What Can TANF Funds Be Used For? A Guide to How States Spend Welfare Dollars

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What is TANF?

Temporary Assistance for Needy Families (TANF) is a cornerstone federal program in the United States designed to provide financial support and other services to low-income families with children. Often simply called “welfare,” TANF aims to help these families address basic needs and achieve greater economic security and stability.

TANF was established by the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, a major piece of legislation commonly referred to as “welfare reform”. This act replaced the previous Aid to Families with Dependent Children (AFDC) program, which had been in place since the New Deal era. TANF officially began on July 1, 1997.

At the federal level, TANF is administered by the Office of Family Assistance (OFA) within the Administration for Children and Families (ACF), an agency of the U.S. Department of Health and Human Services (HHS). However, a defining characteristic of TANF is its structure as a block grant. This means the federal government provides fixed annual funding amounts to states, territories, the District of Columbia, and federally recognized Indian tribes, granting these jurisdictions significant flexibility to design and operate their own programs within a framework of broad federal goals.

The Four Pillars: What TANF Aims to Achieve

The flexibility granted to states is not unlimited. Federal law mandates that any expenditure of TANF funds must be “reasonably calculated” to accomplish at least one of the four broad statutory purposes outlined in Title IV-A of the Social Security Act. Recent proposed federal regulations seek to provide clearer guidance on what constitutes a “reasonably calculated” expenditure to ensure funds align closely with these core aims.

The four purposes are:

Purpose 1: Provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives.

This purpose represents the program’s fundamental safety net function, focusing on providing basic support to maintain family stability and prevent children from entering foster care due to poverty. Activities funded under this purpose often include direct cash assistance and support for kinship caregivers.

Purpose 2: End the dependence of needy parents on government benefits by promoting job preparation, work, and marriage.

This purpose reflects the “welfare-to-work” philosophy central to the 1996 reforms. Funds used under this purpose support employment services, job training, education related to employment, and activities aimed at encouraging marriage as a pathway to economic stability.

Purpose 3: Prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies.

This purpose allows funding for a range of activities, including teen pregnancy prevention programs, youth development initiatives, and potentially family planning services (though TANF generally cannot fund medical services, an exception exists for pre-pregnancy family planning).

Purpose 4: Encourage the formation and maintenance of two-parent families.

Linked to Purpose 2’s emphasis on marriage, this goal allows states to fund initiatives like healthy marriage education, relationship skills training, and responsible fatherhood programs.

The structure of these four purposes significantly influences how states can use TANF funds. Purposes 1 and 2 explicitly target “needy” families or parents, requiring states to define and apply financial need criteria for benefits and services funded under these goals.

However, Purposes 3 and 4 offer states more latitude. For activities funded under these latter two purposes, states are not strictly required to limit services only to “needy” families (as defined for Purposes 1 and 2), provided the funds used are segregated federal TANF funds and the activity is not considered “assistance”.

This inherent flexibility allows states to direct TANF resources toward broader social objectives, such as community-wide pregnancy prevention campaigns or marriage promotion initiatives available to a wider population. While enabling innovation, this structure also permits states to allocate funds to areas beyond the core safety net for the most economically vulnerable families, contributing to observed shifts in spending patterns over time.

Funding TANF: A Federal-State Partnership

TANF operates through a combination of federal and state funding streams.

Federal Block Grant

The primary federal contribution is the State Family Assistance Grant (SFAG), a fixed block grant totaling approximately $16.5 billion annually distributed among the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, and federally recognized tribes. Additional federal funds may sometimes be available through mechanisms like the TANF Contingency Fund, designed to help states during economic downturns.

Historical Basis and Erosion of Value

Crucially, the amount of each state’s basic block grant was determined based on its federal funding levels for AFDC and related programs in the early to mid-1990s. These amounts have remained essentially frozen since TANF’s inception in 1997, with no adjustments for inflation, population growth, or changes in the level of poverty.

