The Senate Finance Committee's TANF Reauthorization Bill

On September 10, 2003, the Senate Finance Committee approved its version of TANF reauthorization legislation on a straight party-line vote, with only Republican members supporting the bill. The bill is nearly identical to the proposal released two days earlier by Senator Charles Grassley (R-IA), Chair of the Senate Finance Committee.[1]

The Finance bill is an improvement on the controversial TANF reauthorization legislation passed by the House on a narrow partisan vote earlier this year.[2] Taken as a whole, however, the bill raises a number of issues and concerns, and would need to be changed in several significant ways to be workable for families and states.

Child care funding is inadequate. The bill provides only $1 billion over five years in additional child care funding, far below what is needed just to allow states to maintain their current child care programs. Under the bill, an estimated 430,000 children would lose access to child care subsidies by 2008.
Work requirements needlessly restrict state flexibility. Under the bill, states would be required to increase the number of parents participating in work activities and the hours each parent participates. Yet, states would have limited flexibility to engage recipients in vocational training and activities to address barriers to employment, including disability, substance abuse, and illiteracy.
No new state flexibility to help low-income legal immigrants. Under current law, states are prohibited from using TANF funds to provide benefits and services to recent legal immigrants — including employment services or English-language instruction — and from providing health coverage to recently-arrived immigrant children and pregnant women. The bill maintains these restrictions, despite bipartisan support for state flexibility in this area.
Substantial new resources are provided for untested and restrictively-defined marriage-promotion programs. The bill provides for up to $1.5 billion in TANF funding for a very limited set of “marriage-promotion” activities. This level of investment is unwarranted given the lack of evidence that these programs are effective for low-income families, and the strict limitations on how states and organizations can use the funds.
The Finance bill includes several important improvements over current law:

Child Support: The bill gives states broader flexibility to change their child support rules to direct significantly more child support to children than the House bill. And, unlike the House bill, it does not impose new fees on custodial parents who are receiving child support-enforcement services.
Transitional Medical Assistance: Transitional Medical Assistance (TMA) provides temporary Medicaid coverage to many families moving from welfare to work. The bill extends the program for five years and includes several key improvements that could simplify the program and increase participation among eligible families. These improvements were not included in the initial Grassley proposal but an amendment to add them was approved during committee consideration.
TANF Contingency Fund: In contrast to the House bill, the Finance bill includes improvements in the TANF contingency fund to ensure that states receive additional funding when they face rising caseloads during economic downturns.
The most notable change made to the original Grassley proposal is in the area of waivers. The Grassley proposal had included vague language allowing up to 10 states to obtain “superwaivers” — waivers of federal laws and rules encompassing an unspecified array of low-income programs. This proposal appeared modeled on the controversial “superwaiver” provision in the House bill. The final bill approved by the Senate Finance Committee limited this new waiver authority to three programs: TANF, the child care block grant, and the Social Services Block Grant. The provision remains very vague and currently includes no details about which aspects of these programs would or would not be subject to waivers. The proposal continues to raise concerns such as whether waivers could be used to divert child care funds to other purposes or to direct TANF and child care funds away from their current low-income target population. Narrowing the list of programs, however, is an improvement over the earlier version.

In considering the bill as a whole, it is important to note that much has changed since the President proposed TANF reauthorization legislation last year and even since the House passed its bill earlier this year. More than half of all states have been forced to make cuts in existing TANF-funded child care and welfare-to-work programs because of limited resources and the state fiscal crisis. Recent data from the Census Bureau show that the number of children in poverty increased between 2001 and 2002.[3] And unemployment rates for single mothers increased substantially between 2000 and the first half of 2003, particularly for single mothers without a high school education who now face an unemployment rate of 20 percent.[4] Similarly, the Urban Institute recently found that the proportion of former welfare recipients who are working fell from 50 percent in 1999 to 42 percent in 2002.[5] Moreover, the share of families that have left welfare and are “disconnected” — that is, not working or living with a working spouse and not receiving welfare or disability benefits — rose significantly between 1999 and 2002.[6]

Given these troubling trends, Congress should focus more on helping states help low-income parents prepare for, find, and retain good jobs — in weak and strong labor markets — and afford quality child care, and less on imposing inflexible and unwarranted new mandates on states.

