States Are Hoarding $5.2B in Welfare Funds Even as the Need for Aid Grows

When Congress passed welfare reform in 1996, states were given more autonomy over how they could use federal funding for aid to the poor. They could demand welfare recipients find work before receiving cash assistance. They could also use their federal “block grants” to fund employment and parenting courses or to subsidize childcare.

Twenty-five years later, however, states are using this freedom to do nothing at all with large sums of the money.

According to recently released federal data, states are sitting on $5.2 billion in unspent funds from the federal Temporary Assistance for Needy Families program, or TANF. Nearly $700 million was added to the total during the 2019 and 2020 fiscal years, with Hawaii, Tennessee and Maine hoarding the most cash per person living at or below the federal poverty line.

States have held on to more of this welfare money amid rising poverty. According to the U.S. Census Bureau, 16.1% of children under age 18 lived in poverty in 2020, up from 14.4% the year before. The poverty rate also ticked up for people aged 18 to 64, from 9.4% to 10.4%. As unused TANF dollars have accumulated, applications to the cash assistance program have waned, though it’s not for a lack of need, say experts and people who have applied to the program.

Bonnie Bridgforth experienced the counterintuitive reality of a state, Maine, that is stockpiling more welfare money while using less to help those in need.

Two weeks away from giving birth near the end of 2014, the stay-at-home mom was thrust into the role of sole income provider when her then-husband was convicted and sentenced to jail time for possession of child pornography. Her family of five was left without a regular paycheck.

Bridgforth, then 35, turned to the Maine Department of Health and Human Services, where a caseworker looked past her pregnant belly and told her that to get aid she’d need to meet the state’s requirement that she get a job. After explaining that it would be difficult to find employment with her due date weeks away and four children at home, Bridgforth was approved for $981 a month in cash assistance with the understanding she would start working after she gave birth.

Soon, with two of her children in school and her infant, 2-year-old and 4-year-old in the care of extended family, Bridgforth started working at a gas station. She earned $8 an hour, 50 cents above Maine’s minimum wage at that time, later receiving a 50-cent raise. Bridgforth was also pursuing an associate degree in justice studies and taking a full course load.

Yet less than two years later, DHHS informed Bridgforth that she no longer qualified for assistance, including child care. The notice from the agency said her family did not meet the “deprivation” standard, a TANF requirement that assesses the extent to which children have been deprived of financial support from one or both parents. Bridgforth’s children no longer met the standard because her husband had been released from jail and they were now considered a two-parent household, even though the couple was estranged and he was not living with them. They divorced soon after.

In an email to a DHHS welfare specialist, Bridgforth asked for an explanation. “I think I have whip lash. It is exhausting,” Bridgforth wrote in the Aug. 30, 2016 email.

The specialist replied, “Sorry Bonnie. An eligibility worker was reviewing the case and it appears that a decision was made that deprivation does not exist, I am not an eligibility worker so cannot make this determination.”

Reflecting back on the rejection, Bridgforth told ProPublica, “No one seemed to care that we were living in significant poverty.” During this period, she said, she struggled to buy diapers, gas, clothing and her children’s school books. Her oldest daughter, who was 12, “felt very poor because we couldn’t buy the good shampoo,” Bridgforth recalled.

The same year Bridgforth was kicked off TANF, Maine was sitting on $111 million in unspent welfare dollars. It spent only $45 million on the program that year. The following year — as Bridgforth “fought to keep a roof over my kids’ heads” — the unspent welfare money continued to pile up, reaching $141 million. While its surplus has since declined, Maine continues to have one of the largest per-capita stockpiles of welfare money in the nation, $93 million as of fiscal year 2020. That comes out to $657 per person in poverty.

The unused welfare stash tells a larger story of how the 1996 welfare reform law has failed the poor: It allows states to not distribute cash assistance even when they have the money to do so.

Each year, the federal government awards states a block grant, or lump sum, of funding, with the intention that the money be spent to help poor people meet their basic needs, become employed and start two-parent families. States have discretion in how they can use, or not use, the money and have increasingly used it to fill unrelated budget gaps. Experts say it’s reasonable for states to have some TANF reserves, even as large as their annual block grant, but when they stockpile the money from year to year it’s cause for concern.

