In 1996, Congress created the Temporary Assistance for Needy Families (TANF) program, replacing Aid to Families with Dependent Children (AFDC), and making sweeping changes to the nation's welfare system. The federal government placed much of the responsibility for creating revised welfare programs on the states, but also put in place significant requirements, including a five-year time limit on benefits. In terms of work, education and training, TANF: established strict work requirements (at least 30 hours per week in work activities); limited the amount of time program recipients could spending in education and training activities (no more than 12 months for vocational education); capped the amount of a state's caseload that could be engaged in education and training at 30 percent; and limited the types of education and training that could count as a work activity (postsecondary academic education is among excluded activities).

With a "work first" mandate in place, most states began diverting many TANF recipients into any available jobs, regardless of the quality of those jobs. Nor did they account for the possibility that, with education and training opportunities, recipients might land better quality jobs that could lead to self-sufficiency. This strategy led to dramatic reductions in welfare caseloads in states across the country, but not necessarily an increase in the incomes of those leaving the welfare rolls. According to data from the U.S. Department of Health and Human Services, median hourly wages for those leaving welfare ranged from $6.50 to $9.00 an hour, and former recipients with jobs worked an average of 33 to 39 hours per week.

Though working, given these low wages, many leaving welfare still required assistance from states in the form of work supports such as childcare and transportation. The decline in caseloads and healthy state economies of the late 1990s created a surplus of TANF dollars in many states and afforded some states the opportunities to create programs to meet some of these needs.

2006 Reauthorization:

Originally scheduled for reauthorization in 2002, welfare again faced dramatic changes. At the same time states were facing significant deficits, further changes to the program were requested by the Bush Administration and some in Congress.

In 2002, the House of Representatives passed a welfare reauthorization bill. The bill sought to place even stricter work requirements (40 hours per week) on recipients, and even more severe limitations on education and training (four months for vocational education, down from 12). The House bill also required additional caseload reduction targets for states. While requiring more hours of work, the bill provided few additional resources to states for work supports such as childcare.

In the Senate, the Finance Committee, which has authority over TANF, crafted a tri-partisan plan, with broad agreement amongst key committee members to make some modest improvements to the 1998 TANF law, including increasing the time recipients could spend in education and training activities (24 months for vocational education), modifying the cap on the percentage of a state's caseload that could be engaged in education and training activities, and expanding the definition of work activities to include additional categories, including postsecondary education. The Finance Committee bill never made it to the Senate floor for a vote by the full Senate in the 107th Congress, and welfare reauthorization was delayed until the 108th Congress convened in 2003. TANF was extended in its current form after its original expiration of September 30, 2002.

In 2003, Congress again worked to complete the TANF reauthorization.  In February, the House of Representatives passed a bill, H.R. 4, nearly identical to its 2002 House-passed bill and the Administration’s plan for welfare reauthorization. The House bill contained increased work requirements and severe restrictions on education and training opportunities for TANF recipients. In September, the Senate Finance Committee marked up its new version of reauthorization legislation that took a more moderate approach to work, education and training. While the Senate version did not contain as many improvements to TANF as those included in its 2002 bill, the Finance Committee’s version was more moderate than the bill passed by the House. The Senate Committee’s bill increased required work hours to 34 and maintained current limitations on education and training, particularly the 12 month limit on vocational education, and the 30 percent cap on the number of recipients states can have engaged in education and training activities. The bill did, however, include an amendment by Senator Snowe (R-ME) to allow postsecondary education to count as a work activity for 10 percent of a state’s caseload for an expanded period of time. However, in the absence of final Senate action on welfare reauthorization once again, Congress extended TANF in its current form until March 31, 2004.

Again in 2004, for the third consecutive year, Congress failed to complete reauthorization of the TANF program. The 2003 Senate bill finally made it to the Senate floor in late March, but was pulled after several days of debate and never came to a vote. Partisan differences over issues such as allowing a vote on raising the minimum wage led to the bill’s pull from consideration. In the absence of final Senate action or a conference committee on welfare reauthorization in 2004, Congress extended TANF in its current form three times, first until June 30, 2004, then until September 30, 2004, and finally until March 31, 2005.

Finally, in 2005, more progress was made toward a reauthorization of TANF. On January 4, Rep. Pryce (R-OH) introduced H.R. 240, the "Personal Responsibility, Work and Family Promotion Act of 2005" to reauthorize TANF. This bill required recipients to work 40 hours per week to obtain cash benefits (up from the 30 hours in the 1996 law), and required states to ensure that 70 percent of their adult caseloads were working (up from 50 percent in the 1996 law). TANF recipients would be required to spend 24 hours per week engaging in direct work activities such as private or public employment, on-the-job training, or supervised community service. The bill also reduced the number of months – from 12 to three in most cases – that education and training could count as direct work activity. Full-time vocational education and training could count as a direct work activity for up to four months if the program was tied to a specific job. The Human Resources Subcommittee of the House Committee on Ways and Means, which has jurisdiction over portions of the bill, voted to approve it on March 16. On October 26, the full Committee approved H.R. 240 for inclusion in the budget reconciliation bill. On October 20, the House Education and the Workforce Committee, which has jurisdiction over other portions of the bill, also voted 23-20 to approve H.R. 240 as part of budget reconciliation, and efforts to increase the amount of education and training allowed under TANF were not successful. The budget reconciliation bill, including TANF reauthorization, was passed by the House on November 18.

In the Senate, the Finance Committee finalized its TANF reauthorization bill, S. 667, on March 17. The Senate bill also increased work requirements for TANF recipients, although not as drastically as the House bill. It increased child care funding by $6 billion over five years, and maintained the 1998 law’s 12 months allowed for education and training. The Senate bill also included the “Parents as Scholars” program, which allowed 10 percent of a state’s welfare recipients to participate in postsecondary education for longer periods of time, and a new $1 billion program for transitional jobs and business links programs to promote job development. Even though the Senate Finance Committee did not include the TANF reauthorization bill in its budget reconciliation package, provisions to reauthorize the program through FY 2010 were included in the reconciliation conference report.

The new TANF law was finally completed on February 1, 2006. On February 1, the House of Representatives voted 216-214 to approve S. 1932, the budget reconciliation bill, to reduce mandatory spending by $39.7 billion (including $12.7 billion from student loans, and reductions to other programs such as Medicare and Medicaid). The House had passed an earlier version of the bill on Dec.19, but when the Senate passed the bill on Dec. 21, three technical changes were included. This required the bill to return to the House for a final vote.

In addition to the mandatory spending cuts, the budget reconciliation bill included legislation to reauthorize the Temporary Assistance for Needy Families (TANF) program through 2010. The TANF provisions within the budget reconciliation bill mandate that states meet a 50 percent work participation rate in order to avoid federal penalties. The bill would not increase work requirements for cash assistance as proposed by previous House and Senate bills, nor would the bill implement limitations on participation in education to three months within any consecutive 24 month period (as the House bill proposed). Instead, the bill would retain current law on these education-related issues.

However, the bill would make it more difficult for states to allow TANF recipients who work fewer hours than required (30 hours per week) to receive assistance that is funded by state maintenance of effort (MOE) funds only. This could impact states’ abilities to offer state programs that allow TANF recipients to participate in postsecondary education.

A new healthy marriage initiative is also included within the TANF legislation that could provide additional funds to high school programs that provide education on the value of marriage, relationship skills, and budgeting.