Consequently, the real purchasing power of the federal TANF block grant has significantly eroded over time. Adjusted for inflation, the grant’s value in Fiscal Year (FY) 2023 was 47% lower than in FY1997. This steady decline in the real value of federal funding places considerable strain on state budgets and their ability to meet the needs of low-income families, forcing difficult decisions about program priorities and potentially weakening the effectiveness of the safety net.

State Maintenance of Effort (MOE)

To receive their full federal block grant, states are required to spend a minimum amount of their own funds each year on TANF-allowable activities for eligible families. This state contribution is known as the Maintenance of Effort (MOE) requirement.

Like the federal grant, the MOE spending floor is also based on historical state spending levels, specifically from FY1994 under the pre-TANF programs. States generally must spend at least 80% of their historical FY1994 amount; this threshold drops to 75% if the state meets its federally mandated Work Participation Rate (WPR) targets for the year. The MOE requirement, like the federal block grant, has not been adjusted for inflation.

The structure of the MOE requirement, combined with the broad TANF purposes, allows states significant flexibility in how they meet this obligation. States can count spending not only within their main TANF program but also in “Separate State Programs” (SSPs) towards their MOE requirement, as long as the expenditures serve eligible families and meet one of the four TANF purposes.

Federal regulations have also historically allowed states to count certain qualifying expenditures made by third-party non-governmental organizations towards MOE, although recent proposed rules aim to curtail this practice by excluding cash donations and the value of in-kind contributions from non-governmental third parties.

This flexibility enables states to count state spending on a wide array of programs—such as state Earned Income Tax Credits (EITCs), child welfare services, pre-kindergarten programs, and workforce development initiatives—towards their TANF MOE obligation. While these activities can benefit low-income families, counting them as MOE can effectively free up state general funds that might have otherwise supported these programs. This creates a pathway for states to meet their federal matching requirement while potentially shifting resources away from direct cash assistance and core TANF services.

A Crucial Distinction: Understanding “Assistance” vs. “Non-Assistance”

Perhaps the most critical concept for understanding how TANF funds can be used is the distinction between “assistance” and “non-assistance.” This classification determines which federal rules and requirements apply to a particular benefit or service.

Defining “Assistance”

Federal regulations (specifically at 45 CFR § 260.31(a)) define “assistance” to include benefits designed to meet a family’s ongoing basic needs. This encompasses:

• Cash payments, vouchers, or other benefits intended for recurring essentials like food, clothing, shelter, utilities, household goods, personal care items, and general incidental expenses.
• Supportive services, such as transportation or child care subsidies, only when provided to families who are not employed.

Defining “Non-Assistance”

The regulations (45 CFR § 260.31(b)) explicitly exclude several types of benefits and services from the definition of “assistance.” Key examples include:

Non-recurrent, short-term benefits (NRST)

These are crucial for emergency aid and diversion programs. To qualify as non-assistance, NRST benefits must be:

1. Designed to deal with a specific crisis or episode of need
2. Not intended to meet recurrent or ongoing needs
3. Not extend beyond four months

Examples include one-time payments for rent arrears to prevent eviction, utility payments to avoid shut-off, car repairs needed for work, or emergency housing.

Work subsidies

Payments made to employers or third parties to help cover costs related to employee wages, benefits, supervision, or training.

Supportive services for employed families

Child care, transportation, and similar services provided to families who are employed.

Refundable earned income tax credits

Refundable EITCs and other refundable state/local tax credits.

Services not providing basic income support

This broad category includes counseling, case management, peer support, child care information and referral, job retention and advancement services, financial education, and similar activities that do not directly meet basic needs.

