Expiring TANF Emergency Fund Needs Extension Now

UPDATE (4/26/10): The Senate did not extend the TANF Emergency Contingency Fund when it passed short-term extensions of expanded unemployment benefits and COBRA subsidies. However, the House and Senate are currently negotiating longer-term extensions of these benefits, plus extensions of enhanced support for state Medicaid programs and various tax breaks. So there is another opportunity to advocate for extension of the Emergency Fund. A link to a new petition is at the end of this posting.

The TANF, or Temporary Assistance for Needy Families, program includes a contingency fund that states can draw on when bad economic conditions drive up their costs. But no one anticipated a recession as deep as the one that began in late 2007. With caseloads rising in so many states, the U.S. Department of Health and Human Services realized the contingency fund could be tapped out.

Congress came to the rescue by creating a new Emergency Contingency Fund as part of the economic recovery act. The fund provides an 80 percent federal match for state spending increases in three major categories: basic assistance like cash or vouchers, subsidized employment and non-recurrent short-term benefits.

Many types of expenditures can count as short-term benefits, including lump sum payments to help non-TANF families over a financial hump, education and training, work-related expenses, emergency shelter for victims of domestic violence and assistance to prevent utility shut-offs, foreclosures and evictions.

In tallying expenditures, states can include spending and in-kind contributions by third parties like local governments and in-state nonprofits. These expenditures can be for anything the states are allowed to count toward the minimum they must spend for their regular federal block grant, e.g., child care assistance, alcohol and drug abuse treatment.

So states have many options for claiming reimbursements from the Emergency Fund, provided they don't cut back their own expenditures below their required minimum share of total program costs or, if they're claiming basic assistance reimbursements, their caseloads. The Emergency Fund thus helps protect families on TANF and families who become eligible from changes designed to get them — or keep them — out of the program.

As of late January, 39 states and the District of Columbia had had their applications for reimbursements approved. All are entitled to additional funds, and applications from other states are under review. To find out how much your state could get and how much, if anything, it has already received, check the table in this recent CLASP report.

Congress allocated up to $5 billion to the Emergency Fund, virtually ensuring it wouldn't run dry. At this point, the fund still has somewhat over $3.75 billion to support key services for TANF families and other very low-income families as well. The Center on Budget and Policy Priorities reports that, by summer, it will be supporting more than 100,000 subsidized jobs in more than 20 states.

But the fund will expire at the end of September unless Congress extends it. Unemployment rates will still be extraordinarily high and more people jobless long enough to have exhausted their unemployment benefits. So even more families will need the kinds of help the Emergency Fund supports.

President Obama's proposed Fiscal Year 2011 budget for HHS would extend the fund for another year, with $2.5 billion to distribute. Though most terms would remain the same, the match for subsidized employment would increase to 100 percent.

Here's the hitch. Congress probably won't agree on an HHS budget until some time in the fall. Most states, however, begin their fiscal years on July 1, and all but a few are facing budget shortfalls. Unlike the federal government, all but Vermont have to balance their budgets every year.

Unless states know they'll have additional TANF funding after September 30, they're likely to curtail their TANF programs. CBPP warns of "harsh cutbacks" in basic cash assistance.

And that's not all. Governor Arnold Schwarzenegger is proposing to eliminate California's TANF program unless the state gets more federal funds. Arizona Governor Jan Brewer proposes to reduce the number of months families can receive cash assistance.

CBPP says that subsidized jobs programs may be scaled back or phased out even before July 1 because these programs generally involve six-month placements. Some states that don't have these programs have tentatively decided not to start them because they'd have to be shut down so soon.

Like CBPP, CLASP is calling on Congress to extend the Emergency Fund now, with a new appropriation of at least $5 billion. The extension legislation could boost the fund's job creation power by adopting the President's proposed 100 percent match for job subsidies.

The Senate will soon, at long last, take up the extension of unemployment benefits and COBRA subsidies. This latest installment in its job creation efforts would be a good vehicle for the Emergency Fund extension. If it's not included, it could be deferred for months — or even die in the wrangling over tax cuts, deficits, etc.

Urge your representatives in Congress to extend the TANF Emergency Fund now.

Photo credit: paulgorman