RIPPING OFF THE POOR?

HOW STATES ARE DIVERTING WELFARE MONEY

MEANT FOR THE NEEDY

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The Temporary Assistance for Needy Families (TANF) program was created in 1996 to provide cash assistance and job support to low-income families with children. Nearly three decades later, much of its funding no longer goes directly to families in need.

Each year, TANF provides states with about $16.4 billion in federal funding, along with required state contributions, totaling more than $30 billion annually. Because TANF operates as a block grant, states have broad control over how the money is spent. Unused funds can be saved and carried forward, and federal oversight is limited.

This structure allows states to shift large portions of TANF funding away from basic assistance, such as cash for rent, food, utilities, and clothing. Research from the Center on Budget and Policy Priorities shows that states now spend less than one-quarter of TANF funds on direct cash aid, with some states spending under 10 percent. Most funding instead goes to administrative costs, employment programs, and other “non-assistance” services.

Oversight findings from the Government Accountability Office highlight serious accountability problems. A 2025 review identified 162 unresolved audit findings across 37 states, including 56 material weaknesses, the most serious type of financial control failure. Some of these problems remained unresolved for more than ten years.

GAO also found that federal officials have not consistently required states to fix these weaknesses. In separate testimony, GAO reported that states devote a growing share of TANF funds to non-assistance programs while spending on basic aid continues to decline. At the same time, reporting rules do not provide enough detail to show how much money reaches struggling families.

As a result, billions of dollars intended for poverty relief are spent with limited transparency and few measurable results. Meanwhile, low-income families face rising housing, food, and medical costs, even though modest cash support could help prevent evictions, utility shutoffs, and food insecurity.

Policy analysts argue that meaningful reform would require stronger reporting standards, clearer spending rules, and enforcement when audit failures occur. Some also recommend reconsidering the block-grant model, which has not been updated for inflation or modern economic conditions.

Without reform, TANF is likely to continue functioning less as a direct safety-net program and more as a flexible funding source for state budgets. While legal under current rules, this shift has weakened the program’s ability to serve the families it was created to protect.

Temporary Assistance for Needy Families: HHS Needs to Strengthen Oversight of Single Audit Findings (U.S. Government Accountability Office, 4-4-25)

Temporary Assistance for Needy Families: Actions Needed to Improve HHS Oversight (U.S. Government Accountability Office, 4-8-25)

Investing TANF Dollars in Basic Assistance Is Vital for Families to Meet Needs (Center on Budget and Policy Priorities, 1-15-26)

How States Spend Funds Under the TANF Block Grant (Center on Budget and Policy Priorities, 1-16-26)

How a $30 Billion Welfare Program Became a ‘Slush Fund’ for States (The Wall street Journal, 2-7-26)

Hidden in Plain Sight: How America’s $30 Billion Welfare Safety Net Drifted Into a Slush Fund (Abacus News, 2-8-26)