Bill Provides Inadequate Child Care Funding

The Finance bill includes only $200 million per year in additional child care funding over the next five years, the same funding level as the House-passed TANF bill. This figure is far from what is needed just to ensure that states can maintain their current level of child care assistance to low-income working families not receiving TANF cash benefits. If funding is not increased by more than $200 million per year, hundreds of thousands of children in low-income working families will lose access to child care assistance in the coming years.

The Congressional Budget Office projects that the cost to states of meeting the increased work requirements included in the bill (discussed in detail below) would be between $1.1 and $1.5 billion over five years, with the bulk of these costs coming in 2007 and 2008. [7] This represents the cost both of operating larger welfare-to-work programs and of paying for the increased child care costs that result when more parents participate in work programs and the number of hours they must participate increases. By 2008, the cost of meeting the new work requirements exceeds the $200 million in additional funding provided by the bill and the state funding that would be required to draw down these funds.

Because the new funding for child care is so modest and is needed to meet the costs associated with the increased work requirements, the number of children in low-income working families who states can serve in their child care programs will fall significantly under the Finance bill. Under the bill, an estimated 430,000 children in low-income working families will lose access to child care subsidies in 2008 when the increased work requirements in the bill are fully in effect.[8] (Losses in child care slots will begin in 2004 and grow sharply over the five-year period.) This decline would occur for three reasons:

The cost of providing child care assistance rises over time as the wages of child care workers and the cost of space and other materials increase. The Finance bill does not provide the resources needed to cover the costs of these increases.
States will have less TANF funding to devote to child care over the coming years. The Congressional Budget Office projects that overall TANF spending will fall significantly as unspent TANF funds from prior years are exhausted.[9] As overall TANF spending falls, TANF funds directed to child care are almost certain to fall as well.
The cost of meeting the new work requirements will leave fewer child care and TANF resources available for providing child care to low-income working families who are not receiving TANF cash assistance, including many working families with incomes below the poverty line.
Access to child care assistance already has begun to shrink as recent reports by the General Accounting Office and various organizations have shown. More than half of the states have instituted cutbacks in their child care programs over the past three years. In fact, in 24 states, child care assistance is no longer available to any low-income working families newly applying for such help. Tennessee, for example, no longer accepts child care applications from families that do not receive TANF cash assistance.[10]

Even before these latest cutbacks, funding levels were so low that most children eligible for child care subsidies did not receive them. In 2000, only an estimated one in seven children eligible for child care subsidies received them.[11] While some of these children do not need child care assistance for a variety of reasons, many do, as is evident from the substantial waiting lists for child care assistance in many states. In Florida, for example, there were some 48,000 children on the child care waiting list as of December 2002.

The lack of sufficient child care resources in the Senate Finance bill sparked a heated debate during the committee mark-up. An amendment offered by Senator Jeff Bingaman (D-NM) to increase child care funding by $11.25 billion over five years failed on a 11-9 vote. During the debate on this amendment, however, Senator Olympia Snowe (R-ME) said that she will offer an amendment to the bill on the Senate floor that would increase child care “significantly.”

New Work Mandates Do Not Provide Adequate Flexibility for States

The Senate Finance bill would increase the number of recipients states must engage in a specified set of work activities and increase the required hours each recipient must participate. While the Finance bill imposes fewer restrictions on state program design choices than the House-passed bill, it still needlessly restricts state flexibility in key areas which will make it harder for states to run programs that help parents find and retain employment. (This analysis is limited to a few key elements of the work provisions in the bill. See the Appendix for a more detailed comparison of the work provisions in the bill and the House-passed bill.)

Under the Finance bill, the work participation rates states must meet would increase over current levels. By 2008, states would be required to engage 70 percent of all adult recipients each month in certain types of work activities. States would receive a credit toward this participation rate based on the number of families that leave welfare and are working.