Why the Distinction Matters

The classification as “assistance” or “non-assistance” is paramount because most of the stringent federal TANF requirements are triggered only when funds are used for “assistance.” These requirements include:

• Time Limits: The federal 60-month lifetime limit on receiving federally funded aid applies primarily to adults in families receiving “assistance”. Months receiving non-assistance generally do not count toward this limit.
• Work Participation Rates (WPR): States must meet targets for the percentage of families receiving “assistance” who are participating in specified work activities. Families receiving only non-assistance are typically excluded from the WPR calculation.
• Child Support Assignment: Families receiving “assistance” must generally assign their rights to child support payments to the state, allowing the state to retain collected support to offset TANF costs.
• Detailed Data Reporting: States face more extensive federal reporting requirements for families receiving “assistance”.

This regulatory framework creates a significant incentive for states to design programs and deliver benefits in ways that qualify as “non-assistance” whenever possible. By structuring aid as NRST benefits (like diversion payments) rather than ongoing monthly cash grants, states can provide support while avoiding the complexities and potential penalties associated with federal time limits and work requirements. This dynamic directly influences the types of support families receive and is a key factor behind the documented national shift in spending away from basic cash assistance towards other categories.

Core Support: Direct Financial Help for Families

Despite the trend towards non-assistance spending, providing direct financial support remains a potential use of TANF funds, primarily falling under Purpose 1 (caring for children at home).

Basic Cash Assistance

This is the most traditional form of TANF support: regular, typically monthly, cash payments provided via methods like Electronic Benefit Transfer (EBT) debit cards or direct deposit. These payments are intended to help families cover fundamental ongoing needs such as housing, food, utilities, and clothing.

Because it meets ongoing basic needs, this form of aid unequivocally counts as “assistance” under federal rules. Consequently, families receiving basic cash assistance are subject to federal requirements like the 60-month time limit (for adults in the household), work participation rules, and child support cooperation mandates.

States have broad discretion in setting eligibility criteria (income and asset limits) and benefit amounts for basic assistance. This leads to wide variation across the country. For example, in July 2022, maximum monthly income eligibility for a family of three ranged from $268 to $2,359, and maximum monthly benefits for a single parent with two children ranged from $162 in Arkansas to $915 in New Hampshire.

Spending Trend: Spending on basic assistance has dramatically decreased as a share of total TANF and MOE expenditures. While it constituted roughly 70% of spending in FY1997, it fell to about 23% by FY2022.

In FY2022, nationwide spending on basic assistance (excluding relative foster care and adoption subsidies) was approximately $6.7 billion out of a total $31.3 billion in federal and state MOE funds used. Some states allocate very little to this category; in 2020, 15 states spent 10% or less of their TANF funds on basic assistance.

Emergency & Diversionary Aid (Non-Recurrent Short-Term Benefits – NRST)

States can use TANF funds for short-term, non-recurring benefits (NRST) to address specific crises or episodes of need, often aiming to prevent families from needing ongoing cash assistance (diversion programs) or to help current recipients weather an emergency (emergency assistance – EA). These benefits must meet the specific NRST criteria: designed for a specific crisis, not for ongoing needs, and lasting no more than four months.

Because they meet the NRST criteria, these benefits generally count as “non-assistance,” meaning they typically do not trigger federal time limits or work requirements.

Examples of allowable NRST uses include:

• Payments for back rent or utilities to prevent eviction or shut-off
• Security deposits or first month’s rent for housing
• Emergency food aid
• Car repairs needed for employment
• Work-related expenses like uniforms or tools
• Burial assistance
• Clothing allowances
• Back-to-school payments
• Assistance related to natural disasters or domestic violence situations

State programs vary significantly. Some states offer lump-sum cash payments directly to families, while others make payments directly to vendors (e.g., landlords or utility companies). Maximum benefit amounts differ widely; for instance, Washington offered up to $2,000 in Diversion Cash Assistance (DCA) in a year, while New Jersey’s maximum was $750 for a family of three. Some states impose a period of ineligibility for regular TANF cash assistance after a family receives a diversion payment. During the COVID-19 pandemic, many states utilized or expanded their NRST programs to provide emergency relief.

