From its creation in 1934 to the mid-1990s, the Assistance to Families with Dependent Children (AFDC) program was a major component of America’s safety net, providing cash assistance to low-income families with children. In 1996, President Bill Clinton and a Republican-controlled Congress approved reforms to “end welfare as we know it.” AFDC became Temporary Assistance for Needy Families (TANF), with much stricter limits on who can receive aid and for how long and much greater leeway for state officials to use federal funds for welfare as they see fit.
Prior to the 1996 welfare reforms, AFDC was an entitlement like Social Security, Medicare, and Medicaid. That means any qualifying family who applied could receive benefits, and spending on the program went up and down based on need. Under the new TANF rules, recipients must satisfy a work or training requirement, and they can lose benefits for not meeting these requirements. TANF benefits to families also have a strict time limit — recipients may receive benefits for a maximum of five years over their lifetime, unless they meet limited criteria for a hardship extension.
Another major change with welfare reform is that TANF funds are now provided as block grants to states. Instead of going up and down based on need, the total amount of the basic TANF block grant has remained at $16.5 billion per year since 1996. Due to inflation, its real value has fallen by one-third since that year.
States also are no longer required to use most welfare funds on basic cash assistance. They can spend the TANF block grant on programs to meet any of four goals:
- Provide assistance to needy families so that children can be cared for in their own homes;
- Reduce the dependency of needy parents by promoting job preparation, work and marriage;
- Prevent and reduce the incidence of out-of-wedlock pregnancies; or
- Encourage the formation and maintenance of two-parent families.
The block grant format allows states to decide which areas to fund or if they will fund them at all.
Oklahoma’s Use of TANF Funds
Oklahoma, unfortunately, is an example of how basic assistance through TANF has severely eroded over time. In 1997, Oklahoma spent $95.1 million on basic cash assistance. In 2014, the state only spent $18.1 million on basic cash assistance. Over that time, Oklahoma’s cash assistance to families has plummeted 80.8 percent, even before inflation.
Oklahoma is one of just 10 states that spends less than 10 percent of TANF funding on basic cash assistance. We spend so little on cash assistance for a couple reasons. First, Oklahoma provides very small payments per family. Oklahoma’s maximum benefit is $292 per month for a single-parent family of three, or just 18 percent of the federal poverty line. In contrast, the national median of a maximum payment for a family of that size is $429 per month.
Secondly, Oklahoma provides these already small payments to very few families. In fiscal year 2015, a monthly average of just 2,469 adults were enrolled in TANF in Oklahoma, a tiny fraction of the more than 370,000 Oklahomans age 18 to 64 living in poverty. Because of the stringent work requirements and time limit coupled with the low cash assistance, families may opt to voluntarily leave or may see their benefits terminated, even though they are still living in poverty.
One area that Oklahoma has dedicated significant TANF funds to is child care. In 1997 Oklahoma spent nearly $16 million on child care; in 2014, that had increased to $63 million. While this is a significant increase, spending on childcare has steadily decreased since its peak at $124 million in 2009. This decrease has resulted in less children having access to childcare.
If Oklahoma is not spending TANF funds on low-income families’ most pressing needs, where is the money allocated? Some of the money goes to programs that speak to goals 3 and 4 of TANF: pregnancy prevention and two-parent family formation. Some money is transferred out of TANF to the Social Service Block Grant (SSBG) and Child Care and Development Block Grant (CCDBG). SSBG and CCDBG spending in 2014 was $43.6 million.
Another area where Oklahoma uses TANF funds is Authorized Under Prior Law (AUPL) + Other. This category includes spending areas that were acceptable under AFDC and other non-assistance programs. AUPL funds are used for wide ranging activities, including domestic violence services, in-home child welfare services, funds to faith-based organizations, disability services, and emergency assistance.
Because the block grant format of TANF allows states substantial leeway to allocate funds, the nature of the program varies dramatically from state to state. Oklahoma’s use of TANF funds falls far short of providing a true safety net for the poorest Oklahoma families. The current trend of spending less money on the core purposes of TANF may shrink the population of “welfare” recipients, but it does nothing to address poverty. The diverting of those funds, while permissible under the law, means that “welfare” barely exists in Oklahoma.