Yesterday was interview day as I was interviewed for this article and on another issue. This article is behind a paywall, so I can’t share it. But I can share my take on the issue as I am working on legislation and chaired the working group.
TANF(Temporary Assistance for Needy Families) is a federal program that allots funds to each state as a block grant in order to support needy families. TANF replaced the old AFDC welfare program and has requirements and limitations like a work requirement and maximum length of time on the program is 60 months. The recipients on average earn less than $10 per hour at their jobs while the Tennessee average hourly private wage is over $25/hour.
The funds can essentially be used a few ways and there are restrictions/strings on each.
1)Held in a reserve
3)Wrap around services (2Gen grants)
6)30% transfer to a qualified program like the Child Care Development Fund
In order to receive the annual allotment, each state must prove their “maintenance of effort”(MOE) in the program. Basically, each year a state must meet a spending threshold on needy families before the feds will grant the allotment. For Tennessee, the allotment is $191 million per year.
During the Bredesen years, Tennessee’s needs exceeded the $191 million and Tennessee spent the MOE + TANF allotment + Additional funds from our General Fund.
During the Haslam/Lee years as Tennessee’s economy improved and less people needed TANF, Tennessee only needed to utilize the MOE + a portion of the TANF allotment. As less and less of the TANF allotment had to be used for cash assistance, the reserve grew to around $732 million.
This issue was brought to our attention by the Beacon Center. Subsequently, Speaker Sexton and Lt. Governor McNally appointed a bipartisan TANF Working Group to look into the issue and see if we could assist DHS in determining fiscally sound ways of utilizing the funds to better serve Tennesseans.
I was subsequently elected by the Senate and House members to chair the working group. Though the Comptroller’s office audits the various departments, it is usually a combination of a 30,000 ft audit with some targeted metrics. We asked for a more forensic audit of the program and for guidance in how much of a reserve we needed to keep.
The audit discovered that as the economy improved and less of the TANF allotment was needed, DHS actually continued to spend monies from the General fund above and beyond the MOE. In essence, instead of using federal dollars for TANF recipients, DHS used state dollars to the tune of $221 million. We ensured that they put an end to that practice and worked to get reimbursed by the feds from our $732 million reserve which would have brought the reserve down to $511. They denied Tennessee that request.
Left with $732 million + $191 million annual allotment, we worked with DHS to set an adequate reserve while looking at other avenues to utilize the funds in a fiscally sound manner.
Of note, overhead is roughly $35 million(Yes, it is that much) and cash assistance is roughly $35 million. So Tennessee has been spending about $70 million of the $191 million. Prior to COVID, DHS had put forth a $50 million dollar plan for 2Gen grants which would have brought the utilization up to $120 million. The $50 million isn’t necessarily spent in one year, but for conceptual purposes, I will present the numbers that way.
We, also, were working on a bill that was the original “Pathway to Prosperity” which would have increased a family’s assistance(cash or wrap around services) up to 100% if they actively participated in an apprenticeship, technical college, or other educational endeavors(TN reconnect) that would get them on a pathway off of TANF. TANF recipients are currently required to work, but we know that it takes about two years of additional education or training for an individual to improve their workforce skill set or educational background to experience upward income mobility. This would fall under workforce development and would be up to $35 million.
There were a few other bills out there, but on paper, it would have been 35+35+50+35 or approximately utilization of 155 of the 191 with the the capacity to entertain other legislation or amendments.
However, when the tornado and COVID hit, we did not know the extent of new need. I looked at how we could assist those victims and amended my bill for emergency utilization. The fiscal note was around $56 million. However, the administration and DHS found a way where we could possibly assist thousands of more Tennesseans. The potential utilization could have been well over $400 million. Thus, in order to ensure we still had a reserve, other bills were held. The 2 Gen grant program was already moving forward and didn’t need legislation. Ultimately, only $25 million of the potential $400 million was needed.
For the year, DHS essentially utilized 35(overhead)+35(cash assistance)+50(2Gen, but not all counts for this year)+25(emergency assistance)+60(CCDF pandemic child care transfer) = 205
The article focus on the growth of the reserve from last year and makes the point that there isn’t a specific plan in place to spend the funds. In my interview, I pointed out most of the details above and that obviously, circumstances had evolved and changed. I met with DHS this week to discuss the situation and the potential legislation for next year. They provided an update to the Working Group members, as well. Next week, we are meeting to go over more specifics and dive a bit more into legislation.
Hope this helps everyone to better understand the issue.