State Refundable Tax Credits

TANF funds (both federal and state MOE) can be used to finance the refundable portion of state or local tax credits provided to low-income families. Common examples include state Earned Income Tax Credits (EITCs) or state Child Tax Credits.

A credit is “refundable” if the family receives a payment for the amount of the credit that exceeds their state income tax liability. TANF funds cannot be used for non-refundable credits, which only reduce the amount of taxes owed, as these are considered foregone government revenue rather than an expenditure.

Refundable tax credits funded by TANF are classified as “non-assistance”.

This has become a notable use of TANF/MOE funds, particularly state MOE funds, in several states. Nationally, in FY2022, states reported spending approximately $2.8 billion in combined federal TANF and state MOE funds on refundable tax credits (both EITC and other types). This allows states to provide significant income support, often counted towards their MOE requirement, without triggering TANF “assistance” rules. As of 2023, 16 states offered state-level child tax credits, with 12 of them being refundable.

Investing in Opportunity: Work, Education, and Training

A major focus of TANF, stemming from Purpose 2 (ending dependence), is supporting activities that help parents prepare for, find, and maintain employment.

Work Activities

TANF funds support a range of work-related activities defined in federal law, including:

• Job search and job readiness assistance: Helping participants look for work and prepare for the job market.
• Work experience: Placing participants in unpaid work settings to gain skills and experience.
• Community service: Unpaid work performed for civic or charitable organizations.
• Subsidized employment: Using TANF funds to pay part or all of the wages for participants placed in public or private sector jobs.
• On-the-job training: Training provided by an employer during work hours.
• Unsubsidized employment: Regular employment where wages are paid entirely by the employer.

Education and Training

TANF funds can also support education and training, although federal rules place some limitations, particularly regarding how these activities count towards state Work Participation Rates (WPR). Allowable uses include:

• Vocational educational training: This typically counts toward WPR for up to 12 months per individual.
• Job skills training directly related to employment: Training focused on specific occupational skills.
• Education directly related to employment: Applicable when a participant has not completed secondary school or received a GED.
• Satisfactory attendance at secondary school or in a course of study leading to a GED: For participants without a high school diploma or equivalent.
• Post-secondary education: While TANF funds can potentially support college attendance or tuition assistance (e.g., DC’s TAPIT program, Virginia’s RISE program), its countability towards WPR is limited, often falling under the “job skills training” or “vocational education” categories with their associated restrictions. States have flexibility in how they support education, but federal rules can create barriers for participants seeking degrees. Proposed federal regulations may further scrutinize the use of TANF for college scholarships, particularly for adults without children, requiring states to demonstrate a clear link to a TANF purpose.

Work Supports and Supportive Services

These services aim to remove barriers to employment or participation in required activities. The classification as “assistance” or “non-assistance” often depends on the recipient’s employment status:

• For Employed Families (Non-Assistance): States can fund services like transportation assistance (e.g., bus passes, car repairs), child care subsidies, costs for work uniforms or tools, license fees, job retention and advancement services, and financial education or asset-building programs (like matched savings accounts).
• For Unemployed Families Participating in Activities (Assistance): Providing necessary supportive services like transportation or child care to enable participation in required work activities generally counts as “assistance”.
• Other Services (Generally Non-Assistance): Services like counseling, case management, peer support, domestic violence services, and substance abuse treatment services (sometimes counted as job readiness, with time limits) are typically considered non-assistance as they don’t provide basic income support.

The interplay between TANF’s goal of promoting work and the complex federal Work Participation Rate (WPR) requirements creates challenges. The WPR mandates that states engage a specific percentage of families receiving “assistance” in narrowly defined work activities for a minimum number of hours each week. Failure to meet these rates can result in financial penalties for the state.

