CHARACTERISTICS AND FINANCIAL CIRCUMSTANCES OF TANF RECIPIENTS

Temporary Assistance for Needy Families (TANF) Program

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
Office of Planning, Research and Evaluation
Washington, DC 20447

CONTENTS

Introduction

Summary

AFDC/TANF Trends

(Exhibits I)

List of Tables

Appendix

INTRODUCTION

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) established a new Temporary Assistance for Needy Families (TANF) program to replace the Aid to Families with Dependent Children (AFDC) program. The new welfare law also established new State reporting and data requirements for the TANF program. In September 1997, HHS issued the Emergency TANF Data Report specification providing States with guidance/instructions for the collection and submission of this important data.

The TANF statute allowed for a phase in of the data reporting requirements based on when a State implemented their TANF program. Thirty-nine States reported the first TANF data for the July – September 1997 quarter. All States, the District of Columbia, Guam, Puerto Rico and Virgin Islands were required to submit TANF data on the demographic characteristics and financial circumstances of families receiving assistance under their TANF program for the 1999 federal fiscal year. All 54 States and Territories transmitted 11,058,378 active cases and 1,042,941 closed cases onto the national TANF database.

Under the new data reporting system, States have the option to submit either sample data or universe data to HHS. Thirty-two States submitted universe data, from which HHS randomly selected approximately 200 active cases and 400 closed cases each month to prepare this report. The remaining 22 States submitted sample data. A total sample of 164,481 active cases was used to compile 33 TANF recipient characteristics tables. Also, a total sample of 196,347 closed cases was used to compile Table 31 regarding reasons for closure. The statistical data in this report are estimates derived from samples and, therefore, are subject to sampling errors as well as non-sampling errors. Statistical specifications can be found in Appendix, the study design and reliability of estimates.

The new TANF data reporting system posed significant initial challenges to State and HHS and delayed the issuance of this report. Despite every effort to ensure the reliability of the data, HHS eliminated some problem/questionable data from this report. In cases where a few States submitted questionable data, the data from those States were eliminated from the tables. In cases where numerous States reported questionable data or unusually large numbers of "unknown" or "other" categories, HHS urges caution in drawing conclusions on the basis of the data.

SUMMARY

The TANF Family

The average monthly number of TANF families was 2,648,000 in fiscal year (FY) 1999. The estimated total number of TANF recipients was 2,068,000 adults and 5,319,000 children. The average monthly number of TANF families decreased in almost all States and reflects an overall 17 percent decrease from 3,176,000 families in October 1997 - September 1998. The number of TANF families increased in only three States (Guam, New Hampshire and New Mexico). During FY 1999, 2,514,000 TANF families had their assistance terminated.

California had the largest number of TANF families with a monthly average of 624,000, which accounted for a quarter of the U.S. total TANF families. New York ranked second with a monthly average of 294,000. California and New York had a combined monthly average of 918,000, which accounted for 35 percent of the US totals. Of the $11 billion paid to TANF eligible families in cash assistance during FY 1999, California alone paid $3.7 billion, which accounted for a third of the US total cash payments. New York made total cash payments of $1.7 billion. The combined TANF cash payments of California and New York accounted for almost a half of the US total TANF cash payments.

The average number of persons in TANF families was 2.8 persons. The TANF families averaged 2 recipient children, which remained unchanged. Two in five families had only one child. One in 10 families had more than three children.

Two-thirds of TANF families had only one adult recipient, and five percent included two or more adult recipients. Fifteen States did not include two-parent family cases in the TANF data reporting system because they placed two-parent families in separate State programs. About 29 percent of TANF families had no adult recipients, up about 6 percentage points for the 49 States that reported child-only cases for the October 1997 – September 1998 period. Even though the percentage of child-only cases on the welfare rolls has continued to increase in the past several years, the total number of child-only cases has actually declined by about 200,000 since FY 1996.

Of TANF families, 98 percent received cash and cash equivalents assistance with the monthly average amount of $357 under the State TANF program. Of such TANF families, 81 percent received Food Stamp assistance, which is consistent with previous levels. Also, almost every TANF family was eligible to receive medical assistance under the State plan approved under title XIX.

