This is the accessible text file for GAO report number GAO-06-414 
entitled 'Welfare Reform: Better Information Needed to Understand 
Trends in States' Uses of the TANF Block Grant' which was released on 
April 3, 2006. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to the Chairman, Committee on Finance, U.S. Senate: 

March 2006: 

Welfare Reform: 

Better Information Needed to Understand Trends in States' Uses of the 
TANF Block Grant: 

GAO-06-414: 

GAO Highlights: 

Highlights of GAO-06-414, a report to the Chairman, Committee on 
Finance, U.S. Senate: 

Why GAO Did This Study: 

Under the Temporary Assistance for Needy Families (TANF) block grant 
created as part of the 1996 welfare reforms, states have the authority 
to make key decisions about how to allocate federal and state funds to 
assist low-income families. States also make key decisions, through 
their budget processes, about federal and state funds associated with 
other programs providing assistance for the low-income population. 

States’ increased flexibility under TANF as well as the budgetary 
stresses they experienced after a recession draw attention to the 
fiscal partnership between the federal government and states. To update 
GAO’s previous work, this report examines (1) changes in the overall 
level of welfare-related spending; (2) changes in spending priorities 
for welfare-related nonhealth services; and (3) the contribution of 
TANF funds to states’ spending for welfare-related services. GAO 
reviewed spending in nine states for state fiscal years 1995, 2000, and 
2004 and focused on spending for working-age adults and children, 
excluding the elderly, long-term and institutional care. 

What GAO Found: 

GAO found that spending for low-income people for health and nonhealth 
services in nine states generally increased in real terms from 1995 to 
2000 and from 2000 to 2004. Health spending, excluding spending for the 
elderly, outpaced nonhealth spending over the decade and now consumes 
an even greater share of total spending for low-income people, 
mirroring a nationwide expansion in health care costs. Spending 
increases were substantially supported by both federal and state funds 
in the health and nonhealth areas in each time period, reflecting the 
important federal-state partnership supporting these low-income 
programs. Overall, spending increases reflected changes in eligible 
populations and needs, increasing costs, as well as policy changes. 

While nonhealth spending increased in real terms, spending priorities 
shifted away from cash assistance to other forms of aid, particularly 
work supports, in keeping with welfare reform goals. The largest 
increases for noncash services occurred from 1995 to 2000, with smaller 
increases from 2000 to 2004, when some state officials cited challenges 
in maintaining services. By 2004, states used federal and state TANF 
funds to support a broad range of services, in contrast to 1995 when 
spending priorities focused more on cash assistance. However, reporting 
and oversight mechanisms have not kept pace with the evolving role of 
TANF funds in state budgets, leaving information gaps at the national 
level related to numbers served and how states use funds to meet 
welfare reform goals, hampering oversight. Any efforts to address these 
gaps should strike an appropriate balance between flexibility for state 
grantees and accountability for federal funds and goals. 

Welfare-Related Nonhealth and Health Spending in Nine States since 
1995: 

[See PDF for image] 

[End of figure] 

Notes: Includes federal, state, and local spending captured in our 
survey of expenditures about which states make key budgetary decisions. 
Excludes spending for long-term care, institutional care, and the 
elderly. 

What GAO Recommends: 

Congress may wish to obtain additional information on the number of 
persons served by TANF and how funds are used to meet welfare reform 
goals to improve its access to useful information for oversight and 
policy-making purposes. 

www.gao.gov/cgi-bin/getrpt?GAO-06-414. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact David D. Bellis at (415) 
904-2272 or Stanley J. Czerwinski at (202) 512-6520. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Spending on Low-Income Programs Increased over the Decade: 

Spending Priorities Shifted Away from Cash Assistance: 

TANF and MOE Funds Played an Expanding and Flexible Role across State 
Budgets, but Accountability Remains a Challenge: 

Conclusion: 

Matter for Congressional Consideration: 

Agency Comments: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Federal and State AFDC, TANF, and MOE Spending as a Share 
of Total Welfare-Related Nonhealth Spending: 

Appendix III: Total Welfare-Related Health and Nonhealth Spending from 
Federal and State Sources: 

Appendix IV: Welfare-Related Nonhealth Spending by Spending Category: 

Appendix V: Survey Instrument: 

Appendix VI: Comments from the Department of Health and Human Services: 

Appendix VII: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Percentage Change in Real Spending for Welfare-Related Health 
Care: 

Table 2: Welfare-Related Health Spending as a Share of Total Welfare- 
Related Spending: 

Table 3: Percentage Change in Real Spending for Welfare-Related 
Nonhealth Services: 

Table 4: Federal Share of Welfare-Related Health Spending over Time: 

Table 5: Federal Share of Welfare-Related Nonhealth Spending over Time: 

Table 6: Percentage Change in Real Spending for Cash Assistance: 

Table 7: Percentage Change in Real Spending for Noncash Assistance: 

Table 8: Percentage Change in Real Spending for Employment Services and 
Training: 

Table 9: Percentage Change in Real Spending for Work and Other 
Supports: 

Table 10: Percentage Change in Real Spending for Child Care or Child 
Development: 

Table 11: Percentage Change in Real Spending for Aid for the At-Risk: 

Table 12: Percentage Change in Real Spending for Child Welfare: 

Table 13: Total Welfare-Related Health Spending: 

Table 14: Total Welfare-Related Nonhealth Spending: 

Table 15: Welfare-Related Health Spending from Federal and State 
Sources: 

Table 16: Welfare-Related Nonhealth Spending from Federal and State 
Sources: 

Table 17: Percentage Change in Welfare-Related Health Spending from 
Federal and State Sources: 

Table 18: Percentage Change in Welfare-Related Nonhealth Spending from 
Federal and State Sources: 

Table 19: Total Cash Assistance Spending: 

Table 20: Total Employment Services and Training Spending: 

Table 21: Total Work and Other Supports Spending: 

Table 22: Total Aid for the At-Risk Spending: 

Table 23: Total Noncash Assistance Spending: 

Figures: 

Figure 1: Welfare-Related Spending Categories Used in Our Analysis: 

Figure 2: Changes in Poverty Rates in Nine States from 1995 to 2000 and 
from 2000 to 2004: 

Figure 3: Total Welfare-Related Nonhealth and Health Spending in Real 
Dollars since 1995: 

Figure 4: Share of Federal and State Spending (Combined) for Welfare- 
Related Nonhealth Services by Category over Time (Based on Real 
Spending): 

Figure 5: Percentage Change in TANF and MOE Spending for Noncash Aid 
and Services (Percentage Change in Real Spending from 1995 to 2004): 

Figure 6: Share of Federal TANF and State MOE Spending for Welfare- 
Related Nonhealth Services by Category over Time (Based on Real 
Spending): 

Figure 7: TANF Balances as a Percentage of Total TANF Funds Available 
by State in Federal Fiscal Years 2000 and 2004: 

Figure 8: Welfare-Related Spending Categories Used in Our Analysis: 

Letter March 3, 2006: 

The Honorable Charles E. Grassley: 
Chairman: 
Committee on Finance: 
United States Senate: 

Dear Mr. Chairman: 

In 1996, the federal government made sweeping changes to national 
welfare policy, significantly altering the federal-state partnership in 
assisting low-income families as well as setting new goals for states 
to help parents become independent of government assistance. A decade 
has passed since then, during which strong economic growth faded into a 
short recession and many states faced a period of significant budgetary 
stress. This warrants attention to how the 1996 changes have evolved 
over time. These changes, enacted through the Temporary Assistance for 
Needy Families (TANF) block grant, gave states authority to make key 
decisions about how to allocate federal and state funds to assist low- 
income families. Since states implemented welfare reforms, they have 
spent almost $200 billion in federal and state TANF funds on their 
programs. TANF spending is but a portion of the billions of federal and 
state dollars that flow through state budgets for a variety of programs 
for low-income working-age adults and children. These welfare-related 
programs and services include ongoing cash assistance, employment 
services and training, work and other supports, aid for the at-risk, 
and health services. 

