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Welfare Reform, Aid to Families with Dependent Children (AFDC), and Temporary Assistance for Needy Families (TANF)

Many programs exist in the United States to assist families and children living with economic hardship. Some of these programs are federally run, and others are run at the state level. In many cases the programs are mandated at the federal level and administered by the states, which can make tracking them complicated.

In 1996 the U.S. Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act (PL 104–193) to reform the welfare system. The primary goal of the legislation was to get as many people as possible into the paid labor force and off welfare rolls. The law set limits on how long welfare recipients could receive

FIGURE 4.1

FIGURE 4.2

assistance, encouraging them to seek gainful employment. Aid to Families with Dependent Children (AFDC), a guaranteed assistance program for low-income families,

FIGURE 4.3

was eliminated and replaced with the Temporary Assistance for Needy Families (TANF) program. Under TANF, states receive a fixed amount from the federal government based on what they spent on welfare programs in 1994 without regard to subsequent changes in need. TANF frees the states from many federal constraints on how they manage the funds. The program reduced the federal welfare

TABLE 4.1

Total number of families and recipients of Temporary Assistance for Needy Families (TANF), September 1996 and September 2003
TANF families TANF recipients
Total families 4th qtr FY03 Change from September 1996 to Sep-03 Total recipients 4th qtr FY03 Change from September 1996 to Sep-03
State 3-Sep Sep-96 families % change 3-Sep Sep-96 recipients % change
SOURCE: Adapted from "Temporary Assistance for Needy Families: Total Number of Families and Recipients, July–September 2003," in Welfare Rolls Drop Again, U.S. Department of Health and Human Services, March 30, 2004, http://www.acf.hhs.gov/news/press/2004/TANF_TOTFAM_4th2003.htm (accessed August 24, 2004)
Alabama 19,228 40,708 −52.80% 45,528 99,818 −54.40%
Alaska 4,909 12,319 −60.20% 13,650 36,033 −62.10%
Arizona 51,336 61,787 −16.90% 121,271 167,410 −27.60%
Arkansas 10,745 22,109 −51.40% 24,469 56,470 −56.70%
California 449,275 870,343 −48.40% 1,099,695 2,550,032 −56.90%
Colorado 14,210 33,554 −57.70% 37,114 93,282 −60.20%
Connecticut 20,967 57,103 −63.30% 43,844 158,454 −72.30%
Delaware 5,699 10,474 −45.60% 12,951 23,743 −45.50%
Dist. of Col. 16,825 25,139 −33.10% 42,980 68,858 −37.60%
Florida 58,555 200,292 −70.80% 121,921 531,485 −77.10%
Georgia 56,496 120,914 −53.30% 134,819 323,471 −58.30%
Guam 3,072 2,254 36.30% 10,783 8,364 28.90%
Hawaii 9,367 21,887 −57.20% 24,384 66,510 −63.30%
Idaho 1,727 8,393 −79.40% 3,175 21,142 −85.00%
Illinois 34,688 217,815 −84.10% 87,545 635,538 −86.20%
Indiana 51,711 49,747 3.90% 135,339 131,775 2.70%
Iowa 20,135 31,088 −35.20% 52,528 84,556 −37.90%
Kansas 15,859 23,386 −32.20% 41,288 62,466 −33.90%
Kentucky 35,252 70,442 −50.00% 77,697 169,822 −54.20%
Louisiana 23,069 66,542 −65.30% 58,504 225,498 −74.10%
Maine 9,196 19,745 −53.40% 28,195 53,205 −47.00%
Maryland 25,678 68,931 −62.70% 61,168 189,342 −67.70%
Massachusetts 50,875 84,333 −39.70% 112,810 225,439 −50.00%
Michigan 78,549 167,529 −53.10% 210,154 494,991 −57.50%
Minnesota 36,096 57,248 −36.90% 93,508 167,362 −44.10%
Mississippi 19,722 45,223 −56.40% 45,182 120,626 −62.50%
Missouri 41,494 79,100 −47.50% 102,031 219,651 −53.50%
Montana 5,465 9,812 −44.30% 15,017 28,299 −46.90%
Nebraska 11,049 14,379 −23.20% 27,533 38,914 −29.20%
Nevada 9,547 13,210 −27.70% 22,874 32,803 −30.30%
New Hampshire 6,077 8,915 −31.80% 14,044 22,340 −37.10%
New Jersey 43,656 100,806 −56.70% 105,702 269,632 −60.80%
New Mexico 17,421 32,974 −47.20% 45,885 98,427 −53.40%
New York 145,627 412,720 −64.70% 331,144 1,127,888 −70.60%
North Carolina 39,201 107,483 −63.50% 80,956 263,093 −69.20%
North Dakota 3,336 4,668 −28.50% 8,667 12,748 −32.00%
Ohio 85,008 201,945 −57.90% 188,226 541,055 −65.20%
Oklahoma 15,154 35,299 −57.10% 37,169 94,239 −60.60%
Oregon 18,093 28,525 −36.60% 41,302 74,320 −44.40%
Pennsylvania 84,288 180,123 −53.20% 220,136 509,430 −56.80%
Puerto Rico 18,601 49,511 −62.40% 52,295 149,944 −65.10%
Rhode Island 12,961 20,489 −36.70% 34,187 55,953 −38.90%
South Carolina 19,266 42,906 −55.10% 46,281 110,837 −58.20%
South Dakota 2,690 5,698 −52.80% 5,919 15,384 −61.50%
Tennessee 72,345 96,206 −24.80% 191,652 251,717 −23.90%
Texas 117,532 238,757 −50.80% 281,765 638,119 −55.80%
Utah 8,944 14,044 −36.30% 22,944 38,564 −40.50%
Vermont 4,815 8,680 −44.50% 12,243 24,045 −49.10%
Virgin Islands 526 1,348 −61.00% 1,591 4,808 −66.90%
Virginia 8,225 60,455 −86.40% 23,527 148,529 −84.20%
Washington 53,534 96,801 −44.70% 131,721 266,591 −50.60%
West Virginia 16,405 37,595 −56.40% 41,750 84,911 −50.80%
Wisconsin 21,708 49,932 −56.50% 52,280 142,746 −63.40%
Wyoming 388 4,343 −91.10% 694 11,783 −94.10%
U.S. totals 2,006,597 4,346,029 −53.80% 4,880,037 12042462 −59.50%

