America's Neediest Families Are About to Run Out of Money

Update: Governor Jan Brewer has ordered state officials to redirect $650,000 in state funds so that families continue to receive welfare benefits.

When Congress shut down the government, one of the many programs caught up in the fracas was Temporary Aid for Needy Families (TANF), the program created by the 1996 welfare-reform law. Spending on the program is mandatory, and normally wouldn't be a casualty of an appropriations fight like the one waged now. But the law officially expired three years ago. Instead of taking it up again, Congress has simply extended the last reauthorization with each new spending bill. No spending bill, no welfare program.

The biggest way the '96 reform law changed the program was by turning it into a block grant to states: Whatever the federal government appropriated for programs designed to help poor families, they would send it in chunks to state governments that were fairly free to decide how to spend it. TANF continues to provide cash benefits to some families-cash benefits are what most people think of when they think of welfare-but it also provides money for job-training programs and other services that are designed to help low-income adults work, like subsidies for child care. Those chunks of money ended with the shutdown Tuesday. What that means for families who get cash payments through the program depends on which state they live in. "States are in different places about their capacity and their willingness to step forward in order to mitigate the effects," says Elizabeth Lower-Basch, a policy coordinator at the Center for Law and Social Policy in Washington, D.C., an organization that develops policies meant to improve the lives of low-income families.

States are allowed to shuffle funds around so that they can continue to make cash payments to families who receive them while the federal government is shut down, but they don't have to. Some have restricted their own spending through law. Eleven states rely primarily or solely on federal funds to make cash payments. Arizona uses only federal funds, and it has said that about a third of its caseload won't receive checks as long as the federal government remains shut down because their cases were new or pending recertification.

Other states don't have enough funds to last for very long, and could join Arizona in stopping payments if the shutdown lasted more than a week or two, says LaDonna Pavetti from the Center on Budget Policy and Priorities, a nonpartisan Washington think tank. The money states are required by the federal government to contribute to their welfare programs are set at 80 percent of 1996 levels-it was part of the reform law-so legislatures know what it is every year and budget for a set amount. They're also allowed to use money from previous years that remains unspent, and there was extra money set aside as a contingency fund for states in the stimulus bill that is approved for spending through 2014. But it doesn't add up to a lot of money. Delaware has said it has about a week's worth of funds; others wouldn't make it past October's end.

The federal government has promised to reimburse the states for the money they spend for families during this period, or to allow them to count it toward spending requirements. "The longer it draws out, however, the more nervous states will be about whether the federal government would make them whole," Lower-Basch says.

No one in the House or the Senate has put forward a reauthorization bill that would end the program's reliance on continuing resolutions. Advocates for the poor and people who study the program, however, are unsure whether they would want this Congress to debate a bill right now, when it might be subject to spending cuts like everything else. "It's not the right environment to do good things for poor people," Pavetti says. "It's such a toxic program, it's hard to figure out who the champion would be."

This is despite the fact that many conservatives largely view the welfare-reform bill as a success. It moved more women into the workforce, and, at least in the beginning, many states provided quality work-training programs to help move people off the welfare rolls. Even after the recession, the employment rate for single moms who have never been married is at 58.7 percent, according to the Brookings Institution, a centrist think tank, and their poverty rate is up to 49.3 percent from 60 percent before reform. Yet few people understand the fundamental changes enacted in the reform bill-there are lifetime limits, work requirements, and the cash benefits amount to very little money. It worked well when the economy was good, but in a deep recession and slow recovery, some of its provisions seem out-of-place. In Kansas, for example, recipients have to prove they've applied to 20 jobs a week. In Colorado, recipients have to work between 20 and 30 hours a week, depending on their situations, just to receive their checks, in addition to looking for other jobs. In Arkansas, the maximum benefit for a family of three is $204 a month. These states aren't outliers. To qualify, no one in any state can earn more money than half of the poverty line, which is $9,765 for a family of three. "People still have this idea, that people are on it for very long periods of time, and aren't looking for work," Pavetti says. "I think people still have this image of pre-1996."

The families getting checks are already among the poorest of the poor, and, in many cases, have exhausted all other opportunities because it's such a hassle to qualify for the programs. When the numbers of poor Americans shot up to the highest levels in decades during the Great Recession, the number of families receiving cash benefits barely nudged upward. Nine states provide assistance to fewer than 10 percent of families living in poverty in their states. Even when families do receive aid, they max out after five years. With other programs affected by the shutdown-food stamps and nutrition programs for pregnant women and young children-it's hard to imagine these families will have any money should their cash assistance stop. "It's a multiple whammy," Lower-Basch says.