In addition to increasing the number of adults that states must engage in work programs, the bill also would increase the hours an adult must participate in order to be fully countable toward the work participation rates. The hourly requirement would increase from 30 to 34 hours for single parents with children age six and over, from 30 to 39 hours for most two-parent families, and from 20 to 24 hours for single parents with children under age six. In a useful change from current law, states would receive partial credit when recipients participated less than the required number of hours. (In a change from the original Grassley proposal, states also would receive a very modest amount of “extra credit” for recipients who participate for more than the required hours.)

These mandated increases in the hourly requirements are not based on any research evidence showing, or even suggesting, that increased hourly requirements would result in improved employment outcomes for TANF recipients. In fact, Gordon Berlin, senior vice president of the Manpower Demonstration Research Corporation — a leader in the evaluation of welfare-to-work programs for HHS and state and local governments — has criticized increasing the hourly requirement because it would make it more difficult to reach the goal of universal engagement of TANF recipients.[12]

While the bill would increase the work participation rates states must meet and increase the hours of required participation by individual recipients, states’ ability to engage recipients in rehabilitative services designed to address recipients’ barriers to employment or in education or training programs would be limited. The bill includes a provision which would allow participation in certain activities designed to address barriers to employment, including disability, substance abuse, or low literacy levels, but it would place a six-month limit on the amount of time a recipient placed in such activities could count fully toward the work rates. After six months, such activities only would count if the recipient also participated in standard work activities for 24 hours each week — a bar that will be too high for some recipients with serious barriers. This is an improvement over the original Grassley proposal which would have limited the period during which such activities could count fully toward the work rates to six months, but still fails to recognize that some recipients with serious or multiple barriers to employment may need additional time in specialized activities.

David Butler, vice president of the Manpower Demonstration Research Corporation, testified about the importance of allowing recipients with barriers to employment to participate in a broader range of activities tailored to their circumstances without imposing arbitrary limits on state flexibility to provide these services. In his April 2002 testimony before the Senate Finance Committee, Butler stated:

The research suggests that many welfare recipients with characteristics that make them hard to employ will need specialized or more intensive services. Ideally, participation in treatment-related services should not have a pre-imposed time limit. Instead, an individual’s progress in treatment should determine the treatment timeframe. TANF programs in Oregon and Utah have taken this more individualized approach to serving people with serious barriers.[13]

There is bipartisan support for providing states with more flexibility in this area. Senators Gordon Smith (R-OR), James Jeffords (I-VT), and Kent Conrad (D-ND) recently introduced a bill (S. 1523) that would allow states to count participation in specialized activities designed for people with disabilities or substance abuse problems after a six-month period if they also participate in standard work activities during half of their hours of participation. Such an approach requires states to move recipients toward work, but recognizes that some recipients need more time in activities designed to help them overcome barriers to employment if they are to succeed ultimately in the labor market.

The Committee did approve an amendment that would give states the option to count participation in postsecondary education and vocational training toward the work participation rates for a limited number of recipients. This change would help states that want to expand access to education and training for TANF recipients to help them secure better-paying jobs.

Finally, the bill includes a “universal engagement” provision that would require states to assess the skills, work experience, education, and barriers to employment of adult TANF recipients and to develop self-sufficiency plans for each TANF family. This provision improves modestly upon a similar provision in the House bill. One improvement would require states to review a family’s self-sufficiency plan prior to imposing a sanction for non-compliance.

Scaled-Back Waiver Provision Still Raises Concerns

The Senate Finance Committee bill includes a scaled-down version of a broad waiver provision included in the House-passed TANF bill. (It also is narrower than a very vague provision included in the initial Grassley proposal, although the language was so incomplete that it is difficult to know what was intended.) The House bill would allow sweeping waivers affecting more than a dozen low-income programs, including waivers that change fundamental aspects of these programs.

The legislative details of the Senate provision are not available because the Senate Finance Committee considered only a conceptual description of the provision; final legislative language will be developed in the coming weeks. According to a document released by Senator Grassley’s staff prior to Committee action, the bill “would establish a demonstration program for up to 10 states to enhance or to provide for improved program integration coordination and delivery across the TANF, CCDF and SSBG programs.”[14] No further details — including any limitations on this waiver authority — are available, leaving many critical questions unanswered.