commitment by $55 billion. Total TANF expenditures for fiscal year 2002 were $23.4 billion.

Since the inception of TANF, the number of welfare cases has declined. The total number of welfare recipients fell from 14.4 million in March 1994 to 5.3 million in September 2001, a drop of 63%. Between September and December 2001, due in part to the terrorist attacks of September 11, 2001, AFDC/TANF recipient rolls increased by two hundred thousand. At the end of 2001 there were 5.5 million participants. But by September 2003 the number of recipients had once again declined, to about 4.9 million. (See Table 4.1.)

When welfare caseloads are counted by the number of recipient families instead of individual recipients, the same pattern of decline is seen. Participating families peaked at 5.1 million in March 1994. At the end of 2001 there were 2.1 million families enrolled, a 59% decrease. By September 2003 there were only two million families enrolled. (See Table 4.1.) This represents the largest welfare caseload decrease in history, the smallest number of people on welfare since 1968, and the lowest percentage of the population on welfare since 1965. The strong economy and job market during the 1990s played a role in reducing caseloads.

Under TANF each state decides what categories of children receive aid. AFDC required states to aid all families with children eligible under federal rules unless their income was above state-set limits. TANF, on the other hand, requires that a recipient work in exchange for time-limited assistance. Because of this requirement, the number of working recipients reached an all-time high of 34% in 2000, compared with less than 7% in 1992.

Despite such improvements, welfare reform has been attacked for its coercive aspects. The new standards set a number of ineligibility rules. For example, states are not permitted to use TANF to aid unwed mothers under the age of eighteen unless they live in an adult-supervised setting and, if not already a high school graduate, attend school. Mothers are in most cases barred from receiving TANF assistance unless they are willing to name the fathers of their children. And Congress used the welfare law to launch a campaign against "illegitimacy"—and not only among TANF recipients. In both 2000 and 2001 the Department of Health and Human Services offered an award ($100 million in 2000 and $75 million in 2001) to states that had the greatest decrease in their ratio of births to unmarried mothers to total births without an increase in abortion rates.

CHARACTERISTICS OF TANF RECIPIENTS. One of the primary goals of the welfare reform laws enacted in the mid-1990s was to help people receiving public assistance get back into the paid labor force. A count of how many current and former welfare recipients are employed is, therefore, an important measure of the success of welfare reforms. Analysis shows that the employment rate of current and former TANF recipients has increased significantly. In fiscal year 2001 working recipients accounted for 26.7% of adult TANF recipients, compared with 11.3% in fiscal year 1996 (Indicators of Welfare Dependence, Annual Report to Congress, U.S. Department of Health and Human Services, 2003).

