State officials withholding $732 million of Temporary Assistance for Needy Families (TANF) funding

Tennessee has accrued over $732 million in unused federal funds allocated for Temporary Assistance to Needy Families (TANF). Tennessee has done that by withholding aid from children in poverty, and by reducing services that help working families lift their children out of poverty. No other state has hoarded its TANF funds like Tennessee, and our unused funds far outstrip other states’.

In addition to failing to use the TANF allotment, Tennessee has allowed $300 million to revert to the federal government that was meant to  help working families defray the costs of childcare. Unlike TANF funds, these monies are permanently lost because we did not use them during the year they were received. Last year the state returned $66 million, making Tennessee one of only two states not to use all of its federal childcare allocation from the Child Care and Development Fund.

These unspent funds represent an enormous wasted opportunity to reduce childhood poverty and to prevent the adverse childhood experiences (ACEs) that can, if left unaddressed, have lasting effects into adulthood, at enormous cost to society.  Tennessee’s failure is sadly ironic, for throughout the years that the funds have sat unused, state leaders have aspired “to establish Tennessee as a national model for how a state can … prevent and mitigate ACEs and their impact.” While ACEs can occur at all income levels, children living in poverty are at much greater risk, and TANF funds are meant to address those children’s needs.  Nearly one in four Tennessee children is growing up in poverty, the 9th highest rate of child poverty in the U.S. The state’s failure to use federal funds to help them is like a city cutting off the water supply even as its firefighters battle a dangerous blaze.

The question facing the state is, “What now?”

In the case of childcare funding, the answer is simple: pass through all of the federal allocation to Tennessee’s working families, so that none of the money reverts to the federal government, and fix any administrative problems that may be preventing the money from reaching families in need.

The $732 million in unspent TANF funds represent a unique opportunity to turn past failures into a better future for Tennessee’s most vulnerable children. To make the most of that opportunity, it is important to establish a process that is inclusive, fair, creative and thoughtful. There are many possible competing uses for the money and therefore a need to weigh the trade-offs and opportunity costs associated with different policy choices. To prevent spending decisions from becoming ad hoc political choices, the process should start with a commitment to guiding principles that keep the welfare of children at the forefront:

  • Diverse views and voices should be involved, including especially those families most affected.
  • Spending should prioritize the needs of children in extreme poverty.
  • Spending decisions should be evidence-based.
  • Funding decisions should reduce, not increase, racial disparities in measures of child welfare.
  • Funds should go to those interventions and services that are most cost-effective.

Community leaders and organizations need to come together to ensure that, going forward, our state makes wise use of federal funds, so that more Tennessee children can thrive. The Center on Budget and Policy Priorities released recommendations to alleviate the effects of child poverty in Tennessee by using TANF funds to boost the incomes of its most vulnerable families.