States Are Hoarding $5.2 Billion in Welfare Funds While Denying More People Aid

The 1996 welfare reform passed by Congress gave states more freedom over how they could use federal funds for aid to the poor. They could insist that welfare recipients work before they are eligible for cash assistance. They could also use their federal “block grants” to fund employment and parenting courses or to subsidize childcare.

Twenty-five years later, however states are still able to use this freedom to do absolutely nothing with large sums.

According to recently released federal dataThe $5.2 billion in federal Temporary Assistance for Needy Families (TANF) funds that states have not used is sitting in their pockets. The total was nearly $700 million more than in the 2019 and 2020 fiscal year. Hawaii, Tennessee, and Maine have the highest cash holdings per person living below the federal poverty line.

Despite increasing poverty, states have retained more of this welfare money. The U.S. Census Bureau reported that 16.1% of children younger than 18 lived in poverty in 2020. This is an increase from 14.4% the previous year. The poverty rate for those aged 18-64 grew from 9.4% to 10.4%. As unused TANF dollars have accumulated, applications to the cash assistance program have waned, though it’s not for a lack of need, say experts and people who have applied to the program.

Bonnie Bridgforth witnessed the paradoxical reality that Maine is accumulating more welfare money and using less to help those who are in need.

Two weeks before she was due to give birth, the stay at home mom was forced into the sole income provider role by her husband’s conviction for child pornography possession. Her family of five was left without regular income.

Bridgforth, then 35, turned to the Maine Department of Health and Human Services, where a caseworker looked past her pregnant belly and told her that to get aid she’d need to meet the state’s requirement that she get a job. Bridgforth explained that it was difficult to find work with her due date being weeks away and four children at home. She was then approved for $981 per month in cash assistance, with the understanding that she would start working once she had given birth.

Bridgforth began working at a gas station soon after her children were in school. She earned $8 an hour, 50 cents above Maine’s minimum wage at that time, later receiving a 50-cent raise. Bridgforth was also working towards an associate degree and taking a full load of courses.

Bridgforth was notified by DHHS two years later that she was not eligible for any assistance, including child-care, because of this. The notice from the agency said her family did not meet the “deprivation” standard, a TANF requirement that assesses the extent to which children have been deprived of financial support from one or both parents. Bridgforth’s children no longer met the standard because her husband had been released from jail and they were now considered a two-parent household, even though the couple was estranged and he was not living with them. They split up soon after.

Bridgforth requested an explanation in an email to a DHHS welfare expert. “I think I have whip lash. It is exhausting,” Bridgforth wrote in the Aug. 30, 2016 email.

The specialist replied, “Sorry Bonnie. An eligibility worker was reviewing the case and it appears that a decision was made that deprivation does not exist, I am not an eligibility worker so cannot make this determination.”

Bridgforth reflected on the rejection and told ProPublica, “No one seemed to care that we were living in significant poverty.” During this period, she said, she struggled to buy diapers, gas, clothing and her children’s school books. Her oldest daughter, who was 12, “felt very poor because we couldn’t buy the good shampoo,” Bridgforth recalled.

Maine had $111million in unutilized welfare dollars at the time that Bridgforth got kicked off TANF in the same year. The program was funded by $45 million. The following year — as Bridgforth “fought to keep a roof over my kids’ heads” — the unspent welfare money continued to pile up, reaching $141 million. Although the surplus has declined over the years, Maine still has $93 million in welfare money per capita. This figure was for fiscal year 2020. This is $657 per person living in poverty.

The unutilized welfare stash is a bigger story about how 1996 welfare reform law has failed poor people: It allows states not to distribute cash assistance even if they have the money.

The federal government grants states a lump sum, or block grant, each year. This money is to be used to help low-income people meet their basic needs, get work, or start families with two. States have more freedom to use the money in their own ways and are increasingly using it. fill unrelated budget gaps. Experts say it’s reasonable for states to have some TANF reserves, even as large as their annual block grant, but when they stockpile the money from year to year it’s cause for concern.

Tennessee has $790 million in federal welfare funding sitting around — the largest pool of unspent welfare dollars nationwide — though it has recently promised to spend it. Hawaii has $364million sitting idle in an account, which is equivalent to $2923 per person living below the poverty line. Oklahoma has $264 Million, almost double its $138 million annual TANF budget.

Devin Stone, director of communications for the Tennessee Department of Human Services, said, “Fluctuations in caseload and decreased participation in the state’s TANF program resulted in a surplus of TANF funds accumulating over a period of several years.” In fiscal year 2020, Tennessee reported its lowest-ever TANF caseload, about 17,000, down from 68,100 cases in 2006.

Jackie Farwell, a spokesperson for the Maine DHHS, gave a similar explanation for that state’s unspent TANF funds, saying it was caused by the Maine Legislature limiting lifetime welfare eligibility to five years. As a result, “Maine’s TANF caseload rapidly declined from 13,522 in January of 2012 to 4,320 in January of 2018,” she said. “This reduction in the number of people served by the program in turn led to an increase in Maine’s TANF block grant balance.”

Oklahoma’s Department of Human Services did not respond to a request for comment.

The coronavirus pandemic and accompanying economic travails did not make a dent in states’ TANF reserves. Between June and November 2020 the national poverty rate saw its highest jump since the government began to track it 60-years ago, rising from 2.4% down to 11.7%. Other parts of the federal government’s social safety net increased aid to help some of the 7.8 million Americans who fell into poverty, with stimulus packages and expanded unemployment benefits. TANF, on the other hand, helps fewer people.

