Reviewing the Temporary Assistance for Needy Families Program

Introduction

Representative Barbara Ballard requested this audit, which was authorized by the Legislative Post Audit Committee at its April 25, 2023, meeting.

Objectives, Scope, & Methodology

Our audit objective was to answer the following questions:

1. How has the percentage of TANF funding provided directly to families changed over time?
2. What impact have changes to TANF rules since 2011 had on program outcomes?

The scope of our work included reviewing Kansas’s TANF rule changes, possible impacts of those changes, and how the Kansas Department for Children and Families (DCF) uses federal TANF dollars. This was for state fiscal years 2009 through 2023.

We reviewed state and federal laws and regulations related to TANF and reviewed accounting reports from DCF. We also talked to stakeholders about Kansas’s TANF rule changes and reviewed academic literature on TANF rules and outcomes. More specific details about the scope of our work and the methods we used are included throughout the report as appropriate.

Important Disclosures

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. Overall, we believe the evidence obtained provides a reasonable basis for our findings and conclusions based on those audit objectives. However, we were somewhat limited in our ability to answer audit objective 2 due to DCF data limitations. Although limited, we were still able to answer the audit objective. This is discussed later in the report.

Since 2009, the percentage of spending going towards cash assistance decreased by 39% while cash assistance caseloads also decreased significantly during that time.

Background

The federal government created the Temporary Assistance for Needy Families (TANF) program in 1996.

• The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 replaced Aid to Families with Dependent Children (AFDC). The act created TANF (42 U.S.C. 601) and provides states with an annual block grant based on the amount of funding states received from AFDC funding before 1996.

• TANF has 4 purposes defined by 42 U.S.C. 601. The 4 stated purposes are:
  • to help needy families so that children can be cared for in their own homes,
  • to reduce dependency by promoting job preparation, work, and marriage,
  • to prevent out-of-wedlock pregnancies,
  • to encourage the formation and maintenance of two-parent families.

Kansas funds a variety of programs with the TANF block grant.

• In Kansas, DCF administers TANF funds. Since FY 2013, DCF funded about 50 programs with the TANF block grant. Some examples include cash assistance, foster care services, and TANF employment services. Other programs include the Kansas Alliance of Boys and Girls Club and two-parent family initiatives.

• These programs are allowable because TANF gives states broad flexibility when spending federal TANF funds. The only requirement is that states must spend TANF funds on qualified individuals or programs that a reasonable person would consider to be within the 4 purposes of TANF.

• Qualified individuals include families that have children and families who cooperate with the state’s child support program. It also includes teenage parents who are attending school and living in settings with adult supervision.

Kansas must follow federal laws and rules to receive the TANF block grant and offer cash assistance.

• Federal law requires states to contribute maintenance of effort (MOE) payments towards their TANF programs.  States must meet their MOE each year to receive their full TANF block grant. For Kansas, that’s about $62 million to $66 million per year. These payments can be made towards any program or activity that supports a TANF family directly or indirectly. Kansas typically claims the earned income tax credit as its primary expenditure towards the TANF MOE.

• Under federal requirements, states must enforce TANF work requirements.  For example, states must monitor work activity for work-eligible individuals who participate in a cash assistance program. In general, a work-eligible individual is an adult receiving assistance under TANF. Work activities are broad. They include things like employment, job search activities, community service, and vocational training.

• Federal law also requires states to establish paternity for TANF cash assistance recipients. This means states must identify and locate the second parent with a financial obligation to the family receiving cash assistance.

• Federal law limits families to a total of 60 months of cash assistance benefits. States can set limits shorter than this 60-month ceiling. States can allow up to 20% of the caseload in any one year to receive benefits beyond the 60-month time limit.

TANF cash assistance serves Kansas families with very low incomes.

• States have broad flexibility in how they operate their TANF programs. In Kansas, cash assistance is 1 program the state spends TANF funds on to meet the goals of TANF. But TANF is not an entitlement program. This means states don’t have to offer any individual or family cash assistance from TANF block grant funds. States can spend TANF funds on other programs related to TANF goals instead.

