The TANF Resources Problem
With David Meni — Forthcoming (2017), Journal of Poverty and Public Policy.
2016 marks the twentieth anniversary of passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Among other things, PRWORA replaced Aid to Families with Dependent Children program (AFDC) with Temporary Assistance for Needy Families (TANF). Whereas a federal support for AFDC was an open-ended matching grant, TANF is funded with a block grant from the federal government combined with a “Maintenance of Effort” obligation for states. The block grant and MOE contributions are set for the most part at nominal levels from the mid-1990s. This paper looks at recent trends in TANF funding compared to trends in prevalence of child poverty. Compared to other work with similar intent, the novelty here lies in use of a more comprehensive poverty measure, incorporation of adjustments for interstate variation in prices, and a minor exploration of the connection between TANF resources and state fiscal capacity. Over the past decade inequality in state resources per poor child has increased. The disparities are great, making application of common performance standards without adjustment for resources questionable. Options for reform include separation of federal support for income maintenance from support for the various other programs that now garner well over half of TANF funding.