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SENATE FISCAL OFFICE 4 of 4 Since the start of the recession in December 2007, Rhode Island’s TANF caseloads dropped by 38.5 percent, the largest decrease of any state. The TANF block grant for FY2011 totals $95.0 million, and in addition to cash assistance is used to fund child care subsidies, transportation subsidies, and administrative costs. In order to draw down TANF funding, Rhode Island is responsible for identifying state expenditures totaling at least 75.0 percent of the block grant ($60.4 million) as maintenance of effort (MOE). WORK PARTICIPATION Federal law requires that 50.0 percent of all families receiving TANF benefits participate in 30 hours or more of work activities. However, states may apply credits against their work participation rate targets which make the requirement easier to achieve. Most notably, the target for a given federal fiscal year is reduced by a “caseload reduction credit” equal to the percentage point reduction in overall TANF caseload between the prior year and a base year, currently 2005. (Caseload reductions that result from state policy changes do not count towards the credit.) The work participation rate target can also be lowered by committing additional state funds as maintenance of effort above the 75.0 percent that is required. Rhode Island’s caseload reduction credit for fiscal year 2008 was 63.2 percent, reflecting a significant decrease in caseload between 2005 (the base year) and 2007 (the comparison year) from 13,217 families to 4,863. Because the caseload reduction credit reduced the target work participation rate to (effectively) zero, Rhode Island was able to meet its target even though the actual work participation rate was only 17.5 percent. For federal fiscal year 2009, Rhode Island’s work participation rate was 13.8 percent. Based on data through June 2010, the work participation rate for 2010 is projected to be 10.9 percent. The state is still waiting to receive notification of the official caseload reduction credit in effect for 2009 and 2010. TANF provides steep penalties for states that do not meet the work participation rate. For Rhode Island, a failure to achieve the minimum required rate may result in a penalty of as much as $4.8 million (5.0 percent of the block grant) reducing the FFY2011 block grant to $90.7 million and increasing the required MOE to $69.8 million.

Prepared February 15, 2011, for the Senate Committee on Finance, State of Rhode Island by Matthew R. Harvey. Please direct any questions to mharvey@rilin.state.ri.us. Figure 2: Caseload since start of current recession (December 2007) 0 5,000 10,000 15,000 20,000 25,000 30,000 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Families Recipients Unemployment (right axis)