• Generally, in Kansas, a family is eligible for TANF cash assistance if they have insufficient income or resources to support themselves. Funds must be granted to families that live in Kansas. The family must include a child or expectant mother who is a U.S. citizen, legal immigrant, or qualified immigrant. Eligible families use electronic benefit transfer (EBT) cards to access their cash assistance.

• Insufficient income is determined by many factors. This includes things like household size, county of residence, and income. This means income eligibility requirements vary from household to household. For example, a family of 2 in Shawnee County living in non-shared housing must earn less than $326 in total countable income per month before they’re eligible for TANF cash assistance. That includes allowable deductions such as the $90 work expense deduction.

Federal funding for TANF hasn’t changed since the creation of TANF in 1996.

• Kansas receives about $102 million per fiscal year in federal TANF block grants. Funding decreased slightly in FY 2017, but generally remained stable around $102 million for Kansas, since 1996. This also means funding hasn’t been adjusted for inflation since the beginning of the program in 1996.

• We used the Bureau of Labor Statistics (BLS) Consumer Price Index-Urban average (CPI-U) to estimate the effects of inflation on TANF block grant funds. We estimated that by 2023, Kansas’s TANF block grant lost about 49% of its purchasing power since 1996.

The state’s 2015 Hope, Opportunity, and Prosperity for Everyone (HOPE) Act changed eligibility requirements for TANF cash assistance in Kansas.

• In 2015, Kansas enacted the HOPE act. The act placed more restrictions on TANF cash assistance time limits. For example, K.S.A. 39-709(b)(1) reduced the lifetime limit for cash assistance from a total of 48 months to a total of 36 months. The act was amended in 2016 to reduce the limit to a total of 24 months. Families may receive a single extension of 12 months for hardship. This is allowable but stricter than the federal lifetime total of 60 months.

• The act also reduced the amount of time single caregivers are exempt from work requirements. In Kansas, that exemption only applies to single caregivers when caring for a child under 3 months old. Kansas allows an exception if the child was born significantly prematurely or has a serious medical condition or disability. This is allowable but stricter than federal regulation that lets states exempt single caregivers caring for a child under 12 months old from work activities for up to 12 months.

• The act added tiered penalties for cash assistance recipients not adequately complying with work activity requirements or not cooperating with Child Support Services. The maximum penalty is 10 years of TANF ineligibility. Federal law requires states to meet work participation rates or face penalties that reduce their TANF block grant. Federal law also requires states to establish paternity for TANF cash assistance recipients

• The HOPE act also restricted purchases with TANF cash assistance EBT cards. For example, the act prohibits EBT card transactions at liquor stores, casinos, and adult entertainment venues. The act also added additional prohibitions for transactions at places like tattoo parlors and points of sale outside of Kansas. Federal law only prohibits EBT card transactions at liquor stores, casinos, and adult entertainment venues.

TANF Cash Assistance Spending for Selected Years

We reviewed state financial reports, internal DCF reports, and TANF plans to categorize and calculate the state’s TANF cash assistance block grant expenditures.

• We reviewed 5 state financial reports from FY 2009 to FY 2023 and intermittent years. We focused on cash assistance paid with the TANF block grant because, generally, Kansas does not pay for cash assistance with state funds. This means other forms of cash assistance like one-time special TANF dollars appropriated through the American Recovery and Reinvestment Act or pandemic relief funds were not included in our totals. We did this to maintain consistency across the years we reviewed.

• It’s important to note that comparing our calculations to DCF’s federal reports may not align. This is because we used the state FY expenditures as opposed to the federal FY expenditures which begin in October.

• We also used the state’s broader definition of administrative costs. For state budgeting purposes, administrative costs include salary and benefit expenditures for staff that directly provide TANF-related services. These expenditures are considered program costs in the federal reports. In federal reports, the costs necessary for the administration of TANF, such as monitoring and evaluating eligibility, are considered administrative.

• The exception to this is our reporting on the average monthly cash assistance aid per person. This is because the internal DCF report we reviewed tracked cases that received any form of cash assistance. We used this report to get an idea of how DCF’s cash assistance caseloads and aid changed over time because it was the best option available. DCF couldn’t provide us with the client-level caseload data we requested because their new staff couldn’t retrieve this information during the course of our work. We did not audit this internal report.