Tennessee has $790 million in federal welfare funding sitting around — the largest pool of unspent welfare dollars nationwide — though it has recently promised to spend it. Hawaii has $364 million idling in an account, equivalent to $2,923 per person living in poverty. And Oklahoma has $264 million, nearly double its annual TANF budget of $138 million.

Devin Stone, director of communications for the Tennessee Department of Human Services, said, “Fluctuations in caseload and decreased participation in the state’s TANF program resulted in a surplus of TANF funds accumulating over a period of several years.” In fiscal year 2020, Tennessee reported its lowest-ever TANF caseload, about 17,000, down from 68,100 cases in 2006.

Jackie Farwell, a spokesperson for the Maine DHHS, gave a similar explanation for that state’s unspent TANF funds, saying it was caused by the Maine Legislature limiting lifetime welfare eligibility to five years. As a result, “Maine’s TANF caseload rapidly declined from 13,522 in January of 2012 to 4,320 in January of 2018,” she said. “This reduction in the number of people served by the program in turn led to an increase in Maine’s TANF block grant balance.”

Advocates blame the state’s previous administration for the unspent funds. Under the administration of Gov. Paul LePage, who held office from 2011 through 2018, Maine slashed welfare benefits and was one of the last states to impose full-family sanctions on TANF recipients, which denies assistance to an entire family if a parent doesn’t fulfill TANF requirements. Maine repealed the sanctions this year, which advocates hope signals a shift in the state’s welfare policies under the administration of Gov. Janet Mills, who took office in 2019.

Keili McEwen, communications director at the Oklahoma Department of Human Services, said the buildup in TANF reserves was caused by a decline in participation in the program. The agency has “started to build a strategy towards deploying the funds out into the community,” she said. Earlier this month, the department announced it would invest $27 million in TANF funds in organizations that serve low-income Oklahoma families, including a community crisis center and a birth equity initiative. The state, however, is not considering adjusting eligibility requirements or increasing the amount of cash assistance qualifying families receive per month, which is currently capped at $292 for a family of three.

The coronavirus pandemic and accompanying economic travails did not make a dent in states’ TANF reserves. Between June and November 2020, the national poverty rate made its largest jump since the government began tracking it 60 years ago, from 2.4% to 11.7%. Other parts of the federal government’s social safety net increased aid to help some of the 7.8 million Americans who fell into poverty, with stimulus packages and expanded unemployment benefits. TANF, conversely, is helping fewer people.

TANF acceptance rates have steadily declined over the past few years, with some states—Texas, Mississippi, Arkansas and Nebraska—denying about 90% of applicants in fiscal year 2020, according to federal data.

“During the covid pandemic, when unemployment rates and hunger rates were skyrocketing nationwide, TANF funds were still sitting unused,” said Ashley Burnside, a policy analyst at the Center for Law and Social Policy, a national advocacy organization for low-income Americans. The devastation wrought by the pandemic “is as much of a ‘rainy day’ as states could have had. If funds are still left unused, it makes me question what states are waiting to use this money for.”

Ty Bishop, a spokesperson for the Texas Department of Human Services, which has the nation’s lowest TANF acceptance rate at just 7% of those who apply, said most applicants there “exceed the income and resource limits.” To qualify, a family with two children and one caretaker must have less than $1,000 in assets and a monthly income of less than $188. Those requirements haven’t changed despite the state’s $281 million in unspent TANF funds in fiscal year 2020.

In 1995, Congress debated a precursor to the welfare reform law that ultimately passed the following year. Then-Sen. Carol Moseley Braun, a Democrat from Illinois, predicted some states would choose to not spend the federal dollars instead of distributing them to the poor. She proposed an amendment to prohibit states from carrying over unused welfare funds from year to year.