To provide information on how this welfare-related spending has evolved 
over the decade since reform and particularly after the national 
recession in 2001, this report responds to your request that we examine 
(1) changes in the overall level of welfare-related spending for 
nonhealth and health services in the periods before and after the 
recession and over the decade; (2) changes in spending priorities for 
nonhealth services over these same periods; and (3) the contribution of 
TANF funds to states' spending for welfare-related services. 

To address these questions, we collected state spending data and 
conducted site visits in nine states examined in our earlier 
reports[Footnote 1] that represent a diverse set of characteristics, 
including geographic region, population size, and experiences with 
welfare initiatives. These states are California, Colorado, Louisiana, 
Maryland, Michigan, New York, Oregon, Texas, and Wisconsin.[Footnote 2] 
Together, these states represented about 50 percent of all federal TANF 
spending nationwide in 2004. In each of these states, we collected 
budget data and program information for three points in time based on 
state fiscal years: for 1995 before the passage of federal welfare 
reform legislation; for 2000; and for 2004, the most recent year for 
which data were available. We focused on spending for working-age 
adults and children and excluded spending for the elderly, long-term 
care, and institutional care. We classified spending into five key 
areas: cash assistance, employment services and training, work and 
other supports, aid for the at-risk, and health care. We also spoke 
with budget and program officials in these states and at the Department 
of Health and Human Services (HHS), which oversees TANF at the federal 
level. 

Our study includes federal, state, and local spending associated with a 
broad array of programs, including Medicaid, TANF, housing assistance, 
and child care and welfare programs for which states make key budgetary 
decisions. (See fig. 1.) We also focused specifically on federal TANF 
funds and state funds--referred to as maintenance of effort (MOE) 
funds--that states must spend at a specified level under law to receive 
their federal TANF funds. We excluded federal program spending about 
which states do not make key budget decisions, such as food stamp 
benefits, the Earned Income Tax Credit (EIC), and others; as a result, 
our data do not capture all federal spending for low-income 
individuals. We adjusted spending data for each of our three study 
years to 2004 dollars in order to make the spending more comparable 
over time. While information on real spending levels is important, 
additional data on the extent to which eligible individuals targeted by 
these programs are being served--information not routinely available-- 
would be needed to draw conclusions about how service needs are being 
met at these spending levels. 

Figure 1: Welfare-Related Spending Categories Used in Our Analysis: 

[See PDF for image] 

[End of figure] 

We conducted our work from October 2004 through February 2006 in 
accordance with generally accepted government auditing standards. 

Results in Brief: 

Over the decade, state spending from both federal and state sources 
increased for welfare-related health and nonhealth services in the nine 
states. Health spending, excluding that for the elderly, increased in 
all of these states in both periods (1995 to 2000 and 2000 to 2004), 
reflecting upward trends in health spending nationwide, and, according 
to state officials, increasing caseloads and costs for delivering 
health services. Because health spending outpaced nonhealth spending 
since 1995, health spending consumed an increasing portion of spending 
for welfare-related populations in each of the nine states by the end 
of the decade. Nonhealth spending also increased--in six states during 
the first time period and in all nine states in the second time period-
-due to changes in eligible populations and needs as well as federal 
and state policy changes. Spending increases were substantially 
supported by both federal and state funds in the health and nonhealth 
areas in each time period, demonstrating the important federal-state 
partnership supporting these low-income programs. For nonhealth 
programs, the federal share of spending appeared to change with 
economic conditions, while it remained fairly constant for health 
programs. 

The overall nonhealth spending increases during the decade mask 
substantial changes that occurred in the types of spending. By 2004, 
the nonhealth portion of state spending for low-income people looked 
substantially different than it did in 1995. Cash assistance spending 
fell by at least 50 percent in the nine states over the decade, driven 
by falling caseloads. In general, noncash spending--for employment 
services and training, work and other supports, and aid for the at-risk 
combined--increased significantly from 1995 to 2000, then increased 
more slowly from 2000 to 2004. Several factors played a role in these 
increases, including an increased emphasis on supporting working 
families in their efforts to avoid the welfare rolls, increased demand 
for child welfare and other services, and increased costs in areas such 
as mental health. Officials in some states said that they faced 
challenges in maintaining the services and programs that expanded from 
1995 to 2000, as spending then slowed in the following time period. 

The combination of a substantial decline in cash assistance caseloads, 
increased state flexibility under TANF rules, and states' 
implementation of their new welfare programs resulted in a changing 
role for TANF and MOE dollars across state budgets. Since welfare 
reform, states have increasingly spent TANF and MOE funds for aid and 
services outside of traditional cash assistance payments, as allowed 
under TANF. We found that the states used these TANF and MOE funds to 
support a wide range of state priorities, such as child care and 
development, including prekindergarten; child welfare services; mental 
health and substance abuse treatment; and refundable state EIC; among 
others. This shift was curtailed somewhat from 2000 to 2004, when cash 
assistance caseloads and related spending increased in several states, 
associated with a contraction of spending for other forms of aid and 
services. Still, by 2004, in seven of the nine states cash assistance 
spending accounted for less than 40 percent of total TANF and MOE 
spending. However, TANF reporting and oversight mechanisms at the 
federal level have not kept pace with the evolving uses of TANF funds. 
As a result, little information exists on the numbers served by TANF 
funds and limited information is available nationwide on how funds are 
used to meet welfare reform goals. 

To address these information gaps, Congress should direct the Secretary 
of HHS, in consultation with states, to identify and assess cost- 
effective options for obtaining additional information on the numbers 
served by TANF and how funds are used to meet welfare reform goals. 
These options should take into account the need to strike an 
appropriate balance between flexibility for state grantees and 
accountability for federal funds and goals. 

Background: 

The TANF block grant was created by the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996 (PRWORA),[Footnote 3] and 
changed the federal role in financing welfare programs in states. 
PRWORA ended families' entitlement to cash assistance by replacing the 
Aid to Families with Dependent Children (AFDC) program--essentially a 
federal-state matching grant--with the TANF block grant, a $16.5 
billion per year fixed federal funding stream to states. PRWORA coupled 
the block grant with an MOE provision, which requires states to 
maintain a significant portion of their own historic financial 
commitment to their welfare programs as a condition of receiving their 
full TANF allotments.[Footnote 4] This helped to ensure that states 
remained strong fiscal partners. PRWORA provided states greater 
flexibility and responsibility for administering and implementing their 
welfare programs. Importantly, with the fixed federal funding stream, 
states must assume the fiscal risks in the event of a recession or 
increased program costs. 

In addition to increased flexibility and the new fiscal structure, 
PRWORA charged HHS with oversight of states' TANF programs and gave HHS 
new responsibilities for tracking state performance. PRWORA also set 
federal requirements that states must impose on many families receiving 
cash or other ongoing assistance, including time limits and work 
requirements for adults. At the same time, the law restricts HHS's 
authority to regulate states' programs and reduced the number of 
federal employees involved in the program. 

TANF and MOE spending is one component of federal, state, and local 
spending on a range of programs aimed at serving low-income and needy 
populations, which in this report we will refer to as welfare-related 
spending. In state fiscal year (SFY) 2004, among the nine states in our 
study, TANF and MOE spending represented from 12 to 28 percent of all 
federal, state, and local spending flowing through the state budgets 
for welfare-related services outside of the health spending captured in 
our survey. (See app. II.) Outside of TANF and MOE, welfare-related 
spending provides a wide range of services and comes from a variety of 
federal, state, and local sources. Transportation subsidies, rental 
assistance, child care subsidies, heating and energy assistance, and 
low-income tax preferences, among others, can all serve low-income and 
needy populations and are funded through multiple federal agencies, 
such as the Department of Housing and Urban Development, HHS, and the 
Department of Transportation, as well as by state and local 
governments. 