TANF acceptance rates have steadily declined over the past few years, with some states — Texas, Mississippi, Arkansas and Nebraska — denying about 90% of applicants in fiscal year 2020, according to federal data.

“During the COVID pandemic, when unemployment rates and hunger rates were skyrocketing nationwide, TANF funds were still sitting unused,” said Ashley Burnside, a policy analyst at the Center for Law and Social Policy, a national advocacy organization for low-income Americans. The devastation wrought by the pandemic “is as much of a ‘rainy day’ as states could have had. If funds are still left unused, it makes me question what states are waiting to use this money for.”

Ty Bishop, a spokesperson for the Texas Department of Human Services, which has the nation’s lowest TANF acceptance rate at just 7% of those who apply, said most applicants there “exceed the income and resource limits.” To qualify, a family with two children and one caretaker must have less than $1,000 in assets and a monthly income of less than $188. Those requirements haven’t changed despite the state’s $281 million in unspent TANF funds in fiscal year 2020.

Congress debated a 1995 precursor to the welfare law, which was passed the following year. Carol Moseley Braun, a Democrat representing Illinois, predicted that some states would opt to spend federal dollars rather than distribute them to the poor. She proposed an amendment that would prohibit states from transferring unused welfare funds from one year to the next.

“If we send the states this money in a block grant, there is nothing to prohibit that state from saying we do not want to have assistance for poor children,” Moseley Braun said. “We are not going to address the issue of job creation. We won’t train people to return to work. We are not going provide any assistance to the children. We are going to reduce the resources available to address the issue of poverty in our state. We will take money from the federal government and use it to move from year to another and not sustain our efforts. I think that would be a real tragedy.”

Moseley Braun’s “race-to-the-bottom amendment” — intended to prevent states from “trying to underbid one another” in assistance to the poor — did not make it into the final bill that President Bill Clinton signed in 1996.

Representatives from the Maine and Tennessee human services departments stated that Hawaii is working with their states to plan how welfare funds will be spent on new programs that help families on the edge of poverty to achieve greater financial stability.

According to Amanda Stevens, a spokesperson for Hawaii, the state plans to use its surplus for employment services such as job coaching and placement for parents with children receiving TANF. Also, diaper assistance will be provided to eligible families. Stevens said that the state is considering increasing benefits and offering monthly assistance with housing.

In Maine, the money will be used to pay for a variety of programs and “system-wide improvements” to better serve the poor, said Farwell, the DHHS spokesperson. These include counting the pursuit of a high school diploma as an approved work activity for receiving benefits; updating the state’s application system so TANF recipients can recertify their eligibility online; and providing “coaches” to help families set goals and access resources.

Tennessee lawmakers passed legislation this year pledging to work with community “partners” to spend down the state’s $790 million in TANF reserves. The law, which was in effect July 1, raised monthly cash assistance for a three-person family to $387 per months, up from $277. It also includes a 2-year pilot program to allocate $50,000,000 to community organizations serving low-income families. Additionally, it provides additional cash assistance to individuals who are pursuing educational opportunities.

Advocates and state welfare caseworkers claim that TANF has already irreparably lost trust among the poor despite all the efforts made.

“Many families living below the poverty line are deciding that the benefits TANF provides are not worth the onerous upfront requirements to get on and stay on the program,” said LaDonna Pavetti, a welfare expert at the Center on Budget and Policy Priorities. “Reserves are going up because caseloads are going down.”

TANF applicants who qualify could lose any child support they might have received from a noncustodial parent. Moriah Geler, a Maine Equal Justice caseworker and legal aid organization, advised Bridgforth in her search for TANF.

“There are so many unknowns and confusing parts about the program,” Geer added. “Families don’t want to go through the indignity of applying to this program again, even if more funds and programs are now being offered. I have many clients who choose poverty over having to go back and beg for cash assistance to be able to feed their families and keep a roof over their heads.”

Sky Arnold, a spokesperson for Tennessee’s Department of Human Services, said there are other explanations for the decline in welfare applications, including that “less families need the money. This is a sign that our economy has been booming in recent years.

“Decreasing applicant numbers speak to our state’s ability to build families who no longer need assistance,” said Arnold, who recently left the agency.

The Center on Budget and Policy Priorities, a progressive think tank that analyzes the impact of federal and state policies, disputes the notion that TANF’s decreasing numbers indicate families no longer need assistance. This organization created a metric that shows how many people in poverty are actually assisted by welfare. According to its “TANF to poverty ratio,” many states, including Tennessee, are largely failing to meet the needs of poor families. According to the analysis, 18 of 100 families with children were assisted by the state in 2019, down from 67 when this program was started in 1996.

A reportThis year, TANF was found to only serve one in four Maine children below the federal poverty level. In addition, 84% families who had opted out of the cash assistance program for 2019 were still living in poverty.

Today, Bridgforth, who completed her associate and bachelor’s degrees while remaining the sole breadwinner for her family (her ex-husband remains incarcerated; Bridgforth remarried in May 2021), works in special education. She dreams of attending law school.

In September, she gave birth to a written statementShe spoke to the Maine Legislature about her experience in TANF and suggested ways that the state could improve the program.

“I made it despite the monthly attempts to kick me off TANF before I was ready,” Bridgeforth wrote in her statement. “I am no different from so many other women who find themselves on welfare.”