Consequently, income levels of TANF recipients also rose. Average monthly earnings of employed adult TANF recipients increased from $466 in fiscal year 1996 to $533 in 1998, $598 in 1999, $668 in 2000, and $686 in 2001—an increase of 47% between 1996 and 2001.

According to the U.S. Department of Health and Human Services, the average number of people in a TANF family was 2.6 in 2001, down from an average of 2.8 in 1996. Almost half (44.8%) of TANF families in 2001 included one child recipient, 28.5% included two child recipients, and 24.7% included three or more child recipients. Two-thirds (66.9%) of these families were headed by a single adult. Only 11.7% of recipients were married.

The average monthly benefit per TANF recipient in 2001 was $137, down from a high of $221 (in 2001 dollars) in 1978 under the AFDC program. The average monthly benefit per family was $351, down from a high of $766 (in 2001 dollars) in 1969. (See Table 4.2.) Benefits included cash assistance, food stamps, and health insurance under Medicaid.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC), originally approved by Congress in 1975, reduces the amount of taxes owed by working people with low incomes and can result in a tax refund. To receive the EIC for 2003, a single person with no children must have had an adjusted gross income of no more than $11,230, with one child no more than $29,666, and with two or more children no more than $33,692. The adjusted gross income levels were $1,000 higher for married couples filing jointly. The maximum credit in 2003 was $2,547 for a family with one child and $4,204 for a family with two or more children. The maximum credit for those without qualifying children was $382.

In 2004 employees with at least one child living with them could file an Earned Income Credit Advance Payment Certificate with an employer to receive the advance EITC payments. The employer paid part of the credit to the employee in advance throughout the year, and the taxpayer could claim the rest when filing a 2004 federal tax return.

The Special Supplemental Nutrition Program for Women, Infants, and Children

The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) provides food assistance and nutritional screening for low-income pregnant and postpartum women and their infants and children under the age of five. Congress appropriated almost $5 billion for WIC in fiscal year 2004. Participants must have an income below 185% of the poverty level and be nutritionally at risk. The 2004–05 eligibility guidelines stated that a family of one could earn up to $1,436 a month and still qualify for WIC. A family of four could earn $2,907 a month and participate in WIC.

Recipients receive food items or vouchers for purchases of certain items in retail stores. The WIC program is federally funded but administered by state and local health agencies. In April 2002 about eight million women

TABLE 4.2

Trends in average monthly payment for Aid to Families with Dependent Children (AFDC) and Temporary Assistance for Needy Families (TANF), 1962–2001
Monthly benefit per recipient Average number of persons per family Monthly benefit per family (not reduced by child support) Weighted average1 maximum benefit (per 3-person family)
Fiscal year Current dollars 2001 dollars Current dollars 2001 dollars Current dollars 2001 dollars
1The maximum benefit for a 3-person family in each state is weighted by that state's share of total AFDC families.
2Estimated based on the weighted average benefit for a 4-person family.
3The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 repealed the AFDC program as of July 1, 1997 and replaced it with the Temporary Assistance to Needy Families (TANF) program.
Note: AFDC benefit amounts have not been reduced by child support collections. Constant dollar adjustments to 2001 level were made using a CPI-U-X1 fiscal-year price index.
SOURCE: "Table TANF 6. Trends in AFDC/TANF Average Monthly Payments, 1962–2001," in Indicators of Welfare Dependence, Annual Report to Congress, U.S. Department of Health and Human Services, 2003, http://aspe.hhs.gov/hsp/indicators03/index.htm (accessed August 24, 2004)
1962 $31 $168 3.9 $121 $634 NA NA
1963 31 166 4 126 650 NA NA
1964 32 167 4.1 131 670 NA NA
1965 34 174 4.2 140 705 NA NA
1966 35 178 4.2 146 716 NA NA
1967 36 179 4.1 150 716 NA NA
1968 40 188 4.1 162 746 NA NA
1969 43 198 4 173 766 1862 854
1970 46 200 3.9 178 753 1942 848
1971 48 200 3.8 180 730 2012 840
1972 51 207 3.6 187 732 2052 828
1973 53 205 3.5 187 701 2132 824
1974 57 202 3.4 194 670 2292 816
1975 63 206 3.3 209 658 243 791
1976 71 216 3.2 226 665 257 782
1977 78 220 3.1 241 662 271 768
1978 83 221 3 249 644 284 756
1979 87 213 2.9 257 609 301 735
1980 94 207 2.9 274 583 320 703
1981 96 192 2.9 277 536 326 651
1982 103 192 2.9 300 543 331 617
1983 106 190 2.9 311 537 336 600
1984 110 189 2.9 321 534 352 602
1985 112 186 2.9 329 527 369 610
1986 115 186 2.9 339 529 383 618
1987 123 193 2.9 359 546 393 617
1988 127 192 2.9 370 541 404 609
1989 131 189 2.9 381 531 412 593
1990 135 185 2.9 389 516 421 577
1991 135 176 2.9 388 490 425 554
1992 136 172 2.9 389 477 419 530
1993 131 161 2.8 373 444 414 509
1994 134 160 2.8 376 437 420 497
1995 134 157 2.8 376 425 418 487
1996 135 152 2.8 374 410 422 478
19973 130 144 2.8 362 405 420 464
1998 130 142 2.7 358 406 432 469
1999 133 142 2.7 357 439 452 481
2000 133 138 2.6 349 428 453 468
2001 137 137 2.6 351 351 456 456