In 2001, we examined welfare-related spending in 10 selected states 
before and after the passage of welfare reform, from SFY 1995 to SFY 
2000.[Footnote 5] We reported that after welfare reform, since both the 
amount of flexible federal TANF funds and required MOE remain fixed 
regardless of the number of people served with these funds, and since 
cash assistance caseloads declined dramatically since the mid-1990s, 
states had additional budgetary resources available for use toward a 
variety of welfare-related purposes and spending. From SFY 1995 to SFY 
2000, while total spending levels for all welfare-related services 
generally increased, states began using these additional budgetary 
resources to enhance spending for noncash services, such as training, 
education, and a range of other welfare-related spending--an allowable 
practice under TANF. As state TANF programs and welfare-related 
spending evolved after welfare reform, the nation's welfare system now 
looks quite different than it did under AFDC. 

Our previous findings focused on a period of sustained economic growth 
and increasing tax collections in states. From 1995 to 2000, state 
government tax collections grew in inflation-adjusted terms, and 
unemployment and poverty rates were generally falling, although there 
was some variation among the nine states we studied. Overall, these 
circumstances suggest that states were generally faced with declining 
spending demands from low-income populations and increasing fiscal 
resources to meet those demands. In 2001, however, the nation 
experienced a recession from March through November, and a contrasting 
set of economic and fiscal circumstances developed. A period of rising 
unemployment and declining state tax collections ensued. In seven of 
the nine states, poverty rates that fell from 1995 to 2000 increased 
from 2000 to 2004, as shown in figure 2. These shifts suggest that, in 
general, states were faced with an increased demand for services aimed 
at low-income populations at a time when fewer fiscal resources were 
available to meet these demands after the recession. 

Figure 2: Changes in Poverty Rates in Nine States from 1995 to 2000 and 
from 2000 to 2004: 

[See PDF for image] 

Notes: The poverty rate for 1995 and 2000 is a 3-year centered average, 
that is, the poverty rate for 1995 is the simple average of the poverty 
rates of 1994, 1995, and 1996, and the poverty rate for 2000 is the 
average of those for 1999, 2000, and 2001. However, the poverty rate 
for 2004 is a 2-year average of 2003 and 2004, the latest available 
year. The change in the poverty rate is the difference of these 
averages from 1995 to 2000 and from 2000 to 2004. 

[End of figure] 

Spending on Low-Income Programs Increased over the Decade: 

According to data provided by the states, total welfare-related 
spending rose over the decade in each of the nine states. Health 
spending accelerated as the decade progressed, increasing faster over 
the decade than nonhealth spending, which varied somewhat by state and 
period. Health and nonhealth spending from both federal and state 
sources increased over the decade, a reflection of the strong fiscal 
partnership between the federal government and states in supporting low-
income individuals. However, while the federal share of health care 
spending remained fairly consistent over the decade, the federal share 
of nonhealth spending varied over time. 

Total Spending for Welfare-Related Services Increased over the Decade: 

In the nine states, spending for low-income people for health and 
nonhealth services increased over the decade since welfare reform. 
These spending levels, shown in figure 3 for each of the three points 
in time we examined, include federal and state funds that flowed 
through state budgets for programs targeting low-income and at-risk 
individuals. The figure excludes spending for the elderly, for those in 
institutions, and for long-term care. 

Figure 3: Total Welfare-Related Nonhealth and Health Spending in Real 
Dollars since 1995: 

[See PDF for image] 

Note: Includes federal, state, and local spending captured in our 
survey of expenditures about which states make key budgetary decisions. 
Excludes spending for long-term care, institutional care, and the 
elderly. 

[End of figure] 

Health Spending Grew Faster Than Nonhealth Spending: 

In general, health spending accelerated over the decade. The median 
growth rate increased from 11 percent in the first period (from 1995 to 
2000) to 40 percent in the second period (2000 to 2004), as shown in 
table 1. Colorado and Oregon were exceptions, with larger increases 
during the strong economy of the late 1990s. States often cited 
increases in eligible populations and rising pharmaceutical and service 
delivery costs as the primary reasons for the rapid spending growth in 
this area. 

Table 1: Percentage Change in Real Spending for Welfare-Related Health 
Care: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 2; 
SFY: 2000-2004: 38; 
SFY: 1995-2004: 41. 

State: Colorado; 
SFY: 1995-2000: 129; 
SFY: 2000-2004: 32; 
SFY: 1995-2004: 202. 

State: Louisiana; 
SFY: 1995-2000: 8; 
SFY: 2000-2004: 48; 
SFY: 1995-2004: 61. 

State: Maryland; 
SFY: 1995-2000: 8; 
SFY: 2000-2004: 45; 
SFY: 1995-2004: 58. 

State: Michigan; 
SFY: 1995-2000: 3; 
SFY: 2000-2004: 32; 
SFY: 1995-2004: 36. 

State: New York; 
SFY: 1995-2000: 11; 
SFY: 2000-2004: 40; 
SFY: 1995-2004: 55. 

State: Oregon; 
SFY: 1995-2000: 123; 
SFY: 2000-2004: 22; 
SFY: 1995-2004: 173. 

State: Texas; 
SFY: 1995-2000: 52; 
SFY: 2000-2004: 62; 
SFY: 1995-2004: 147. 

State: Wisconsin; 
SFY: 1995-2000: 15; 
SFY: 2000-2004: 59; 
SFY: 1995-2004: 83. 

Median; 
SFY: 1995-2000: 11; 
SFY: 2000-2004: 40; 
SFY: 1995-2004: 61. 

Maximum; 
SFY: 1995-2000: 129; 
SFY: 2000-2004: 62; 
SFY: 1995-2004: 202. 

Minimum; 
SFY: 1995-2000: 2; 
SFY: 2000-2004: 22; 
SFY: 1995-2004: 36. 

Source: GAO survey and analysis of state spending data. 

Note: Includes federal, state, and local spending captured in our 
survey. Excludes spending for long-term care, institutional care, and 
the elderly. 

[End of table] 

The health spending we examined in this report included state spending 
from federal and state sources for any health care program for working 
age adults and children, excluding long-term and institutional care. 
While this spending included such services as public health 
initiatives--outreach, prevention, diagnosis, care, and children's 
vaccines, most funds were spent on the State Children's Health 
Insurance Program (SCHIP) and the Medicaid program. Medicaid is a 
complex program that serves many different low-income populations. 
Nationwide, children and their families constitute 75 percent of those 
served but only account for 30 percent of expenditures, while those 
with disabilities represent 16 percent of beneficiaries and 45 percent 
of expenditures.[Footnote 6] Between 1995 and 1997, the number of able- 
bodied adults and children on Medicaid fell, which may be due in part 
to changes in the relationship between TANF and Medicaid triggered by 
the 1996 welfare legislation.[Footnote 7] At the same time, states were 
starting to enroll low-income children in SCHIP, a new federal-state 
partnership created by Congress in 1997. It extends health insurance to 
low-income children whose families earn too much to be eligible for 
Medicaid but are unable to obtain insurance another way, either through 
an employer or outright purchase of private insurance. Nationwide, 
enrollments in Medicaid and SCHIP generally increased from 2000 to 
2004.[Footnote 8] Even so, not all low-income individuals are eligible 
for Medicaid or SCHIP, and some of those who are eligible are not 
enrolled for a variety of reasons, including lack of information about 
the program or choosing not to enroll.[Footnote 9] 

Because health spending grew faster than nonhealth spending since 1995, 
it now consumes a greater share of welfare-related spending in the 
state budgets we examined, as shown in table 2. In eight of our nine 
states, health care accounted for at least 45 percent of welfare- 
related spending for low-income programs from federal and state sources 
by 2004. This mirrors a nationwide trend of rising health costs, 
raising concerns about growing government expenses for health programs. 

