NC Budget and Tax Center, TANF 20 Years Later

Redesigning TANF to lift more families out of poverty

The 1996 welfare law that created Temporary Assistance for Needy Families (TANF) has many shortcomings, as we’ve detailed in a blog series over the past week. Primarily, TANF fails to adequately support families with children who are poor through cash assistance and meaningful work activities—despite the law’s two core missions of providing a basic safety net and promoting work. The result has been grim, including a shocking spike in the number of destitute families living in crisis despite doing their best to get by.

Some folks ignore poor families’ lived experience over the past two decades and have declared that TANF has been a success overall. They often point to the impressive employment gains—often in low-wage jobs—among single mothers in the immediate years following the law’s implementation. Yet, they ignore the booming economy and the pro-work incentives built into an EITC expansion. Those benefits eroded in the aftermath of the 2007 economic downturn, which resulted in fewer jobs, deeper levels of poverty, and a sharp drop in TANF cash assistance. Economic context is key, and the uneven and weak economy has exposed the fault lines in the TANF design.

Overall, there is broad bi-partisan consensus that Congress needs to redesign the 1996 welfare law to strengthen TANF and support pathways to work that allow families to afford the basics. Big picture reforms should include ensuring that North Carolina and other states (1) serve a minimum level of families and children living in poverty and (2) set minimum levels for cash benefits. These floors would help prevent the drops in TANF’s reach that we experienced over the past 20 years, and, if set at a decent level, would restore some of the purchasing power that has since been lost. Congress should also require states to use more of their TANF dollars on core activities — work, work supports, and basic cash assistance. This reform would ensure that states use TANF to serve truly needy families, rather than supplant state funding and pay for tax cuts. Read more

NC Budget and Tax Center, TANF 20 Years Later

Twenty years later, TANF does little to relieve poverty and hardship

This blog is the second post in a series that will detail how lawmakers have weakened Temporary Assistance for Needy Families (TANF) over the past 20 years, explain why TANF is a cautionary tale rather than a model for other work and income support programs, and map out a better way forward.

TANF does little today to help families make ends meet or to connect them to work to reduce their need for supports—thus violating the purported intention of the 1996 welfare law to move people off welfare to work. Known as WorkFirst in North Carolina, TANF is a cautionary tale, not a model, for lifting families out of poverty.  Below are the top three reasons why.

1. WorkFirst provides a safety net for fewer families who are poor, despite increased need. Just 8 out of 100 North Carolina families with kids living below the federal poverty line benefit from the program today, as opposed to 74 out of 100 when the law was first enacted (known as the TANF-to-poverty ratio; see the chart below). There are only seven states with a lower ratio. In other words, cash assistance through TANF is simply inaccessible in North Carolina.

In fact, WorkFirst failed to cushion families against deep spikes in unemployment during the Great Recession and its aftermath. The TANF-to-poverty ratio either stayed flat or fell every year since the 2007 downturn. Since 2006-07, nearly 50,000 more families with children live in poverty, but caseloads dropped by more than 36 percent. One would expect, at minimum, for the cash assistance program to respond modestly to meet the surge in poverty, but WorkFirst failed completely to react and left a lot of needy families without the basics. Read more

NC Budget and Tax Center, TANF 20 Years Later

TANF at 20: How it contributed to a tattered safety net for struggling families

This blog is the first post in a series that will detail how lawmakers have weakened Temporary Assistance for Need Families (TANF) over the last 20 years, explain why TANF is a cautionary tale rather than a model for other work and income support programs, and map out a better way forward.

Come Monday, Aug. 22, it will be 20 years since President Bill Clinton signed into law what’s widely known as welfare “reform”—an overhaul of the nation’s main assistance program for families struggling to make ends meet. Lawmakers created Temporary Assistance for Needy Families (TANF) to, as President Clinton pledged, “end welfare as we know it.” And the 1996 welfare law did just that—the reforms created a harsh hole in the nation’s safety net for the most vulnerable families across the U.S.

The welfare law imposed a five-year limit on benefits—ending the legal right to basic assistance—with the expectation that recipients who can work do so. Policymakers also expected states to maintain a temporary safety net to help families weather short-term troubles and a bad economy. The law gave states a great deal of spending flexibility over programs when it converted federal aid to a fixed block grant, but many states like North Carolina have significantly reduced basic assistance without using TANF to help parents prepare for or connect to work.

The result: TANF does little today to help families regain their footing on the economic ladder or to connect them to work to reduce their need for supports—thus violating the purported intention of the law to move people off welfare to work. In fact, Peter Edelman and Barbara Ehrenreich, two of our nation’s foremost experts on poverty, warned President Clinton and Congress at the time that this would happen, as they recall:

“We argued that the low-wage jobs available to former welfare recipients would not pay the bills. We warned that the legislation didn’t provide adequate child care for single mothers thrown off welfare. And we cautioned that many welfare recipients faced serious barriers to success in the job market.”

Their warnings fell on deaf ears and in the end accurately depicted the fallout of TANF 20 years later. Read more

NC Budget and Tax Center

Prosperity Watch: SNAP (food stamps) caseloads declining quickly

The latest issue of Prosperity Watch takes a look at the trend in SNAP caseloads between January and April of this year. We selected this period because it covers the time in which 23 of the state’s 100 counties began cutting people off SNAP after re-imposing the three-month time limit in January.

We found that the number of North Carolinians on SNAP fell quickly during this period, especially in the counties that reinstated the three-month time limit for childless, non-disabled adults (see the map below).

Jump over to Prosperity Watch for the full details and another graphic. Read more

2017 Fiscal Year State Budget, NC Budget and Tax Center

Budget falls short of being a visionary plan for North Carolina’s economic future, finds a new report from the NC Budget & Tax Center

North Carolina lawmakers approved their state budget this month, a budget constrained by limited aspirations. The pursuit of a rigid spending formula combined with another round of tax breaks prevented lawmakers from proposing an adequate budget, let alone a bold one, as we explain in our new Budget & Tax Center report.

The new tax breaks in the budget come on top of recent tax breaks, which together are projected to cost more than $2 billion annually once fully implemented. While the budget reinvests in some worthy programs and services, these investments are just a small fraction of what we need to build thriving communities and boost economic opportunity in North Carolina. The reality is that without tax giveaways to the wealthy and powerful, much more could have been possible to improve North Carolinians’ quality of life and to build a stronger, more inclusive economy for all.

Read the report to learn more about what lawmakers prioritized in the 2017 fiscal year budget, areas where investments fall short of what’s needed to help North Carolinians thrive, and what lawmakers’ fiscal decisions mean for the state’s ability to boost quality of life and shared prosperity.