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U.S. Department of Health and Human Services, Administration for Children and Families
September 2000

Temporary Assistance for Needy Families (TANF)

On August 22, 1996, "The Personal Responsibility and Work Opportunity Reconciliation Act of 1996," a comprehensive bipartisan welfare reform plan that dramatically changed the nation's welfare system into one that requires work in exchange for time-limited assistance was signed into law. The Temporary Assistance for Needy Families (TANF) program replaces the former Aid to Families with Dependent Children (AFDC) and Job Opportunities and Basic Skills Training (JOBS) programs, ending the federal entitlement to assistance. In TANF, states and territories operate programs, and tribes have the option to run their own programs. States, territories, and tribes each receive a block grant allocation with a requirement on states to maintain a historical level of state spending known as maintenance of effort. The total federal block grant is $16.8 billion each year until fiscal year (FY) 2002. The block grant covers benefits, administrative expenses, and services. States, territories, and tribes determine eligibility and benefit levels and services provided to needy families.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) gives states enormous flexibility to design their TANF programs in ways that promote work, responsibility, and self-sufficiency, and strengthen families. Except as expressly provided under the statute, the federal government may not regulate the conduct of states.

States may use TANF funding in any manner "reasonably calculated to accomplish the purposes of TANF." (see "A Guide on Funding Services for Children and Families through the TANF Program") These purposes are: to provide assistance to 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; and to encourage the formation and maintenance of two-parent families.


Work requirements. With few exceptions, recipients must work after two years on assistance. Twenty-five percent of all families in each state must be engaged in work activities or have left the rolls in fiscal year FY 1997, rising to 50 percent in FY 2002. Single parents must participate for at least 20 hours per week the first year, increasing to at least 30 hours per week by FY 2000. Two-parent families must work 35 hours per week by July 1, 1997. Unless a state opts out, non-exempt adult recipients who are not working must participate in community service two months after they start receiving benefits. Single parents with a child under 6 who cannot find child care cannot be penalized for failure to meet the work requirements. States can exempt from the work requirement single parents with children under age one and disregard these individuals in the calculation of participation rates for up to 12 months. Failure to participate in work requirements can result in either a reduction or termination of benefits to the family.

Work Activities. To count toward state work requirements, recipients will be required to participate in unsubsidized or subsidized employment, on-the-job training, work experience, community service, 12 months of vocational training, or they must provide child care services to individuals who are participating in community service. Up to 6 weeks of job search (no more than 4 consecutive weeks) would count toward the work requirement. However, no more than 25 percent of those meeting the participation rates of each state's caseload may count toward the work requirement solely by participating in vocational training or by being a teen parent in secondary school. The teen parent limitation is phased in over several years.

A five-year time limit. Families who have received assistance for five cumulative years (or less at state option) will be ineligible for cash aid under the new welfare law. States will be permitted to exempt up to 20 percent of their caseload from the time limit, and states will have the option to provide non-cash assistance and vouchers to families that reach the time limit using Social Services Block Grant or state funds.

State maintenance of effort requirements. States must maintain their own spending on welfare at 80 percent or more of FY 1994 levels. States must also maintain spending at 100 percent of FY 1994 levels to access a $2 billion contingency fund designed to assist states affected by high population growth or economic downturn. In addition, states must maintain 100 percent of FY 1994 or FY 1995 spending on child care (whichever is greater) to access additional child care funds beyond their initial allotment. To receive their full allocation, states must demonstrate they are spending on activities related to TANF 80% of the amount of non-federal funds they spent in FY 1994 on AFDC and related programs. If they meet minimum work requirements, their mandatory state effort is reduced to 75%.

Additional funding:

  • Performance bonus to reward work and reductions in out-of-wedlock births. Through FY 2003, $1 billion will be available for performance bonuses to reward states for moving welfare recipients into jobs. There is also a $100 million annual appropriation for bonuses to states that reduce the number of out-of-wedlock births and abortions.

  • Contingency fund and loans. A $2 billion (over 5 years) contingency fund is available for states experiencing economic downturns, comprised of an $800 million (over 4 years) fund to provide supplemental grants for states with high population growth and low welfare spending, and a $1.7 billion federal loan fund.