• Finally, we used the BLS CPI-U average to estimate the effects of inflation on average monthly cash assistance aid per person.

Since FY 2009, total spending on TANF cash assistance has decreased by about 39%.

• Our work focused on TANF cash assistance because the audit asked us to look at TANF funding provided directly to families in Kansas.

• Figure 1 shows spending on all TANF programs as a percentage of the total block grant. As Figure 1 shows, spending on TANF cash assistance has decreased from about 15% of block grant spending to about 9% of block grant spending from FY 2009 through FY 2023. Figure 2 shows spending on TANF cash assistance has also decreased in total over time. As Figure 2 shows, TANF cash assistance expenditures decreased from about $15.2 million in FY 2009 to about $9.4 million in FY 2023, or about a 39% decrease across 14 years.

• But spending on some program categories increased. For example, foster care & prevention services was the program category with the largest increase in spending since FY 2009. As Figure 1 also shows, spending on foster care and prevention services increased from about 7% of block grant spending to about 32% of block grant spending since FY 2009. Spending increased from about $7 million in FY 2009 to about $32 million in FY 2023. That’s an increase of about 354% or about $25 million. DCF officials said the increase in spending was because of increased focus on preventative services for foster care.

• DCF officials also explained that they transferred a portion of the TANF block grant to the Social Services Block Grant and the Child Care Development Fund for each of the 5 FYs we reviewed. Federal law allows states to transfer up to 30% of the TANF block grant to the Social Services Block Grant and the Child Care Development Fund annually. DCF officials explained the remaining TANF block grant funds were retained for use in future years. They said the state draws TANF funds from the federal government as needed, using the oldest remaining grant first.

Although monthly payments remained stable, all cash assistance caseloads decreased by 77% since 2009.

• DCF’s internal cash assistance caseload report is a tool DCF uses to make future caseload estimates. This report tracks the total number of all cash assistance cases (e.g., TANF dollars, special TANF dollars, and state dollars) by month going back to FY 2000. This report summarizes the years by average monthly cases, average monthly number of persons, and average monthly cost per person. A case typically represents a single family that is 2 or more individuals.

• According to DCF’s internal caseload report, from FY 2009 through FY 2023, Kansas’s average monthly aid per person receiving any cash assistance remained stable over the reviewed years. This was between about $111 and $118 per person per month. This means that while cash assistance caseloads are decreasing, eligible families receive about the same amount of aid per person as they did in FY 2009. This is because the benefit amounts in Kansas haven’t been updated since 1997

• Figure 3 shows the average monthly number of cash assistance cases for all forms of cash assistance. As Figure 3 shows, cash assistance caseloads decreased from about 12,600 average monthly cases in FY 2009 to about 2,900 average monthly cases in FY 2023. That’s about a 77% decrease in average monthly cash assistance cases. This means the decrease in TANF cash assistance spending isn’t unexpected.

• A few factors may contribute to Kansas’s decreasing cash assistance caseloads. For example,it’s possible eligibility changes made through the HOPE act reduced TANF cash assistance caseloads. These changes included reducing the lifetime limit on cash assistance to 24 months, reducing work exemption time for single caregivers, and adding penalties for not cooperating with work requirements and Child Support Services.

• Increasing wages and inflation may also reduce cash assistance caseloads because Kansas’s eligibility requirements and benefit amounts haven’t been updated since 1997. That means it’s harder to qualify for TANF and the cash assistance provided doesn’t have the same purchasing power as it used to.
  • For example, the maximum cash assistance benefit for a family of 2 in Shawnee County living in non-shared housing is $326 per month. The family would only receive the maximum cash assistance benefit of $326 if their total countable income was $0 for the month.
  • In 1997, this family is eligible for TANF cash assistance if they worked less than 22 hours per week at the federal minimum wage ($4.75 per hour). In 2023, they must work less than 15 hours per week at the federal minimum wage ($7.25 per hour) before they are eligible for TANF cash assistance. This means it’s harder for families to qualify for TANF cash assistance in 2023 because they’re being measured against what was considered “in need” in 1997.

