March 16, 1999

The Honorable John G. Rowland
Governor of Connecticut
210 Capitol Avenue
Hartford, CT 06106

Dear John:

Most states have not been spending all the federal dollars that have been allocated to them under the Temporary Assistance for Needy Families (TANF) block grant. According to our budget analysts, states have about $6 billion in unspent funds left over from fiscal years 1997 and 1998. My colleagues and I on the Committee on Ways and Means are fighting to save this money from those who would like to spend it on other priorities, but I want you and all the other governors to understand that unless states begin spending more of this money, we will eventually lose the battle to protect it here in Washington.

The most surprising thing about the growing TANF reserves is that there are so many fruitful ways states should be spending this money. Based on the hearings we have conducted in our Committee, as well as on numerous research studies, many of which have been conducted by states themselves, it is becoming clear that many states are now working with the clients who will have a more difficult time achieving independence from welfare. Many of the adults remaining on the welfare rolls seem to have lower levels of education, less work experience, or more difficult transportation problems than those who have already left the rolls; further, many have mental health problems or addictions. In short those remaining on the Tolls need more services and more assistance to enter employment and succeed than those who have been placed thus far. States should be doing everything possible to be certain these more disadvantaged parents get the help they need to achieve independence.

Another issue that has repeatedly come to our attention is that some lower-income families, especially those who have never been on welfare, need child care subsidies if they are to escape or avoid welfare. Apparently some states, by focusing their child care resources on families leaving welfare, are putting other low-income, working families at a disadvantage by not helping them pay for child care. This policy could place low-income families without child care assistance at risk of falling into welfare. When Congress created the TANF block grant and revamped the Child Care and Development Block Grant in the 1996 welfare reform legislation, we allowed states to transfer up to 30 percent of their TANF funds into their child care block grant. Thus, states have lots of flexibility in employing their TANF dollars to subsidize child care – including child care for low-income families who have not been on welfare- States should rise to the challenge and use their TANF money to help as many of these families as possible. -2-

Integration of employment and training programs is another productive use of TANF dollars. For several years now, Congress has been working toward a vision of national employment policy that calls for the integration of TANF, the U.S. Employment Service, and the block grants under the Workforce Investment Act. This policy is embodied in the concept of one-stop career centers in which all these programs are co-located and work together to share resources while serving a wide range of young people and adults who need jobs or job training or both. Given the greater flexibility of TANF dollars than those of the Workforce Investment Act, TANF could play a particularly central and vital role in creating and operating one-stop facilities.

Yet another issue is that the success of welfare reform with mothers previously dependent on welfare has served to underline the relative lack of programs for poor fathers. Research shows that children need the active support of two parents if they are to develop properly. Because many fathers in poor communities are uninvolved in their children’s life, and because many of these fathers have difficulty meeting their financial obligations to their family, state and local government, working cooperatively with the private sector, must lead the way in developing programs that help poor fathers both play their vital role ‘in family life and achieve the economic potential that is so central to their parenting role.

Finally, some states are setting aside TANF funds to handle future caseload increases that may be caused by an economic downturn. Although the substantial decline in the TANF caseloads, which has now reached more than 40 percent in the average state, means that states have what amounts to an annual built-in savings account in the block grant, the idea of setting aside a specific amount for a rainy day is wise policy. We are trying to produce an estimate of how much of the annual TANF surplus is actually money that has been set aside in a rainy day account because this information will help us explain at least part of the surplus amounts now building up in state accounts. However, unless states take formal legislative action, we will not be able to accurately estimate the money set aside in rainy day accounts.

These suggestions are certainly not exhaustive. But they provide some concrete ways that TANF money can be used productively to move welfare reform to a new level of accomplishment.

In closing, let me assure you that Congress is deeply grateful for the superb job states have done in directing welfare reform. As shown by the enclosed study of 12 states, nothing even remotely like the present ferment and accomplishment has occurred in the history of the federal-state welfare partnership. To continue this achievement, however, we must protect the resources states now control. The time is rapidly approaching when it will not be possible to protect these funds unless states begin to demonstrate that all the funds can be productively employed. Spend the money.




Nancy L. Johnson Chairman

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