Welfare Reform at 20: A Block Grant is No Way to Help Children in Poverty

Chuck Sheketoff

“Welfare reform” turns 20 this month and that’s nothing to celebrate. While the redesigned program, now called Temporary Assistance for Needy Families, or “TANF,” is charged with helping low-income families with dependent children build a better life, it has fallen short of that promise. To understand why, it helps to follow the money.

Beneath the lofty goals of fostering personal responsibility, the 1996 federal welfare reform law fundamentally changed how the program is financed. The federal government stopped its partnership with states when it changed the funding mechanism to a “block grant.”

Under the block grant, states are no longer entitled to federal matching funds tied to need and a state’s willingness to invest in the program. Instead, the block grant is a fixed dollar amount with no adjustments for need or state spending. States are required only to maintain a portion of what they were spending in the program when the welfare law was passed.

History has shown the block grant amount — as well as the state’s required contribution — to be frozen in time.

Unfortunately, leading up to the 1996 legislation, Oregon was a proponent of the block grant scheme. It joined other states in arguing that a block grant meant fewer spending restrictions and increased flexibility to find innovative ways to help poor families become self-sufficient.

Three problems set up this arrangement to fail.