The Wait is Over, the Work Begins: Implementing the New TANF Legislation

Guide to Stragetic Decision-making: What Governors Need to Know

Executive Summary

In February 2006, Congress reauthorized the Temporary Assistance for Needy Families (TANF) program with the passage of the Deficit Reduction Act of 2005 (DRA). The new provisions for TANF present both a challenge and an opportunity for state welfare programs. Since the creation of TANF in 1996, states have been highly successful at moving record numbers of welfare recipients into employment and off the welfare rolls. However, new provisions in the DRA challenge the states to do even more in the future.

The original TANF reauthorization expired on September 30, 2002, and Congress continued the program through a series of 13 short-term extensions. This lack of progress in reauthorizing TANF left states unsure about the program's future direction and inhibited their ability to adopt major innovations or changes to their welfare programs. With the end of this uncertainty and a clear challenge from Congress to improve their programs, states now must move forward.

To help states develop strategies to implement the latest reforms, this Issue Brief provides an overview of the DRA's new TANF provisions, a discussion of key roles for governors, and a list of questions to guide strategic decision-making.

The Deficit Reduction Act:

• extends the TANF block grant through 2010 with fixed funding of $16.57 billion per year;
• increases the Child Care Development Fund by $200 million per year in federal matching dollars ($7.4 billion less than costs projected by Congressional Budget Office);
• eliminates the high performance and out-of-wedlock birth bonuses and establishes new competitive grants for healthy marriage promotion and responsible fatherhood initiatives;
• retains work participation rates of 50 percent for all families and 90 percent for two-parent families;
• changes the base year for calculating the caseload reduction credit from FY 1995 to FY 2005 to determine work participation rate requirements. Because this change becomes effective in FY 2007, most states will need to rapidly and substantially increase work participation among their recipients.
• includes welfare recipients receiving assistance in separate state programs in the calculation of the state's work participation rate. This makes it more difficult for states to meet the work rates unless they fund programs with general fund dollars that do not count toward state maintenance-of-effort requirements.
• requires the U.S. Department of Health and Human Services (HHS) to issue regulations on the definition of work activities, procedures for uniform reporting and verification of hours of work, and the circumstances in which a parent who resides with a child in a child-only assistance case would be counted in the work rate.

As in the past, governors are in a position to assume a key role in charting the course for reform. States are under considerable pressure to satisfy higher work participation rates in a very short timeframe while also moving more families into long-term self-sufficiency. Satisfying work participation rate requirements and avoiding penalties are important tasks, but they are not the central objectives of states' welfare programs. The leadership of governors is vital to maintaining a consistent focus on the overarching goal of helping low-income families achieve economic security. Key roles for governors and staff as they implement the changes mandated by welfare reauthorization include:

• setting direction by reviewing state investments, goals, and priorities;
• taking stock of programs to identify strengths and areas for improvement;
• implementing program design options that maximize work participation and help families achieve economic self-sufficiency; and
• monitoring progress towards goals.

While the latest round of reauthorization has increased time and financial pressures on states, it also provides an opportunity to review efforts to date, clarify goals, and recommit to governors' visions. Just as they did in 1996, governors can continue to play a vital role in welfare by shaping the direction for reform and using TANF in innovative ways to help low-income families end welfare dependence and secure stable, family-sustaining employment.