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Ten Ways to Use Short-Term TANF Benefits

Ten Ways to Use Short-Term TANF Benefits and (Mostly) Federal Money to Help Low-Income Families and Children

 

What are non-recurrent, short-term benefits?

Short-term TANF benefits are defined as cash, in-kind or voucher payments to meet a specific crisis situation or episode of need and are not intended to meet recurring or ongoing needs. They cannot extend beyond four months. States have developed a variety of approaches to short-term benefits that respond to a wide range of family needs, including housing, employment, transportation, education and training, and child development. 


Top Ten Ways to Use Short-Term Benefits:

Third Party Spending for the State Share

Many families are struggling during the recession and the federal TANF Emergency Fund offers states substantial new resources to help them. States can receive 80% federal reimbursement (in addition to their TANF block grants) for new or expanded short-term TANF benefits that help low-income families meet emergency needs, overcome barriers to work, ensure adequate housing, get education and training, repair or buy a car to get to work, and meet expenses such as back-to-school costs.

The federal economic stimulus package can help states offer new supports for low-income working families struggling during the recession. The TANF Emergency Fund provides up to $5 billion for an 80% federal reimbursement for increased spending for short-term payments and services to low-income families. States have used short-term benefits to help low-income families meet emergency needs and avoid going on cash assistance, overcome barriers to getting or keeping a job, avoid eviction or foreclosure or move into adequate housing, get education and training, repair or buy a car to get to work, and meet expenses such as high energy bills and back-to-school costs. States can claim up to 50% of their TANF block grant in additional funds between now and September 2010 (including funds claimed under the TANF Contingency Fund). They can even draw down these funds with no new state spending--they can count new or increased spending and in-kind services by third parties including local governments and schools, foundations, corporations, and community organizations. The window of opportunity is time-limited however: spending must occur before September 30, 2010 to receive the federal reimbursement.

Top Ten Ways to Use Short-Term Benefits

Here are ten ways to provide supports to low-income families to help them through the recession and improve their opportunities as the economy recovers. And have the federal government pay 80% of the costs.

Diversion Programs

Lump sum payments to help clients get a job or meet emergency needs instead of placing them on monthly cash assistance. Most states use some form of diversion (typically a one-time payment of about 3 months worth of benefits for applicants judged likely to be able to find work), but only a few states have used it for a substantial proportion of applicants. States could use it more aggressively for applicants or clients with good possibilities for getting a job, particularly where regular caseloads are not increasing so that the state does not qualify for additional reimbursements for its basic assistance costs.
• Maryland's Welfare Avoidance Grants (WAGs) provide up to three months of cash assistance in a lump sum payment to help families meet their immediate financial needs and avoid going onto regular cash assistance. WAGs are used for car repairs or purchases, utility costs and work expenses. Follow-up research has shown that the great majority of families that receive WAGS do not come back for cash assistance.
• North Carolina provides diversion payments worth up to 3 months of cash assistance to more than one-third of its new TANF families. Benefit diversion is available to families expecting to have jobs within a few months and can cover household expenses such as rent, utilities, car insurance and child care.
 

Employment/Training Bonuses

Rewards or bonuses for TANF clients who get a job or maintain employment. Additionally, this may include bonuses for clients who meet training or credentialing bench marks such as a GED or other form of educational or training accreditation.
• Florida provides a Cash Assistance Severance Benefit of $1000 to families where the family has received cash assistance for 6 months and the parent finds employment and chooses the payment in lieu of receiving additional cash assistance.
• West Virginia provides continuing support and incentive payments for families that lose eligibility for TANF due to employment. Families can continue to receive their full cash assistance payment for 6 months after losing eligibility and up to $1500 in needed car repairs. They can also receive bonuses for completing their high school diploma or GED and for completing vocational education courses.
• Beginning in August 2009, Los Angeles County is using TANF Emergency Funds to provide one-time work allowances of $500 for families that leave TANF for work.