Table 2: Welfare-Related Health Spending as a Share of Total Welfare- 
Related Spending: 

Percentages based on real 2004 dollars. 

State: California; 
SFY: 1995: 32; 
SFY: 2000: 31; 
SFY: 2004: 34. 

State: Colorado; 
SFY: 1995: 48; 
SFY: 2000: 61; 
SFY: 2004: 67. 

State: Louisiana; 
SFY: 1995: 64; 
SFY: 2000: 68; 
SFY: 2004: 74. 

State: Maryland; 
SFY: 1995: 47; 
SFY: 2000: 49; 
SFY: 2004: 53. 

State: Michigan; 
SFY: 1995: 40; 
SFY: 2000: 40; 
SFY: 2004: 45. 

State: New York; 
SFY: 1995: 51; 
SFY: 2000: 54; 
SFY: 2004: 59. 

State: Oregon; 
SFY: 1995: 41; 
SFY: 2000: 58; 
SFY: 2004: 62. 

State: Texas; 
SFY: 1995: 54; 
SFY: 2000: 60; 
SFY: 2004: 70. 

State: Wisconsin; 
SFY: 1995: 54; 
SFY: 2000: 56; 
SFY: 2004: 64. 

Median; 
SFY: 1995: 48; 
SFY: 2000: 54; 
SFY: 2004: 62. 

Maximum; 
SFY: 1995: 64; 
SFY: 2000: 68; 
SFY: 2004: 74. 

Minimum; 
SFY: 1995: 32; 
SFY: 2000: 31; 
SFY: 2004: 34. 

Source: GAO survey and analysis of state spending data. 

Note: Includes federal, state, and local spending captured in our 
survey. Excludes spending for long-term care, institutional care, and 
the elderly. 

[End of table] 

Spending for a Broad Range of Nonhealth Services Increased: 

Nonhealth spending also generally increased after 1995, although at a 
slower rate and with more variation among the states and time periods, 
as shown in table 3. Nonhealth spending includes the following 
categories: cash assistance, employment services and training, work and 
other supports, and aid for the at-risk. Spending in these combined 
categories occurs through a wide variety of federal and state programs 
that can serve low-income and needy populations. While we found that 
spending increased overall when looking at all these programs combined, 
some differences emerged when compared with health spending. Since 
1995, median nonhealth spending increased 17 percent, in contrast to 
the 61 percent median growth rate for health. 

Table 3: Percentage Change in Real Spending for Welfare-Related 
Nonhealth Services: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 11; 
SFY: 2000-2004: 17; 
SFY: 1995-2004: 30. 

State: Colorado; 
SFY: 1995-2000: 38; 
SFY: 2000-2004: 2; 
SFY: 1995-2004: 40. 

State: Louisiana; 
SFY: 1995-2000: -12; 
SFY: 2000-2004: 15; 
SFY: 1995-2004: 2. 

State: Maryland; 
SFY: 1995-2000: 2; 
SFY: 2000-2004: 23; 
SFY: 1995-2004: 25. 

State: Michigan; 
SFY: 1995-2000: -1; 
SFY: 2000-2004: 8; 
SFY: 1995-2004: 7. 

State: New York; 
SFY: 1995-2000: -1; 
SFY: 2000-2004: 14; 
SFY: 1995-2004: 13. 

State: Oregon; 
SFY: 1995-2000: 12; 
SFY: 2000-2004: 4; 
SFY: 1995-2004: 17. 

State: Texas; 
SFY: 1995-2000: 17; 
SFY: 2000-2004: 5; 
SFY: 1995-2004: 22. 

State: Wisconsin; 
SFY: 1995-2000: 3; 
SFY: 2000-2004: 14; 
SFY: 1995-2004: 17. 

Median; 
SFY: 1995-2000: 11; 
SFY: 2000-2004: 8; 
SFY: 1995-2004: 17. 

Maximum; 
SFY: 1995-2000: 38; 
SFY: 2000-2004: 23; 
SFY: 1995-2004: 40. 

Minimum; 
SFY: 1995-2000: -12; 
SFY: 2000-2004: 2; 
SFY: 1995-2004: 2. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. The nonhealth category reflects total spending from the 
following previously defined GAO categories: cash assistance, 
employment services and training, work and other supports, and aid for 
at-risk. See app. I for a further explanation of these categories. 

[End of table] 

Because nonhealth spending includes so many different federal and state 
programs and services, it is difficult to clearly identify factors that 
explain spending changes overall. However, our previous work and our 
discussions with state officials show that the spending outcomes 
reflect a multitude of factors, including changes in the numbers and 
needs of eligible populations and in federal and state policy and 
fiscal situations. We provide more information on the factors affecting 
spending changes in this area in the next section. 

After Welfare Reform, State Spending for Low-Income Programs Generally 
Increased from Both Federal and State Sources: 

Federal and state governments are important fiscal partners when it 
comes to providing many types of assistance to low-income and at-risk 
individuals. Our analysis of state expenditures showed that the 
spending increases evident since 1995 were substantially supported by 
both federal and state funds in the health and nonhealth areas in both 
time periods. (For more details on federal and state spending, see app. 
III.) The state contribution is noteworthy particularly during the 
second time period when states experienced declining revenues. States 
generally are required to balance their operating budgets, and may need 
to raise revenues or reduce spending to do so. At the same time, many 
of the key federal programs for low-income individuals are structured 
in a way to help ensure that states maintain their financial commitment 
to these programs in order to receive continued federal support. 

In the health area, federal and state funds spent on health services 
grew at roughly the same rate over the decade, resulting in a fairly 
stable split in federal and state shares of spending over time. As 
shown in table 4, in 2004, the median federal share of health spending 
totaled 58 percent, which would correspond to a state share of 42 
percent. The higher federal shares in some states, such as Louisiana, 
may be explained in part by the greater role the federal government 
plays in funding Medicaid costs in states with lower per capita 
incomes. At the same time, because the health spending data include 
services other than Medicaid, the federal share will not correspond 
directly to the share under Medicaid.[Footnote 10] 

Table 4: Federal Share of Welfare-Related Health Spending over Time: 

Percentages based on real 2004 dollars. 

State: California; 
SFY: 1995: 49; 
SFY: 2000: 49; 
SFY: 2004: 52. 

State: Colorado; 
SFY: 1995: 53; 
SFY: 2000: 50; 
SFY: 2004: 53. 

State: Louisiana; 
SFY: 1995: 73; 
SFY: 2000: 70; 
SFY: 2004: 75. 

State: Maryland; 
SFY: 1995: 49; 
SFY: 2000: 49; 
SFY: 2004: 54. 

State: Michigan; 
SFY: 1995: 56; 
SFY: 2000: 54; 
SFY: 2004: 58. 

State: New York; 
SFY: 1995: 42; 
SFY: 2000: 50; 
SFY: 2004: 49. 

State: Oregon; 
SFY: 1995: 62; 
SFY: 2000: 61; 
SFY: 2004: 64. 

State: Texas; 
SFY: 1995: 63; 
SFY: 2000: 62; 
SFY: 2004: 61. 

State: Wisconsin; 
SFY: 1995: 57; 
SFY: 2000: 58; 
SFY: 2004: 60. 

Median; 
SFY: 1995: 56; 
SFY: 2000: 54; 
SFY: 2004: 58. 

Maximum; 
SFY: 1995: 73; 
SFY: 2000: 70; 
SFY: 2004: 75. 

Minimum; 
SFY: 1995: 42; 
SFY: 2000: 49; 
SFY: 2004: 49. 

Source: GAO survey and analysis of state spending data. 

Note: Excludes spending for long-term care, institutional care, and the 
elderly. 

