TANF needs more accountability and better funding

Former Hall of Fame quarterback Brett Favre has been in the news potentially receives over $1 million in Temporary Assistance for Needy Families (TANF) funds to help low-income families in Mississippi. The Favre scandal is just the latest of them all a long series of scandals about Mississippi’s misuse of welfare funds.

While some gleefully applied the same label of “welfare queen” to Favre that was attached to Linda Taylor five decades ago, Washington Post Editorial Board took the opportunity to highlight some of the broader structural problems plaguing federal TANF funding since Social protection reforms from 1996.

The committee touched on two different issues—one about federal oversight and one about federal support—that are worthy of further investigation.

“The food there is terrible…”

The Post editorial team rightly points out that lax oversight and unclear federal government standards have led to a situation where federal TANF grants have “turned into an opaque fund for the states.” A relatively small portion of TANF funds actually reach families as basic cash assistance. The rest of the funds are earmarked for other social policy objectives. Between 1997 and 2020, the share of funds used for financial aid headlong from 71 percent to 22 percent.

Some progressives point to spending on Republican-backed initiatives to nurture marriages or crisis pregnancy centers — or, in Favre’s case, plain old scams — as examples of why we’ve seen a decline in aid. The reality is that only a small fraction of TANF dollars are used for these purposes.

Recent research from Zach Parolin highlights trends in government spending priorities over time. He finds that spending on job facilitation programs and other services has surpassed cash assistance as a share of total TANF spending. The first includes subsidies for work, education/training, childcare assistance and refundable tax credits. The last category consists of different types of spending on social services. Spending on programs to discourage single motherhood has increased, but typically accounts for less than 7 percent of total spending.

Figure 1. TANF spending by category 1997-2014

The Favre scandal has gained attention because it is a massive misuse of TANF funds. But before this recent period of looting, Mississippi’s TANF funding was most likely siphoned off for what most would consider reasonable purposes such as labor subsidies, education/training, and child care.

“…and the portions are so small”

The editorial also correctly points out that federal funding has decreased significantly over time. Because the value of the block grant is not indexed for inflation, it has lost about 40 percent of its real value since 1997. This erosion is exacerbated by the fact that it is not adjusted for population size either, leaving fewer dollars to cover more children overtime.

These issues are particularly problematic for Mississippi because of the way Congress originally structured the TANF block grant back in 1996. As I explained in “Rich country, poor country,” state allocations for the new block grant were based on an older matching formula that effectively favored rich states over poor states. All states may have seen their federal TANF grant decrease over time, but states like Mississippi started with a significantly lower base level.

Figure 2. Consumption per child card

As a result of these changes, Mississippi receives a fraction of the federal funding per child that wealthy states receive from the same block grant. New York, which is twice as rich as Mississippi, receives nearly five times as much per child. The disparity is so significant that even if Mississippi spent all of its federal TANF funding on cash assistance, it still wouldn’t be able to spend as much per child as New York does now.

Time for a bipartisan deal on TANF?

As with past welfare scandals, the right’s initial reaction will be to crack down on waste, fraud and abuse in the program, while those on the left will demand more resources.

Among Republicans, JOBS Act will take important initial steps to increase accountability by limiting government spending on basic basic assistance and employment assistance to no less than 25 percent of total spending. In addition, the programs would be limited to serving families making no more than 200 percent of the federal poverty line. The bill would also overhaul reporting requirements, but does nothing to reverse block grant erosion or inequitable distribution.

Among Democrats, the focus was on increasing the value of block grants without fully addressing the issue of allocation or leakage of funds for questionable programs. Increasing funding without addressing the sources of aid crowding out is a recipe for disaster.

Effective reform will require addressing the lack of accountability in state spending, as well as reduced funding and inequity in the distribution of TANF funds among states. Supporting our most vulnerable families is too important to allow partisan gridlock to stand in the way of fixing TANF.

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