The Potential Role of the Temporary Assistance for Needy Families (TANF) Block Grant in the Recession

Source: Gene Falk, Congressional Research Service, R40157, February 24, 2009

From the summary:
The recession that began in December 2007, and the loss of 3.6 million jobs since, has raised issues about policies to address the threats to the economic security of people and families from an economic downturn. This recession will likely be the first real test of how policies put in place in the mid-1990s affect the well-being of families with children during a steep economic downturn and high unemployment. Unemployment insurance (UI) is the major program to replace lost wages for unemployed workers. However, low-wage workers and those with intermittent employment are less likely to receive UI than higher-wage workers with stronger labor force attachment. In the past, the safety net for families with children included cash welfare. The 1996 welfare reform law created the Temporary Assistance for Needy Families (TANF) block grant with fixed funding and altered rules that apply to the cash welfare caseload. The American Recovery and Reinvestment Act (ARRA, P.L. 111-5) creates a new, temporary TANF fund to help pay for the increased costs of cash welfare, short-term aid, and subsidized employment for FY2009 and FY2010. ARRA temporarily modifies the caseload reduction credit states receive toward their TANF work participation. A states credit will not be reduced for any caseload increases occurring in FY2008 through FY2010. ARRA also extends TANF supplemental grants through the end of FY2010. It further allows states to use their TANF reserves for any TANF benefit or services. Under prior law, reserves could be used only for TANF cash welfare programs. This report will be updated.

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