The website FiveThirtyEight, best known for its political prognosticating, has an interesting look today on how things have changed since the country overhauled welfare assistance in 1996. In a deal reached between President Bill Clinton and Republican leadership, the very federal Aid to Families with Dependent Children was replaced with the very state-controlled Temporary Assistance for Needy Families (TANF).
Click here to read the story, which focuses on the most significant change brought about by this shift: A massive drop in direct cash assistance to poor people. Two years into TANF, 60 percent of the funds reached people directly. In fiscal 2014, just 25 percent of the funds went to cash assistance.
It’s a quick and worthy read, because the patterns are far from uniform across state lines. Youth Services Insider had no idea until reading this how much variance there was in state practice when it comes to TANF.
So considering that welfare spending under TANF is about the same as it was under AFDC, where is all the money that used to find its way directly to poor families going? Cash assistance is one of the four specified purposes for TANF; promoting job readiness, preventing out-of-wedlock pregnancies, and encouraging the formation of two-parent families are the other three.
But about a third of TANF money goes to a basket of “other” allowable expenses, and one of the big ones is child welfare spending. According to two studies on the program, $2.3 billion in TANF funding went to child welfare in fiscal 2006 and $2.3 billion went to child welfare in fiscal 2015.
So child welfare systems have benefitted, fiscally at least, from the increased amount of welfare dollars that go to programs instead of people. And those funds can be used more flexibly than the predominant federal funding source for child welfare, the foster care-focused IV-E entitlement.
On the other hand, as FiveThirtyEight points out, some economics research suggests that direct transfers of cash is more effective than programs are at fighting poverty. And considering the nexus between poverty and child welfare involvement, one wonders if child welfare systems might also be in contact with some families it would not be with more cash assistance.