[End of table] 

In the nonhealth spending area, we also found spending increases 
generally supported by both federal and state funds, although the 
federal share showed more variation over the two time periods for 
nonhealth than for health spending. As shown in table 5, the median 
federal share fell in 2000 (from 50 percent to 44 percent), possibly as 
states responded to higher state revenues during the late 1990s. In 
2004, the median federal share rose to 49 percent, possibly as a 
reflection of the tighter fiscal conditions states faced in this time 
period. In addition, the federal share of nonhealth spending grew more 
consistent among the states over the decade. The federal share ranged 
from 33 to 73 percent in 1995, tightening to range from 43 to 61 
percent by 2004. 

Table 5: Federal Share of Welfare-Related Nonhealth Spending over Time: 

Percentages based on real 2004 dollars. 

State: California; 
SFY: 1995: 46; 
SFY: 2000: 44; 
SFY: 2004: 44. 

State: Colorado; 
SFY: 1995: 50; 
SFY: 2000: 39; 
SFY: 2004: 49. 

State: Louisiana; 
SFY: 1995: 73; 
SFY: 2000: 52; 
SFY: 2004: 58. 

State: Maryland; 
SFY: 1995: 42; 
SFY: 2000: 42; 
SFY: 2004: 45. 

State: Michigan; 
SFY: 1995: 53; 
SFY: 2000: 51; 
SFY: 2004: 54. 

State: New York; 
SFY: 1995: 33; 
SFY: 2000: 38; 
SFY: 2004: 43. 

State: Oregon; 
SFY: 1995: 61; 
SFY: 2000: 60; 
SFY: 2004: 61. 

State: Texas; 
SFY: 1995: 51; 
SFY: 2000: 56; 
SFY: 2004: 58. 

State: Wisconsin; 
SFY: 1995: 39; 
SFY: 2000: 43; 
SFY: 2004: 46. 

Median; 
SFY: 1995: 50; 
SFY: 2000: 44; 
SFY: 2004: 49. 

Maximum; 
SFY: 1995: 73; 
SFY: 2000: 60; 
SFY: 2004: 61. 

Minimum; 
SFY: 1995: 33; 
SFY: 2000: 38; 
SFY: 2004: 43. 

Source: GAO survey and analysis of state spending data. 

Note: Excludes spending for long-term care, institutional care, and the 
elderly. 

[End of table] 

It is important to highlight the distinction between the health and 
nonhealth areas again when discussing the federal and state shares of 
spending. In contrast to the health area where much of federal and 
state financial participation is guided by federal Medicaid statute and 
regulations, nonhealth spending--comprising numerous federal and state 
programs--is guided by an array of different laws and rules about 
federal and state financial participation. Specifically, supports for 
low-income people vary in terms of whether they are funded with federal 
funds, state-local funds, or a combination. While several key funding 
sources, such as the TANF block grant, foster care, food stamp 
administrative costs, and others require state matching and MOE 
provisions, others do not. In these cases, funding decisions are left 
entirely up to states. 

Spending Priorities Shifted Away from Cash Assistance: 

The overall increases in spending for nonhealth services in the nine 
states mask some substantial shifts over the decade in how states spent 
federal and state funds for low-income people. Two trends emerged. 
First, spending shifted away from cash assistance programs toward other 
types of aid and services (excluding health). Second, this expansion in 
noncash spending was strongest from 1995 to 2000, and spending 
increased further--but more slowly--from 2000 to 2004. Spending for 
work and other supports, particularly child care and development, was a 
key growth area in several states, reflecting state efforts to support 
welfare reforms that focused on employment. Spending on the various 
nonhealth services varied among the states, reflecting to some extent 
different state spending priorities. In general, states reported that 
increases in these areas were driven by policy changes to welfare and 
other social programs, increased program costs and demand, and 
increases in federal grants. 

Spending Priorities for Low-Income Programs Changed Significantly from 
1995 to 2004: 

By 2004, the nonhealth portion of state spending (from federal and 
state sources) for low-income services looked substantially different 
than it did in 1995. In all of the nine states, the total portfolio of 
nonhealth services shifted away from cash assistance toward other 
programs, as demonstrated in figure 4. For example, in New York, 33 
percent of total nonhealth spending was devoted to cash assistance in 
1995, compared with 13 percent in 2004. Other shifts among the noncash 
assistance categories varied by state and period, reflecting differing 
spending priorities. For example, work and other supports increased 
from 39 percent to 58 percent of the welfare-related budget in 
Wisconsin over the decade, while in Louisiana, the same category 
declined from 37 percent to 31 percent. 

Figure 4: Share of Federal and State Spending (Combined) for Welfare- 
Related Nonhealth Services by Category over Time (Based on Real 
Spending): 

[See PDF for image] 

Notes: Each bar represents 100 percent of all welfare-related state 
spending--from federal and state sources--for nonhealth services 
captured in our survey in each state for each year. Bars may not total 
to 100 percent due to rounding. 

[End of figure] 

Figure 4 also shows the relative size of the nonhealth categories. 
Employment services and training remained the smallest category in most 
of these states over the decade. Although cash assistance began the 
decade as a larger category in many states, by 2004 it was generally 
the second smallest category. Over the decade, work and other supports 
grew to become the second largest category in most states, and aid for 
the at-risk generally remained or became the largest category. The aid 
to the at-risk category includes spending for child welfare, juvenile 
justice, mental health, and other related services. 

Cash Assistance Spending Declined Significantly, Largely from 1995 to 
2000: 

Cash assistance spending declined dramatically from 1995 to 2000 in all 
case study states and varied from 2000 to 2004, as shown in table 6. 
Although some states increased spending after 2000, all nine states 
experienced at least a 50 percent decline in cash assistance spending 
over the decade. In all of the states, a dramatic decrease in cash 
assistance caseloads led to the decline in spending in this area, 
particularly from 1995 to 2000.[Footnote 11] 

Table 6: Percentage Change in Real Spending for Cash Assistance: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: -54; 
SFY: 2000-2004: 1; 
SFY: 1995-2004: -53. 

State: Colorado; 
SFY: 1995-2000: -71; 
SFY: 2000-2004: 26; 
SFY: 1995-2004: -64. 

State: Louisiana; 
SFY: 1995-2000: -59; 
SFY: 2000-2004: -2; 
SFY: 1995-2004: -60. 

State: Maryland; 
SFY: 1995-2000: -69; 
SFY: 2000-2004: 7; 
SFY: 1995-2004: -66. 

State: Michigan; 
SFY: 1995-2000: -70; 
SFY: 2000-2004: 13; 
SFY: 1995-2004: -66. 

State: New York; 
SFY: 1995-2000: -32; 
SFY: 2000-2004: -35; 
SFY: 1995-2004: -55. 

State: Oregon; 
SFY: 1995-2000: -62; 
SFY: 2000-2004: 3; 
SFY: 1995-2004: -61. 

State: Texas; 
SFY: 1995-2000: -53; 
SFY: 2000-2004: -20; 
SFY: 1995-2004: -62. 

State: Wisconsin; 
SFY: 1995-2000: -80; 
SFY: 2000-2004: 56; 
SFY: 1995-2004: -69. 

Median; 
SFY: 1995-2000: -62; 
SFY: 2000-2004: 3; 
SFY: 1995-2004: -62. 

Maximum; 
SFY: 1995-2000: -32; 
SFY: 2000-2004: 56; 
SFY: 1995-2004: -53. 

Minimum; 
SFY: 1995-2000: -80; 
SFY: 2000-2004: -35; 
SFY: 1995-2004: -69. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the cash assistance 
category. 

