The Tennessee Justice Center, the state’s leading safety net advocate, sits across the street from Nashville’s largest public housing project.
The average age of the more than 4,000 residents of Napier Sudekum Housing is 28. Nearly 90 percent of children live in single-parent households. About 85 percent of residents over age 16 are employed, but more than 70 percent of residents live in poverty, all according to U.S. Census data.
“We’ve been tracking these families for three years,” said Michele Johnson, TJC’s executive director. “Guess how many of the families are on TANF? Almost none (1.6 percent). How is that possible in a state that has been hoarding hundreds of millions of dollars of TANF funds intended for kids living in concentrated poverty?”
TANF – Temporary Assistance for Needy Families – is the nation’s primary welfare assistance program. It was the product of the Clinton administration’s effort in the mid-1990s to “end welfare as we know it.”
It did.
Before TANF, welfare benefits reached about 70 percent of families in poverty across the country.
Nearly three decades later, TANF benefits reach only about 20 percent of such families, and only about 15 percent in Tennessee, according to the nonpartisan Center for Budget and Policy Priorities.
Overall, TANF caseloads in Tennessee have dropped 80 percent, from 68,000 to 13,000. The percentage of poor children receiving TANF assistance has declined as much.
Among the reasons:
- TANF funding hasn’t increased in 30 years. That means the real value of the federal government’s annual $6 billion TANF block grant to states has declined by 40 percent due to inflation.
- States have been allowed to divert billions in TANF funds to other non-welfare programs.
- States have been allowed to hoard billions of TANF dollars for a number of reasons, including a loophole that rewards states for pushing recipients off TANF rolls, even if they don’t have other sources of support.
- Federal law requires that TANF cash assistance be provided to “needy” families with children, but there is no federal definition of “needy” and each state sets its own requirements.
“The lack of minimum federal standards has allowed states to enact extremely restrictive eligibility policies, leaving the families with the greatest needs — including, disproportionately, Black families — unable to cover the basic essentials through either employment or cash assistance,” the nonpartisan Center reported in 2023.
Public officials on both sides of the political aisle agree that TANF isn’t working as it should.
Since the Covid-19 recession began in 2020, the number of U.S. households receiving SNAP (food stamps) benefits has increased by six million. The number of individuals receiving unemployment benefits has increased by eight million.
In contrast, the number of families receiving TANF benefits during that time increased by only about 250,000.
“We all want TANF caseloads to go down because more parents are moving into good jobs,” U.S. Rep. Jim McDermott (D-Wash.) said at a House hearing on TANF reauthorization earlier this year. “But if caseloads go down or stay flat, even as unemployment and poverty go way up, that should never be anyone’s definition of success. If it is, we might as well completely eliminate the TANF program right now. We would then have a caseload of zero, a perfect success.”
At the same hearing, U.S. Rep. John Linder (R-Ga.) agreed: “Instead of bribing states to increase welfare rolls, or fund make-work jobs that will go away as soon as the funding ends, we should help more low-income parents train for, look for, find, and keep real jobs to support their families.”
The Biden administration and members of Congress have proposed a series of TANF reforms.
Tennessee isn’t waiting.
“We would like to propose a bolder vision for the future,” said Clarence Carter, Tennessee’s Commissioner of Human Services. “We want to use TANF as a tool to transform the Tennessee safety net.”
That “bolder vision” is called the Tennessee TANF Opportunity Act, a 2021 state law that is redirecting millions in federal welfare funds to a handful of nonprofit organizations, including two in Memphis — GROWWTH and AFIRM.
Each of the seven nonprofits are getting $25 million in TANF funds and four years to test and prove different “theories of change” — strategies to “help families to become stable and move beyond the need for safety net benefits in the long-term.”
State officials believe that one or more of the pilots will become a model for TANF reform here and across the country.
“From the beginning, we have been focused on creating a conservative, thoughtful way to put those (unspent) dollars into play to help the Tennesseans who need them,” Carter said.
But safety net advocates say the pilots, while well-intentioned, are redirecting funds that should go directly to poor families with children in the form of cash assistance.
“Why are we hijacking unspent TANF funds for a bunch of distractions?” Johnson asked. “The point of TANF is to give emergency funds to families in crisis to give them a path out of poverty.”
In his travels around the state, Clarence Carter likes to show audiences a graphic created a decade ago by Republican staff members of the U.S. House Ways and Means Committee.
The graphic is a tangle of color-coded circles, squares, triangles and rectangles that represent 84 federally funded social welfare programs administered by 26 federal agencies — more than $1 trillion worth of government benefits and services available to low-income individuals.
“What it shows is, in short, a mess,” committee Chairman Charles Boustany (R-La.) said at the time. “This system may have started out with good intentions, but it has become a confusing maze of programs that are overlapping, duplicative, poorly coordinated, and difficult to administer. I defy anyone to say this is the best way to address the human tragedy so many of our fellow citizens experience.”
