New Goals and Outcomes for Temporary Assistance: State Choices in the Decade after Enactment

Margy Waller and
Margy Waller Visiting Fellow, Economic Studies and Metropolitan Policy, The Brookings Institution
Shawn Fremstad
Shawn Fremstad Director, Inclusive and Sustainable Economy Initiative

August 1, 2006

A review of spending decisions nationwide and in three states—Ohio, Pennsylvania, and Wisconsin—under the Temporary Assistance program since its enactment in 1996 finds that:

  • Nationwide, states have evolved from spending most Temporary Assistance funding on cash assistance to spending more on benefits and services to a large number of families who do not receive cash assistance. In 1997 and 1998, state officials focused on retooling the previous program, and spent considerably less than was available under the federal block grant. From 1999 to 2001, state officials dramatically expanded spending on child care and other work supports under the block grant, and reduced cash assistance expenditures. From 2001 to 2004, state spending on Temporary Assistance stabilized. Though states spent a substantial 24 percent of these funds on “social services” in 2004, more than $1.6 billion in excess of the amount of funding allocated to child care, no uniform information is available to national policymakers regarding these services.

  • Overall spending levels on Temporary Assistance in the three states have diverged in recent years. All three states built up reserves of unspent funds in the initial years of the program equal to half or more of their annual federal block grant allocation. Between 2001 and 2004, Temporary Assistance expenditures jumped in Pennsylvania, remained relatively stable in Wisconsin, and dropped back to their 1998 levels in Ohio. Meanwhile, Pennsylvania and Wisconsin have spent more than half their initial reserves, while Ohio’s reserve fund continues to grow.

  • All three states spend a majority of Temporary Assistance funds on benefits and services other than cash assistance. Cash assistance accounted for between a quarter and a third of Temporary Assistance spending in the three states in 2004, far less than in 1998. Wisconsin spends 44 percent of its Temporary Assistance funds on child care, more than double the proportion in Ohio and Pennsylvania, where officials spend almost three out of 10 program dollars on social services.

  • As in the rest of the nation, each of the three states provides Temporary Assistance-funded benefits to a substantial number of low-wage workers who do not receive cash assistance. For example, in 2001, Wisconsin officials provided more than 56,000 individuals not part of the cash assistance caseload with benefits and services funded by Temporary Assistance, such as child care, job training, and state earned income credit payments. Federal officials do not count these individuals in the program caseload since the policy only requires that state officials report assistance recipients.

Because most states now spend a majority of their Temporary Assistance funds on benefits and services other than cash assistance, they must demonstrate to federal policymakers and others that the program promotes more than “welfare to work.” To do so, state and local officials should articulate goals and develop new program measures that reflect the reality of funding decisions, and thus promote the long-term viability of the federal block grant program.