Facts In Action

By September 30, 2002, Congress must reauthorize the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), the 1996 legislation that overhauled the nation's welfare system. This process includes reviewing the rules and funding for child care subsidies utilized by a wide range of families including, mothers receiving cash assistance who take part in GED classes; two-parent households in which the mother and father both work; and former welfare recipients working low-wage jobs that make them ineligible for public assistance. What might be changed, and what are the implications of those changes for children who need care while their parents work or go to school? How can voices from all concerned parties be heard as interest groups scramble for the attention of Congressional leaders?

Background

The 1996 welfare reform legislation made significant changes to several programs. Congress eliminated Aid to Families with Dependent Children (AFDC), the cash assistance program created in the 1930's, and replaced it with Temporary Assistance to Needy Families (TANF). The major differences between AFDC and TANF are the new emphasis on "temporary" assistance - cash assistance is now time-limited - and the imposition of work requirements on most recipients. The legislation also created the Child Care Development Fund (CCDF), which consolidated into a separate funding stream a variety of programs that provided child care subsidies to low-income families. The CCDF allows states considerable flexibility in deciding how much families are required to contribute towards child care expenses, how long they remain eligible for assistance, how much to reimburse providers, and which populations receive priority for subsidies.

Per the 1996 welfare reform legislation, states are permitted to transfer TANF funds to the CCDF for child care subsidies and/or to spend TANF money directly on child care. A study issued by the Center for Law and Social Policy reports in the year 2000, the federal funds redirected from TANF to directly provide child care subsidies actually exceeded the total allocated to CCDF.

Issues

Massachusetts has increasingly relied on federal money from TANF to fund child care programs. The $35.7 million in TANF money spent directly on child care in 1999 rose to $116 million by 2001. This increase made several improvements:

• funded approximately 11,000 child care slots;

• increased the rates paid to providers;

• paid for one-time improvements in quality for infant/toddler and school-age child care; and

• provided resource and referral agencies with additional funding for consumer education, provider recruitment, and outreach.

During this same period, however, state funding for child care assistance decreased by about $30 million. Some critics of this approach are concerned that with an economic recession looming, an increase in welfare rolls may result. Massachusetts' reduced reliance on state funds to pay for child care assistance may lead to a shortfall as more TANF dollars are spent on cash assistance.

Massachusetts faces additional funding issues given a plan introduced by Acting Governor Jane Swift on October 22nd. She proposed that work requirements be extended to include TANF recipients whose youngest child is at least two-years old. Members of the Joint Committee on Human Services and Elderly Affairs expressed concern for the large number of two- to six-year olds who would require care while their parent works. The United Way and the Massachusetts Taxpayers Foundation issued a report stating the $5.7 million Swift earmarked for child care in her proposal would not be adequate to meet the needs of the affected families.

Most members of Congress and leaders in state governments view TANF as a major improvement over AFDC. It's doubtful, then, that the rules and regulations in that legislation emphasizing time limits and work requirements will undergo big changes at reauthorization. It is less clear if, or by how much, Congress will adjust the amount of money available to states to spend on welfare-related programs, including child care for low-income families. Further complicating Congress' decisions is the disappearance of the budget surplus, caused in part by the reduction in tax receipts following the downturn in the economy, as well as by new federal spending in reaction to the September 11th terrorist attack.

Source:
Looking Ahead to Reauthorization of TANF: Some Preliminary Thoughts, M. Greenberg, Presentation to Bi-Partisan Welfare Reform Seminar for Senior Congressional and Administration Staff, February 18, 2000.

For more information:
contact CLASP at (202) 328-5140, by email at info@clasp.org, or look on-line at www.clasp.org/pubs/TANF/LookingAheadtoReauthorization.htm. Editor's note: This url has changed:http://www.clasp.org/publications/looking_ahead_to_reauthorization.pdf

Source:
The Impact of TANF Funding on State Child Care Subsidy Programs, R. Schumaker, M. Greenberg, and J. Duffy, CLASP Policy Brief, September 2001.

For more information:
contact CLASP at (202) 328-5140, by email at info@clasp.org, or look on-line at www.clasp.org/pubs/childcare/TANFChildCareFullReport.pdf. Editor's note: This url has changed:http://www.clasp.org/publications/the_impact_of_tanf.pdf]

Facts in Action, October 2001