U.S. Senate Approves TANF Extension, but Ends Contingency Funds

Monday, November 22, 2010 at 11:30 PM by

The U.S. Senate unanimously passed legislation Friday that would extend the basic federal welfare program, known as Temporary Assistance for Needy Families (TANF), through Sept. 30, 2011. The one-year extension is a stop-gap measure, in lieu of a 5-year reauthorization. The House is expected to concur in the bill during the lame duck session.

Unfortunately, the bill does not revive the TANF emergency contingency fund (ECF) and it cuts off funding for the regular Contingency Fund.  The ECF, which was passed as part of the 2009 Recovery Act, enabled states to place adults with private employers and youth in summer jobs programs. That funding expired at the end of September, after Republicans blocked attempts to extend it.

A previous continuing resolution had set aside $506 million in FY 2011 for the regular TANF Contingency Fund, which has been an important funding source for Wisconsin in recent years. However, once the new resolution is enacted, it would prospectively stop states from tapping any more of that funding.

As the Washington Post reported Saturday, the package approved by the Senate Friday also approves the settlement of longstanding claims that the federal government mismanaged trust funds for American Indians and discriminated against black farmers. The Senate was finally able to pass these court-approved settlements after Democrats agreed to find offsets from other programs instead of paying with deficit spending.

In many states the demise of the ECF led to the termination of transitional jobs programs, which have been a significant source of employment for displaced low-income workers. A WCCF blog post in early October noted that Wisconsin’s transitional job program won’t be affected very much in the first year because the state used its share of TANF ECF dollars to free up other TANF funds that, unlike the ECF funding, didn’t have to be spent before October 1, 2010.  On the other hand, the termination of both the ECF funding and the regular Contingency Fund will make it more difficult for the state to finance the sharp increase in W-2 participation that has occurred over the past two years.

The TANF extension includes two new reporting requirements for states, which are described in a brief paper from the Center on Law and Social Policy.
Jon Peacock

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