The strict definitions and hour requirements, particularly the limitations on how long education and training can count, can incentivize states to prioritize immediate job placement, even in low-wage positions, over longer-term investments in skills and education that might lead to greater economic mobility. This structure, influenced by historical narratives about welfare recipients, may inadvertently hinder participants from achieving genuine self-sufficiency. However, states retain flexibility in defining exemptions from work requirements and determining “good cause” for non-participation, allowing some states to design more individualized and supportive employment programs.

Supporting Children’s Well-being and Development

Beyond direct financial aid and work supports for parents, TANF funds are frequently used for services aimed directly at improving the well-being and development of children.

Child Care

Supporting access to child care is a major use of TANF funds, aligning with Purpose 1 (allowing care at home or with relatives while parents work) and Purpose 2 (enabling parents to work or train). States utilize TANF funds for child care in two primary ways:

Transfer to CCDF

States can transfer up to 30% of their annual federal TANF block grant funds to the Child Care and Development Fund (CCDF), the main federal funding stream for child care subsidies. Once transferred, these funds become subject to all CCDF rules, including minimum health and safety standards for providers. In FY2023, states transferred over $1 billion from TANF to CCDF.

Direct Spending

States can also use federal TANF funds or state MOE funds to pay directly for child care services without transferring the money to CCDF. This “direct spend” approach offers states more flexibility, as these funds are not automatically subject to CCDF provider requirements, including health and safety standards. While this doesn’t necessarily mean the care is low-quality (states may have their own standards), it bypasses the federal quality benchmarks tied to CCDF. In FY2023, states spent $1.3 billion in TANF funds directly on child care.

Spending Context: Combined, TANF transfers and direct spending represent a substantial portion of national child care funding. In FY2022, total TANF/MOE spending reported under the “Child Care (Assistance and Non-Assistance)” category was approximately $5.2 billion. However, state investment levels vary greatly.

Pre-Kindergarten and Head Start

TANF funds can be used to support pre-kindergarten, Head Start, or other school readiness programs, provided the spending does not supplant existing state/local funding for general public education and aligns with a TANF purpose (typically Purpose 1). This allows states to expand access to early learning opportunities for low-income children. In FY2022, states spent roughly $1.8 billion in TANF/MOE funds on Pre-K/Head Start.

Child Welfare Services

TANF funds can support a range of child welfare activities aimed at keeping children safely in their own homes or the homes of relatives (Purpose 1). Allowable uses include:

• Family support, family preservation, and reunification services: Community-based services designed to strengthen families involved with the child welfare system.
• Kinship care support: Providing ongoing assistance and services when children are placed with relatives. This can include Relative Foster Care Maintenance Payments and Adoption/Guardianship Subsidies, which are often reported under Basic Assistance.
• Adoption services: Supporting the adoption process for needy families, though generally not replacing Title IV-E adoption assistance payments.
• Services for children and youth: Funding programs like after-school activities, mentoring, tutoring, home visiting programs, and services addressing abuse and neglect.

Prior Law Authority: States may use federal TANF funds (but not MOE funds) for specific foster care or emergency assistance activities that were part of their approved state plans prior to TANF (as of 9/30/95 or 8/21/96), even if not otherwise allowable under current TANF rules. However, ongoing foster care maintenance payments for non-relative placements are generally not an allowable use of TANF funds under Purpose 1, as the primary goal is care in the home with parents or relatives.

Spending Context: Spending on child welfare services has become a significant use of TANF funds in some states. Nationally, in FY2022, states spent approximately $3.7 billion in TANF/MOE funds across various child welfare categories (including Family Support/Preservation, Adoption Services, Additional Child Welfare, Foster Care Payments authorized under prior law, and potentially parts of Basic Assistance for relative placements). Some states dedicate very large portions of their TANF/MOE funds to child welfare (e.g., Arizona, Georgia, North Dakota reported spending over 45% in FY2020).

Promoting Healthy Families: Marriage, Fatherhood, and Pregnancy Prevention

Aligning with Purposes 2, 3, and 4, TANF funds can be used for activities designed to prevent out-of-wedlock pregnancies, encourage two-parent families, and promote healthy relationships.