Reasons for which TANF families received a reduction in assistance for the reporting month were: sanction at 4.5 percent, recoupment of a prior overpayment at 8.1 percent and other at 11.1 percent. "Other" could include reasons for a reduction in assistance, such as receiving a lower benefit based on a state policy to pay families that move from another State at a lower level, or the application of a family cap.

The reasons for TANF families no longer receiving assistance were due to employment at 23.0 percent, State’s policy at 16.5 percent and sanction at 6.2 percent. However, understanding the reason for case closure is severely limited by the fact that States reported 54.0 percent of all cases that closed did so due to "other" reasons. For example, while independent studies of the reason for families leaving welfare typically find that somewhat over half leave as a result of employment, States reported only 23 percent of cases closing due to employment, clearly an understatement of the true rate. The final rule of TANF data collection requirements, effective October 1999, provides a detailed reason for case closure classification codes. These data specifications should result in more accurate determination of the reason for families leaving TANF.

The TANF Adults

The average age of TANF adult recipients was 31.8 years. Of TANF adult recipients, 6 percent were teenagers and 20 percent were 40 years of age or older. Nearly 90 percent of adult recipients were the head of the household. About 4 percent of TANF adult recipients were teen parents whose child was also a member of the TANF family. Only 18 percent of adult recipients were married and living together.

There was no significant change in the racial composition of TANF families. Three of five TANF adult recipients were members of minority races or ethnic groups. Black adults comprised 36 percent of adult recipients. White adults comprised 32 percent of adult recipients and 23 percent were Hispanic. Of adult recipients, 1.7 percent were American Indian or Alaska Native, and 5.0 percent were Asian.

Most TANF adult recipients were US citizens. Non-citizens residing legally in this country were 12 percent of TANF adults.

Employment increased by about 22 percent among TANF adult recipients. Compared to October 1997 – September 1998, when 23 percent of adult recipients were employed, about 28 percent were employed in FY 1999. Furthermore, the average earnings of those employed increased from about $553 per month to $598, an increase of about 8 percent. Six percent of adult recipients had unearned income averaging about $233 per month. Finally, an additional 44 percent of TANF adult recipients were in the labor force, i.e., seeking work but not employed, and about one quarter of adult recipients were not in the labor force.

Work participation was mandatory for almost three of every five adult recipients. Of TANF adult recipients, about 9 percent were exempt from the work participation because they were single custodial parents with child under 12 months. Only 3.5 percent were exempt because of a sanction or participation in a Tribal Work Program. Nearly 14 percent were exempt from the work participation status because of a good cause exception, e.g., disabled, in poor health, or other. About 17 percent were teen parents who were required to participate in education.

Overall, 42 percent of all TANF adult recipients participated in some type of work activities during the reporting month. In other words, 28 percent worked in unsubsidized jobs, 6 percent did job search, and another 12 percent were engaged in subsidized employment, job skills training or work preparation activities. (Some TANF adults did two or three work activities. Also, some adults participated in under the work exemption status.) Their average number of hours per week participating in work activities was 25 hours.

In addition to 45 percent who were exempt from work participation, at least 10 percent of adult recipients did not participate in the required mandatory work activities.

The TANF Children

TANF recipient children averaged about 7.8 years of age. Twelve percent of recipient children were under 2 years of age, while 38 percent were of preschool age under 6. Only 8 percent of the children were 16 years of age or older.

Most recipient children were children of the head of the household in TANF families, and only 7 percent were grandchildren of the head of the household. Of TANF recipient children in child-only cases, 66 percent lived with a parent and 22 percent with a grandparent who did not themselves receive assistance.

The racial distribution of TANF recipient children was slightly changed in recent years. Black children continued to be the largest group of welfare children, comprising about 40 percent of recipient children. About 26 percent of TANF recipient children were white and also were Hispanic. The percentage of black children on TANF remains unchanged. However, the percentage of Hispanic children is up 2.6 percentage points, and down by 2.5 percentage points for white children when compared to October 1997 – September 1998.