Education and training

Payments and services to enable low-income parents to obtain short-term education and training so that they have the necessary qualifications for good jobs within their local area. Payments and services can include tuition and fees, books and expenses, and transportation.
• North Carolina provides supports for education (ABE, ESD, GED), skills training and on-the-job training for families and non-custodial parents with incomes below 200% of the level of poverty.
• Massachusetts provides support for training and education as part of its Post-Employment Support services for cash assistance families and families who left cash assistance in the past year.

Work expenses

Payments for work clothing, professional fees, transportation and tools and equipment, and temporary child care needed to find and start work. These payments could be made to divert an individual from assistance to obtain or retain employment (e.g., tools) or as a reward for those who go to work to help cover new work related expenses.
• Maine provides for vouchers worth up to three months of cash benefits to pay child care expenses needed to keep parents working.
• Pennsylvania authorizes up to $2000 for tools and equipment needed for a job and up to $250 for union dues or professional fees.
• New Jersey provides up to $500 for work-related expenses, such as, clothing (uniforms), car maintenance, tools, supplies, licenses, and testing fees.

Transportation Support

One time payments to help clients with transportation between work and home. This can be in the form of a payment toward the purchase of a car, car repair, license restoration or securing insurance.
• Texas provides payments of up to $1000 for car repairs or to avoid repossession of a car or truck.
• Maine provides Alternative Aid Assistance payments as vouchers worth up to 3 months of cash benefits where families need car repairs to keep working
• Hawaii provides up to $1000 for car replacement or repair.

Housing and Utilities

Payments to avoid utility shut-offs, mortgage foreclosures, evictions for rent arrearages, urgent appliance repairs and up-front costs such as first and last month’s rent and security deposits for homeless families and those in inadequate housing.
• New Hampshire provides emergency assistance payments for permanent housing to TANF eligible individuals to obtain or retain safe and healthy housing. These benefits can be used for the payment of rent, mortgage and utility arrearages, rental and utility deposits, and fuel deliveries.
• Rhode Island's Emergency Housing Assistance Program assists eligible low-income families who are experiencing a temporary housing crisis that either threatens or actually results in a loss of housing. Funds may be used for two months' rent, mortgage payments (principal and interest only) for up to two months; or security deposits up to $1200.

One-Time Payments for Family Expenses

Payments for periodic or one-time expenses such as back-to-school costs, new baby expenses, debt counseling, emergency food, winter heating or summer cooling costs, tax preparation expenses, or funeral expenses. These one-time payments are an especially important area for state innovations as they think about how the state can use the TANF Emergency Fund to help them meet family needs during the recession.
• New York is providing back to school payments of $200 for all 850,000 New York children on cash assistance or food stamps funded by a $35 million donation from the Open Society Institute and $140 million from the federal TANF Emergency Fund.
• Texas provides a supplemental $1000 payment for grandparents taking care of TANF children and a back-to-school payment for all children in TANF families.
• New Hampshire and Maine provide emergency energy assistance to families facing high heating costs.

Child Safety

Payments or services for families at risk of losing their children because of abuse or neglect. Services can include in-home supports to families, such as crisis counseling and Family Builders and out-of-home supports such as temporary housing, clothing and other expenses, respite and child care.
• Connecticut provides up to four months of residential foster care as emergency assistance for children at risk of abuse or neglect.
• Florida provides in-home support services to remedy some of the underlying conditions that lead to abuse, neglect or abandonment of children and to strengthen families so that children can be cared for in their own homes or in the home of a relative. Services are designed to improve parenting skills by reinforcing parents’ confidence in their strengths, helping them identify where improvement is needed and obtaining assistance with the necessary skills related to child development, family budgeting, health, nutrition and coping with stress.
• New Hampshire provides emergency assistance payments for family preservation to provide services to children and their families in situations involving credible reports of child abuse, neglect, and abandonment, imminent risk of a child’s removal from the home and urgent situations where continued presence in the home is not in the best interest of the child.

