When he ran for president, Bill Clinton promised to “end welfare as we know it.” In 1996, Clinton signed legislation that led to major changes in the way the federal-state welfare system helps low- or no-income families with children.
Now, as the Temporary Assistance for Needy Families (TANF) program nears its 30th birthday, caseloads have plunged dramatically but there’s still disagreement about whether work requirements and lifetime limits on benefits have succeeded in moving people out of poverty and into long-term stability.
TANF’s predecessor program, known as Aid to Families with Dependent Children, or AFDC, provided cash assistance to 5 million families in 1994. By fiscal 2024, TANF provided such aid to just 841,000families.
Under AFDC, 68 percent of families with children in poverty received cash assistance through the program. By the start of this decade, that share had dropped to 21 percent. In most states, a majority of families who are eligible receive no funding at all.
Inflation, meanwhile, has steadily eaten away at the value of the cash assistance that is available. Federal funding for the program has remained static since 1996; that means the value of money sent out to states today is less than half of what it was at TANF’s inception.
In many states, struggling families find it challenging to navigate the various requirements and administrative hurdles for getting and staying on TANF, says Karen Chatfield, associate director of the National Center for Children in Poverty. “Families at the very bottom of the income scale, probably many more of them need TANF and access to cash assistance,” Chatfield says. “But there are a number of ways that states prevent people from receiving that.”
Some states put little of their TANF funds into direct cash assistance. When this is paired with strict work requirements and other rules, some families conclude that the burden of compliance outweighs the benefit of the amount of money on offer. “When you put a lot of administrative hurdles between people and a benefit, and then make the benefit itself worth very little,” Chatfield says, “there will not be a lot of take-up, even when there are many people who are technically eligible for that benefit.”
Robert Rector, who helped craft the 1996 law that created TANF and is currently a senior research fellow at the conservative Heritage Foundation, sees the drop in enrollment as a sign that program is working as intended. The new rules block participation from those who weren’t truly needy, Rector says, as well as encouraging marriage, which he says is an important strategy for reducing poverty.
There’s been a decline in births among unmarried teenagers since TANF replaced AFDC, as well as a slowing or disruption of the former trend away from two-parent families. “Not very many people are accessing the program anymore because they don’t really need the program,” Rector says.
As with many other things, the nature of welfare changed dramatically during the 1960s. After two decades of slow growth, the number of AFDC beneficiaries took off in the late 1960s, rising from slightly more than 2 million recipients in 1960 to more than 10 million recipients by 1972.
The composition of AFDC recipients also changed. The widows of the 1940s were replaced by divorced and separated women with children, as well as single mothers who had never been married. By 1979, single mothers made up nearly 80 percent of all AFDC recipients.
Racial demographics shifted as well. Many program administrators, especially in the South, had restricted AFDC support to children in homes deemed to be “suitable,” a subjective standard that was often used to exclude Black families. In the 1960s, however, the federal government ruledthat an “unsuitable” home wasn’t a valid reason to deny helping a child in poverty.
By the 1990s, AFDC provided cash assistance payments to children if one of their parents was dead, absent from home, incapacitated or unemployed. It was an entitlement program, serving anyone who met state and federal criteria. State and federal governments funded the program together, with the federal government providing states with unlimited matching funds.
As the makeup of the groups benefiting from welfare changed, the program grew less popular with the public. During the late 1970s and early 1980s, President Ronald Reagan and other conservative politicians railed against what they saw as the excesses of the welfare state. They touted racially charged images of “welfare queens” who drove Cadillacs and paid for Hawaii vacations with fat stacks of food stamps and welfare cash. Reagan’s welfare queen proved to be more myth than reality, but many lawmakers concluded that AFDC was creating a culture of dependency and needed to change.
Led by Wisconsin, Republican states began experimenting with work requirements and other ways of pushing AFDC recipients into work. Their approach heavily informed the Clinton-era federal changes. Under TANF, the federal government switched to giving states block grants to use to reduce poverty.
States are required to invest only75 to 80 percentof what they’d been contributing to AFDC-related programs in fiscal year 1994. They can choose to spend more, but obviously 1994 dollar amounts don’t go as far as they did way back then. Federal funding and the minimum required contribution levels from states do not increase to match rises in inflation, the cost of living, population increases or growth in the number of people in poverty.
