Comparing the New (TANF) with the Old (AFDC) - Federal Spending On Afdc And Tanf
expenditures billion programs percent
Table 7.1 shows the federal and state shares of the money spent on AFDC and related programs (1996 and earlier), and TANF (1997 and later). Prior to the enactment of TANF, the federal government reimbursed states for a portion of AFDC, the related expenditures for Emergency Assistance (EA), and Job Opportunity and Basic Skills (JOBS). Federal funds paid from 50 to 80 percent of the state AFDC benefit costs, depending on per capita income. In addition, the federal government paid 50 percent of the administrative costs for the programs. Of the $24.5 billion spent on TANF in 2001, federal funds accounted for 60 percent ($14.8 billion), while state funds made up the remaining 40 percent ($9.8 billion).
States were required to end the AFDC program and begin TANF by July 1, 1997, but many began the new system earlier. The federal block grant for TANF ($16.5 billion per year from 1997 through 2002) is based on each state's peak level of federal expenditures for AFDC and related programs; for most, this was the 1994 level. Federal conditions apply to the federally funded TANF, such as work-participation requirements, five-year time limits, child-support assignment and distribution, and aid to only those unwed minor parents living in an adult-supervised setting.
Though TANF is called a block-grant program, it combines seven different grants, each having federal funding caps (limited maximums):
State family-assistance grant—the $16.5 billion grant based on historic state welfare expenditures.
Bonuses to reward decreases in illegitimacy—$20 million grant to each of the five states with the largest reduction in out-of-wedlock birth rates combined with a decline in abortion rates.
Supplemental grants for population increases in certain states—formula grants to states with above-average population growth and below-average federal spending per poor person in AFDC and related programs.
Bonuses to reward high-performance states—bonus funds for states meeting the goals of the TANF program.
Welfare-to-work formula grants—matching grants to states to fund welfare-to-work initiatives targeting long-term welfare recipients, with an 85 percent pass-through of funds to localities (Job Training Partnership Act Service Delivery areas).
Welfare-to-work competitive grants—grants competitively awarded to private industry councils and cities or counties with welfare-to-work projects.
TABLE 7.1 Total, federal, and state expenditures for Temporary Assistance for Needy Families and predecessor programs (Aid to Families with Dependent Children, Emergency Assistance, and Job Opportunities and Basic Skills Training), fiscal years 1990–2001
Actual (current) dollars
Percent change: 1995–2001 (change from peak spending)
Constant (inflation-adjusted) 2001 dollars
Percent change: 1995–2001 (change from peak spending
Note: State TANF expenditures exclude child care expenditures that can be "double counted" toward maintenance-of-effort requirements of both the CCDF and TANF.
Contingency—fund-matching grants to states that experience high unemployment rates or increased food stamp caseloads.
Almost all of the TANF program funds the state family-assistance grant. This grant is capped at $16.5 billion for fiscal years 1997 through 2002 and was $1.5 billion more than the federal share of the AFDC and related programs in 1996.
Table 7.2 compares the federal and state shares of AFDC funding in 1995 and TANF funding in 2001. During this period, federal expenditures dropped by $1.3 billion and state spending dropped by $4.1 billion. In 2002 the federal share was $14.8 billion, a lower amount than the AFDC expenditures for each year from 1991 to 1996.
TABLE 7.2 Federal and state expenditures on Aid to Families with Dependent Children (AFDC) /Temporary Assistance for Needy Families (TANF) and related programs, by state, fiscal years 1995 and 2001 (millions of dollars)
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