by Ed Lazere and Chris Tallent
PDF of this Report
Key Findings
- DC’s TANF benefits leave needy families with children well below poverty. The monthly benefit for a family of three with no other income ‘ $379 ‘ is just 28 percent of the federal poverty line.
- DC’s TANF benefits are lower than in half the states, including Maryland and Virginia. When TANF benefits are measured relative to housing costs, the District’s benefits are less adequate than in all but three states.
- DC’s TANF benefits have fallen nearly 40 percent since 1990, after adjusting for inflation, as the District eliminated annual cost-of-living adjustments and instituted actual benefit reductions. The decline in the purchasing power of TANF in DC was greater than in 48 states.
- An increase in TANF benefits would assist families that are unable to work and provide stability for families trying to take steps toward self sufficiency. If TANF benefits had been adjusted for inflation since 1990, the monthly benefit for a family of three would be nearly $600. This could serve as a possible goal for TANF benefit increases to reach over the next few years.
Report
Temporary Assistance for Needy Families (TANF) is a key part of the safety net for low-income families with children. DC’s TANF program, like TANF programs in the states, provides cash assistance to low-income families that are not employed or under-employed to help them meet basic needs. In return, adults in TANF families who are able to work are expected to participate in work activities and to look for employment. TANF programs, which are funded by the federal TANF block grant and required state contributions, also can be used for a variety of other supports, such as education, child care, and transportation.
While the District has taken a number of steps under its TANF program to help parents move from welfare to work, DC’s TANF cash assistance benefit levels leave families with children well below poverty and are lower than in a majority of states, including Maryland and Virginia. When DC’s high cost of living is considered, its benefits are less adequate than in nearly every state. And the purchasing power of DC’s TANF benefits has declined dramatically over the past two decades as a result of policy decisions, including the elimination of annual cost of living adjustments and reductions in benefit levels. The drop in the value of DC’s TANF benefits since 1990 has been greater than in almost every state.
The low levels of DC’s TANF benefits make it difficult or impossible to find affordable decent housing, which forces needy families with children to live in unstable situations and in neighborhoods with high crime, poor schools, and limited access to jobs. This is significant because many TANF families are unable to work ‘ such as those caring for a disabled family member ‘ and must rely on TANF for their entire needs. For other families, the challenges created by low benefit levels are likely to make it difficult for parents to focus on looking for work.
These findings suggest that an increase in TANF benefits could help stabilize families, provide a better foundation for parents to seek employment, and improve the ability to meet their children’s needs. While there is no formula for determining the appropriate level, some reasonable measures suggest that DC’s TANF grants should be raised to roughly $600 per month for a family of three. This is the level that TANF benefits would be if they had been adjusted for inflation since 1990. An increase to this level, which could be phased in over a period of several years, also would allow TANF benefits to cover roughly the same share of housing costs as in the typical state.
DC’s TANF Benefits Leave Families in Deep Poverty
Table 1 shows that DC’s TANF benefits leave families with children well below poverty.
- For a family with one parent and one child, the maximum TANF benefit is $298 per month, or $3,576 per year. This is just 28 percent of the 2005 federal poverty guideline for a family of that size.
- A single parent with two children can receive up to $379 per month, or $4,548 per year. That is just 28 of the $16,090 of the 2005 poverty guideline.
- TANF families typically qualify for food stamps, yet even when these are considered, TANF families live well below poverty. Combined TANF and food stamp benefits are about $760 per month for a family of three, or 56 percent of the poverty line.
DC TANF Benefits Are Less Adequate than in most States to Meet Families’ Needs
DC’s TANF benefit levels also appear inadequate when compared with benefits provided elsewhere in the nation. DC benefits are lower than in more than half the states, despite the high cost of living in DC, especially for housing.
- The maximum benefit for a DC family of three was 28th lowest in the country in 2004. This is lower than the maximum monthly benefit in Maryland ‘ $477 ‘ and in Virginia ‘ $389 ‘ in Northern Virginia. (The maximum Maryland benefit has since been raised to $490.) DC’s TANF benefits also are far lower than in a number of states with much lower costs of living, such as Iowa and Kansas. (See table 2.)
