TANF at 20: The 1996 “Welfare Reform” and its Impact, Part 1

Don Friedman August 24, 2016

Since 1973, some incarnation of Empire Justice Center has been fighting for low income and disenfranchised New Yorkers’ rights.  We’ve seen many changes and weathered many storms, including the so-called “welfare reform” of 1996.  The advent of the federal Personal Responsibility and Work Opportunity Act of 1996 brought us the Temporary Assistance for Needy Families block grant, for better or for worse.  Twenty years later, New York families are still living in poverty.  We present to you our perspectives on TANF at 20.

First up, Don Friedman, Senior Attorney in our Public Benefits Practice Group… 

The Personal Responsibility and Work Opportunity Act of 1996 (PRWORA), commonly known as “welfare reform,” reaches 20 years of age this year.  I was somewhat taken aback to realize that my experience with public assistance advocacy began 20 years before this welfare reform, and has now extended for 20 years since!  But my assessment of PRWORA has not changed: I believe that this law not only introduced an array of harmful policy changes, but also – building on changes wrought during the Reagan administration – served to intensify public hostility towards public assistance programs and to ensure that benefits for those in need would be increasingly difficult to access and ever more punitive in their administration.

Here I’ll describe key primary provisions of the 1996 welfare reform and discuss some of the consequences, intended or otherwise.  In light of the wealth of research on PRWORA, I also provide citations to a sampling of available resources.

The Culture of Welfare Administration

I’ve chosen to begin this discussion not with the statutory changes instituted by welfare reform, but with the cultural changes in welfare administration that accompanied or were exacerbated in the course of welfare reform.  These weren’t necessarily federal mandates, but rather changes that were made more feasible due to the spirit as well as the specifics of the new law.  State and local welfare agencies around the country actively discouraged pursuit of TANF benefits and erected ever higher procedural barriers, making it increasingly difficult to pursue and retain needed benefits.

A case in point:  Jason Turner became nationally famous for dramatically reducing the number of welfare recipients in Wisconsin.  Much of what he did anticipated the federal reforms.  Mayor Giuliani brought him to New York City to work his magic.  A key element of Turner’s approach was called diversion, using a variety of tactics – many subsequently ruled illegal by a federal judge – to discourage people from applying for benefits.  It was the culture encouraged by the welfare reform law and the national debate that surrounded it. [1]

Block Grants, Benefit Levels

The 1996 welfare reforms, as with prior welfare law, left it to the states to determine benefit levels (in contrast with many other benefit programs).  But PRWORA converted TANF (what had been AFDC) [2] from a matching grant program to a block grant program.  This meant that instead of states getting a federal contribution to meet half of their welfare costs – the prior 50% matching grant – each state would receive a fixed amount based on a formula – a block grant – and they would receive that amount and no more, regardless of how many people might need assistance. [3]  In addition, the law provided that the block grant could be used for a range of different purposes, not just cash assistance.  Multiple consequences flowed from these changes:

The block grant and use of TANF funds:  In the early years after PRWORA became law, the nation was experiencing an economic boom, and fewer people needed TANF.  But the block grant remained the same, so states actually often had a TANF surplus.  This masked the problem of a fixed block grant.  Now, 20 years later, the amount of the block grant has not changed – in real dollars, it has lost about 30% of its value – even as the cost of living, particularly with the gradual recovery from the recession, has steadily risen.  In addition, in most states, cash assistance now comprises a significantly reduced percentage – about one-third – of the block grant.  The other purposes for which it is allocated are generally worthy, but too often they don’t reach the poorest Americans. [4]

Stagnant benefit levels:  As a result of the intense stigma associated with welfare, the diversion of the TANF block grant for other purposes, and the fact that the block grant has remained flat, family benefit levels have stagnated throughout the nation.   A critical result is that, whereas in the mid-1970s a welfare grant plus food stamps would typically bring a family to the poverty line or even above it, the grant plus SNAP now is more likely to leave a family well below the poverty line. [5]  And by itself, the average monthly TANF benefit provides roughly one-third of the poverty threshold for a family of two. [6]

TANF’s counter-cyclical effect:  Before PRWORA in 1996, and particularly since the 1970s, welfare had played an important counter-cyclical role in the American economy.  That is, when the economy was doing poorly, more families would become eligible for and receive benefits to help them weather hard times.  Because of the stagnation of benefits and the diversionary and punitive tactics of the welfare culture, TANF, to a large extent, no longer plays this critical role of cushioning families against economic downturns.  In recent years, including during the great recession from which we are only gradually emerging, only about one-quarter of families with income below the poverty threshold have received TANF cash assistance in a typical month. [7]

Time Limits

Perhaps the most historically dramatic change in the 1996 welfare reform package was the imposition of time limits on the receipt of TANF benefits.  With limited exceptions, families could only receive TANF for a lifetime maximum of five years.  Until the adoption of this rule, welfare law required that each state establish welfare eligibility standards, and then provide benefits to any family that applied and met these criteria.  Many of us saw this as the essential definition of an “entitlement.”  With the adoption of time limits, however, a family could continue to meet the eligibility criteria, comply with all requirements, and still be in need, but nevertheless be denied benefits because they had reached the five year limit.  Furthermore, the five years was a maximum; states were free to set a shorter maximum period, and many have done so.

The TANF time limit, perhaps the most onerous provision in a law packed with restrictions, sanctions and burdensome mandates, has not had the impact in New York that it has had in most other states.  This is owing to either the wisdom and humanity of our lawmakers, or to a unique feature of our state constitution, or some of both.

