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1 TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) INTERIM WORKING GROUP REPORT January 2023 Report Mandate Item 340.J. of the 2022 Appropriation Act directed the Department of Social Services to create a workgroup to study Temporary Assistance for Needy Families (TANF) block grant spending. J. The Department of Social Services shall create a workgroup to study Temporary Assistance for Needy Families (TANF) block grant spending. The workgroup shall include appropriate staff from the Office of the Secretary of Health and Human Resources, the Department of Planning and Budget, and the House Appropriations and Senate Finance and Appropriations Committees. DSS shall submit a final report with options and recommendations for changes necessary to ensure annual structural balance in state TANF spending. These recommendations, if accepted, shall ensure that planned spending shall not exceed the annual federal TANF award beginning in FY 2025. The report shall be made to the Governor, Chairs of the House Appropriations and Senate Finance and Appropriations Committees, and the Director, Department of Planning and Budget by September 1, 2022. Background TANF is an annually fixed federal block grant program designed to provide cash assistance to families living in poverty in order to help them achieve self-sufficiency. Virginia’s annual allotment for the TANF block grant is $158 million. Under the federal program rules, TANF dollars may be spent on a wide variety of activities to further any of the four statutory purposes: 1. to provide assistance to needy families so that children can be cared for at home; 2. to end the dependence of needy parents on government benefits by promoting job preparation, work and marriage; 3. to prevent and reduce the incidence of out-of-wedlock pregnancies; and 4. to encourage the formation and maintenance of two-parent families. The federal government allows states to set their own eligibility criteria and amount of cash payments. States are not required to spend their full allotment of the TANF block grant each year and any unspent funds can be carried over to subsequent budget years. Because Virginia’s Standards of Assistance changed relatively little for several decades, there has traditionally been a substantial reserve fund from those pool of unspent funds rolled over from previous fiscal years. The General Assembly historically directed a portion of the unspent rollover funds to organizations in the Expanded TANF Programming category rather than