While this demonstration is more limited in nature than the House superwaiver, the proposal continues to raise concerns about whether such waiver authority could allow states to divert TANF, child care, and SSBG funds to fill state budget holes. Moreover, there are concerns that without appropriate protections or limitations in place, waivers could be used to divert child care funds to other purposes or to direct TANF and child care funds away from their current low-income target population. There also are questions about whether this waiver authority would allow states to waive certain important protections for low-income families, such as the requirement that state child care programs provide families with meaningful choices of child care providers.

As details of this provision become available, it will be important to analyze them to determine if the demonstration project is constructed in a manner that fosters innovation or whether it opens the door for harmful waivers that could weaken assistance and work-support programs for low-income families.

Bill Provides No New State Flexibility to Serve Immigrants in Key Low-Income Programs

The bill would continue the current-law ban on providing Medicaid, SCHIP, and TANF benefits to most legal immigrants who have lived in the United States for less than five years. The current ban in TANF applies not only to cash assistance but also to services, including English-as-Second-Language classes and job training.

Both the Senate Finance Committee and the full Senate have voted on a bipartisan basis on previous occasions to limit the applicability of this “five-year bar.” The TANF bill passed by the Finance Committee on a bipartisan basis last year would have given state the option to lift the five-year bar in TANF, and, for pregnant women and children, in Medicaid and SCHIP. And, as part of the Medicare prescription drug legislation passed earlier this year, the Senate included a provision that would lift the five-year bar in SCHIP and Medicaid for pregnant women and children for fiscal years 2004 to 2007. An attempt to strip this provision from the bill on the Senate floor was defeated on a 65-33 vote. This provision currently is being debated in a Senate-House conference committee and may or may not be included in the final version of the prescription drug bill.

Contrary to the misperceptions of some, most children of low-income immigrants live in working, married two-parent families. These children and their families are no more immune to crises such as unemployment and economic insecurity than are families headed by U.S. citizens. In recognition of this fact, many states have used state funds to provide TANF and health care benefits to legal immigrants who are subject to the five-year bar, and both the National Governors Association and the National Conference of State Legislators have called for lifting the bar. Giving states the option to provide TANF and Medicaid benefits to legal immigrants would sensibly allow them to extend the same safety net protections and work supports to these families that they provide to citizens.

Bill Includes Significant Funding For Narrow, Untested Marriage Promotion Programs

The Finance bill appears to closely follow the approach taken in the House bill to devote a substantial amount of federal TANF funds to a narrow set of rigidly defined “marriage promotion” activities. Like the House bill, the Grassley proposal would earmark up to $1.5 billion in federal funds over five years for these activities. This includes $500 million over five years provided to the Secretary of Health and Human Services for research, demonstration projects, and technical assistance, and up to $1 billion in federal funds over five years for competitive grants for similar programs and activities.

Committing such a substantial amount of federal funding is unwarranted. Little is known about the potential effectiveness of government-funded marriage programs, particularly the very narrow set of programs the bill would authorize. Furthermore, a substantial share of the earmarked funds come from redirecting TANF funds that states currently can use for a wide range of programs, including child care and welfare-to-work programs. Absent research showing that government-funded marriage promotion programs are more effective than the uses to which these funds are now being put, such a large amount of federal funds should not be dedicated to such a narrow range of marriage promotion programs.

If such a high funding level is maintained in the bill, at a minimum, the Senate should allow for greater flexibility in the use of the funds, including the flexibility to fund programs that improve the odds of healthy marriages by reducing nonmarital pregnancies and domestic violence. In addition, some of the funds should be used for the fatherhood program that the Finance bill authorizes, but leaves unfunded. These programs would help married and unmarried fathers improve their parenting skills and their ability to provide financially for their children. Even if marriage-promotion programs succeed in dramatically reducing the number of children living in single-parent families, the remaining children in single-parent families would benefit immensely by programs that increase the extent to which their fathers are involved in their lives.

Bill Contains Some Important Improvements to Current Law

In addition to the improvements on the House-passed bill described above, the Finance bill contains three significant improvements to the current federal provisions related to child support distribution, Transitional Medical Assistance (TMA) and the TANF contingency fund.

