The TANF policy environment was shaped by federal parameters and state capacity constraints that changed over time. These parameters coincided with temporally discreet configurations of state capacity constraints to direct state policy trajectories, which, in turn, elicited federal responses of their own in subsequent policy iterations.
A close inspection of the sequence of state TANF policy decisions under the discretion-capacity framework provides additional support for a view of block grants as policy feedback mechanisms. States responded strategically to parameters that restricted discretion—structuring programs and funding streams to facilitate compliance with federal work participation rates. Federal legislators felt that state manipulations in the early years of the program circumvented legislative intent and, after a drawn-out reauthorization process, curbed those practices under restrictive parameters in the DRA of 2005. This prompted another series of state responses, though patterns therein were somewhat obscured by the fiscal havoc wreaked by the financial crisis and ensuing recession.
Discretion
In TANF, the extent to which federal parameters constrained state discretion was dependent on circumstances that encompassed both federal and state level considerations. At the state level, the initial impact of federal TANF parameters on state policy choices was dependent on states’ prior decisions regarding AFDC programs. The states in this sample had been experimenting, to different degrees, with welfare-to-work policies prior to the enactment of federal TANF legislation.
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AFDC waivers to pursue work-oriented policies were sought in anticipation of federal legislative changes and, in some cases, deflected the initial impact of federal parameters under TANF legislation. Even for states in this sample with “integrated” and “generous” policy regimes (Ohio and California, respectively), federal parameters on time limits were less restrictive than state measures previously imposed on cash assistance. For states in which these parameters were non-binding, federal TANF
legislation did not elicit specific state-level policy responses. However, not all states had adopted work-oriented AFDC reforms.
In contrast to the states in this study, New York had only experimented with welfare policy on a limited basis prior to federal TANF legislation (Zedlewski et al. 1998). The federally legislated sixty-month time limit imposed a severe constraint on state discretion in its welfare policy. New York’s constitution includes a provision that requires it to assist the needy (Lurie 1998). Under TANF, New York would continue to assist low-income individuals beyond the federal cutoff, creating a state funded program to absorb welfare recipients who faced time-limit disqualifications.
Though many states conditioned eligibility on work requirements prior to TANF (under AFDC waivers), federal parameters on this policy dimension restricted state discretion in several respects. State (or, in many cases, county) implementing agencies, were directly confronted with complex issues, including mental health, substance abuse, domestic violence, and disabilities, that kept participants from working. States were more inclined to grant exemptions based on these barriers to employment and found federal allowances for exempting 20% of the caseload insufficient. Over time, the work participation rates became more restrictive as employment services were able to assist
work-ready individuals, leaving participants with serious barriers to employment as a growing share of the remaining caseload.
Prior to the DRA, states used permissive MOE definitions to assist these populations with state funds and exclude them from the work participation rate. When the DRA eliminated this practice, states were forced to redirect efforts for these
individuals or allocate non-MOE funds. Specific provisions of TANF work
requirements, both in their initial implementation and in subsequent revisions, made them more restrictive than most policies previously pursued under state AFDC waivers.
Capacity
The political constraints acting on TANF were rooted in state AFDC experiences. Momentum to reform welfare grew out of broad dissatisfaction with the program and TANF’s emphasis on welfare-to-work enjoyed bipartisan support. Relative to the SCHIP policy timeline, the political capacity constraints seem to feature less prominently in the development of TANF. Explanations for this may be found in the particular combination of political and fiscal conditions. At the state level, TANF did not require identification of new funding streams. Federal funding remained constant, states’ MOE requirements were set below previous expenditures and caseloads were declining. The TANF fiscal structure avoided the partisan wrangling over budget appropriations that mark the implementation of most social programs.
In subsequent periods, stable funding streams (with declining caseloads) seemed to alleviate the political constraints associated with ongoing budget negotiations. Though fiscal crises produced TANF budget cuts, MOE requirements exercised as a floor.
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increased vulnerability of the TANF population during economic downturns, seemed to afford the program a degree of protection from state budget swings.
Comparing the TANF experience in two different recessionary periods provides some interesting insights into the dynamics of fiscal constraints on state policy choices. In the first recession (2001-2004), most states carried unobligated balances from prior years and were able to draw on these to mitigate the impact of budget reductions on TANF. This period coincided with the TANF reauthorization debate and growing criticism of excess reserves. State efforts to deploy unobligated balances may have been accelerated by a fear of reduced federal support in the future. The combination of
conditions motivated states to tap into unused balances and, for the most part, to continue investing in TANF through the first recession.
By the second recession (2008-2011), unobligated TANF balances had been substantially liquidated and caseloads were on the rise. The drastic change in
circumstances prompted an infusion of federal funds under ARRA legislation in early 2009 that shielded states from the direct impact of a major fiscal constraint.
In each recessionary period, a combination of conditions sheltered TANF choices from severe fiscal constraints. Absent an example of state choices under a severe fiscal constraint, it will be interesting to observe state responses over the next several years, as ARRA funds are withdrawn before state budgets have fully recovered.
The Discretion-Capacity Framework
In structuring a view of state policy choices as trajectories that are subject to a variety of constraints originating from federal parameters and state capacity constraints, the framework highlights an interesting pattern of policy responses. Under TANF, when
federal parameters were binding, state responses tended to follow a two-step approach. The first response was to strategically structure programs and funding streams to
manipulate the calculation of performance metrics and comply with federal requirements. Failing on the first effort, the second response tended to include the assignment of
“solely-state funds” to continue providing the service. This result undermines theoretical arguments that the dynamics of a federalist system encourage a race to the bottom in social provisioning (Tweedie 2002).
This is not to claim that states uniformly pursued a policy trajectory more progressive than that supported by federal legislation. Federal TANF statutes left states sufficient discretion to pursue divergent policy trajectories, and did little to enforce a lower bound on states inclined to pursue limited policies. The AFDC to TANF transition removed the entitlement and states were free to determine eligibility and benefits as desired. The discrepancy across states on these policy dimensions reflect the divergent policy trajectories directed by different configurations of state level capacity constraints.
An unexpected finding in the analysis of TANF was the ability of policy trajectories to diverge, even within a state. Under TANF, there was a general
retrenchment in cash assistance programs but expansions in work support programs that were allowed, but not specifically required, by federal statutes. These contradictory policy responses made it complicated to make generalizations about state responses. The TANF analysis builds on the SCHIP research in the previous chapter by assessing variation in state responses over time in a second block grant program. In Chapter 6, I focus on the third research objective, using a comparative approach to evaluate variation across the SCHIP and TANF block grant programs.