Changing TANF Rules: Estimating effects on state compliance and the well-being of low-income families

• In Event: Administrative Burden in the Safety Net: Spillovers and Solutions

Abstract

Although states determine all policy parameters and administer TANF payments, about half of their funding comes from a federal block grant. Federal law mandates that at least half of each state’s work-eligible TANF recipients participate in work-related activities for a minimum of 30 hours per week. While these requirements and the penalties for noncompliance appear stringent, states can reduce their required participation rates through a complex “caseload reduction credit” calculation.

 This research evaluates the effects of changes to the rules governing how states comply with federal work participation requirements, focusing in particular on the modifications introduced by the Fiscal Responsibility Act (FRA) for fiscal years after 2025. Using a similar analytical framework, it also assesses the impact of three other proposed reforms: changing the targeted families to meet maintenance-of-effort (MOE) requirements, indexing state spending to inflation, and adjustments to the caseload reduction formula. In addition to estimating the varied effects these changes may have on state compliance, we examine possible policy responses by noncompliant states and the broader implications for low-income families. Although TANF work requirements are intended to incentivize states to support recipients in finding employment and exiting the program, our analysis underscores the complexity of the federal accounting system that determines each state’s actual work participation requirement. This complexity may impose administrative burdens on states and encourage compliance strategies that do not necessarily align with the program’s goal of promoting self-sufficiency through work.

Authors

• Josep M Nadal-Fernandez, Tulane University
  Presenting Author

• Gabrielle Pepin, W. E. Upjohn Institute for Employment Research
  Non-Presenting Co-Author

• Kane Schrader, W. E. Upjohn Institute for Employment Research
  Non-Presenting Co-Author