Penalties: States can incur reductions in their block grant allocations for failure to:

  • Satisfy work requirements, a penalty of 5% in the first year, increasing by 2% per year for each consecutive failure with a cap of 21%
  • Comply with five-year limit on assistance, a 5% penalty
  • Meet state maintenance of effort requirements under either TANF or the contingency fund, based on amount of state underspending
  • Reduce recipient grants for refusing without good cause to participate in work activities, a penalty of between 1% and 5%, based on the degree of noncompliance and imposed in the succeeding fiscal year
  • Maintain assistance when parents cannot find child care for child under age 6, a penalty of 5% Submit required reports, a penalty of 4%
  • Comply with paternity establishment and child support enforcement requirements, up to a 5% penalty
  • Participate in the Income and Eligibility Verification System, up to a 2% penalty
  • Repay a federal loan on time, based on amount unpaid
  • In addition, for the misuse of funds states can be penalized for the amount misused and, if found intentionally misused, an additional penalty of 5%
  • States must expend additional state funds to replace federal penalty reductions. States can seek exceptions under limited conditions and develop a corrective compliance plan before they are penalized. The total penalty assessed in a given year may not exceed 25 percent of a state's block grant allotment.

Personal employability plans. States are required to make an initial assessment of recipients' skills. States can also develop personal responsibility plans for recipients which identify the education, training, and job placement services needed to move into the workforce.

Teen parent live at home and stay in school requirements. Unmarried minor parents will be required to live with a responsible adult or in an adult-supervised setting and participate in educational and training activities in order to receive assistance. States will be responsible for locating or assisting in locating adult-supervised settings for teens.

State Plans. The Department of Health and Human Services (HHS) reviews the plans only for completeness. States must allow for a 45-day comment period on the state plan by local governments and private organizations and consult with them. The state plan must have "objective criteria" which are "fair" and "equitable" for eligibility and benefits and must explain appeal rights.

Job subsidies. The law also allows states to create jobs by taking money now used for welfare checks and using it to create community service jobs or to provide income subsidies or hiring incentives for potential employers.

State flexibility. States which received approval for welfare reform waivers before July 1, 1997 have the option to operate their cash assistance program under some or all of these waivers until their expiration.

Effective dates: States had until July 1, 1997 to submit their state plans and begin implementing TANF, although they could opt to implement earlier.


Federally-recognized Indian tribes may apply to operate a TANF block grant program. Eligibility to administer TANF is, however, restricted to Federally-recognized tribes in the lower 48 states and and 13 designated entities in Alaska (i.e., the 12 Alaska Native regional non-profit associations and Matlakatla. TANF allotments for Indian tribes are based upon previous state expenditures of federal dollars in AFDC, Emergency Assistance (EA), and JOBS in fiscal year 1994. Tribal TANF programs could be implemented as early as July 1, 1997. Like states, Indian tribes may use their TANF funding in any manner reasonably calculated to accomplish the purposes of TANF, and they have broad flexibility to determine eligibility, method of assistance, and benefit levels. Unlike state plans, tribal plans are approved by HHS. Also, HHS and tribes reach agreement on time limits, work requirements, and minimum participation rates.

In addition to authorizing tribes to administer TANF, PROWORA replaced the former Tribal JOBS Program with the Native Employment Works (NEW) Program. The NEW Program provides funding for Tribes and inter-tribal consortia to design and administer tribal work activities that meet the unique employment and training needs of their populations while allowing Tribes and States to provide other TANF services. Final regulations for the Tribal TANF and NEW programs were published on February 22, 2000.


Final regulations of the welfare reform bill, published by HHS on April 12, 1999, are intended to help all welfare recipients who can work go to work, and to encourage states to work with all families. They provide states with a basic framework for implementing the new welfare program, reinforce the importance of work requirements, promote positive outcomes for needy children and families, and fulfill the new federal role of supporting state flexibility, innovation, and success. The regulations incorporate the core TANF accountability provisions, including work requirements, time limits, state penalties, and data collection and reporting requirements. In general, they reflect a limited and restrained federal role. Since Congress specifically limited the authority of the federal government to regulate the new TANF program, the regulations cover only areas where Congress specifically directed the Secretary to regulate or where the Secretary is regulating her own actions.

This document is not necessarily endorsed by the Almanac of Policy Issues. It is being preserved  in the Policy Archive for historic reasons.

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