- DC’s TANF benefits are lower than in 47 states when measured relative to housing costs. An important way to assess the adequacy of TANF benefits is to compare benefit levels with housing costs. For TANF recipients who do not get housing assistance, housing is likely to be their single largest expense. Table 2 also compares TANF benefits for a family of three with the fair market rent for a two-bedroom apartment in the state’s largest city. (The Fair Market Rent is the HUD estimate of the cost to obtain decent but modest housing.)
Table 2 shows that housing costs in DC are among the highest in the nation. Of the largest cities in each state, only Boston has a higher Fair Market Rent. This means that many low- and moderate-income DC families face affordable housing challenges. But the very low level of DC’s TANF benefits makes it particularly difficult for these families to find adequate housing. The table shows that DC TANF benefits cover only one-third of the cost of an apartment at the fair market rent. The ratio of TANF benefits to housing costs is lower in DC than in 47 states. (The table also shows that TANF benefits are less than the cost of decent housing in nearly every state.)
DC TANF Benefits Have Fallen Dramatically in Value since 1990
The low value of DC’s TANF benefits reflects the fact that benefits have not been raised in years. In fact, benefits were cut in the 1990s and have not been restored. As a result, TANF benefits have fallen dramatically, especially after adjusting for inflation. The decline has been far greater than in nearly every state.
DC’s TANF benefits rose steadily from 1970 through 1990 ‘ at that time, the program was known as AFDC ‘ in part because of required annual cost of living adjustments. These steady benefit increases ended in the early 1990s, however, when the COLA requirement was eliminated. DC’s TANF benefits remained frozen until 1997, when the DC Council adopted a cut in benefit levels. DC’s TANF benefits have been frozen at this reduced level since 1997.
- The maximum TANF benefit for a family of three rose from $195 in 1970 to $409 in 1990.
- DC benefits were increased to $428 in 1991 but then were cut to $420 in 1994.
- The maximum benefit for a family of three remained at $420 until 1997, when the benefit was cut to $379, the current level.
As a result of these changes, DC’s TANF benefits have fallen sharply in value since 1990. The decline has been greater than in nearly every state.[1]
- DC is one of only eight states where current TANF benefits are lower than benefits in 1990, without adjusting for inflation.
- The purchasing power of DC’s TANF benefit fell 36 percent between 1990 and 2004, when inflation is taken into account. The decline in value was greater than in 48 states.
What is the Appropriate Level for DC’s TANF Benefits?
These findings show that DC’s TANF benefits would need to be increased substantially to address the decline in value over the last 15 years or to make DC’s benefits more adequate relative to the cost of housing. Because TANF benefits are set by each state, and there is no formula governing how benefit levels are determined, it is difficult to determine the appropriate increase in DC’s TANF benefit levels. Nevertheless, two reasonable formulas suggest that DC’s TANF benefits should be raised to more than $600 per month for a family of three:
- If DC’s TANF benefits just had kept pace with inflation since 1990, the maximum benefit for a family of three would have been $628 in 2006, rather than $379.
- In the median state, the TANF benefit for a family of three equals 55 percent of the Fair Market Rent for a two-bedroom apartment. If DC’s benefits were simply set at this median level, the maximum benefit for a family of three would be $653. It is worth noting that TANF benefits in states with high housing costs typically are far higher than in the District. For example, the maximum TANF benefit for a family of three is $618 in Boston, $691 in New York City, and $704 in Los Angeles.
It may not be practicable to raise TANF benefits to this level at once. Nevertheless, the District could set s goal of reaching this level over a number of years. For example, monthly TANF grants could be raised by $75 for a family of three for each of the next three years, or by $60 for each of the next four years.
Endnotes
[1] Adjusted to 2005 dollars using the October 2005 Consumer Price Index.