Carter, a Black Republican who has led state welfare agencies in Arizona and Virginia and national welfare agencies for the Bush and Trump administrations, could not agree more.
“Our system of public supports should be about freeing people to act in their own best interest, not making them wards of an ever-expanding and complex public assistance system,” Carter said.
Carter grew up in Pittsburgh. He saw the 1960s “war on poverty” as a noble effort gone awry. “I’d grown up surrounded by people who were struggling. I’d seen the flaws in the welfare system. I knew it didn’t work,” he said.
After college, Carter worked for social service agencies in Virginia and New Jersey. In 1994, he became commissioner of the Virginia Department of Social Service. That’s the year Clinton and Congress began haggling over welfare reform.
In 1995, a year before TANF became law, Virginia became the first state to reform its welfare system, requiring able-bodied adult recipients to look for work. In Carter’s six years as commissioner in Virginia, public assistance rolls there declined by more than half to a 30-year low.
Last summer, Carter told a U.S. House subcommittee about a young woman he met in Virginia who had been unemployed since the birth of her first child 15 years before.
“She said to me, ‘When they told me I would have to work, I was scared. Do you know what I did with my first paycheck? I took my kids out for pizza!’ She began to cry,” Carter said. “Finally, she said, ‘Mr. Carter, at the beginning I was afraid but now I know I will never be on welfare again because I know I can do this.’ It is that very inspiration, hope, and vision that drives me every day in this work.”
In 2001, Carter went to work for the second Bush administration and eventually was put in charge of the U.S. Department of Agriculture’s $40 billion food stamp program. Food stamp participation increased dramatically during those years as Congress expanded the program.
For Carter, more food stamps didn’t mean less poverty. He thinks government welfare programs measure the wrong things. He likes to point out what he believes is one of TANF’s fatal measurement flaws.
The TANF law requires that 50 percent of all families and 90 percent of two-parent families who receive assistance engage in “a work activity” for at least 30 hours a week (or 20 hours a week for a single parent with a child under age 6).
States can lose funding if they do not meet that standard. But because of loopholes in TANF law, few states have had to meet that standard.
For every 1 percent reduction in the number of families receiving TANF aid, a state gets a 1 percent “caseload reduction credit” in the work requirement.
“The caseload reduction credit rewards states for pushing recipients off cash assistance, even if they do not have other sources of support,” the Congressional Research Office noted in 2021.
Another loophole allows states to send food stamp recipients who are working a $20 monthly TANF check and count them as “working” TANF recipients.
In 2021, only six states had to comply with the 50 percent requirement, while 34 states — including Tennessee — had reduced their work requirement to zero.
“It was not that there weren’t eligible families,” Carter said. “It was that previous administrations had not been very creative beyond cash assistance in seeking innovative solutions to meet the economic, social and developmental challenges of our consumers.”
Carter’s tenure as director of Arizona’s Department of Economic Security from 2011-2015 highlighted another flaw in TANF.
Federal TANF funds are received as block grants, and TANF’s four stated purposes are fairly broad. So states are free to shift TANF funds from job training, child care and cash assistance for the poor — core purposes of TANF — to other state programs.
Indiana used TANF funds for to pay for a textbook rental program.
Louisiana and Michigan used TANF funds to provide college scholarships and financial aid.
Tennessee spends nearly three-fourths of its TANF funds on pre-K and Head Start.
Mississippi, Arizona, and other states have used TANF funds to plug budget holes in other state welfare agencies.
Overall and over time, states have spent about a third of their TANF funds on “other areas.”
“It has become clear that, in some instances, states have indeed undercut statutory requirements by using TANF and (state) funds to pay for activities with, at best, tenuous connections to any TANF purpose,” the Biden administration said late last year.
Those expenditures include:
- More than $1 billion spent on college scholarships (including for middle- and high-income individuals without children). States have claimed that those expenditures are allowable because they are “reasonably calculated” to accomplish the purpose of preventing and reducing out-of-wedlock pregnancies, one of TANF’s four core purposes.
- Close to $1 billion spent on general youth services that are not targeted to vulnerable youth, but that states say accomplish the purpose of preventing and reducing out-of-wedlock pregnancies.
- Close to $2 billion spent covering ordinary operating costs in state child safety programs, justified as providing assistance to needy families.
“Pre-K, child welfare, all of these are valuable things, and it’s important that they’re funded,” said Heather Hahn, a TANF expert for the Urban Institute. “But it shouldn’t come at the expense of not providing basic assistance and work supports for people who need them.”
Under Carter’s leadership in Arizona, TANF rolls plummeted. By 2013, only 9 of 100 impoverished families with children received TANF basic assistance. As benefits declined, more children were taken into state custody and placed in foster care or group homes.
Arizona moved more than two-thirds of its TANF funds into child protection services. It wasn’t enough.