Pregnancy Prevention

States can fund initiatives aimed at reducing pregnancies, particularly among unmarried individuals and teens (Purpose 3). Allowable activities can include:

• Youth development programs that focus on positive life choices and risk avoidance
• Public information campaigns
• Home visiting programs with goals related to birth spacing
• Case management and support services for teen parents to help them stay in school and prevent subsequent pregnancies
• Pre-pregnancy family planning services (as an exception to the general prohibition on funding medical services)

Marriage and Relationship Education

TANF funds (under Purposes 2 and 4) can support voluntary programs offering education and skills training to help individuals form and sustain healthy marriages and relationships. This can include:

• Pre-marital education and counseling
• Marriage enhancement and relationship skills programs for couples
• Education on controlling aggressive behavior and preventing domestic violence

Responsible Fatherhood Initiatives

Linked to Purpose 4, states can fund programs specifically designed to engage fathers and promote responsible parenting and economic stability. Activities may include:

• Parenting skills education and mentoring
• Activities encouraging child support payments
• Employment and economic stability services tailored for fathers
• Outreach campaigns promoting father involvement (e.g., #Dadication campaign)

Funding Mechanism: In addition to states using their block grant or MOE funds for these purposes, the federal government also provides separate competitive grants specifically for Healthy Marriage and Responsible Fatherhood (HMRF) initiatives, often awarded to community-based organizations. These grants totaled $150 million per year as of recent data.

Serving Non-Needy Populations: As noted earlier, activities funded solely under Purposes 3 and 4 (pregnancy prevention and two-parent family formation) are not strictly limited to financially “needy” families, allowing states to use segregated federal TANF funds for broader community initiatives.

Administrative and Other Uses

Beyond direct benefits and services, TANF funds are also used for program administration and can be transferred to other block grants.

Program Management and Administration

States use TANF funds for the costs associated with running the program, including eligibility determination, case management, systems development (monitoring and tracking), and general administrative overhead. Federal law generally caps the amount of federal TANF funds that can be used for administrative costs at 15% of the grant.

Transfers to Other Block Grants

States have the authority to transfer a portion of their federal TANF block grant funds to two other major social service block grants:

• Child Care and Development Fund (CCDF): Up to 30% of the annual TANF grant can be transferred to CCDF to support child care assistance.
• Social Services Block Grant (SSBG): Up to 10% of the annual TANF grant can be transferred to SSBG, which funds a wide range of social services. Funds transferred to SSBG must be used for programs serving children or families with incomes below 200% of the federal poverty line.
• Combined Limit: The total amount transferred to both CCDF and SSBG combined cannot exceed 30% of the state’s annual TANF grant. Transfers must occur within the fiscal year the TANF funds were awarded.

What TANF Funds Generally Cannot Be Used For

While states have broad flexibility, federal law and regulations place several restrictions on the use of TANF funds. Key prohibitions include:

Medical Services

TANF funds generally cannot be used to pay for medical services. An explicit exception exists for pre-pregnancy family planning services. Substance use disorder and mental health services may be allowable as time-limited job search/readiness activities under specific state and federal rules, but not as general medical treatment.

Replacing (Supplanting) Other Funds

TANF funds are intended to supplement, not supplant (replace), existing federal, state, or local funding for services. This means states cannot simply use TANF dollars to pay for activities they were already funding through other means, although demonstrating supplantation can be complex in practice. Specific initiatives like the Pandemic Emergency Assistance Fund (PEAF) explicitly reiterated the non-supplantation rule.

Construction

Federal TANF funds generally cannot be used for constructing buildings or facilities, or purchasing land.

General Public Education Costs

TANF funds cannot be used to cover the general costs of free public elementary and secondary education. Funding for specific programs like Pre-K or Head Start expansion may be allowable if structured carefully to avoid supplanting general education funds.

