Established in 1935 under the Social Security act of 1935, AFDC was designed to support children in need in which one parent was absent, deceased, unemployed or disabled. States were given unlimited entitlement funds to administer cash assistance to all families who met program requirements. After rising concern over the prevalence of families abusing AFDC funds and a concern over the legislation’s lack of structure to promote self-sufficiency, the Clinton Administration redesigned the program in the PRWORA Act of 1996.
In the first few years after Welfare Reform, TANF caseloads dropped, the percent of employed single mothers rose, and child poverty decreased during a time of national economic growth. However, after an economic lull in 2001, employment among single mothers declined, while childhood poverty rose. During this time, welfare rolls continued to decline. Studies have shown that prior to the 1996 Welfare Reform, AFDC covered up to 80 % of eligible families, a figure that dropped to 40 % in 2005. A focus on welfare-roll reduction—instead of poverty reduction—may have contributed to this drop, as states limited their share of TANF recipients.
Many families left welfare rolls with a successful transition to employment, especially in the late 1990s. However, many families have not had this experience in the 21st century. It is estimated that 87 % of the caseload reduction between 1995 and 2005 was due to eligible families not receiving TANF funds, as opposed to the much smaller percentage of families that rose above income eligibility. Although Congress had the opportunity to make adjustment to increase program participation, few steps were taken to do so when TANF was reauthorized in 2005 under the Deficit Reduction Act, after a series of short-term extensions following its scheduled 2002 reauthorization date.
The causes for such a high percentage of income eligible nonparticipating families vary greatly. Families are deflected from the cumbersome application process altogether, whereas others may reach the five-year limit or choose not to apply in order to save TANF for a period of greater need. Some families are sanctioned off of the program for various reasons, which may include incompliance with work requirements. In many cases, incompliance or the decision not to apply may be due to barriers to employment that families encounter, such as domestic violence, disability, substance abuse, care of infants, educational limitations and others. Roughly 11 % of these eligible families have experienced being “disconnected,” off of welfare and unemployed, living off of very low incomes. Thus, the share of families receiving cash assistance was historically low in 2007, and within this figure, over half accounted for child-only recipients. Specifically, the percentage of poor children receiving TANF cash assistance in 2007 was 24 %, whereas in 1997, the figure was 55 %.
In addition to implementation roadblocks, the TANF Block Grant has not been adjusted for inflation from its $16.57 billion allotment in 1996. This has caused the program to depreciate in value by 26 %. As of 2008, only one state provided adequate assistance to bring yearly family income above the federal poverty level. Most states have increased their average TANF benefit, but the additional funds have not kept up with inflation.