In 2014, a state agency found that Carter’s department had failed to investigate more than 6,000 reports of child abuse and neglect. The investigation found no evidence Carter knew about the problem. “Carter should have asked questions. He should have sounded the alarm,” the Arizona Republic said in an editorial calling for Carter to resign.
The Arizona governor removed child protective services from Carter’s department and created a separate Department of Child Safety. Carter resigned in 2015.
“It’s not as if those dollars were removed to build roads and bridges,” Carter told RetroReport, a nonprofit news organization, in 2016. “They were used to support another important function of the safety net, and that’s strengthening families. So the monies were not hijacked.”
Arizona, which limits TANF benefits to 24 months, still spends nearly three-fourths of its TANF funds on child welfare services. Much of that is spent investigating child welfare cases. More than 90 percent are child neglect cases, which are often tied to poverty.
“In other words, welfare in Arizona largely goes not to helping poor parents financially but rather to the state’s Department of Child Safety — an agency that investigates many of these same parents, and that sometimes takes their kids away for reasons arising from the poverty that they were seeking help with in the first place,” ProPublica and NBC News reported in 2022.
Before Carter was appointed Tennessee’s Commissioner of Human Services in 2021, he ran the TANF program for the Trump administration.
Carter found that states were holding on to massive reservoirs of idle TANF funds — more than $6 billion that Congress had allocated to help poor families. Tennessee was sitting on about $800 million, the largest surplus in the country.
“We encouraged states to use their unexpended balances to demonstrate ways to grow capacity to reduce dependency of their consumers served through the TANF program,” Carter told a U.S. House subcommittee on work and welfare a year ago. “Unfortunately, our encouragements fell flat.”
Over the past year, Congress and the Biden administration have proposed new laws and regulations that redefine how TANF funds are spent and for whom.
“America’s welfare system – instead of helping more low-income Americans find and keep a job that supports their family – has allowed taxpayer dollars to be wasted on pet projects and absurd administrative costs,” U.S. Rep. Jason Smith (R-Mo.), chairman of the House Ways and Means Committee, said in a recent press release.
Smith pointed to Mississippi as the poster state for misuse and abuse of TANF funds. A state audit and a Pulitzer Prize-winning investigation by Mississippi Today found that at least $77 million in TANF funds were misused from 2017-2020.
TANF funds were spent on a 15-acre horse ranch, construction of a volleyball stadium, lobbying expenses, sports camps for young athletes, and star-studded high school rallies. During the same time, the state cut the number of families receiving monthly TANF assistance from nearly 6,000 to 2,600, according to Mississippi Today.
The state’s former director of Human Services and six others have pleaded guilty to criminal charges. Twenty others face civil charges.
“The Mississippi case is emblematic of a systemic problem,” Smith said. “A lack of basic financial safeguards have unfortunately created an environment ripe for fraud that robs resources from families in poverty, with some states diverting non-assistance funds to fill budget gaps and to fund programs loosely related to TANF’s core goals.”
Smith’s House committee has proposed a package of seven reforms that would reauthorize TANF for the first time in 20 years.
One proposal would prevent states from using TANF funds to fill other state budget gaps. Another would require states to spend all allocated TANF funds within three years.
The Biden administration, meanwhile, has proposed new federal rules intended to increase direct cash assistance (also called income support) to the neediest families.
The new rules define the word “needy” and restrict TANF eligibility to those at or below 200 percent of the federal poverty line ($38,730 for a family of three). More than one in three children in America live in families with incomes less than 200 percent of federal poverty guidelines.
Many states have used TANF funds to fill budget holes by providing services for families at up to 500 percent of the federal poverty line ($129,100 for a family of three).
The Biden administration estimates that stricter TANF spending rules would redirect billions of dollars a year to the neediest families, especially children in those families.
“Establishing a ceiling on the term ‘needy’ as proposed would help ensure that TANF funds are spent in ways ‘reasonably calculated’ to support the well-being of children in need,” Hahn wrote in a 2023 brief supporting the rule changes.
It’s unclear whether or how federal reforms in TANF will affect Tennessee’s plans.
The 2021 Tennessee TANF Opportunity Act increased the state’s maximum monthly TANF assistance from $277 to $387 a month, a 40 percent increase but still more than a third lower than the national average.
“Tennessee’s monthly benefits are better but still not nearly enough to lift a family out of poverty,” said Jane Dimnwaobi of the Tennessee Justice Center.
Nationally, only a quarter of families who qualify for TANF apply for it. Even fewer try to re-qualify after they’ve been removed from the rolls.
Safety net advocates are hopeful that will change with the reforms being pushed by the Biden administration, Congress, and some states.
“We’re at a moment of innovation right now,” said Aditi Shrivastava, a TANF expert at the Center for Budget and Policy Priorities. “We haven’t seen that happen in a long time. Change is slow, but with TANF now it seems like change is possible.”
