local government agency called a "substitute father figure".
TANF is administered by the states, who have extensive leeway in deciding the combination of cash assistance, job help, and other programs that it offers. However, if too few families receiving financial assistance engage in work-related activities, a state may lose federal support. This could lead it to reduce or eliminate certain services for needy families.
In some cases, this has already happened. For example, before Texas reformed its program in 1999, almost no one worked. After the change was implemented, many more people started looking for jobs. Today, half of all recipients are working or searching for work.
However, in other states where TANF has been made more restrictive, such as by requiring most recipients to look for work and allowing them only limited time off from work, fewer people are working. In those cases, more people need TANF but there are still not enough jobs to go around. That can lead to longer lines at unemployment offices and more people falling through the cracks of the system.
There have also been reports of states reducing or eliminating services for needy families as a way of saving money. For example, several studies have shown that housing costs account for a large part of TANF expenditures. If a family receives TANF but cannot afford a rent increase, the provider who funds its portion of the cost has no way of recouping its investment.