Child care subsidies have been critical for families who receive TANF benefits, especially as they transition off of TANF and into employment. With the emphasis on Welfare-to-work under the changes in legislation in 1996, families need the support of child care in order to ensure that their children are being looked after while working. Subsidies also boost opportunities for families to seek child care programs that they believe are safe and provide educational opportunities for their children. TANF recipients make up a small, yet important portion, of those who receive child care subsidies.
The process for TANF recipients to receive and maintain child care subsidies are often challenging. Various states and localities have different ways of coordinating welfare-to-work and childcare programming that are often not seamless, as families end up with multiple caseworkers, have difficulty meeting the work requirements to maintain their benefits, or encounter unmet childcare costs or needs. Additionally, once families are approved for welfare-to-work and receipt of childcare subsidies, there is often little time or assistance provided for a family to seek out a satisfactory child care provider before they begin employment. Families leaving TANF for work often do not know about the opportunities to continue to receive childcare subsidies or may find the process too burdensome to continue.
Alternately, states such as Arizona  have severely cut Child Care and Development Block Grants (CCDBG), shrinking subsidies and limiting the number of recipients, thus creating very long waitlists. In order to receive child care assistance, families have been turning to TANF to ensure that they can have coverage for their children while they work. This runs contrary to the purposes of TANF to act as a safety net for those in great need, and for those able to procure a job to rely on child care assistance instead of cash assistance from TANF. Yet when applying for TANF benefits is the only way to secure child care in many states, people have made the decision to do so in order to support their family.
Although not specific solely to TANF funds, the American Recovery and Reinvestment Act gave states the opportunity to draw down funds from a $2 billion federal allocation through September 30, 2010 to use for CCDBG. States have used these funds to reduce waitlists, increase payment rates, lower co-payments and increase professional development and job search timelines. Some of the TANF $5 billion allocation from ARRA has also been utilized for CCDBG as well.
The Urban Institute: http://www.urban.org/publications/311302.html