Louisiana may be forced to change how it allots welfare money

Every year, Louisiana gets more than $150 million from the federal government to help people in poverty. The money comes to states through Temporary Assistance for Needy Families (TANF) block grants — also known as welfare funds.

Typically, the state has had relatively wide latitude on how to use that money.

But President Joe Biden’s administration has filed a proposed package of reforms that could dramatically change how Louisiana spends its pots of welfare money. The resulting federal rule could leave big gaps in Louisiana’s budget for some programs, including child protective investigations and LA 4, the state’s pre-K initiative, which together amount to more than one-third of Louisiana’s annual welfare spending.

The rule encourages states to shift back to direct cash assistance. And some advocates are applauding the federal proposal.

“We have so many families in Louisiana that could benefit from additional support to help them get on stable footing and be able to really focus on the things that are important in life,” said Christina LeBlanc, of Invest in Louisiana. “That’s what these funds were earmarked for, right? They’re supposed to be poverty alleviation. So it’s important for our families to be able to access them.”

In recent history, only a very small portion of Louisiana’s TANF grant has actually been given directly to poor people. Despite having one of the highest poverty rates in the nation, Louisiana ranks poorly in the proportion of welfare that is cash assistance, sent directly to Louisianan residents living in poverty. In 2021, Louisiana ranked 43rd in the country for the proportion of its welfare budget spent on cash assistance..

During that year, Louisiana had control of how much of its $207 million in TANF spending — which includes tens of millions in state matching funds — went to direct cash assistance to people in poverty.

Nationally, states spent an average of 23 percent on direct cash assistance. Louisiana spent just 6 percent.

Louisiana has plenty of people living in poverty – 18.9 percent in 2023, with 25 percent of all children living in poverty.

Plus, Louisiana is one of only a handful of state’s without a minimum wage above the federal hourly minimum of $7.25, LeBlanc emphasized. “On average, our incomes here are lower than in other states, so our families really need support from TANF to make ends meet — especially as costs rise,” she said.

But while other states issued assistance to a broader swath of its poorest families, Louisiana has issued few welfare checks — and only to households with extremely low incomes.

A state auditor’s report from 2021 noted that a family of three could only be eligible for cash assistance in Louisiana if they made $240 or less a month. As a result, only four out of every 100 Louisiana households living in poverty in the state were given a monthly welfare check – far lower than the national average of 23 households in 100, the report noted.

Starting in January of 2022, Governor John Bel Edwards widened that eligibility by raising the income limit, and quietly doubled the amounts that qualifying families received in welfare payments, moving monthly payments from $240 to $484 for a family of three, which is in line with the national average.

But even after the increase, state welfare spending and the number of people who receive welfare checks in Louisiana is still far lower than it was in 1996. That follows a national trend.

Now, to push states to spend TANF money in ways that better align with federal statute, the Biden administration has filed its proposed package of reforms, to get Louisiana and other states to shift spending away from programs that aren’t specifically designed to eliminate poverty — and back toward basic cash assistance.

A drastic reduction in monthly welfare checks, which leaves more families in deep poverty

In 1996, President Bill Clinton pushed for what’s widely known as “welfare reform,” when the U.S. Congress overhauled the national welfare system, ending Aid to Families with Dependent Children, or AFDC, and introducing TANF, welfare funds delivered to states through block grants.

That spurred major change. In September of 1997, nearly 50 thousand families in Louisiana received welfare checks totaling more than $7 million.

This September, 10 percent of that number – fewer than 5,000 families – got checks amounting to $2.8 million. But about half of that total includes dollars spent as part of the state’s Kinship Care Subsidy Program, which was established in 2000 to provide cash support for children living with relatives other than their parents.

Nationally, three decades ago, more than 77 percent of families eligible for welfare received assistance. In 2020, only 20 percent of eligible families received cash assistance, according to an Urban Institute analysis.

A hallmark of the 1996 “welfare to work” reforms was to give states flexibility in how they spent federal welfare money, so that recipients could move to work instead of welfare. State spending merely had to comply with TANF’s four stated goals:

1) help needy families so that children can be cared by parents or relatives

2) end dependence on benefits by promoting job preparation, work, and marriage

3) prevent and reduce out-of-wedlock pregnancies

4) encourage and maintain two-parent families.

With the newfound flexibility, Louisiana phased out much of its cash assistance and began spending large portions of welfare funds on other things — like pre-K education, child protective investigations, and work-training programs. Welfare money also pays for drug courts around the state and electronic monitoring for juveniles who get arrested.

Like several other states, Louisiana also uses part of its block grant to operate controversial crisis pregnancy centers, which critics have accused of spreading misinformation and not aligning with TANF goals. Though state officials often claim that they can use TANF money for crisis pregnancy centers under the goal aiming to avert out-of-wedlock pregnancies, critics say the funding doesn’t align with that goal, because people only go to crisis pregnancy centers once they are already pregnant.

The 1996 reforms were designed to make welfare policy more effective at eliminating poverty. But research organizations like the Center for Budget and Policy Priorities have found that TANF reaches far fewer families and provides less cash assistance to families than AFDC, leaving more families in deep poverty.

