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Substance Abuse and Mental Health Services Administration
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The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 replaced the nation’s basic cash assistance program for poor families with the Temporary Assistance for Needy Families (TANF) block grant. Since 1997, states have received $16.5 billion annually through the TANF block grant. States were required to spend roughly $10.5 billion in state resources to meet their maintenance-of-effort (MOE) requirement and qualify for these federal TANF funds.

The TANF block grant allows states to allocate resources to a broad array of services that promote the four purposes of the TANF statute: assisting needy families so children may be cared for at home, ending dependence of needy families on government benefits by promoting work and marriage, reducing nonmarital pregnancies, and encouraging the formation and maintenance of two-parent families. As the number of families with children receiving basic cash assistance fell, states increasingly devoted TANF block grant funds to supports for low-income working families, such as child care, to more intensive employment efforts to help families that have not yet made the transition to work, and to efforts to meet the law’s “family formation” goals, such as reducing teen pregnancy.

The remainder of this section discusses the issues that arise from the current-law funding structure, namely (1) the fixed funding level of the block grant, (2) the large disparities in block grant allocations among states, and (3) the lack of a mechanism to provide additional resources to states during recessions. The next section of this paper discusses how states have used their TANF funds over the past five years. A discussion of reauthorization proposals then follows. (Authors)
Washington, D.C.