Income qualification varies considerably by state. In 2023, a family of three in Alabama could earn no more than $307 per month to be eligible for TANF benefits. At the other end of the spectrum, Minnesota allowed earnings of up to $2,935 per month.
States do not have to use all their federal grant money in the year they receive it. They have also changed what they pay for. During the 1990s, direct cash assistance to families accounted for 75 percent of TANF spending nationally. By 2022, it comprised just 25 percent, according to the Government Accountability Office. States that reduced cash benefits and enrollments can use the unspent federal money for other TANF-relevant projects, which cover a wide array of initiatives. “These new financing rules created strong financial incentives for state governments to reduce caseloads and dependence and divert limited funds to other services,” Rector says.
States’ spending choices vary greatly. In 2023, Kentucky directed 55 percent of federal and state program funding into cash assistance, while Illinois put 53 percent in child care. Arizona used 69 percent for child welfare services and Mississippi put 20 percent into fatherhood and two-parent family programs.
“[States] don’t necessarily need to use their TANF dollars to help the most low-income families in the state,” says Diana Azevedo-McCaffrey, a policy analyst at the Center on Budget and Policy Priorities, which is nonpartisan but leans left. For example, states can fund college scholarships that go to better-off families. “A trend we’ve seen over the years is not only a decline in TANF caseloads but also an increase in disbursement of TANF diverted away from the neediest families,” Azevedo-McCaffrey says.
Anticipating this year’s imposition of work requirements on Medicaid recipients, TANF calls on states to require that a portion of participants demonstrate they are spending a certain number of hours either working or participating in work-related activities, such as training and job searches. During the program’s first quarter-century, welfare participation fell sharply due to work requirements.
Many former AFDC recipients did in fact find jobs, which helped them earn more via wages and tax credits. Others, however, were unable to find work and therefore lost benefits. Many of them were left with no income aside from food stamps and fell into deep poverty. The drop in caseloads “primarily has been driven by declining participation among families whose income is low enough for them to qualify for the program,” according to theCongressional Budget Office.
If just one parent or qualifying caregiver fails to meet the work requirements, some states will revoke benefits for the entire family, including children, a practice known as full family sanctions. Forty states imposesuch sanctions, although 22 of them do not withdraw benefits immediately.
TANF’s changes were also designed to deter people from receiving aid when they hold jobs but don’t report income. “A work requirement is a kind of gatekeeping device, which will separate out those people who truly need assistance from those people who don’t, but are willing to take a free handout if you have one for them,” Rector says.
The required minimum contributions from states have remained fixed at a level slightly below what they were contributing in 1994. Some states have also cut benefits below 1996 levels. A family of three in Arizona could receive up to $347 of cash assistance in 1996; by 2023, they could only receive up to $278. Arkansas is one state that has kept the dollar amount of its cash benefit flat, without adjustments for inflation. As a result, the maximum cash assistance a family of three could receive in 2023 had 46 percent less purchasing power than in 1996.
Other program changes have contributed to declining enrollment. AFDC set no limit on how long someone could receive assistance. TANF, however, created a lifetime limit of 5 years’ worth of support. Some states have lower lifetime limits or restrict how many months in a row an individual can receive payments. Arkansas givesfamilies a one-year lifetime limit and Kansas allows two years.
Some states use TANF funds to offer “diversion payments,” offering short-term support to help people resolve immediate challenges so they don’t need to go on TANF long term. As of last year, seven states prohibited anyone who’d received a diversion payment from then enrolling in TANF for a year.
With budgets tightening and other assistance programs being cut, no one thinks TANF is about to see any kind of expansion. South Dakota, for one, is reducing TANF cash assistance by 10 percent this year, with plans ultimately to cut it by 35 percent. Matt Althoff, the state’s social services secretary, says the cuts are needed to maintain “long-term fiscal responsibility.”
When it comes to assistance programs, “TANF isn’t the big deal anymore,” Rector says, “because there really aren’t that many mothers on TANF anymore.”
