"Needy Families and the Recovery Act Funds: Is your state leaving money on the table?"

  • Reporting: Best Practices
  • December 08, 2009
  • Renee Davidson

In response to rising poverty in a time of recession, Congress included provisions for $5 billion in emergency assistance in the American Recovery and Reinvestment Act of 2009 (ARRA). The Emergency Fund offers help to the nearly 40 million Americans -- including nearly 14 million children -- living in poverty. But since the program was announced in February, states have been slow to take advantage of it. In fact, as of mid-November, less than $1 billion of the funds had been awarded, and many states had yet to apply.

The provisions, called the TANF Emergency Contingency Fund (ECF), offer help that takes three forms: basic assistance (cash welfare), non-recurrent short term benefits and subsidized employment.

Experts say states are just now becoming aware of the wide range of opportunities offered by the fund, and misconceptions about how the money can be used abound. But the clock is ticking: Funds are only available until the end of fiscal year 2010. Measures must be met by September 2010 in order for state efforts to be applicable or remain reimbursable at the maximum rate.

Welfare policy experts say the situation is urgent. There is $5 billion available to help low-income families, says Jack Tweedie, director of the Children and Families Program at the National Conference of State Legislatures (NCSL). “We don't want to leave that money sitting on the table when our families are so clearly in need.”

This backgrounder provides an overview of the TANF Emergency Fund, including: what it offers; the obstacles faced by states that try to obtain the funds; how to debunk misconceptions about the funds; how to report on the needs of your community; and how to track your state’s application process.

ABOUT TANF

TANF, or Temporary Assistance to Needy Families,  is the primary safety net for the nation’s low-income families. Created under the 1996 welfare reform law, TANF aids poor families through a wide range of vital services, including education and job training, child support, child care and programs to promote fatherhood and marriage.

While the number of impoverished families has increased due to the recession, in most states, TANF has not kept pace with the need for help: The total number of families with children receiving cash assistance through state TANF programs remained essentially flat between March 2008 and March 2009.

Why? Welfare experts have long argued that TANF severely limits welfare distribution, namely through its elimination of the cash welfare entitlement, or the legal right to cash assistance; sanctions and mandatory work requirements; a five-year lifetime cap on cash assistance; and family formation provisions. Experts largely attribute the current lag to these measures, particularly strict state eligibility requirements. Some states, for example, require applicants to participate in work activities before they can qualify for aid, but critics argue that families must have their basic needs met before they are able to enter the work force.

In general, the welfare reform law of 1996 encouraged states to reduce the number of people receiving assistance. But in the wake of the recession, with the primary safety net leaving so many needy families without services, Congress decided to increase aid by including it in the economic recovery package.
 

ABOUT THE EMERGENCY FUND

States qualify for the Emergency Fund if they increase their TANF-related expenditures in fiscal years 2009 or 2010 in one of three areas:

  1. BASIC ASSISTANCE (cash welfare)
  2. NON-RECURRENT SHORT-TERM BENEFITS
    Benefits for individuals who may or may not need or qualify for TANF cash assistance, but still need help with economic emergencies or other critical service needs. These benefits cannot last for more than four months, and they are not intended for ongoing needs.
  3. SUBSIDIZED EMPLOYMENT
    The creation of subsidized jobs for individuals who are unable to find work in the current job market or who need to enhance their skills in order to compete for unsubsidized employment as the economy improves.

States are eligible for funds to reimburse them for up to 80 percent of their increased spending in each of these areas.
 

IDENTIFYING "EPISODES OF NEED": WHAT STORIES DO STATE DATA TELL?

A key aspect of the Emergency Fund is the great amount of flexibility it gives states. Non-recurrent short-term benefits, for example, can include a wide range of state services: emergency energy or housing assistance, nonmedical counseling services, refundable earned income tax credits (EITC) or diversion programs to keep recipients off the main cash assistance programs. (For more information, see NCSL's "Top Ten Ways to Use Short-Term TANF Benefits," or ACF's list of examples.)

In order to design non-recurrent, short-term benefits, says Jack Tweedie, director of the Children and Families Program at NCSL, states should analyze the specific "episodes of need" among its families. Is foreclosure the major issue affecting the community right now? Do state teen pregnancy rates suggest a need for prevention services? Do spikes in reports of domestic violence suggest a pressing need for emergency shelter? What stories do state data tell?

In New Jersey, state officials identified homelessness as one of the most immediate, short-term needs facing its communities. In response, they created the Social Services for the Homeless program. The one-time, short-term program provides up to four months of housing payments, or nearly $2,000, to help families pay their rent checks or mortgage payments. In Texas, state officials designed a $1,000 short-term benefit to cover expenses faced by grandparents or other relatives who care for children. Florida and Connecticut have both created in-home support services to assist families who are at risk of losing their children.

“We've had transportation-related benefits for the repair or even the purchase of a car where criteria are met, paying for licenses and registrations,” said Julie Siegel of the Office of Family Assistance, U.S. Administration on Child and Families. “There's just a whole range of things, as long as the state can make an argument that it meets all three of those criteria [to qualify as TANF-related spending].”

At a time of rising unemployment -- which hit 10 percent in October 2009 -- the TANF Emergency Fund is one of the few areas of the Recovery Act that provides funding for direct job creation in the form of subsidized employment.

