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 Eldeman 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.

NC Budget and Tax Center

House lawmakers approve stricter penalties for SNAP recipients

A new rule also requires DHHS to investigate modest lottery winnings

Last week, House lawmakers undercut SNAP, the Supplemental Nutrition Assistance Program, which is the nation’s most important anti-hunger program and plays a critical role in ensuring that North Carolinians have enough to eat. They made it more difficult for those who receive SNAP to access this critical nutritional support by increasing disqualification periods to the maximum level allowed under federal law. The bill also requires the Department of Health and Human Services to investigate unreported lottery winnings in excess of $2,250 among SNAP recipients.

The approval comes just two weeks before some of North Carolina’s poorest adults, who are already living on the edge, stand to lose food assistance as the SNAP time limit returns to the state’s most-economically struggling counties. The time limit kicked in earlier this year for the 23 counties with healthier economies.

The bill that the House approved has three major sections:

1. The bill includes a work penalty provision. Under this bill, SNAP recipients that are not in compliance with work requirements would be disqualified from benefits for three months for the first issue of noncompliance, six months for the second instance, and permanently for three instances. Examples of work requirements include registering for work, participating in an employment and training program, and not voluntarily quitting a job or reducing hours to below 30 hours per week without good cause. Some people are exempted, such as children, older adults, and people unfit for work.

The reality is that 4 out of 5 SNAP participants are working or not expected to work. Nearly half of the folks on SNAP are children who—like older adults and people with a disability—are not expected to work. And work rates are high among SNAP households that can work. Rep. Bert Jones, the bill sponsor, amended the bill to only subject the head of household to the disqualification period to ensure that children are not penalized for the challenges that their parents’ face in finding work or staying on the job.

2. The bill requires the State Lottery Commission to report cash lottery winnings of $2,250 or more to the Department of Health and Human Services, who then must crosscheck that information with SNAP recipients on a monthly basis. If the department discovers that there has been a case of unreported winnings, staff would investigate the SNAP household to determine fraudulent misrepresentation, which can carry a criminal charge.

Proponents of the bill cited fraud as a motivator of this provision despite data that shows error rates are at a near modern low.  Any amount of fraud is unacceptable. The lottery provision in this bill is in line with curbing fraud, and it is in line with federal law. However, it is worth nothing that less than 1 percent of SNAP benefits go to households that are ineligible, according to the Center on Budget and Policy Priorities.  That means that 99 percent of SNAP benefits go to households whom SNAP is designed to help put food on the table. The lottery cases are overblown in the media.

3. The bill authorizes a legislative study to review a federal option called categorical eligibility, which allows some North Carolina families with modest assets and low incomes—but high expenses such as child care, rent, and utilities—to be eligible for federally-funded food benefits. This policy makes sense because it enhances efficiency, saves North Carolina money, and helps at least 22,000 low-income people become eligible for food aid. Eliminating categorical eligibility, as the original bill would have done, is a substantial policy change that requires significant study. As such, the bill sponsor was wise to convert this provision into a study.

Let’s hope that the study committee reviews the compelling body of evidence demonstrating the harsh impact such a change would have on families, the operations of social service offices, and the broader local economy.

In general, the bill continues a shift in state policy designed to eliminate and/or limit public assistance and eligibility to the minimum level that is allowed. Lawmakers axed a modest but vital working family tax credit, drastically cut jobless benefits, required drug testing for some recipients of cash assistance, banned state waivers from the harsh SNAP time limit, and now again have their sights set on scaling back food assistance.

It is important for lawmakers to pivot and focus just as much attention as they have had on dismantling the safety net to growing jobs, ensuring that adults have access to jobs that pay enough to afford the basics, and investing state money into job training programs that can help these jobless workers regain their footing on the economic ladder.