“If we send the states this money in a block grant, there is nothing to prohibit that state from saying we do not want to have assistance for poor children,” Moseley Braun said. “We are not going to address the issue of job creation. We are not going to train people to go back to work. We are not going to provide the children with any assistance. We are just going to further squeeze the amount of resources devoted to the whole issue of poverty in our state and we are going to take the money we get from the federal government and use that to go from year to year to year to year and not maintain our own effort. I think that would be a real tragedy.”

Moseley Braun’s “race-to-the-bottom amendment”—intended to prevent states from “trying to underbid one another” in assistance to the poor did not make it into the final bill that President Bill Clinton signed in 1996.

Representatives of the human services departments in Maine, Tennessee and Hawaii said their states are working on plans to spend the welfare funds on new programs that will help families on the brink of poverty find greater financial stability.

Hawaii plans to use its surplus to extend employment services like job coaching and placement for noncustodial parents who have children receiving TANF and to provide diaper assistance to families that are eligible for the program, said Amanda Stevens, a spokesperson for the state. The state is also considering increasing benefits and offering monthly housing assistance, said Stevens.

In Maine, the money will be used to pay for a variety of programs and “system-wide improvements” to better serve the poor, said Farwell, the DHHS spokesperson. These include counting the pursuit of a high school diploma as an approved work activity for receiving benefits; updating the state’s application system so TANF recipients can recertify their eligibility online; and providing “coaches” to help families set goals and access resources.

Tennessee lawmakers passed legislation this year pledging to work with community “partners” to spend down the state’s $790 million in TANF reserves. The law, which went into effect in July, increased monthly cash assistance for a family of three to $387 a month, from $277. It also includes a two-year pilot program to allocate $50 million to community organizations that serve low-income families and to provide additional cash assistance to individuals pursuing educational opportunities.

Despite those efforts, advocates and state welfare caseworkers say, the steep decline in TANF applications nationwide shows the program has already irreparably lost the trust of the poor.

“Many families living below the poverty line are deciding that the benefits TANF provides are not worth the onerous upfront requirements to get on and stay on the program,” said LaDonna Pavetti, a welfare expert at the Center on Budget and Policy Priorities. “Reserves are going up because caseloads are going down.”

If they qualify for TANF, applicants also risk losing any child support they might receive from a noncustodial parent, said Moriah Geer, a caseworker at Maine Equal Justice, a legal aid organization that assisted Bridgforth as she navigated TANF.

“There are so many unknowns and confusing parts about the program,” Geer added. “Families don’t want to go through the indignity of applying to this program again, even if more funds and programs are now being offered. I have many clients who choose poverty over having to go back and beg for cash assistance to be able to feed their families and keep a roof over their heads.”

Sky Arnold, a spokesperson for Tennessee’s Department of Human Services, said there are other explanations for the decline in welfare applications, including that “less families need the money. Our economy has been gangbusters in recent years and this is a sign of it.

“Decreasing applicant numbers speak to our state’s ability to build families who no longer need assistance,” said Arnold, who recently left the agency.

The Center on Budget and Policy Priorities, a progressive think tank that analyzes the impact of federal and state policies, disputes the notion that TANF’s decreasing numbers indicate families no longer need assistance. The organization designed a metric to show how many people living in poverty are actually helped by welfare. According to its “TANF to poverty ratio,” many states, including Tennessee, are largely failing to meet the needs of poor families. In 2019, the state assisted only 18 out of 100 poor families with children, down from 67 when the program began in 1996, according to the analysis.

A report this year found that TANF serves only one in four Maine children living at or below the federal poverty level, and that 84% of families in the state leaving the cash assistance program in 2019 were still living in poverty.

Today, Bridgforth, who completed her associate and bachelor’s degrees while remaining the sole breadwinner for her family (her ex-husband remains incarcerated; Bridgforth remarried in May 2021), works in special education. Her dream is to attend law school.

In September, she provided a written statement to the Maine Legislature about her experience with TANF and suggested how the state could improve the program.

“I made it despite the monthly attempts to kick me off TANF before I was ready,” Bridgeforth wrote in her statement. “I am no different from so many other women who find themselves on welfare.”

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.