[End of table] 

In our previous work, we found that several factors have been cited to 
explain the large reductions in cash assistance caseloads. These 
include changes in welfare programs; the strong economy of the late 
1990s; and other policy changes, such as expansions of the federal EIC 
and increased federal spending for child care subsidies.[Footnote 12] 
One state attributed the more recent caseload increases to the economy. 
Many state officials also noted changes in the characteristics of those 
who remained on the welfare rolls. They told us that after the shift to 
a work-first approach, the caseloads stabilized as the most employable 
recipients transitioned into the workforce. They said that the 
remaining cash assistance recipients tend to have multiple barriers to 
employment and require a wider and costlier range of services to enable 
them to be self-sufficient. 

Other Nonhealth Spending Increased Rapidly until 2000, Then Growth 
Generally Slowed: 

In general, spending for other noncash categories combined (employment 
services and training, work and other supports, and aid for the at- 
risk) increased significantly after welfare reform, but slowed from 
2000 to 2004 in most of these states, as shown in table 7. While most 
states increased spending after 2000, some states cited challenges in 
maintaining their initial rate of growth as their fiscal situations 
tightened. In contrast to cash assistance spending, which declined 
sharply during the first period, noncash expenditures rose dramatically 
in the first period and generally continued to rise during the second 
period, but at a slower rate. 

Table 7: Percentage Change in Real Spending for Noncash Assistance: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 60; 
SFY: 2000-2004: 21; 
SFY: 1995-2004: 94. 

State: Colorado; 
SFY: 1995-2000: 73; 
SFY: 2000-2004: 0; 
SFY: 1995-2004: 74. 

State: Louisiana; 
SFY: 1995-2000: -1; 
SFY: 2000-2004: 17; 
SFY: 1995-2004: 16. 

State: Maryland; 
SFY: 1995-2000: 17; 
SFY: 2000-2004: 24; 
SFY: 1995-2004: 45. 

State: Michigan; 
SFY: 1995-2000: 22; 
SFY: 2000-2004: 7; 
SFY: 1995-2004: 31. 

State: New York; 
SFY: 1995-2000: 14; 
SFY: 2000-2004: 29; 
SFY: 1995-2004: 47. 

State: Oregon; 
SFY: 1995-2000: 38; 
SFY: 2000-2004: 5; 
SFY: 1995-2004: 44. 

State: Texas; 
SFY: 1995-2000: 31; 
SFY: 2000-2004: 7; 
SFY: 1995-2004: 40. 

State: Wisconsin; 
SFY: 1995-2000: 36; 
SFY: 2000-2004: 11; 
SFY: 1995-2004: 52. 

Median; 
SFY: 1995-2000: 31; 
SFY: 2000-2004: 7; 
SFY: 1995-2004: 45. 

Maximum; 
SFY: 1995-2000: 73; 
SFY: 2000-2004: 29; 
SFY: 1995-2004: 94. 

Minimum; 
SFY: 1995-2000: -1; 
SFY: 2000-2004: 0; 
SFY: 1995-2004: 16. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. Noncash assistance spending reflects total spending from the 
following previously defined GAO categories: employment services and 
training, work and other supports, and aid for at-risk. See app. I for 
a further explanation of these categories. 

[End of table] 

Changes in Spending for Employment Services and Training Varied: 

State spending patterns for training and education varied, although one 
trend related to welfare reform was evident. As shown in table 8, six 
states expanded employment services and training spending after 1995, 
in part to meet the increased employment focus of their TANF programs. 
Then five of these states cut this spending back as state revenues 
declined after 2000. For example, as cash assistance caseloads declined 
in Wisconsin from 1995 to 2000, it more than doubled spending for 
employment services and training. However, as cash assistance caseloads 
increased after 2000, spending for employment services and training was 
reduced 44 percent. Even so, spending for employment services and 
training ended more than 30 percent higher at decade end than at its 
beginning. In addition, in California, a large amount of TANF funds 
were moved into the training and education area from 1995 to 2000, but 
some of these funds were removed after 2000. In contrast, two states 
reduced their training and education spending during the period 
immediately following welfare reform, but expanded this spending after 
2000. 

Table 8: Percentage Change in Real Spending for Employment Services and 
Training: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 74; 
SFY: 2000-2004: -6; 
SFY: 1995-2004: 64. 

State: Colorado; 
SFY: 1995-2000: 0; 
SFY: 2000-2004: 173[A]; 
SFY: 1995-2004: 172. 

State: Louisiana; 
SFY: 1995-2000: -35; 
SFY: 2000-2004: 35; 
SFY: 1995-2004: -13. 

State: Maryland; 
SFY: 1995-2000: 43; 
SFY: 2000-2004: -59; 
SFY: 1995-2004: -42. 

State: Michigan; 
SFY: 1995-2000: 41; 
SFY: 2000-2004: -34; 
SFY: 1995-2004: -7. 

State: New York; 
SFY: 1995-2000: -6; 
SFY: 2000-2004: 31; 
SFY: 1995-2004: 23. 

State: Oregon; 
SFY: 1995-2000: 28; 
SFY: 2000-2004: -26; 
SFY: 1995-2004: -5. 

State: Texas; 
SFY: 1995-2000: 3; 
SFY: 2000-2004: 18; 
SFY: 1995-2004: 21. 

State: Wisconsin; 
SFY: 1995-2000: 138; 
SFY: 2000-2004: -44; 
SFY: 1995-2004: 34. 

Median; 
SFY: 1995-2000: 28; 
SFY: 2000-2004: -6; 
SFY: 1995-2004: 21. 

Maximum; 
SFY: 1995-2000: 138; 
SFY: 2000-2004: 173; 
SFY: 1995-2004: 172. 

Minimum; 
SFY: 1995-2000: -35; 
SFY: 2000-2004: -59; 
SFY: 1995-2004: -42. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the employment services 
and training category. 

[A] Colorado state officials said that this large increase was due in 
part to data reporting issues associated with the transition from the 
Job Training Partnership Act employment and training programs to those 
of the Workforce Investment Act. As a result, this number overstates 
the increase in actual spending for employment services and training. 

[End of table] 

Increases in Spending for Work and Other Supports Reflect State Welfare 
Reform Goals: 

Over the decade, state spending generally increased by a higher 
percentage for work and other supports than for any other nonhealth 
category. In most case study states, this was the second largest 
nonhealth category in 2004. In each period, most of these states 
increased spending in this area, although the median increase was much 
smaller after 2000, as shown in table 9. These expansions are 
consistent with our previous work, which found that many states 
expanded the availability of supports that promote employment and 
economic independence for low-income families.[Footnote 13] 

Table 9: Percentage Change in Real Spending for Work and Other 
Supports: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 69; 
SFY: 2000-2004: 18; 
SFY: 1995-2004: 99. 

State: Colorado; 
SFY: 1995-2000: 143; 
SFY: 2000-2004: -6; 
SFY: 1995-2004: 129. 

State: Louisiana; 
SFY: 1995-2000: -31; 
SFY: 2000-2004: 24; 
SFY: 1995-2004: -14. 

State: Maryland; 
SFY: 1995-2000: 38; 
SFY: 2000-2004: 24; 
SFY: 1995-2004: 71. 

State: Michigan; 
SFY: 1995-2000: 5; 
SFY: 2000-2004: 10; 
SFY: 1995-2004: 15. 

State: New York; 
SFY: 1995-2000: -1; 
SFY: 2000-2004: 47; 
SFY: 1995-2004: 46. 

State: Oregon; 
SFY: 1995-2000: 64; 
SFY: 2000-2004: 15; 
SFY: 1995-2004: 88. 

State: Texas; 
SFY: 1995-2000: 59; 
SFY: 2000-2004: 4; 
SFY: 1995-2004: 66. 

State: Wisconsin; 
SFY: 1995-2000: 32; 
SFY: 2000-2004: 32; 
SFY: 1995-2004: 74. 

Median; 
SFY: 1995-2000: 38; 
SFY: 2000-2004: 18; 
SFY: 1995-2004: 71. 