The purchasing power of all cash assistance decreased by about 30% since 2009 due to inflation.

• We used DCF’s internal caseload report to estimate inflation’s effect on all cash assistance. Figure 4 shows all cash assistance’s purchasing power decreasing since FY 2009 when compared to the average monthly aid per person.

• As Figure 4 shows, we estimated the purchasing power of the average monthly aid per person in FY 2009 was about $118 per month in 2009 dollars. But by FY 2023, the purchasing power of the average monthly aid per person decreased to about $81 in 2009 dollars while the actual average monthly aid per person remained relatively stable. That’s about a 30% decrease in purchasing power since FY 2009. Again, these numbers may include other forms of cash assistance.

Researchers and stakeholders had mixed opinions on the impact TANF rule changes in Kansas had on program outcomes since FY 2011.

We tried to evaluate the impact of Kansas’s TANF rule changes since 2011.

• Starting in 2011, TANF cash assistance policy changes were made inside DCF that would later become part of the HOPE act. The HOPE act codified those policy changes into law and changed TANF cash assistance rules in Kansas.

• As we previously discussed, these rule changes reduced the lifetime limit for cash assistance from a total of 48 months to a total of 24 months. They also reduced the amount of time single caregivers are exempt from work requirements in Kansas.

• The rule changes also added tiered penalties for families not adequately complying with work activities or not cooperating with Child Support Services while receiving TANF funds.

• Specific prohibitions for EBT card transactions such as prohibiting EBT card transactions at points of sale outside of Kansas were also added.

The lack of Kansas specific outcomes data limited our evaluation to reviewing academic literature and stakeholder testimony.

• DCF reported to us that they track a few TANF cash assistance outcomes for families. We requested DCF provide us with client level TANF data for those criteria occurring before and after their TANF cash assistance case to try to measure outcomes ourselves. Examples of outcome criteria we requested include income, employment status (e.g., full-time, part-time), and whether they were receiving food assistance before and after leaving TANF.

• DCF couldn’t provide us with sufficient data during the course of our work to answer objective 2 with a regression model. This is because DCF stores Kansas’s TANF data in 2 databases based on the year of the TANF case. Datasets from these databases must match across the necessary fields for use in a regression model. However, a dataset from one database was missing 9 of the important fields we requested. DCF officials told us they’ve recently hired new staff who aren’t familiar with querying this database.

• Because DCF couldn’t provide sufficient data, we selected 8 peer-reviewed studies from other states or nationally that had relevant information on rule changes and outcomes that could be used to explain similar effects in Kansas. For example, we included some studies that involved TANF programs that included sanctions for TANF clients if they didn’t participate in work activities because Kansas also has those rules.

• We also interviewed stakeholders and reviewed their testimony to the legislature to learn how changes to Kansas’s TANF program might have impacted program outcomes since 2011. Stakeholders included DCF officials, researchers, and policy advocates (Foundation for Government Accountability, Center on Budget Policies and Priorities, and Kansas Action for Children).

The research we reviewed suggested TANF rules like those in Kansas lead to mostly negative program outcomes for TANF families.

• Two of the three single-state studies we reviewed suggest that receiving sanctions for not meeting work requirements reduced economic outcomes for TANF participants. For example, one study suggests TANF recipients in Florida who experienced sanctions had lower earnings up to a year after receiving the sanction than those who were not sanctioned. This study controlled for earnings pre -TANF assistance. The third study didn’t address this topic.

• The research we reviewed also suggests TANF rules that reduce TANF caseloads, such as time limits less than the federal ceiling of 60 months, negatively impact measures of well-being for families and children. For example, one of the national studies we reviewed suggests rules that limit TANF caseloads are associated with increased child maltreatment cases and foster care placements. Another national study suggests that TANF caseload reduction is associated with public school student homelessness and food insecurity in families, especially those headed by single mothers living independently with their children. Lastly, one study looked at the effect work participation and child support service requirements had on TANF participants across 20 large US cities. The study suggests an association between benefit reductions for not meeting these requirements and outcomes like eviction and food insecurity for mothers of infants on TANF.
  • According to DCF officials, out-of-home foster care placements in Kansas increased from FY 2009 to 2019. DCF officials told us that in FY 2019 the state dedicated funding for additional foster care prevention services. Since FY 2019, the average out-of-home foster care placement totals have decreased. We did not audit these totals.

