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Millions in federal aid for Alabama low-income families remains unused

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Millions in federal aid for Alabama low-income families remains unused

May 29, 2024 | 8:01 am ET
By Alander Rocha
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Millions in federal aid for Alabama low-income families remains unused
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Alabama in 2022 had $113.3 million in unspent money for recipients of the Temporary Aid for Needy Families (TANF) program, meant to support low-income families, despite a need for assistance. Alabama did not increase the monthly TANF benefit between 2002 and 2023. (John Moore/Getty Images)

Alabama is one of several states holding onto millions of dollars in unspent federal funds meant to support low-income families, despite a growing need for assistance.

The federal government sends Alabama $104 million each year to help needy families, but the state has been accumulating a portion of those funds year after year. Between 2017 and 2022, the carryover in Temporary Assistance for Needy Families (TANF) funding increased nearly 60%, from $71.9 million to $113.3 million.

That carryover was a surprise for Scott Douglas, executive director of the Greater Birmingham Ministries, a faith-based organization providing emergency services for people in need. Depending on how the state spent those funds over a few years, he said it could have a “tremendous support for families trying to educate and work themselves out of poverty.”

“It will give people a leg up, and actually, Alabama has enough poor people that there should never be a surplus,” Douglas said.

Russell Sellers, communications director for the Department of Human Resources, which administers the program, said “Any money that carries over to the next year is being used to help break the cycle of dependency and ensure that our clients are getting workforce training and services they need to move into a stable, lasting career.”

The TANF program provides cash assistance to families with children who are experiencing financial hardship – such as fleeing domestic violence – or have very low incomes. The program is aimed at helping families meet their fundamental needs, like paying essential bills or buying diapers.

TANF is only available to families struggling to survive. A household of three must make less than $344 a month ($4,128 a year, about 16% of the federal poverty line) to qualify. According to the U.S. Department of Health & Human Services, a monthly average of just over 5,600 families received the benefit in Alabama between October 2022 and September 2023. Of those, a majority of recipients (3,437) were “no parents families.”

TANF replaced New Deal-era Aid to Families with Dependent Children (AFDC) established in 1935, as a block grant. Spending for TANF was capped at $16.5 billion per year in 1996, and that has not changed since its creation.

There is a five-year lifetime limit on individuals receiving TANF funds. That has been a part of the federal law since 1996, over arguments that AFDC created a disincentive to getting into the workforce. Once an adult receives TANF benefits for five years, they no longer qualify for the program.

As a result, most TANF assistance in Alabama (83.4%) goes to children, as most adults have aged out of the five-year lifetime eligibility.

Carol Gundlach, a senior policy analyst with Alabama Arise, said that the difficulty in spending those funds stem from the five year limit. According to DHR, the average timeframe for receipt of TANF benefits in Alabama is 36 months.

“So what most states and most low-benefit states like us are seeing now is we’re paying benefits to what are called ‘child-only households,’ that are households where the adult is not part of the assistance unit. It’s just the children that are in the assistance unit,” Gundlach said.

She said that “artificially depresses both how much benefits can be and also how much help families can get.”

That bind forced DHR to find other ways to use the funds or stash them for the future.

DHR has used funding for assistance to find work assistance to those on the program as well. To qualify for TANF benefits, recipients must participate in the JOBS Program, which include job skills training and adult education.

Sellers said in a statement that the state is required to meet at least one of two metrics — 90% of work participation in all families minus a credit for caseload or 50% in work participation rate for two-parents households — to determine success of the program, and that the state has continually met one of the requirements. In the years prior to the pandemic, Alabama met both.

Gundlach said that the fact the federal TANF allocation has not changed in nearly 30 years, a result of the changes she referred to earlier, “gutted” the program at its creation because it based the block grant, which can’t be changed, on previous state spending on needy families. Like most southern states, Alabama underspent on anti-poverty assistance before 1996.

“Really in 1996, Congress, for all intents and purposes, eliminated TANF as a national anti-poverty program, and it’s just a ghost of what it was before,” Gundlach said.

Decades of stalled benefits

Benefit levels are determined by individual states. While some state legislatures have raised their cash benefits or established automatic increases, others have maintained levels that fail to cover the essential expenses of families.

Gov. Kay Ivey quietly increased the TANF benefit last year. Gina Maiola, communications director for Ivey, said the state increased the TANF benefit through the state plan DHR submits to the federal government each year.

“This long-needed increase will help more Alabama families, particularly parents, getting them from poverty to the workforce. We believe this will benefit more Alabama children, parents as well as grandparents raising grandchildren,” Maiola said in a statement.

Alabama provided one of the lowest monthly TANF benefits in the country, but the plan increased the benefit 60%from $215 to $344 a month.

The increase was the first since 2002, when the Legislature raised the benefit from $164 a month for a family of three to $215. It remains below the national median amount of $492

According to the U.S. Department of Agriculture, feeding one child between the ages of 9 and 11 costs approximately $230 per month.

If a family of three set aside 30% of the current TANF benefit (federal standards define rent, including utilities, as affordable when it takes up no more than 30% of a household’s income), they could pay a monthly rent of $100. The fair market rent in Montgomery is $1,092, according to the U.S. Department of Housing and Urban Development (HUD).

Gundlach said that while the TANF program has lost much of its impact, she said the Department of Human Resources (DHR) has done a “reasonably good job” in giving people short-term grants to help during hard times. 

“During the pandemic, they did a great job of giving recipients very short-term grants. So then people would get their $215 a month, but they would also get money for school, for school clothes in July or August, so they can send their kids back to school with a decent wardrobe, or money for Christmas,” Gundlach said.

Other states have not done so well managing that carryover. Mississippi settled a lawsuit in April over misused TANF funding and Tennessee this year introduced a bill to address its $700 million carryover.

The Alabama Legislature could increase the TANF benefit, but has not done so in the past 20 years.

 Sen. Greg Albritton, R-Atmore, the chair of the Senate Finance and Taxation General Fund Committee, which oversees the General Fund budget, said that he is hesitant to spend more on a federal program, for fear that it could be pulled back, leaving the state responsible for funding the program. He said he doesn’t want to “get the state on the hook for excess money that [it doesn’t] have funding for.”

“If the state comes in and puts in an increase or something like that [on monthly TANF benefits], that’s state money that we have to kick in each and every time forever and ever again. We are very cautious about doing that,” Albritton said.

But Gundlach is not sure that’s a valid concern when it comes to TANF, and said she’s never seen Alabama “turn down money for roads and bridges” because they feared the federal government might change their minds.

“It would be really painful if the feds eliminated those programs and obviously painful for the families involved, but I don’t see Alabama stepping up and providing direct cash benefits to families just because the Feds yanked the program,” she said.

Albritton, however, said that he wants to have budgetary hearings starting in the summer focused on carryover funds he’s seen in different agencies. 

“The questions are going to be: what are you doing with it? What are you going to do with it? What’s important and some other issues that’s there. I’m going to try to expose as much of this as I can,” Albritton said.

Douglas said TANF, along with other benefits, like food stamps, can have more of an impact when combined, but that those on TANF have to continuously be looking for a job. Greater Birmingham Ministries doesn’t work with TANF unless someone inquires about the program, which they then refer to DHR, but Douglas said that people who know about TANF are those cycling through that or other safety net programs.

The program, he said, is much less effective now than the beginning, calling it “egregious.” He advocated for the carryover fund to be used for education and child care to help people beat poverty.

“If you have children, who will take care of the children? So there’s a web. Most people who have TANF have worked in their life, but for some reason, they can’t get or find better jobs,” Douglas said.