According to Tweedie, it typically takes up to a year to recruit employers, design the job structure and secure adequate training. In order to avoid these problems, states can expand existing work programs, as Washington and California have done. But many states lack existing programs and thus have been reluctant to pursue funding.

Tweedie, who has worked closely with state officials on advising Emergency Fund efforts, says perhaps the biggest challenge has been getting states to grasp the program’s flexibility and opportunity. “A lot of times I either hear ‘that's too good to be true’ or ‘can we really do that,’ ” to design a subsidized employment program, says Tweedie. “And the answer is -- structured correctly -- it's not too good to be true. It's true and you can do it.”
 

INNOVATION THROUGH PARTNERSHIPS

In order to access the full allotment of TANF emergency funds, “states have to do new things and often in new ways,” Tweedie says. This is a particular challenge under the recession: As states face severe cutbacks to their budgets, it’s difficult for them to envision creating new programs and increasing their spending.

This is a key reason that the TANF Emergency Fund promotes partnerships: Amid budget cuts, states can gain leverage and expand their social services by developing partnerships with local businesses and nonprofits, as well as private philanthropies. What’s more, states are encouraged to claim third-party expenditures and use them toward their own required increases in TANF-related spending.

In Maryland, the Department of Human Resources, which manages the state’s TANF funds, has partnered with two other state agencies -- the Department of Business and Economic Development and the Department of Labor, Licensing and Regulation -- to create a statewide initiative with access to the state’s business community. Several states are in discussions with major retailers about back-to-school payments, in which states and retailers share the profits from gift cards. States can also partner with local emergency providers, such as homeless shelters or food banks, in efforts to expand short-term, non-recurrent help to needy families.

According to Elizabeth Lower-Basch, senior policy analyst at CLASP, which advocates on behalf of low-income Americans, states are just beginning to learn about the opportunities of working with third parties. Until recently, many states falsely assumed that the required increases in TANF spending had to come solely from their own cash-strapped budgets. What’s more, there’s nothing in the federal statute about how the money from the Emergency Fund is distributed, so states and their partners have full power in negotiating how to claim the expenditures.

 

WHERE THINGS STAND

Many states are still in the process of submitting requests for funds, and a number of applications are pending. This means that it will be months until it becomes clear how the Emergency Fund will be used and what its overall impact will be.

Getting states to understand the program has been the major challenge: While many are familiar with identifying episodes of need and possible ways to respond to them, the structure and implementation of short-term benefits and third-party partnerships can be new and overwhelming. What’s more, immediate obstacles posed by the recession make it especially difficult for state Human Services agencies, governor's offices and legislators to focus on deciphering the Emergency Fund’s language.

But even when states understand the program, they are met with another barrier: time. The call for Emergency Fund applications closes in ten months. The deadline leaves those states without existing programs that they can expand or replicate particularly constrained. Some policy experts, including those at CLASP, argue that the deadline should be extended -- and soon, lest states miss their chances.
 

STORY IDEAS

  • What are the greatest needs facing families in your community, particularly low-income families?
    • Search the U.S. Census Bureau's Web site for "Fact Sheets" on your community, which include data on school enrollment, educational attainment, poverty, employment, disability status and more.
    • Once you've identified possible needs, find out what programs working to address them. If so, have they been effective?
  • What effort has your state made to apply for the Emergency funds? Where does it stand in the application process, and how would you evaluate its progress?
  • How can states think outside the box?
    • What third-party partners could your state engage in order to provide additional services to needy families?
    • What programs can be expanded or replicated?
  • Looking ahead: TANF Reauthorization
    In the fall of 2010, the entire TANF program will be up for reauthorization for the first time in five years. Its Congressional review -- which will occur alongside the deadline for TANF Emergency Funds -- will be a particularly critical issue in light of the recession. With critics and supporters alike advocating for changes, the event will prompt a national debate national debate on the needs of America’s children and families. Journalists can prepare for this debate, as well as report on the Emergency Funds within this broader context, by examining the following:
    • How has the current welfare system responded to the rising needs posed by the recession?
    • How effective have the various safety nets (such as food stamps, unemployment insurance, Medicare, Medicaid and CHIP) been?
    • What has been the effect of changes in eligibility rules and requirements brought on by the 1996 welfare reform?
    • How can welfare policy be reformed to better assist recipients with varying needs and capacities?

ADDITIONAL RESOURCES

EXPERTS

ORGANIZATIONS

GOVERNMENTAL

  • Office of Family Assistance, U.S. Administration for Children and Families
    • OFA provides information on the basic categories in which states have applied for funds and how much they have received. However, it doesn’t yet provide details on the funds, including information on the specific programs for which states have applied and/or are receiving funding. Currently, the only way to access this information is to directly contact a state’s Human Services agency. While no federal rules state that agencies must disclose the details, the importance of transparency of federal money is strongly touted by the administration.
    • OFA also provides a listerv for news on the TANF program and a helpful "Q & A" on the Emergency Funds.
  • Welfare Peer Technical Assistance Network, Office of Family Assistance, U.S. Administration for Children and Families
    • Offers an e-mail alert system on emerging state welfare news, data on low-income families and welfare recipients and analyses of various welfare programs and initiatives.
  • HHS.gov/Recovery; provides background on the TANF Emergency Funds included in the Recovery Act, including an overview of TANF.

For further resources, please see JCCF's Economics page.

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