and their children participated in WIC, an increase of 2% since April 2000 (WIC Participant and Program Characteristics, 2002, U.S. Department of Agriculture, Food and Nutrition Service, September 2003). About two-thirds (75.8%) were infants and children. Two-thirds of WIC participants were at or below the poverty line.

The Food Stamp Program

The food stamp program, administered by the U.S. Department of Agriculture (USDA), provides low-income households with online electronic benefit cards that can be used at most grocery stores much like debit cards in place of cash. Food stamps are intended to ensure that recipients have access to a nutritious diet. They are available to households that have a gross monthly income of no more than 130% of the poverty line and a net monthly income at or below the poverty line. Almost all households that received food stamp benefits in 2002 lived in poverty.

The amount of money a family receives on their benefit card is based on the USDA's estimate of how much it costs to provide households with nutritious, low-cost meals. This estimate changes yearly to reflect inflation. In fiscal year 2002 the maximum monthly benefit for a family of four was $452, while the average monthly benefit for all households was $173. Food stamp households containing children received an average of $254 in benefits per

TABLE 4.3

Average values of selected characteristics of food stamp households, 2002
Average values
Households with: Gross monthly income (dollars) Net monthly income (dollars) Monthly food stamp benefit (dollars) Household size (persons)
*Households not containing children, elderly persons, or disabled persons.
SOURCE: Randy Rosso and Melissa Faux, "Table 3.4. Average Values of Selected Characteristics by Household Composition, Fiscal Year 2002," in Characteristics of Food Stamp Households: Fiscal Year 2002, Report No. FSP-03-CHAR02, U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis, Nutrition and Evaluation, 2003, http://www.fns.usda.gov/oane/MENU/Published/FSP/FILES/Participation/2002Characteristics.pdf (accessed August 24, 2004)
Total 633 355 173 2.3
Children 747 436 254 3.3
Single-adult household 676 381 247 3.1
Male adult 681 387 223 2.9
Female adult 676 381 249 3.1
Multiple-adult household 1022 649 298 4.4
Married head household 1057 667 299 4.5
Other multiple-adult household 945 610 295 4.3
Children only 512 253 190 2.2
Elderly 646 368 64 1.3
Living alone 589 316 50 1.0
Not living alone 876 582 121 2.4
Disabled 739 454 106 2.0
Living alone 596 311 50 1.0
Not living alone 942 657 187 3.3
Other households* 198 67 128 1.1
Single-person household 174 53 122 1.0
Multi-person household 472 219 201 2.2
Single-person households 460 229 73 1.0

month, in part because households with children tended to be larger (3.3 people) than households in general (2.3 people). (See Table 4.3.)

The majority of households that received food stamps in 2002 contained children—54.1%, or 4.4 million households. Two-thirds of these households (34.5%) were headed by a single parent, usually a single mother (32.8%) (Characteristics of Food Stamp Households: Fiscal Year 2002, U.S. Department of Agriculture, Food and Nutrition Service, Office of Analysis, Nutrition and Evaluation, 2003).

Supplemental Security Income (SSI)

The SSI program was enacted in Public Law 92–603 on October 30, 1972, to provide a minimum income for blind or disabled individuals. For children to qualify for SSI, their parents must meet the income requirements, they must be neither married nor the head of a household, must be under the age of eighteen (or under the age of twenty-two if a full-time student), and must meet the SSI definition of disabled. Children are considered disabled if they have "marked and severe functional limitations" because of a physical or mental impairment. Many of these children are automatically eligible for food stamps and Medicaid coverage.

