The House Ways and Means Human Resources Subcommittee held a hearing, “Jobs and Opportunity: Legislative Options to Address the Jobs Gap,” with the purpose to unveil a TANF reauthorization. The reauthorization of the Temporary Assistance for Needy Families (TANF) was a Republican bill but in some respects was not as conservative as some had projected. It does ease up on some of the more punitive work requirements with outcomes for states shifted to the number of people who leave assistance and who are working or still working six months and twelve months later. It also eases up on how tightly work is defined including how states use education and vocational education. It also restores more realistic work expectations for two-parent families that became very tough after the 2006 TANF reauthorization.

The most controversial parts however revolve around funding. The TANF block grant has lost approximately one third of its value due to inflation since 1996. Instead of increasing the $16.5 billion block grant, it allows states to continue to receive 75 percent of the block grant ($12 billion) under the same state maintence of effort spending conditions. The remaining 25 percent however is awarded to states based on a child poverty formula and only if the states meet the Medicaid matching rate to draw down funds. States would not have to draw down the funding.

Because this formula does not increase funds, it redistributes funds from states that have traditionally made a political commitment (under both parties) to spend on these programs despite getting a much lower federal match than poor states. As a result, it is calculated (by the Congressional Research Service) that states like California (-$419 million), Connecticut ($-39 million), Massachusetts (-$63 million), Michigan ($-71 million), New York (-$373 million) and Pennsylvania (-$46 million) all lose even if they put up a match. There are other states that are losers too and most of the states that lose have received matches for low income programs based on the Medicaid matching rates. States like New York and California have only received a fifty percent match from federal programs over the last half century, meaning one state dollar draws one federal dollar. Other states that would benefit under this new formula have traditionally received a much better match through the Medicaid match sometimes getting a match of 75 percent or more meaning one state dollars leverages three federal dollars. Some of the big winners are Florida (+$99 million), Georgia ($75 million) Indiana (+$29 million), Mississippi (+$37 million), North Carolina (+$ 59 million), and biggest of all Texas (+323 million). The Texas increase amounts to a 118 percent increase, assuming the state would draw the new funds down. Some of these states benefited from, but did not lobby in support of, keeping a 1996 supplemental grant of $319 million when Congress dropped it in 2012.

As a part of the restructured funding, states would be restricted in how they spend the mandatory funds. The funding would be limited to core services such as cash assistance and training and some limited supports. States could not spend these TANF mandatory funds on child care or child welfare. Instead states could transfer up to half (50 percent) on child care and/or combination of funds to child welfare and the workforce block grant—the Workforce Innovation and Opportunity Act (WIOA). No more than 10 percent could be transferred into the Promoting Safe and Stable Families (PSSF—Title IV-B part 2) program and 5 percent into WIOA. It also eliminates the ability to transfer 10 percent of TANF funds into SSBG.

TANF does expire at the end of this fiscal year. It has not had a full reauthorization since 2006 and instead has had a series of months-long to the most recent two-year extension. This legislation would seek a 5-year extension. Here is a Committee detailed summary.