TN fears some welfare is gone for good
Sanford Myers / The Tennessean

"That ain't enough as it is," she said, her 1-year-old son, Correz, perched on her hip as she left a Department of Human Services office near downtown Nashville. "It's not enough money already, so how are they going to take from that?"

Tennessee's welfare program is about 10 percent poorer than it used to be, and state officials don't expect to get that money back anytime soon.

Funding for supplemental grants through the federal Temporary Assistance for Needy Families program ran out at the end of June, well before the fiscal year ends in October.

That's led to uncertainty in Tennessee and the 16 other states that have received the grants each year since welfare reform passed in 1996.

Tennessee stands to lose $21.6 million in supplemental grants annually. That's more than 10 percent of the $191.5 million in federal welfare money the state will get this year.

"We were hoping that (the cut) wouldn't happen but expecting that it probably would," said Wanda Franklin, director of Families First at the Tennessee Department of Human Services. "We've been trying to figure out how we're going to provide for our clients in the ways we have been providing for them - in other words, to try to streamline our program, make it more practical and efficient, and do it with less money."

Franklin said the agency has not set specific plans for saving money but said they would generally involve collaborating with other state departments or local agencies to provide services.

She said it's doubtful the state will provide extra funding above the $82.8 million it now spends to compensate for the dwindling federal dollars. But service cuts, benefit reductions and eligibility restrictions are not planned, Franklin said.

"We're in the process of trying to see how we're going to manage and make it look as seamless as possible to the client," she said. "We're going to be as effective and efficient as we can be."

Resources are scarce

To people such as Haynes, resources already seem to be stretched thin. Haynes, 24, receives a voucher for child care, but she said it has left her spending $100 a month on day care while she performed mandatory community service to keep her benefits.

Haynes also receives a stipend of $10 a week for transportation, but that has not been enough to cover the cost to get to and from the service site.

In the end, Haynes, in an interview outside the DHS office, said she could not afford to meet the community service requirement and had her benefits suspended.

"And there are still no jobs," she said.

The 1996 welfare law allocated a block grant to each state based on how much the state had spent on welfare in the past. That locked states that had traditionally spent less - mostly poorer states - into low federal grants.

To make up for this, Congress provided $319 million in supplemental grants to 17 states that traditionally spent less on benefits, such as Tennessee, and states with high population growth. Lawmakers also created a $1.3 billion welfare contingency fund for states hit especially hard in bad economic times.

When the welfare law came up for reauthorization last year, Congress extended it until the end of fiscal 2011 but didn't fully fund the supplemental and contingency grants. As a result, the contingency fund expired in December and supplemental grants expired July 1.

Cuts permanent?

Franklin said Tennessee considers the cuts permanent. Policy experts also doubt Congress will reinstate the funding for fiscal 2012.

Experts say some lawmakers consider the grants a dispensable add-on, even though they were created to resolve major inequities in welfare funding, and even though states such as Tennessee don't use the money any differently from basic block-grant funding.

"Supplemental grants are more at risk than baseline grants because they're seen as an increase in spending," said Ron Haskins, an economist at the Brookings Institution who advised President George W. Bush's administration on welfare policy.

"Everything's at risk at this point because Republicans are really vigilant about spending," he said.

Experts say even the basic welfare block grants, which total about $16.5 billion, could be reduced.

"Budget cutting is the new reality," said Don Bruce, an economist at the University of Tennessee who studies welfare. "If we want to have money for Social Security, Medicare and Medicaid, these other things are going to be cut, unless people are willing to stomach a revenue increase."

In 2008, Tennessee welfare recipients got an average of $178 per month in state and federal welfare assistance, according to an analysis of Census Bureau data. That's less than recipients got anywhere else in the country.

The maximum monthly benefit a family of three can receive in Tennessee is $185, according to the Urban Institute. Only Mississippi has a lower limit at $170 per month.

Most states receiving supplemental grants pay low benefits, according to LaDonna Pavetti, vice president for family income support policy at the Center on Budget and Policy Priorities.

"They're states that didn't have a lot of money for poor people to start with," she said. "Many are states that had pretty significant budget problems."

Those states received an average $712 in federal welfare money in 2009 for each child from a low-income family, according to a report Pavetti co-authored in June. Of that, $643 came from block grants and $69 came from supplemental grants.

Child poverty high

The 33 states that don't receive supplemental grants received an average of $1,436 per poor child, the report said.

States receiving supplemental grants also have higher rates of child poverty, according to the report: 22 percent, versus 18 percent in other states. Tennessee's child poverty rate is 23 percent, according to the National Center for Children in Poverty.

States got a boost in welfare funding from the 2009 stimulus act, which created a $5 billion emergency welfare fund to help states cope with higher caseloads during the recession. Tennessee received $50.3 million from the fund, which expired in September.

Pavetti said Tennessee's caseload grew at roughly the same rate as the national average during the recession and has barely come down since peaking in November at nearly 165,000 people. In April, the latest month for which data was available, 156,000 Tennesseans were enrolled in welfare.

With more cases and less funding, Pavetti said, states may resort to cutting benefit amounts, reducing the length of time recipients can remain on welfare or eliminating other support services such as job training.