Child Support Distribution Rules and Responsible Fatherhood

Under existing child support “distribution” rules — the extremely complex set of rules that determine whether the government or the family keeps child support collected when a family receives or used to receive TANF assistance — the government keeps a substantial portion of the child support paid by noncustodial parents that would otherwise go to low-income children. Reforming these child support rules to make it easier for states to pay more child support to families and to simplify child support distribution is broadly supported by states, policy analysts, and advocates for low-income families.

While the House bill makes positive changes in this area, the Finance bill would do more than the House bill to help states finance and implement changes that would ensure that families that have left welfare are paid all of the child support collected on their behalf. The Finance bill also goes farther than the House bill in allowing states to provide child support to families receiving TANF benefits and, more generally, to simplify their distribution rules.

The Grassley proposal also improves on the House bill by not including the House provision that would impose a new $25 annual fee on low-income families that receive child support services but have not received welfare. The fee in the House bill would apply regardless of other fees and charges related to child support enforcement that a low-income parent may be required to pay. Such a fee would impose an additional burden on low-income working families who are struggling to make ends meet and treat families who avoided welfare less favorably than similar families who used to receive assistance. Although it might appear to raise revenue for the state child support systems which would share in the fees collected, the House fee provision is opposed by the national association that represents state child support directors and other child support enforcement professionals for these reasons and also because the amount it would cost states to implement and administer would likely exceed any revenue gains they would realize.[15]

The Senate Finance bill authorizes, but leaves unfunded, a “Responsible Fatherhood Program.” The House bill also authorizes such a program. The Senate Finance version improves on the House version by targeting low-income men and providing grantees with greater flexibility to use funds to improve the economic stability of low-income men. Although it was not offered in committee, Senator Max Baucus (D-MT) filed an amendment that would have shifted $20 million a year in funding from marriage promotion and other HHS research to programs that increase support of children by fostering the economic stability of fathers.

Transitional Medical Assistance

Transitional Medical Assistance (TMA) provides temporary Medicaid coverage to families moving from welfare to work. Under TMA, families whose earnings would otherwise make them ineligible for Medicaid — many of whom are also leaving welfare — can receive up to 12 months of Medicaid coverage. Thus, TMA provides an important transitional support to families moving from welfare to work who generally have low-paying jobs that do not provide health insurance.

Under current law, the TMA program is scheduled to expire at the end of 2002. The Finance bill extends TMA for an additional five years, through fiscal year 2008, an improvement over the House bill which only extends TMA through fiscal year 2004.

The Finance bill also includes several important TMA changes which, despite bipartisan support, are not included in the House bill. These changes — which were not included in Senator Grassley’s initial proposal but were added during Committee consideration — would give states the option to reduce paperwork requirements that place administrative burdens on both states and families, to extend TMA coverage to certain families that quickly move from welfare to employment that currently are ineligible due to some technical eligibility requirements, and to extend the period of time families can receive TMA coverage from the current 12-month limit to 24 months. Most of these provisions were included in the President’s budget.

TANF Contingency Fund

The Finance bill includes a revamped TANF “contingency fund” that would provide significantly more help to states during economic downturns than the current-law contingency fund. The contingency fund included in the 1996 welfare law was intended to help states meet costs associated with increases in TANF caseloads during recessions. Unfortunately, the design of the original contingency fund was deeply flawed and of no use to states during the recent economic downturn. Despite an increase in the national unemployment rate of more than 2 percentage points between October 2000 and August 2003 and significant caseload increases in some states, no state received contingency funding during this downturn.

The bill extends the TANF contingency fund for an additional five years and includes modifications to the fund that would provide states with needed resources during economic downturns. The House bill, by contrast, extends the current contingency but makes such minor modifications to the existing fund that it likely would continue to provide virtually no help to states during recessions.