Juvenile Justice Services

Expenditures for juvenile justice services (including administration, detention, rehabilitation, etc.) are generally prohibited uses of both federal TANF and state MOE funds, as they are not considered reasonably calculated to accomplish a TANF purpose. An exception exists if a state uses federal TANF funds (not MOE) for activities authorized under its pre-TANF emergency assistance plan.

Assistance to Ineligible Individuals

• Immigrants: Federal law restricts the use of federal TANF funds for most legal immigrants who arrived after August 22, 1996, until they have resided in the U.S. for five years. This applies to both assistance and services. States can use their own MOE funds to assist recent immigrants during this five-year bar, but not all do. Undocumented immigrants are ineligible for federal or state TANF funds. U.S. citizen children remain eligible even if their parents are ineligible immigrants.
• Individuals with Drug Felony Convictions: The 1996 welfare reform law imposed a lifetime ban on TANF (and SNAP) eligibility for individuals convicted of a drug-related felony after August 22, 1996. States can enact legislation to opt out of or modify this ban. As of recent data, 7 states maintained the full ban, 18 states and DC had partially lifted it, and 25 states had fully lifted it.
• Fleeing Felons and Probation/Parole Violators: Individuals fleeing prosecution or confinement for a felony, or violating probation or parole, are generally ineligible for TANF assistance.

Other Prohibited Uses

• Matching Other Federal Grants: TANF funds cannot typically be used to meet the matching or cost-sharing requirements of other federal grant programs unless specifically authorized by federal law.
• Foster Care Maintenance Payments (Generally): As noted previously, ongoing maintenance payments for children in non-relative foster care are generally not an allowable use of TANF funds under Purpose 1, as the focus is on care within the child’s own home or the home of relatives. States are expected to use Title IV-E funds for this purpose. Exceptions exist for relative kinship care and potentially under prior law authority.
• Entertainment Expenses: Funds cannot be used for entertainment, such as movie or sports tickets.
• Lobbying: Federal TANF funds cannot be used to support lobbying activities intended to influence federal or state legislation or appropriations.

State Flexibility and Spending Variation

While the four purposes and federal restrictions provide a framework, the TANF block grant structure gives states immense flexibility to design their programs. States determine:

• Eligibility Criteria: Who qualifies based on income (often far below the federal poverty line), assets, family structure (e.g., rules for two-parent families), and non-financial factors. Proposed federal rules aim to set a ceiling for “needy” at 200% FPL for activities under Purposes 1 and 2.
• Benefit Levels: The amount of cash assistance provided, which varies dramatically by state.
• Time Limits: States can impose lifetime limits shorter than the 60-month federal limit and set conditions for extensions or exemptions beyond the federal limit (using state funds or the 20% federal hardship exemption).
• Work Requirements: Specific activities required, hours, sanctions for non-compliance (e.g., partial vs. full-family sanctions), and exemptions.
• Program Focus: Which services to prioritize beyond cash assistance (e.g., child care, work programs, tax credits, child welfare).

This flexibility leads to significant variation in how TANF funds are spent across states. National spending data provides an overall picture, but state-level data reveals diverse priorities.

National Spending Snapshot (FY 2022)

Based on ACF financial data for FY 2022, here’s a general breakdown of how combined federal TANF and state MOE funds were used nationwide:

Source: Derived from ACF Financial Data FY 2022. Percentages may not sum perfectly to 100% due to rounding and categorization methodology.

This table highlights the shift away from Basic Assistance, which now accounts for less than a quarter of total spending, while significant funds go towards Child Care, Work/Education, Tax Credits, Child Welfare, and Pre-K/Head Start. State-specific data (available via resources like CBPP state fact sheets and the Urban Institute’s Welfare Rules Database) show even greater variation, reflecting diverse state policy choices and priorities.

For more information about TANF spending in your state, visit the Office of Family Assistance website.

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