Redirecting TANF funds solves equity

Since replacing Aid to Families with Dependent Children (AFDC) in 1996, the Temporary Assistance for Needy Families (TANF) block grant has been the primary source of funding for states to provide basic cash assistance for families with children when they face a crisis or have very low incomes. But states only spend a little over one-fifth of their combined federal and state TANF dollars on basic assistance for families with children, our analysis of the latest data from fiscal year 2020 shows. 2 (See Table 1.) States continue to use their considerable flexibility under TANF to divert funds away from income support for families and toward other, often unrelated, state budget areas. By redirecting the funds back toward cash assistance, however, states could promote racial equity and child well-being.

Cash assistance to families struggling to make ends meet can improve children’s long-term outcomes while also providing parents with the cash they need to afford basic necessities such as rent, utilities, personal hygiene products, and school supplies. Over time, however, TANF has significantly declined in performing this core task. Fewer families in need have access to the program (in 2020, for every 100 families living in poverty, only 21 received TANF cash assistance, down from 68 families when TANF was created3 ); benefits leave those who do have access far below the poverty line; and as this report explains, states are spending a shrinking portion of their TANF funds on basic assistance.

While TANF provides inadequate support for all children, it does a particularly poor job of aiding Black children, who are more likely than white children to live in states with the weakest TANF programs.4 Black children also experience poverty at twice the rate of white children, owing to historical and continuing barriers to economic opportunity faced by Black families. American Indian and Alaska Native, Asian, and Latinx children also experience higher poverty rates than white children.

States can promote equity by redirecting TANF funds toward providing higher cash benefits to more families. Once TANF cash assistance is strengthened, states should direct remaining TANF funds to well-targeted work programs and supports so that families can address barriers to economic mobility and make the best choices for them. While states can act now, ultimately, federal action to change TANF’s funding structure is needed to ensure that all children live in states that will support them if their families face hard times.