Maximum; 
SFY: 1995-2000: 143; 
SFY: 2000-2004: 47; 
SFY: 1995-2004: 129. 

Minimum; 
SFY: 1995-2000: -31; 
SFY: 2000-2004: -6; 
SFY: 1995-2004: -14. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the work and other 
supports category. 

[End of table] 

Louisiana was the only state to experience a substantial spending 
decline in this category from 1995 to 2000. Louisiana increased 
spending for two areas in this category, including child care and 
development, as discussed below. However, these increases were more 
than offset by other spending areas that decreased, including 
administrative costs for food stamps, associated with declining food 
stamp caseloads in the state.[Footnote 14] After 2000, spending for 
work and other supports increased as Louisiana invested TANF funds in 
additional programs, particularly prekindergarten. In contrast, 
Colorado increased spending on refundable tax credits for working 
families during the robust economic growth of the 1995-2000 period, but 
decreased spending slightly from 2000 to 2004. 

The child care and development area was the main driver of spending 
changes in this category in many of these states, with high rates of 
growth as shown in table 10. In five states, more than half of all 
growth in the category was due to increased spending for child care and 
development. Several states reported that child care continued to be in 
demand, even as TANF caseloads fell, because many working parents 
relied on subsidized child care to help them keep their jobs. While 
most spending in this area is focused on child care subsidy programs, 
some states also increased spending for prekindergarten and other child 
development programs. As part of the 1996 welfare reform, the federal 
government increased funding to states through the Child Care and 
Development Fund (CCDF) to subsidize child care assistance for low- 
income families who were working or preparing for work through 
education and training, with a special emphasis on families working 
their way off welfare. In addition to CCDF, funds allocated by the nine 
states for child care or development included TANF, MOE, and other 
funds. Table 10 shows that substantial investments of these funds for 
child care and development accompanied welfare reforms in the first 
period and continued, in almost all of these states at a slower rate of 
increase, in the second period.[Footnote 15] 

Table 10: Percentage Change in Real Spending for Child Care or Child 
Development: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 215; 
SFY: 2000-2004: 19; 
SFY: 1995-2004: 275. 

State: Colorado; 
SFY: 1995-2000: 112; 
SFY: 2000-2004: 10; 
SFY: 1995-2004: 133. 

State: Louisiana; 
SFY: 1995-2000: 178; 
SFY: 2000-2004: 12; 
SFY: 1995-2004: 212. 

State: Maryland; 
SFY: 1995-2000: 33; 
SFY: 2000-2004: 5; 
SFY: 1995-2004: 39. 

State: Michigan; 
SFY: 1995-2000: 4; 
SFY: 2000-2004: 6; 
SFY: 1995-2004: 10. 

State: New York; 
SFY: 1995-2000: 124; 
SFY: 2000-2004: 41; 
SFY: 1995-2004: 216. 

State: Oregon; 
SFY: 1995-2000: 32; 
SFY: 2000-2004: 8; 
SFY: 1995-2004: 44. 

State: Texas; 
SFY: 1995-2000: 71; 
SFY: 2000-2004: 19; 
SFY: 1995-2004: 104. 

State: Wisconsin; 
SFY: 1995-2000: 219; 
SFY: 2000-2004: 48; 
SFY: 1995-2004: 373. 

Median; 
SFY: 1995-2000: 112; 
SFY: 2000-2004: 12; 
SFY: 1995-2004: 133. 

Maximum; 
SFY: 1995-2000: 219; 
SFY: 2000-2004: 48; 
SFY: 1995-2004: 373. 

Minimum; 
SFY: 1995-2000: 4; 
SFY: 2000-2004: 5; 
SFY: 1995-2004: 10. 

Source: GAO survey and analysis of state spending data. 

Note: Includes federal, state, and local spending (from CCDF, TANF, and 
other sources) captured in our survey for child care or child 
development programs for low-income individuals, including 
prekindergarten and state spending for Head Start. 

[End of table] 

Other areas of expansion included some entitlement or federal grant 
programs, such as tax credits, housing, or food assistance. Four states 
(Colorado, Maryland, New York, and Wisconsin) began or expanded state 
EIC programs to complement the federal EIC program, which offers work 
incentives in the form of a tax credit based on income.[Footnote 16] 
Food assistance spending increased in most states due to increased 
administrative costs related to expanding food stamp benefit rolls, 
although the benefit costs are not reflected here. Two states told us 
they had engaged in publicity campaigns to encourage eligible 
recipients to sign up for federally funded programs such as food stamps 
or EIC. 

Aid for the At-Risk Spending Increased Steadily and Remains the Largest 
Nonhealth Category: 

Spending on aid for the at-risk, generally the largest nonhealth 
category, increased for all nine states in both periods, although 
growth slowed considerably in most states after 2000, as shown in table 
11. This category includes spending for child welfare, mental health, 
developmental disabilities, juvenile justice, substance abuse 
prevention and treatment, and related spending. Among these, the 
largest areas of spending were child welfare, mental health, and 
developmental disabilities. Officials in several states told us that 
there were increases in the costs of providing services for these three 
areas, as well as increased demand for child welfare and other 
services. 

Table 11: Percentage Change in Real Spending for Aid for the At-Risk: 

Based on real 2004 dollars. 

California; 
SFY: 1995-2000: 54; 
SFY: 2000-2004: 27; 
SFY: 1995-2004: 95. 

State: Colorado; 
SFY: 1995-2000: 44; 
SFY: 2000-2004: 1; 
SFY: 1995-2004: 46. 

State: Louisiana; 
SFY: 1995-2000: 57; 
SFY: 2000-2004: 9; 
SFY: 1995-2004: 71. 

State: Maryland; 
SFY: 1995-2000: 7; 
SFY: 2000-2004: 33; 
SFY: 1995-2004: 42. 

State: Michigan; 
SFY: 1995-2000: 33; 
SFY: 2000-2004: 13; 
SFY: 1995-2004: 50. 

State: New York; 
SFY: 1995-2000: 27; 
SFY: 2000-2004: 20; 
SFY: 1995-2004: 53. 

State: Oregon; 
SFY: 1995-2000: 26; 
SFY: 2000-2004: 3; 
SFY: 1995-2004: 30. 

State: Texas; 
SFY: 1995-2000: 23; 
SFY: 2000-2004: 5; 
SFY: 1995-2004: 30. 

State: Wisconsin; 
SFY: 1995-2000: 25; 
SFY: 2000-2004: -2; 
SFY: 1995-2004: 23. 

Median; 
SFY: 1995-2000: 33; 
SFY: 2000-2004: 9; 
SFY: 1995-2004: 46. 

Maximum; 
SFY: 1995-2000: 57; 
SFY: 2000-2004: 33; 
SFY: 1995-2004: 95. 

Minimum; 
SFY: 1995-2000: 7; 
SFY: 2000-2004: -20; 
SFY: 1995-2004: 23. 

Source: GAO survey and analysis of state spending data. 

Note: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the aid for the at-risk 
category. 

[End of table] 

Child welfare spending increased considerably in most of the nine 
states over the decade, primarily from 1995 to 2000, as shown in table 
12. This includes spending for key federal/state partnership programs 
such as foster care, adoption assistance, and other child welfare 
services. Nationwide, child welfare systems investigate abuse and 
neglect, provide placements to children outside their homes, and 
deliver services to help keep families together.[Footnote 17] TANF and 
MOE funds played an important role in four states, which increased TANF-
related spending until it accounted for 19 to 32 percent of child 
welfare spending by 2004. 

Table 12: Percentage Change in Real Spending for Child Welfare: 

Based on real 2004 dollars. 

State: California; 
SFY: 1995-2000: 44; 
SFY: 2000-2004: 22; 
SFY: 1995-2004: 75. 

