USE OF FEDERAL TEMPORARY ASSISTANCE FOR NEEDY FAMILIES FUNDS IN NEBRASKA Prepared for 109th Legislature FFY 2024

Prepared by Mikayla Findlay Legislative Fiscal Office January 15, 2025

TANF Report Temporary Assistance for Needy Families (TANF) is a federal block grant program to states for time-limited and work-conditioned income maintenance assistance and other support services for low-income families with children. In Nebraska, TANF block grants are used for cash assistance, employment-related services, child care, child welfare, and administrative costs. Nebraska receives approximately $56.6 million each year in TANF Block Grants. States are allowed to carryover unspent funding for subsequent years. The carryover funds may be used for any allowable TANF purpose. The carryover balances are referred to as Rainy Day funds. Legislation is often introduced with the intent to use the “Rainy Day” funds. This report is to assist senators in understanding the federal requirements and the flexibility allowed for the use of the TANF funds to better assess uses of the fund when proposed.

Background In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). The federal Aid to Families with Dependent Children Program changed from a federal/state match program to a block grant. The change to a block grant gave states greater flexibility in designing programs and providing services, but also came with new requirements and a focus on work requirements and incentives for those receiving assistance. Federal Requirements All uses of TANF funds must meet one of four purposes:  Assisting needy families so that children can be cared for in their own homes;  Reducing the dependency of needy parents by promoting job preparation, work and marriage;  Preventing out-of-wedlock pregnancies; and  Encouraging the formation and maintenance of two-parent families. Though the four purposes are broad and allow states flexibility in program design and service delivery, each has specific requirements that states must meet to continue to receive their full block grant allotment. In order to maintain the block grant funding, states must meet certain other financial and programmatic requirements. States may be penalized for the following: ◼ Use of the funds in violation of the purposes; ◼ Failure to meet the Maintenance of Effort (MOE); ◼ Failure to satisfy minimum work participation rates; ◼ Failure to participate in the Income and Eligibility Verification System; ◼ Failure to enforce penalties requested by the child support agency; and ◼ Failure to comply with the five-year time limit on assistance.