Beyond Cash Assistance: Correlates of State TANF Spending Priorities

Background and Purpose

Temporary Assistance for Needy Families (TANF), the federal program created by welfare reform, affords states considerable discretion over program design. Determinants of state policy choices include government ideology and party control, citizen ideology, state fiscal capacity, and the demographic composition of the welfare caseload. Most of the scholarly work on state policy design, however, focuses on cash assistance benefits and rules. Cash assistance accounted for less than one third of state TANF expenditures in 2013—a marked contrast to the 63% used for basic assistance at the program’s inception.

The correlates of variation in state cash assistance benefits and program rules have been widely studied. There has, however, been limited systematic investigation of alternative uses of program funds, which vary widely by state and range from refundable tax credits to two-parent family formation initiatives. Case studies conducted by policy analysis organizations provide some insight into the use of TANF funds for other priorities, but cross-state comparative studies of the kind used to analyze cash assistance rules are largely missing. This study supplements the existing evidence by nationally examining state uses of TANF funds.

Method

The study uses a dataset constructed from annual state TANF expenditures reported to the Administration for Children and Families. Expenditures are sorted into categories including basic assistance, transportation and supportive services, alternative types of transfer such as tax credits, and programs intended to prevent pregnancy and promote two-parent families. To account for the varying size of state TANF grants, a set of dependent variables was constructed expressing expenditures on these items in a given state-year as proportions. Fractional response regression models, which allow for a dependent variable bounded by zero and one, were estimated predicting the proportion of resources devoted to particular areas. Key independent variables include party control of government, government professionalism and ideology, and demographic composition of those experiencing poverty.

Results

Several spending priorities (basic assistance, alternative types of transfer, facilitative services, and pregnancy prevention and two-parent family formation) are related to the racial/ethnic demographic profile of those in poverty in a state, with larger populations of color associated with less spending on transfers and facilitative services and more spending on pregnancy prevention and two-parent family formation. A higher poverty rate is associated with lower spending on alternative transfer programs. Finally, more professionalized governments devote a greater proportion of resources to childcare.

Conclusions and Implications

Expenditures for cash transfers and corrective programs appear to be an extension of the patterns observed elsewhere in TANF implementation at the state level, correlated with the presence of larger proportions of people of color in the target population. That the other correlates of spending priorities differ by program area reinforces that the experiences of low-income individuals and families seeking public assistance of some form varies by geographic locale. Continued examination of the alternative uses of program resources under a block grant funding structure would assist advocates and policy practitioners in designing appropriate and equitable public anti-poverty interventions.