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Human Services--Federal

TANF Reauthorization in the 108^th Congress:
Answers to Questions about the Status of Welfare Reform and
Possible New Federal Requirements

April 21, 2003

The 107^th Congress did not complete welfare reform reauthorization last year and left the issue for the 108^th Congress. NCSL has received many questions from state legislators and staff about funding and potential policy changes concerning the Temporary Assistance to Needy Families Block Grant (TANF), Child Care, TANF supplemental grants, and related programs. Following are some answers to frequently asked questions:

On February 20, 2003, President Bush signed into law P.L.108-7, an omnibus appropriations bill that completed the appropriations process for the federal Fiscal Year that began on October 1, 2002. Funding for TANF and related programs such as TANF supplemental grants and child care was only extended through June 30, 2003, the end of the third quarter of the federal fiscal year. Most other programs are continued through September 30, 2003. The Senate had originally included full funding of these programs through September 30 in their version of the FY 03 budget. This was reduced to June 30 in conference with the House, a position the House clearly intended as a message to the Senate to act expeditiously on welfare reform reauthorization.

The bill included a .65% across the board cut in discretionary programs. This means that the $2.1 billion dollar discretionary portion of the CCDBG is cut by $14 million. The cut did not affect the TANF block grant, the Social Services Block Grant (SSBG), or the mandatory portion of the Child Care and Development Block Grant (CCDBG).

In general, all rules that applied to TANF and related programs for FY 02 are in effect through June 30. For example, states can continue to transfer 10% of their TANF block grant to the SSBG.

According to the Congressional Budget Office, funding for TANF and related programs for all of FY 03 is in the baseline for FY 2003. This means that offset would not have to be found to continue funding in the fourth quarter. It does appear, however, that another action (whether in a welfare bill or some other piece of legislation) to get the fourth quarter funded. We anticipate some Congressional action prior to June 30.

Under current law, all state TANF waivers end at their expiration date. Many states had sought extensions for their waiver authority at least until a final welfare reauthorization bill is enacted and some wish to continue their waiver after reauthorization. NCSL had floated a proposal to extend these waivers and there is potential for a bipartisan amendment in the Senate to extend them. The Administration, which had proposed elimination of these waivers in their welfare reform reauthorization, is not supportive of an extension of waivers.

There seems to be enthusiasm for completing reauthorization. However, but there are significant disagreements among the players about approaches, and there potentially there are preemptions of state authority and unfunded federal mandates in reauthorization.

On February 13, the House has adopted its version of welfare reform reauthorization, H.R. 4., a bill that reflects the Bush Administration's proposal for welfare reform reauthorization, by a vote of 230-192. This bill especially reflects the Administration's proposal in regard to dramatically increased work requirements for the states and fiscal penalties on states that do not comply with these requirements. H.R. 4 is virtually the same as last year's H.R. 4737, and it went directly to the floor without consideration by a House Committee.

The bill increases the percentage of recipients who must be engaged and the number of hours per week recipients must be engaged in work and other activities. In general, recipients must work 40 hours a week, an especially large increase for parents with a child under six who currently must only meet a 20 hour requirement. The activities defined as work are reduced from the number in current law. If states do not meet these dramatically increased work requirements, they risk significant financial penalties being imposed by the federal government. This includes a 5% reduction in their TANF grant, having to backfill those dollars with 5% more state funds, and an increase of 5% in the maintenance of effort requirements. The caseload reduction credit, which reduces the work participation rates states have to meet by the amount of their caseload reduction, is modified in the House bill in a way that makes it harder for states to meet the work rates.

Under the House bill, states would be required to impose full family, full check sanctions on recipients who do not meet their self sufficiency plan requirements or refuses to work after the second month of such failure to comply. H.R. 4 contains a provision recommended by the Administration that requires that every family have a plan and be engaged in some activity ("universal engagement"). If states don't comply there would be a penalty. The bill does contain some new funding for child care, a positive step, but the amount provided is less that many observers, including CRS, have predicted will be needed. Substantial new financial flexibility for states in the TANF program is included in the legislation, including the ability to use TANF funds carried over from one fiscal year to another as flexibly as current year TANF.

On April 2, 2002, the Senate Health, Education, Labor and Pensions Committee did pass a bill, S. 880, reauthorizing the Child Care and Development Block Grant. This bill is expected to merged with a welfare reform reauthorization bill to be considered in the Senate Finance Committee. The Senate has not set a definite timetable for action on a welfare reauthorization bill, but the Finance Committee has been discussing trying to mark up a bill in early May. Important issues remain to be resolved between Senate Republicans and Senate Democrats. As of this writing, there is not a Senate Finance Committee bill. Last year, a bill was passed out of the Senate Finance Committee that was based on a proposal advanced by a tripartisan group of Senators. While the bill did increased work participation rates to 70% over 5 years, it kept the hours of work required of participants at 30. It also included a broad definition of work activities, kept the 20 hours of work requirement for a parent with a child under 6, and featured an employment credit to replace the caseload reduction credit. The employment credit would give states the ability to count recipients who leave welfare for work toward the work participation rate. While Senator Grassley (R-IA), who chairs the Finance Committee and Senator Baucus, (D-MT) are known for working in a collaborative, bipartisan manner, it is clear from discussions NCSL has had on the Hill that the Administration and House are pushing hard for an increase in work hours. Senator Grassley has stated that he wishes to come up with legislation that state legislators would view favorably, and has expressed concern about the impact of the administration's plan to require 40 hours would have in his own state of Iowa. There is discussion of including a penalty for not meeting a universal engagement requirement, which is in the House bill, but this is a change from last year bipartisan proposal.

It is critical that state legislators contact their U.S. Senators and remind them of the success of the current welfare reform law and the need for flexibility. In these difficult state fiscal times, remind them that it is impossible for states to pick up additional costs incurred with increasing work rates, including child care. Emphasize the need for state-friendly reauthorization that keeps the required work hours at 30 hours while continuing to move recipients toward self-sufficiency, includes a credit for state success in moving recipients off the rolls into jobs, and allows states to maintain their focus on private sector employment.