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This rule would strengthen the Temporary Assistance for Needy Families (TANF) program as a safety net and a work preparation program, make changes to allowable uses of TANF funds, improve work program effectiveness, and reduce administrative burden. The rule responds to the President’s Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, as well as the Biden-Harris Administration’s priority to build a bridge towards economic recovery. The rule aims to increase support for families with the greatest needs and the services most integral to the safety net, including cash assistance, and help to reduce racial inequities across states. Additionally, the rule aims to help states to tailor effective workforce services to the needs of each family and reduce administrative burden.

Statement of Need:

In fiscal year (FY) 2020, combined federal TANF and state maintenance-of-effort (MOE) expenditures and transfers totaled $31.6 billion. Of that amount only 22 percent was spent on basic assistance, compared to 71 percent in FY 1997. As a result, TANF currently serves less than 25 percent of eligible families across the country, as compared to 1997 when TANF served almost 70 percent of eligible families. States in which the lowest proportion of families in poverty receive cash benefits also have proportionally larger shares of Black and Latinx children. The rule aims to address these shortcomings and would align with the Administration’s efforts to address equity, focus on upstream preventions, and increase opportunities for economic mobility for low-income families.  The NPRM may consider changes around use of funds, eligible families, state MOE spending, and work flexibilities.

Summary of the Legal Basis:

The proposed regulations will relate to allowable spending, eligible work activities and penalties, and administrative simplification. The NPRM would be issued under the Secretary’s authority to issue regulations where Congress has charged the Department with enforcing penalties, 42 U.S.C. 609.

Alternatives:

Without these regulatory changes around allowable uses of funds, states will continue to underinvest in services most integral to the safety net, including cash assistance, and supports for families with the greatest needs. Without regulatory changes to improve work program effectiveness, states will have less flexibility to tailor employment and training services to the needs of each family. Lastly, in the absence of these regulatory changes, states will not experience any relief in their administrative burden to operate the TANF program.

Anticipated Costs and Benefits:

This NPRM imposes no costs on the federal government nor does it change overall funding amounts or spending requirements for states, territories, and tribes, as TANF is a fixed block grant.  We anticipate a benefit in the transfer of funding toward critical supports to families experiencing economic hardships.

Risks:

While we expect more low-income families to receive TANF benefits and receive more effective work-related services, this action may result in states having to increase their own spending to fund activities previously funded by federal TANF dollars or previously counted as state MOE spending.