• In contrast, one national study we reviewed suggests restrictive TANF rules reduced poverty at the state level. But the same study also suggests states with less restrictive TANF rules reduced poverty at similar or higher rates than states with the most restrictive TANF rules. The other studies didn’t address this topic.

Stakeholders held different opinions about the impacts of Kansas’s TANF rule changes.

• Stakeholders had mixed opinions about the impact of work sanctions in Kansas. For example, a report from Foundation for Government Accountability (FGA) estimated Kansas’s work participation sanctions increased the combined earnings of adults leaving TANF between October 2011 and March 2015 by about 3.5 times.
  • What this means is FGA estimated the combined annual income and earnings growth of about 17,000 individuals representing about 6,000 families over a 4-year period using limited earnings data.
  • At baseline, FGA estimated the families had a combined income of about $19.5 million annually. After 4 years, they estimated the families had a combined income of about $67.6 million annually.

• But the Center on Budget and Policy Priorities reviewed the same data and noted that the individuals’ estimated combined earnings were still below the poverty line. For example, they note the combined earnings estimate of $67.6 million across about 6,000 families is about $11,100 per year per family. They also suggest that estimating annual earnings based off limited earnings data could bias the income estimates upward or downward.

• DCF and Kansas Action for Children (KAC) officials thought that the increasing penalties for noncompliance with TANF work programs may be counterproductive. They thought the penalties made it harder for TANF participants to work under DCF supervision and caused participants to lose momentum towards their goals such as economic self-reliance. For example, a KAC analysis noted that, from about 2009 to 2013, TANF caseloads declined, but enrollment in other safety net programs, such as food assistance and Medicaid, increased. This suggests that decreasing TANF caseloads don’t indicate decreased need.

Conclusion

In Kansas, TANF cash assistance has experienced significantly declining caseloads (meaning fewer families receive TANF cash assistance in Kansas). Cash assistance paid to families also has less purchasing power now than it did when the program was created in 1997. At the federal level, the TANF block grant has been essentially unchanged since the late 1990s. In Kansas, income rules have also remained unchanged since the late 1990s. The effect is that fewer Kansans may meet the income eligibility requirements. Further, although monthly payment amounts haven’t decreased, they also haven’t been adjusted for inflation since the program’s inception in 1997. At the state level, Kansas has implemented several TANF cash assistance rules in the last 10 years that may have resulted in fewer TANF recipients. These changes include limiting the amount of time to receive assistance and changing work rules. We attempted to measure the effect of these changes on participant outcomes (employment, wages, use of other social programs). We were unable to calculate the impact Kansas’s eligibility changes had on outcomes due to DCF’s data limitations. However, national studies we reviewed suggest TANF eligibility rules like Kansas’s may have negative impacts on participants’ outcomes.

Recommendations

We did not make any recommendations for this audit. 

Agency Response

On August 15, 2024, we provided the draft audit report to the Kansas Department for Children and Families. Because we did not make any recommendations, the agency’s written response was optional. The agency chose not to submit a response.

Appendix A – Cited References

This appendix lists the major publications we relied on for this report.

1. The effect of welfare sanctions on TANF exits and employment (October, 2013). Chi-FangWu, Maria Cancian, Geoffrey Wallace.
2. Do Welfare Sanctions Help or Hurt the Poor? Estimating the Causal Effect of Sanctioning on Client Earnings (December, 2013). Richard C. Fording, Sanford F. Schram, and Joe Soss.
3. Associations Between State TANF Policies, Child Protective Services Involvement, And Foster Care Placement (December, 2022). Donna K. Ginther and Michelle Johnson-Motoyama.
4. Outcomes and outputs: Long-term effects of Temporary Assistance for Needy Families on caseload enrollment and poverty (January, 2017). Jaclyn Bunch, Scott Liebertz, and Kerri Milita.
5. The Welfare Rules Database (TANF Policy Research: May, 2024). https://wrd.urban.org/