NON-SUPPLANTATION RECOMMENDATIONS

FACT SHEET

PURPOSE OF TANF: To provide assistance to needy families, assuring that children may be cared for in their own homes or in the homes of relatives and ending the dependence of needy parents on government by promoting job preparation, work, and marriage stability.

Background: Supplantation is the use of Federal TANF dollars for a TANF purpose, but to replace (or supplant) former state expenditures for the same purpose or activity.

An article entitled States Raid Fund Meant for Needy Families to Pay for Other Programs by the Pew Charitable Trusts documents how states are using Federal TANF funds to replace state spending--and the record confirms that Virginia has incorporated this supplantation approach into budget proposals. In effect, Virginia has been using the TANF block grants to supplant state funds and balance state budgets rather than comply with the TANF purpose of providing services to the poor. Consider these facts: 1) since 1996, Virginia’s TANF caseload has decreased by more than 60%, but these savings have not been adequately reinvested in meeting the subsistence needs of the TANF families; 2) of the $158.2 million TANF federal block grant given to Virginia for FY2022 budget, only 27.2%, or $43.4 million, is used on subsistence benefits for families; 3) the average family monthly payment in Virginia beginning July 1, 2021 is $361/month; and 4) in FY 2022, $59 million went to “TANF Programming,” social service programs that were previously funded by the state general fund and another $31 million is being transferred to other Block Grants.

In Virginia, in 2019, the number of families receiving TANF benefits for every 100 families in poverty was 11-20, based on research done by the Center on Budget and Policy Priorities.

This practice of supplantation corrupts the purpose of TANF. It is incongruous that the Governor’s budgets consistently include millions of dollars each fiscal year in the Department of Social Services use of TANF to replace General Fund funded programs.

States spend few of their TANF dollars on meeting children’s basic needs. States spent just $6.5 billion of their federal and state TANF funds on basic assistance for families struggling to make ends meet in 2019, down from $14 billion in 1997, TANF’s first full year of implementation. That amounts to a 71 percent decrease in state and federal TANF funding going toward basic assistance, when adjusting for inflation. In 2019, Virginia spent about $287 million in federal and state funds under the Temporary Assistance for Needy Families (TANF) program. It spent 22 percent of these funds on basic assistance, generally as cash assistance to TANF families. As of 2019, Virginia has accumulated $140 million in unspent TANF block grant funds, equal to 89 percent of its block grant.

To maintain the integrity of TANF, a new modus operandi is imperative. Virginia’s routine misuse of Federal TANF funds to replace previous state expenditures for low-income families requires a correction. This practice was never intended, and it impedes the goals of welfare reform.

Goal: To maximize the resources available to serve low-income children and families and ensure that Federal TANF funds are used to supplement, not supplant, existing state and local spending.

Recommendation: SALT supports a Non-Supplantation Provision consisting of a legislative prohibition against using Federal funds to replace existing (as established by a baseline year, i.e., FY 2023) state or local expenditures for similar programs, purposes or activities. A "new spending" test for maintenance of effort (MOE) funds and the non-supplantation approach is needed.

The Pros are:

• Provides a clear and straightforward statement of intent.
• Enhances State human service agency ability to address needs.
• Prevents corruption of the purpose of TANF.

Making the following general non-supplantation prohibition applicable to TANF is recommended:

“Federal funds made available to a state for purposes of the TANF program shall not be used to supplant non-Federal funds for existing services and activities that promote a purpose of this part. State or local funds expended for such a purpose shall be maintained at least at the level of such expenditures for the fiscal year FY2023 and following.”

(Revised 11-24-21)