New York’s Constitution and TANF time limits:  Article 17 of the New York State Constitution provides that the state must provide for the “aid, care and support of the needy…. in such manner… as the legislature may from time to time determine.”  This article has never guaranteed that the public assistance grant would be adequate to meet the basic needs of poor New Yorkers.  But it has meant that the state can’t refuse all assistance to a household that has established its need.  And so, when time limits were placed on TANF benefits, New York created Safety Net Assistance (SNA) to provide aid to families that had reached the TANF time limits.  As with all welfare benefits in New York, SNA grants are inadequate to meet even the most rudimentary needs of poor families, but they do provide some protection, in contrast with states that terminate all assistance when the time limits are reached. 

Work Rules

Welfare programs have always imposed work requirements on adult recipients.  But before PRWORA, states had a good deal more latitude in determining who would be required to participate in work activities, and the range of activities that might be assigned.  With PRWORA, states were mandated to increase the number of people participating in work, increase the hours they would be required to work, and sharply limit the activities that would count as work.

“Work First”:  Perhaps most significantly, the new law embraced the “work first” philosophy, in which the rules were heavily skewed in favor of participation in activities that most resembled a “regular” job. [8]  This might sound reasonable, except that many welfare recipients, in order to improve their job prospects, need training, education and assistance with soft skills.  They also might need drug treatment, appropriate accommodations for disabilities, psychological counseling and support in domestic violence situations.

Education and training:  PRWORA imposed drastic limitations on the discretion of states to count such crucial activities as education, vocational training and various supportive services as work participation.  For example, for some welfare recipients, being permitted to complete an associate’s degree or obtain a four-year degree would virtually assure their ability to leave and remain off of welfare.  But four-year college was completely off limits until regulatory changes were adopted about 12 years after welfare reform was passed.  In New York City, the number of welfare recipients attending college at the time of PRWORA was about 28,000.  Within a few years that number was closer to 5,000. [9]

The impact of participation rates:  PRWORA instituted “participation rates” under which states had to have a certain percentage of adult recipients engaged in countable work activities.  Certain technicalities in the law made this less onerous than it might have been, but states nevertheless tended to shape their work programs to avoid penalties for non-compliance with the participation rates.  Since these rates are based on the total number of families that include an adult, states have had a strong incentive to reduce the number of recipient families, especially families in which the adult is not able to engage in work activities because of, for example, a disability.  Thus the changing culture of welfare administration described above, resulting in daunting barriers to obtaining public assistance, paid off by helping states meet their participation rates.

In this article, I’ve described, in broad terms, some of the key provisions of the 1996 welfare reform.  In the years after its adoption, the number of families receiving TANF benefits fell by more than half nationwide, and by significantly more in some states.  As a result, PRWORA was the hailed as a great success – the rolls fell dramatically, and the disaster predicted by many progressive advocates did not occur.  I have not discussed the major changes made to immigrant eligibility for federal benefits.  This will be the subject of a separate post by Attorney Emeritus Barbara Weiner…

In the next installment, I will take a closer look at the aftermath of PRWORA in an effort to better assess its impact.

End Notes:
 [1] See, Reynolds v. Giuliani, 35 F.Supp.2d 331, 347-48 (Southern District, N.Y.1999).
 [2] PRWORA – the Personal Responsibility and Work Opportunity Act of 1996, a/k/a welfare reform; TANF – Temporary Assistance for Needy Families, the federal cash assistance program for families with children; AFDC – Aid to Families with Dependent Children, the predecessor to TANF.
 [3] An excellent overview of the TANF program, including the block grant, can be found in “Policy Basics:  An Introduction to TANF,” Center on Budget and Policy Priorities, June 15, 2015, http://www.cbpp.org/research/policy-basics-an-introduction-to-tanf.
 [4] See, for example, TANF Block Grant, Center on Law and Social Policy, August 2015, http://www.clasp.org/resources-and-publications/publication-1/TANF-101-Block-Grant.pdf.
 [5] It should be noted that the Federal poverty level is, especially in more expensive parts of the country, unrealistically low.  For example, to suggest that a family of 3 in San Francisco or Boston or New York City is not poor if they an income of $20,160, does not accord with reality.
 [6] “Temporary Assistance for Needy Families: Spending and Policy Options.” Congressional Budget Office, January 2015, https://www.cbo.gov/publication/49887.
 [7] See “Temporary Assistance for Needy Families: Spending and Policy Options,” above.
 [8] A good overview of the TANF work requirements, as modified in 2005, can be found in H. Hahn, D. Kassabian, and S. Zedlewski, “TANF Work Requirements and State Strategies to Fulfill Them,” Urban Institute, March 2012, http://www.acf.hhs.gov/sites/default/files/opre/work_requirements_0.pdf.  For a brief description of “work first,” see Work First:  A Guide for Implementing Employment Programs for Welfare Clients, Department of Health & Human Services, May 2009; https://aspe.hhs.gov/legacy-page/work-first-guide-implementing-employment-programs-welfare-clients.  A work first program emphasizes the mandatory nature of the program, with penalties non-compliance; universal participation with limited exemptions; and a primary focus on rapid employment, as opposed to participation in education, training or job preparation.
 [9] Some of this decline is attributable to the overall drop in the number of welfare recipients, but the impact of PRWORA was clearly a major factor as well.  During this period, the welfare rolls declined by over 50%, but college participation declined by closer more than 80%.