Under the Finance bill, states that faced economic hard times as evidenced by rising unemployment rates or food stamp caseloads (which typically are a good indicator of job availability in the low-wage labor market), would receive funding to offset a portion of the costs associated with rising TANF caseloads. If the weak economy was not leading to increased numbers of families needing TANF assistance, no contingency funding would be provided. While contingency funds would offset only a portion of the costs of caseload increases, states would not be required to provide state funds to match the federal funds — securing such state funds during a recession when state revenues decline can be very difficult.

Conclusion

While the Senate Finance includes some improvements over current law and over the House-passed bill, it raises serious concerns for both states and families. Even as it imposes new work-related mandates on states, the Finance bill fails to provide the child care funding needed to pay for these mandates and to continue providing the current number of child care slots to low-income working families who do not receive welfare. Under the bill, an estimated 430,000 children would lose child care assistance by 2008, making it more difficult for their parents to keep their jobs and remain off of welfare. Moreover, the work requirements themselves are overly restrictive, making it difficult for states to continue effective approaches to helping parents overcome barriers to employment, and to make new innovations in this area. Finally, while the superwaiver provision has been narrowed, it continues to raise concerns, including whether it would allow states to direct TANF and child care funds to other purposes, such as plugging state budget holes.

Appendix
Summary Side-by-Side Comparison of Key Work-Related Provisions in Bill
and House-passed TANF Reauthorization Legislation[16]
Current Law
Senate Finance Bill
House Bill (HR 4)

Work-related Provisions

"Universal Engagement" Requirements
States must ensure that adults are "engaged in work" as determined by the state within 24 months. State option to develop Individual Responsibility Plans for recipients.
Eliminates 24-month “work-trigger” provision. Instead, states must develop self-sufficiency plans for each family within 60 days of TANF enrollment, and outline in their TANF plans how they intend to require parents and caregivers to engage in work or other sufficiency activities.

Each self-sufficiency plan must contain work activities, supportive services that the state intends to provide to the recipient, steps to promote child well-being, and information about work support assistance for which the family may be eligible.

HHS may impose a financial penalty on states that fail to comply with the self-sufficiency plan requirement. The penalty is based on the degree of substantial noncompliance.
States must develop self-sufficiency plans for all parents and caretakers receiving assistance within 60 days of TANF enrollment. Plans must detail work activities.

HHS may impose a financial penalty on states that fail to comply with these requirements.

Assessments
States must conduct an initial assessment of skills, prior work experience, and employability within 30 days of a recipient’s enrollment in TANF.
Similar to current law (although timeline for completion of assessment is unclear), but also requires states to screen for and assess “work barriers” and specifies that the assessment may be conducted in manner state deems appropriate.
Similar to current law, but specifies that assessment may be conducted in manner state deems appropriate.

Participation Rates
"All-families" rate: 50% in FY 2003.

Two-parent family rate: 90% in FY 2003.
55% in 2005, 60% in 2006, 65% in 2007, 65% in 2007, 70% in subsequent years.

Eliminates separate two-parent rate.
55% in 2005, 60% in 2006, 65% in 2007, 70% in 2008.

Eliminates separate two-parent rate.

Participation Rate Credits
Caseload reduction credit allows state to reduce participation rate by one percentage point for each one percentage point decline in caseload since FY 1995 that is not attributable to eligibility rule changes.
Replaces caseload reduction credit with employment credit based on the number of families who leave ongoing cash assistance with a job. Larger credit for families with higher earnings. Also provides a state option to include families not receiving cash assistance if they received short-term benefits and earned at least $1,000 in the quarter after receiving the benefit, or received TANF-funded child care or transportation subsidies.

These credits are “capped” and cannot reduce a state's work rate by more than specified amounts (40% in FY04 declining to 20% in FY08).
Retains caseload reduction credit, but bases it on more recent declines in caseload.

Additional "super-achiever" credit for states that reduced caseloads by more than 60% between 1995 and 2001.

Hours of Participation Required to Count Fully Toward All-Families Rate
Single parents with a child under age 6: 20 hours.

Other single parents: 30 hours.

Two-parent families: 35 hours, or 55 hours if the family receives subsidized child care.
Single parents with a child under age 6: 24 hours.

Other single parents: 34 hours.

Two-parent families: 39 hours; 55 hours if the family receives child care.

