Benefits cliffs refer to the sudden and often unexpected decrease in public assistance that can occur when a small increase in earnings pushes individuals or families out of program eligibility and off a financial cliff. Benefits cliffs are a common challenge for program participants, employers and state and federal program administrators.
Temporary Assistance for Needy Families (TANF) is a state-administered program, jointly funded by states and the federal government, making it ripe for reforms at both levels. Within this state-federal partnership, states have flexibility to make their TANF programs more effective by reducing the occurrence and severity of benefits cliffs.