In 1974 70,900 disabled and blind children received SSI benefits, representing 1.8% of all recipients. The program has since expanded to include a greater proportion of disabled children. In 1996 the number of children receiving benefits peaked at 955,174, or 14.4% of all SSI recipients, and then dropped to 846,784 in December 2000. (See Table 4.4.) In December 2002 914,821 children received SSI payments averaging $487.73 per month. These children made up 13.5% of SSI recipients in 2002. By July 2004 the maximum monthly payment per child was $564.

Other Forms of Assistance

The federal government spends billions of dollars on behalf of low-income children. Most services are spread over several major income-tested programs (meaning the family income cannot exceed a certain limit). Many programs are for noncash assistance. These include Medic-aid, subsidized housing, and free or reduced-price school lunch and breakfast programs.

The National School Lunch Program provides millions of children with nutritious food each day. Children whose families earn no more than 185% of the poverty level are eligible for reduced price school lunches; children whose families earn no more than 130% of the poverty level are eligible for free school lunches. In fiscal year 2003 the U.S. government spent $6.3 billion for the National School Lunch Program and another $1.7 billion on the school breakfast program. In that year 28.4 million

TABLE 4.4

Supplemental Security Income (SSI) recipients by age, December 1974–2002
Under age 18 Aged 18–64 Aged 65 or older
Year Total Number Percentage of total Number Percentage of total Number Percentage of total
SOURCE: "Table 3. Recipients by Age, December 1974–2002," in Supplemental Security Income Annual Statistical Report, 2002, U.S. Social Security Administration, 2003, http://www.ssa.gov/policy/docs/statcomps/ssi_asr/2002/ssi_asr02.pdf (accessed August 24, 2004)
1974 3,996,064 70,900 1.8 1,503,155 37.6 2,422,009 60.6
1975 4,314,275 107,026 2.5 1,699,394 39.4 2,507,855 58.1
1976 4,235,939 125,412 3.0 1,713,594 40.5 2,396,933 56.6
1977 4,237,692 147,355 3.5 1,736,879 41.0 2,353,458 55.5
1978 4,216,925 165,899 3.9 1,747,126 41.4 2,303,900 54.6
1979 4,149,575 177,306 4.3 1,726,553 41.6 2,245,716 54.1
1980 4,142,017 190,394 4.6 1,730,847 41.8 2,220,776 53.6
1981 4,018,875 194,890 4.8 1,702,895 42.4 2,121,090 52.8
1982 3,857,590 191,570 5.0 1,655,279 42.9 2,010,741 52.1
1983 3,901,497 198,323 5.1 1,699,774 43.6 2,003,400 51.3
1984 4,029,333 211,587 5.3 1,780,459 44.2 2,037,287 50.6
1985 4,138,021 227,384 5.5 1,879,168 45.4 2,031,469 49.1
1986 4,269,184 241,198 5.6 2,010,458 47.1 2,017,528 47.3
1987 4,384,999 250,902 5.7 2,118,710 48.3 2,015,387 46.0
1988 4,463,869 255,135 5.7 2,202,714 49.3 2,006,020 44.9
1989 4,593,059 264,890 5.8 2,301,926 50.1 2,026,243 44.1
1990 4,817,127 308,589 6.4 2,449,897 50.9 2,058,641 42.7
1991 5,118,470 397,162 7.8 2,641,524 51.6 2,079,784 40.6
1992 5,566,189 556,470 10.0 2,910,016 52.3 2,099,703 37.7
1993 5,984,330 722,678 12.1 3,148,413 52.6 2,113,239 35.3
1994 6,295,786 841,474 13.4 3,335,255 53.0 2,119,057 33.7
1995 6,514,134 917,048 14.1 3,482,256 53.5 2,114,830 32.5
1996 6,613,718 955,174 14.4 3,568,393 54.0 2,090,151 31.6
1997 6,494,985 879,828 13.5 3,561,625 54.8 2,053,532 31.6
1998 6,566,069 887,066 13.5 3,646,020 55.5 2,032,983 31.0
1999 6,556,634 847,063 12.9 3,690,970 56.3 2,018,601 30.8
2000 6,601,686 846,784 12.8 3,744,022 56.7 2,010,880 30.5
2001 6,688,489 881,836 13.2 3,811,494 57.0 1,995,159 29.8
2002 6,787,857 914,821 13.5 3,877,752 57.1 1,995,284 29.4

children took part in the school lunch program, up from 26.9 million in 1999. (See Table 4.5.)

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