AFDC/TANF Trends in the 1990’s

Because of the rapid decline in the caseload beginning from a record high of 5.0 million families in 1994 and accelerating after the implementation of PRWORA in 1996 to 2.6 million families in 1999, the question has been raised as to whether the current caseload has changed significantly after PRWORA. For example, it has been suggested that the families now receiving cash assistance are more disadvantaged than prior to welfare reform. In order to address the question, an examination of longer-term trends is helpful in beginning to understand whether, and how, welfare reform has contributed to changes in the characteristics of welfare recipients.

A number of major changes in the characteristics of welfare recipients have occurred in the 1990’s including the number of child-only families, the racial composition of welfare families, the age of adult recipients, the age of the youngest child, and the employment rate of adults. These trends in AFDC/TANF recipient characteristics are presented in Exhibit I.

Child-only Families

In 1999, there were about 770,000 child-only cases, which accounted for 29 percent of the total caseload. The number of child-only families increased steadily throughout the middle 1990’s, reaching a peak of 978,000 such families in 1996. Through 1998 the number of child-only families decreased to 743,000, although their proportion of the caseload continued to increase slowly to 23 percent. However, in 1999 both the number and the proportion increased.

Racial/Ethnic Composition of Families

The racial composition of welfare families has changed substantially over the past ten years. In 1990, it was 38 percent whites, 40 percent blacks and 17 percent Hispanics. In 1999, however, it was 31 percent whites, 38 percent blacks and 25 percent Hispanics. In addition, the small percentage of the welfare population which is Asian has grown slowly but steadily over the period from just under 3 percent to about 3 and one-half percent. Viewed over the decade there has been a shift from white to Hispanic families which is consistent with broader population trends. This shift has been accelerated since 1996 and is particularly pronounce in California, New York and Texas. Thus, in 1999, 70 percent of all Hispanic welfare families were in three large States (California, New York and Texas), as compared to 65 percent in 1996. In California, the proportion of Hispanic welfare families increased to 46 percent in 1999 from 38 percent in 1996. In addition, black families which had been a declining proportion of the caseload have trended up slightly since 1996. The upshot of these changes is that the proportion of welfare families that were minorities has increased from three-fifths to just over two-thirds over the decade, primarily driven by the growth in Hispanic families.

Age of Adult Recipients

Throughout the decade the average age of adults has gradually, but steadily, increased from 29.7 in 1990 to 31.8 in 1999. Between 1990 and 1999, the proportion of older adults over 39 years increased most dramatically from 13 to 20 percent of adult recipients. Slightly less than half of this growth occurred in the three years after TANF compared to the six years before.

Employment Rate

The employment rate of adult recipients has been increased significantly in the past five years. In 1999, 28 percent of adult recipients were employed, about 2.5 times the 1996 employment rate of 11 percent and four times the rate of the early 1990’s.

Age of the Youngest Child

Between 1990 and 1999 the proportion of families with a youngest child who was a toddler, i.e., aged 1 or 2, declined sharply from 30 to 21 percent. At the same time the proportion of families with a youngest child with no pre-schooler, i.e., no child under 6 years old, increased sharply from 36 to 44 percent. Furthermore, this trend was accelerated after 1996 with 63 percent of the growth occurring in the later three years.

Although the question of whether the caseload has become more disadvantaged cannot be answered simply through the administrative data provided by the States and will require analysis of data from national data sets as it becomes available, the trends identified above are certainly consistent with a more disadvantaged caseload. For example, older recipients who have older children comprise a larger share of the caseload, and that is consistent, but does not prove, that these may comprise longer-term recipients who are having a harder transition to independence. Similarly, the larger proportion of minorities, especially Hispanics who may have a higher probability of speaking English as a second language could also partly account for the sharper increase in minorities after 1996. However, it is important to note that these trends also represent longer-term trends. In addition, a number of studies suggest that minorities be helped into work as much as non-minorities by the kinds of welfare-to-work strategies that most States are employing. Longer-term observation of these trends along with examination of other national data when it becomes available will thus be necessary to better understand if the caseload is becoming more disadvantaged.

EXHIBIT I

LIST OF TABLES

TANF FAMILIES

ADULT RECIPIENTS

RECIPIENT CHILDREN

CLOSED CASES

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This is a Historical Document.