Partial credit for single parents who participate in 20 or more hours, and for two-parent families who participate for 26 or more hours (40 hours for 2-parent families receiving child care assistance).
40 hours per week, regardless of age of child and number of parents in household. Determination of whether family meets this requirement is based on a 160-hour month.

Partial credit for adults who participate in at least 24 hours of "direct work" activities, but do not meet the 40-hour standard.

Countable Work Activities
"Primary" activities that count toward first 20 hours: 1) paid or unpaid work, including on-the-job training, work experience, and community service; 2) vocational educational training (12 months); 3) job search (6 weeks); and 4) providing child care for other participants.

"Secondary" activities that count toward remaining hours: 1) any of above activities; 2) job skills training; and 3) education related to employment.
Primary: Increases hours to 24, makes minor modifications to rules for counting job search, and, as described below, makes changes related to “barrier removal” and education activities.

Secondary: Current law, plus substance abuse counseling or treatment, programs designed to remove work barriers, and programs or activities authorized under a waiver approved for any state after August 22, 1996.

States may deem a single parent who provides care for a disabled child or dependent to be meeting all or part of a family’s work requirements.
Primary: Increases hours to 24 and limits countable activities to paid or unpaid work, including on-the-job training, supervised work experience, and supervised community service. State may count participants placed in other state-defined "qualified activities" for no more than 3 months in 24.

Secondary: Determined by state subject to such regulations as the Secretary may prescribe.

Barrier Removal and Other Activities
Activities limited as specified above.
For up to six months in any 24-month period, states can count as a primary activity: substance abuse counseling or treatment, programs or activities designed to remove work barriers, programs or activities authorized under a waiver approved for any state after August 22, 1996, and educational activities detailed below. During months 4-6, these activities must be combined with work-readiness activities or employment.
State-defined activities that meet a TANF purpose may count as a primary activity for up to 3 consecutive months out of 24 and as a secondary activity with no time limit.

Education and Training
Vocational education counts as a "primary
activity for up to 12 months.

Number of recipients in vocational education and teen parents in school that a state may count toward work rates is capped at 30% of families that count toward work rates.

Education related to employment allowable as a secondary activity.
Adult basic education and post-secondary education may be counted as a primary activity for 3 months in a 24-month period.

Provides state option to count post-secondary or vocational education as a work activity for more than 12 months, with participation in such programs capped at 10 percent of a state’s caseload.
Eliminates vocational education as a primary activity, except that work-related education or training could count as a primary activity for 3 months (or 4 months under very limited circumstances) in a 24-month period. Eliminates 30% cap.

Sanctions and Sanction Review Procedures
States must sanction families that fail to comply with requirements, but have discretion to partially reduce a family's grant or terminate assistance completely.

No requirement to review a family's circumstances or plan before imposing a sanction.
Current law with two changes: 1) state plan must describe strategies state may take to address services for struggling and noncompliant families and for clients with special problems; and 2) state must review self-sufficiency plan before imposing a sanction.
States must terminate assistance to all family members completely if any family member is non-compliant.

State plan must describe strategies state may take to address services for struggling and noncompliant families and for clients with special problems.

Funding

Child Care Funding
Mandatory funding: $2.7 billion in FY 2003 ($1.2 billion unmatched and $1.5 billion in matching funds).

Discretionary funding: $2.1 billion appropriated in FY 2003.
Mandatory: $1 billion increase in over five years.
Mandatory: $1 billion increase in matching funds over five years.

Discretionary: Authorizes the appropriation of an additional $2.4 billion over five years, but does not actually appropriate any of this funding.

Basic TANF Block Grant Funding
Frozen at $16.5 billion a year through FY 2003.
Frozen at $16.5 billion through FY 2008.
Frozen at $16.5 billion through FY 2008.

Supplemental Grants
$319 million in FY 2003 for states with low TANF funding levels or high population growth.
$319 million annually through FY 2007.
$319 million annually through FY 2007.

