Nebraska lawmakers question $131 million fund created with unused public aid money

A state fund aimed at helping Nebraska families in poverty has raised $131 million this year despite previous claims from state officials that they plan to use the money.

Stephanie Beasley, director of Children and Family Services for the Department of Health and Human Services, said the money represents the accumulation of an unused portion of the Temporary Assistance for Needy Families Federal Block Grant. Block grants provide public assistance to families and help pay for many programs.

Beasley disclosed the October 1 reserve total at a legislative hearing on Friday, prompting frustration from a pair of Omaha-area lawmakers who said the state had not done enough to access the money.

“We have people who are hurting in our communities across the state and we’re sitting on $130 million and that doesn’t sit well with me,” said Omaha State Senator Machella Cavanaugh. “We are in trouble.”

He said HHS officials have told the committee several times in the past that they have plans to use the reserve money to help children and families. Yet each time they come back, the reserve fund increases instead.

The chairman of the committee, Sen. John Ark of La Vista, expressed similar concerns. He said the issue continues despite the department’s previous promises and previous inquiries from MPs.

“We see just one opportunity here,” he said. “We want to see those dollars well utilized and within federal guidance. We have some opportunity to improve services and create some innovative services.”

Beasley said the department launched a working group in March to “study how more funding could be distributed in accordance with federal and state guidelines.” The group, which includes people receiving TANF assistance, is working to assess needs in Nebraska communities, evaluate current programs, and recommend additional programs.

So far, she said, the group has identified family support coaching, emergency housing stability and kinship child care support as a priority. The Working Group is expected to submit its preliminary report in a few months.

Beasley said the group is not looking at the eligibility level for families to receive cash assistance, which she said is a legislative decision.

Diane Amdor, a staff attorney for Nebraska Appleseed, urged lawmakers to increase the amount of monthly cash assistance and use the reserve fund to raise eligibility levels.

She noted that fewer families qualify for help, even though the number of Nebraska families with children in poverty has not decreased. Meanwhile, even before the recent surge in inflation, average profit levels were not commensurate with the cost of living.

“Enough,” she said. “People need direct assistance so that they can afford basic needs, not just a spectrum of new programs and initiatives.”

Concerns have been raised for many years about the size and use of the TANF reserve. In 2014, then-state auditor Mike Foley questioned the reserve, which was $55.8 million at the time. He said it could have been used to reduce the use of state tax dollars for aid.

A Legislative Financial Office report presented at Friday’s hearing said Nebraska has had a reserve fund since the federal government launched the TANF block grant program in 1996 as part of welfare reform.

The block grant program gave states flexibility in using the funds as long as it leads to specified goals. These include helping families in need so that children can stay in their homes, preparing for jobs, promoting work and marriage, preventing pregnancies outside marriage, and encouraging two-parent families.

Beasley said Nebraska uses 29% of its TANF funds for cash assistance and 16% for the Employment First program, which aims to help parents go to work with cash assistance. Block grant funds also help pay for child welfare programs, child care subsidies, emergency assistance for families, paternity initiatives and other programs.

As the Financial Office reports, the TANF reserve was created largely because block grant funds were based on the number of households receiving public assistance in 1994, when caseloads were at an all-time high. About 15,000 Nebraska families were receiving cash assistance that year. As of August, 2,787 families were receiving cash assistance.

Beasley said Nebraska’s low unemployment rate has reduced participation in the program. He said the number of families receiving assistance this year is less as compared to 2021.