Domestic Violence

Payments for the prevention of domestic violence situations in families and/or to support the victims looking to escape situations of domestic violence.
• Pennsylvania provides emergency shelter allowances to families in domestic violence situations.
• Florida provides vouchers for emergency shelter, information and referral case management, child assessment, counseling, community education and professional training to victims of domestic violence.

Parenting and Child Development

Payments and services to families experiencing stressful life situations, including first-time and single parents and low-income families. Several states provide pre- and post-natal home visiting services designed to improve access to health services, reduce child maltreatment and improve child development.
• Florida provides the Healthy Families Florida program which offers home visiting for expectant families and families of newborns who are experiencing stressful life situations to teach parent-child interaction, child development, discipline practices and problem solving skills, and providing emergency supports and referral to other community resources. The program is designed to prevent child abuse and neglect before it occurs and to promote healthy childhood growth and development.


Third-Party Spending for the State Share

The TANF Emergency Fund reimburses states for 80 percent of their increased expenditures on short-term TANF benefits; however, the remaining 20 percent can come from any of several different sources of allowable TANF spending:
• state funds,
• federal TANF funds (including TANF Contingency Funds) or
• spending by other non-Federal third parties (e.g., a local government or school district, foundations, non-profit organization, corporation, or other private party), cash donations by non-Federal third parties, as well as the value of third party in-kind contributions (such spending counts as state MOE spending under federal regulations).

Most states have not taken much advantage of counting third party spending toward their state MOE requirements or for the purpose of drawing down additional TANF Emergency Fund reimbursements. The Open Society Institute's recent donation of $35 million for the state share of a $200 back-to-school payment for New York children on cash assistance or food stamps provides the largest example of states using third-party funding to draw down federal TANF Emergency fund dollars.

The federal ACF has already approved the use of 3rd party spending for TANF MOE. Some states counted 3rd-party spending as state MOE before the development of the TANF Emergency Fund. They counted YMCA afterschool program spending or school district's pre-school programs as they tried to increase their reported MOE spending to increase their caseload reduction credit or to claim additional TANF contingency funds.

The availability of 80% reimbursement for short-term TANF benefits from the TANF Emergency Fund provides a new opportunity to think through how states could offer needed services to low-income families through collaboration with local businesses and employers and community organizations. Potential initiatives where states could offer important services and benefits to families and children with no new state costs include:
• Job skills training grants where employers or community colleges share 20% of the cost
• Back-to-school gift cards where retailers such as Target or Wal-Mart put up 20% of the cost (a $100 gift card for an $80 payment (all federal money) to the retailer)
• Car repair or purchase programs where car repair shops and car dealers bear 20% of the cost
• Increases in emergency food assistance to families from community food banks where increased spending by the food bank is used to draw down federal reimbursement.
• Vouchers for tax preparation services to help families file for EITC payments where community organizations bear 20% of the cost
Where food banks and other community programs have seen increased spending for TANF-eligible benefits and services, states can use those increased expenses to claim reimbursement from the TANF Emergency Fund. The funds received can then be used to expand those benefits and services or for any other TANF-allowable program.

States using third party spending for TANF MOE and to draw down TANF Emergency Fund dollars need to have a letter of agreement between the TANF agency and the spending entity documenting that the spending qualifies for a TANF purpose and that the spending entity understands that the spending is being claimed as TANF spending.

Third party spending would likely be subject to the "comparable expenses" provisions in the federal law that require that TANF Emergency Fund reimbursements be based on spending comparisons between this year and the baseline year that take into account all spending in the baseline year. Like state TANF program spending, only new or increased third-party spending would be counted toward the TANF Emergency Fund reimbursements.

The TANF Emergency Fund enables states to provide critical benefits and services to low-income working families in their times of need during the recession. Innovative approaches (or borrowing from innovations in other states) can help those families using mostly federal money and can identify collaborations with community organizations and local businesses and employers to increase supports for families in difficult times.  


For more information on short-term TANF benefits and how they might be used in your state, please contact Jack Tweedie (303-856-1546), Sheri Steisel (202-624-5400) or Christine Nelson (303-856-1651).
 

 

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