Contingency Fund
$2 billion available to states that experience specified increases in food stamp caseloads or unemployment. Must meet 100% MOE requirement, excluding child care and separate state programs.
$2 billion through FY 2008. Eligibility based on updated unemployment rate, food-stamp caseload, or TANF-caseload increase criteria. Eliminates 100% MOE requirement.
$2 billion through FY 2008. Generally retains current law, except that spending on child care and separate state programs count toward MOE requirement.

Bonuses
High Performance: $200 million a year based on work, work supports, and family formation.

Nonmarital Birth Reduction: $100 million a year.
Reduces high performance bonus to $100 million a year; eliminates bonus criteria related to marriage and work support participation

Eliminates nonmarital birth reduction bonus.
Reduces high performance bonus to $100 million a year; eliminates bonus criteria related to marriage and work support participation.

Eliminates nonmarital birth reduction bonus.

Dedicated Funding for Marriage-Promotion and Family Formation-Related Purposes
TANF funds may be used to support these activities; no dedicated TANF funding stream.
Provides $500 billion over five years for competitive matching grant program for "healthy marriage" promotion. States may use TANF funds to meet what appears to be a 1:1 state match requirement.

Provides an additional $500 billion over five years to HHS for research, demonstrations, and technical assistance, 80% of which must be spent on marriage promotion activities.
Provides $500 billion over five years for competitive matching grant program for "healthy marriage" promotion. States may use TANF funds to meet a 1:1 state match requirement.

Provides an additional $500 billion over five years to HHS for research, demonstrations, and technical assistance, which must be spent “primarily” on marriage promotion activities.

TANF Purposes
1) assist needy families; 2) end dependence of needy parents by promoting work and marriage; 3) reduce out-of-wedlock pregnancies; and 4) encourage the formation and maintenance of two-parent families.
Modifies 4th purpose to read as follows: "encourage the formation and maintenance of healthy, 2-parent married families and encourage responsible fatherhood."
Adds "improving child-well-being" as overall purpose and "reducing poverty" to 2nd purpose.

4th purpose: "encourage the formation and maintenance of healthy, 2-parent married families and encourage responsible fatherhood."

Other

Pass Though of Child Support to TANF Families
TANF recipients must assign to the state their right to unpaid support owed before and during the assistance period to repay cash assistance. States may keep or "pass through" support to TANF families, but must pay a share of collections to the federal government.
Requires federal government to waive its share of a pass-through increase for families that have received TANF benefits for less than five years, up to an amount equal to $400, or $600 for family with two or more children. Pre-assistance assignment requirement eliminated. State option to implement early.
Requires federal government to waive its share of a pass-through increase, up to a $50 increase or $100 pass-through. Retains "pre-assistance assignment" (i.e., requirement to assign support owed to the family before it received assistance).

Distribution of Child Support to Families who have Left TANF
After a family leaves TANF, most support payments must be paid to the family, except support collected through federal tax offset, which is retained and shared by the state and federal government. Distribution rules based on date support is owed.
State must eliminate the tax offset exception and pay all collected support to former TANF families; federal share is waived. Provides funding and implementation flexibility to states.
State option to pay all collected support to former TANF families; federal share is waived. Distribution rules based on date support is collected, not date support is owed. Changes financed in part by an additional annual collection fee charged to families who never received TANF.

Transitional Medical Assistance (TMA)
Families receiving Medicaid for 3 of last 6 months who lose Medicaid eligibility because of earnings or child support are eligible.
Permanently reauthorizes TMA with new state options to extend eligibility and simplify participant reporting requirements.
Reauthorizes TMA for one year.

"Superwaiver"
No superwaiver provision in current law. Some program-specific waiver authority.
States, with approval by appropriate federal agencies, could obtain waivers of federal law and rules related to TANF, Social Services Block, Grant, and Child Care Development Fund.

Unclear whether there are any limitations on provisions in these programs that can be waived.
States, with approval by appropriate federal agencies, could obtain waivers of federal law and rules related to TANF, Food Stamp Program, public housing and most homelessness programs, Social Services Block Grant, Child Care Development Fund, most Workforce Investment Act programs, and adult basic education.

Legal Immigrant Eligibility for TANF and Medicaid\SCHIP
Most legal immigrants ineligible for these programs during their first five years in the United States.
Current law.
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