Looking back, it is clear that TANF’s much-vaunted work programs were largely ignored: in 2020, states collectively only spent only 10 percent of TANF funds on work, education, and training activities meant to connect parents to work, CBPP found. The programs that did exist might connect recipients with entry-level jobs. “It rarely moved parents into jobs that lift their families out of poverty,” according to CBPP.

Proposed Biden-administration reforms would change Louisiana spending

The new reforms could put a complete stop to Louisiana spending its TANF funds on child protective investigations and crisis pregnancy centers.

The rule states that “programs that only or primarily provide pregnancy counseling to women only after they become pregnant likely do not meet the reasonable person standard because the connection to preventing and reducing out-of-wedlock pregnancies is tenuous or non-existent.”

Child protection investigations are also out of line with TANF goals, the rule argues. They “are intended to learn whether a child has been harmed or is at risk of being harmed and should be removed from the home, rather than to provide assistance so that children can remain in their own homes or in the homes of relatives.” While child welfare prevention services, typically practices like family counseling and home visits by nurses, “could be allowable” under TANF, the investigation itself would not be.

Louisiana would also be encouraged to spend more of its TANF money on direct cash assistance to people in poverty.

Though that change would not be mandated, the proposed rules emphasize that the provision of cash assistance is a research-proven practice for poverty reduction – “(W)e remind states that there is a large body of research that shows that cash assistance is a critically important tool for reducing family and child poverty,” the proposed language reads.

Research supporting the effectiveness of cash assistance became even more clear in recent years, as researchers studied the COVID-19 public health emergency, when nearly 1 in 5 people around the world received cash payments of some sort, according to one analysis.

People who had been working to move the needle on poverty found that cash assistance worked, in a way that other measures hadn’t. Data from the Census Bureau showed that poverty fell, from 11.8 percent in 2019 to 9.1 percent in 2020 – and that COVID stimulus payments were the main driver of that decline.

The effectiveness of pandemic cash aid opened the door for anti-poverty advocates to push for increased cash payments, as one of the most effective ways to help families struggling in poverty.

“TANF is intended to be cash assistance,” said Aditi Shrivastava at the Center on Budget and Policy Priorities. “We know that cash is really what families need and what serves them best, and the more that states can provide that, the more it helps families.”

Louisiana will likely need to fill millions in gaps left by federal reforms

It’s unclear if, or when, the proposed rule change will go into effect. A 24-page draft of the new regulations was published in the Federal Register last October, and an open comment period lasted until the end of last year. More than 7,000 individuals and organizations submitted responses, which the federal Department of Health and Human Services (HHS) will need to take into account before finalizing the rule change.

A spokesperson for HHS, which oversees TANF, said that the department was still reviewing the comments.

Last month, officials with Louisiana’s Department of Children and Family Services, which administers TANF funds, told a state legislative committee that they were preparing for the possibility that the new rule would go into effect in two years, for the 2026 federal fiscal year.

In Louisiana, the new rule would likely leave significant financial gaps in programs where TANF funds can no longer be used. Officials projected that $25 million would be needed to fund child-protection investigations, and $20 million more for LA-4, the state-funded pre-K program for low-income children.

Previously, HHS left it up to states to define the “needy” recipients that TANF is designed to serve. So states spend TANF money on programs that benefit people who make as much as four or five times the poverty line — including pre-K, child welfare, tax credits, employment, housing, and emergency assistance.

The new rules are not as loose with “needy family” guidelines. “It is important to understand that an income limit as high as 400 percent of the federal poverty guidelines allows TANF-funded services…to go to families earning roughly $92,000 per year for a family of three,” wrote the Administration for Children and Families, a division of HHS, in the new rule. Of course, households with higher incomes “can also face hardship,” ACF wrote. And programs that offer support to those moderate-income families are “important investments in child well-being.”

But TANF must focus on households in poverty, ACF emphasized. “The Department is proposing a ceiling on the term ‘‘needy’’ to ensure that TANF funds are expended in accordance with the statutory requirements and to maintain program integrity.”

The new rule would define needy it as anywhere below 200 percent of the federal poverty line.

It would also institute a more stringent standard for judging whether or not TANF funds would meet its stated goals. That standard would only allow “expenditures that a reasonable person would consider to be within one or more of the enumerated four purposes of the TANF program.”

In a statement, DCFS spokesperson Amy Whitehead said that the department is “engaged with our federal and state partners regarding the proposed rule” and is “closely monitoring developments to ensure we are prepared to respond when any changes are officially enacted.”

Shrivastava, at CBPP, conceded that the change could force Louisiana to spend less of its TANF funds on child-welfare investigations. But, an increase in direct cash payments to people in poverty could reduce the number of child welfare cases being handled by the state in the first place, she said.

“If you provide economic and concrete supports to families, that decreases the likelihood that they’re going to become more involved in child welfare. More importantly, it is decreasing that risk of child abuse and neglect so families,” Shrivastava said.

A 2023 analysis linked increased aid to fewer reports of child maltreatment — possibly because child-welfare agencies are often called to look into home environments if children repeatedly act out — behavior linked to lack of food and sleep and housing instability. Assistance for families with young children also is linked to less parental stress and better school attendance and test scores in schoolchildren.

Essentially, the monthly cash payments have cumulative positive effects, she said. “I mean, I guess you could look at cash as prevention that way. You know, there really are a lot of benefits.”