State: Colorado; 
SFY: 1995-2000: 50; 
SFY: 2000-2004: 5; 
SFY: 1995-2004: 57. 

State: Louisiana; 
SFY: 1995-2000: 23; 
SFY: 2000-2004: 0; 
SFY: 1995-2004: 23. 

State: Maryland; 
SFY: 1995-2000: 35; 
SFY: 2000-2004: 17; 
SFY: 1995-2004: 59. 

State: Michigan; 
SFY: 1995-2000: 52; 
SFY: 2000-2004: 40; 
SFY: 1995-2004: 112. 

State: New York; 
SFY: 1995-2000: 14; 
SFY: 2000-2004: 13; 
SFY: 1995-2004: 29. 

State: Oregon; 
SFY: 1995-2000: -17; 
SFY: 2000-2004: 18; 
SFY: 1995-2004: -1. 

State: Texas; 
SFY: 1995-2000: 21; 
SFY: 2000-2004: 19; 
SFY: 1995-2004: 44. 

State: Wisconsin; 
SFY: 1995-2000: 118; 
SFY: 2000-2004: -1; 
SFY: 1995-2004: 116. 

Median; 
SFY: 1995-2000: 35; 
SFY: 2000-2004: 17; 
SFY: 1995-2004: 57. 

Maximum; 
SFY: 1995-2000: 132; 
SFY: 2000-2004: 40; 
SFY: 1995-2004: 116. 

Minimum; 
SFY: 1995-2000: -17; 
SFY: 2000-2004: -7; 
SFY: 1995-2004: -1. 

Source: GAO survey and analysis of state spending data. 

Note: Includes federal, state, and local spending captured in our 
survey for adoption assistance, foster care, and independent living 
programs; on any program intended to prevent out-of-home placements, 
promote reunification of families, or provide a safe environment for 
children; and on programs that focus on prevention of child abuse and 
neglect. 

[End of table] 

TANF and MOE Funds Played an Expanding and Flexible Role across State 
Budgets, but Accountability Remains a Challenge: 

The combination of a substantial decline in traditional cash assistance 
caseloads, new flexibilities under PRWORA, and states' implementation 
of their welfare reforms resulted in a changing role for TANF and MOE 
dollars across state budgets. The change from the previous welfare 
program--with its open-ended federal funding that matched state 
expenditures for monthly cash assistance--to the federal TANF block 
grant--with fixed federal funding and a specified level of state 
spending--gave states broader discretion over the types of services and 
activities to fund toward welfare reform goals. This change also gave 
states broader discretion over the amount of federal TANF and state MOE 
funds to spend in a given year, subject to minimum levels required 
under the MOE provisions. Under this new fiscal framework, the 
landscape of spending for traditional welfare funds changed 
substantially since welfare reform. TANF and MOE dollars played an 
increasing role in state budgets outside of traditional cash assistance 
payments, for programs to encourage work, help former welfare 
recipients keep their jobs, and provide services to needy families that 
did not necessarily ever receive welfare payments. However, with this 
shift, gaps arose in the information gathered at the federal level to 
ensure state accountability. Existing oversight mechanisms focus on 
cash assistance, which no longer accounts for the majority of TANF and 
MOE spending. As a result, there is little information on the numbers 
of people served by TANF-funded programs, meaning there is no real 
measure of workload or of how services supported by TANF and MOE funds 
meet the goals of welfare reform. 

Flexible TANF Funds Serve a Broad Population in Various Ways: 

Since welfare reform, states have increasingly spent TANF and MOE funds 
for aid and services outside of traditional cash assistance payments. 
Before welfare reform each of our study states spent some federal and 
state AFDC-related funds in spending categories other than cash 
assistance.[Footnote 18] However, by 2004, most of the states had 
significantly increased their use of TANF and MOE funds in these 
noncash categories compared with the level of spending in 1995, as 
shown in figure 5. 

Figure 5: Percentage Change in TANF and MOE Spending for Noncash Aid 
and Services (Percentage Change in Real Spending from 1995 to 2004): 

[See PDF for image] 

Note: This compares 1995 federal and state AFDC-related funds spent in 
the noncash categories--employment services and training, work and 
other supports, and aid for the at-risk--with the amount of federal 
TANF and state MOE spending in these same categories in 2004. These 
data will not directly correspond to amounts reported by states to HHS 
because of differences in fiscal years and our study methodology. 

[End of figure] 

The TANF block grant played a critical role in this shift in spending 
priorities. Under the block grant structure, states' fixed annual TANF 
allotments did not change as cash assistance caseloads fell. In 
addition, states still had to meet maintenance of effort requirements 
by spending at least 75 percent of the amount they had spent in the 
past when caseloads were much higher. States faced choices about how to 
use these funds, including whether to leave some amount of their annual 
grant in reserve at the U.S. Treasury to help them meet any future 
increases in welfare costs. TANF funds not spent by states accumulate 
as balances in the U.S. Treasury. 

New Welfare Environment Emerges after Federal and State Reforms: 

Our previous work showed that several trends emerged in this new 
welfare environment. First, many states increased their efforts to 
engage more welfare families in work or work-related activities in 
keeping with key TANF program requirements. More specifically, to avoid 
financial penalties, states were to meet specified work participation 
rates by engaging parents receiving cash assistance in work-related 
activities. States generally met these rates, in part because of 
adjustments made in the target rates due to the drop in caseloads and 
other provisions that allowed states to serve some families without 
work requirements.[Footnote 19] In strengthening their welfare-to-work 
programs, states emphasized the importance of work to TANF recipients 
and paid more attention to case management services, child care and 
transportation assistance, and other services to help individuals, 
including those who faced some barriers to employment, become job 
ready.[Footnote 20] 

Second, many states took steps to help parents who had left the welfare 
rolls for employment, often by continuing to provide child care 
assistance, sometimes using TANF funds to supplement other federal 
funds used for child care subsidies for low-income parents. Our work 
has shown that many former welfare recipients work in low-wage jobs 
with limited benefits and that continued assistance, such as child care 
subsidies, can help them maintain their jobs. 

Third, states also used TANF and MOE funds to provide a range of 
services to families that had not previously received cash welfare 
payments. These services can include onetime payments to families in 
need, such as for rent payments that might help keep them off the 
welfare rolls. Some states increased efforts to promote healthy 
marriages and two-parent families. All of these uses of TANF and MOE 
funds are generally considered in keeping with the broad goals 
established in the legislation. As specified by law, the purpose of 
TANF is to: 

* provide assistance to needy families so that children may be cared 
for in their own homes or in the homes of relatives; 

* end the dependence of needy families on government benefits by 
promoting job preparation, work, and marriage; 

* prevent and reduce the incidence of out-of-wedlock pregnancies; and: 

* encourage the formation and maintenance of two-parent families. 

Spending Priorities Shift as Policies and Programs Change: 

This shift to aid and services other than cash assistance is mirrored 
in our analysis of states' spending patterns for TANF and MOE funds. 
Figure 6 shows the percentage of TANF and MOE funds (combined) that 
each state spent in each spending category in 1995, 2000, and 2004. 
(This figure only includes TANF and MOE spending, in contrast to figure 
4, which showed the percentage of total federal and state low-income 
spending that each state spent in each category.) For example, figure 6 
shows that California spent more than 90 percent of its federal and 
state AFDC-related funds on cash assistance in 1995 compared with 68 
percent of its federal and state TANF-related funds in 2004. As the 
share of funds devoted to cash assistance declined in that state, the 
portion devoted to employment services and training, in particular, 
increased. In seven of the nine states, by 2004, cash assistance 
spending accounted for 40 percent or less of total TANF and MOE. States 
varied in how their TANF and MOE funds were distributed among the 
noncash categories. 

Figure 6: Share of Federal TANF and State MOE Spending for Welfare- 
Related Nonhealth Services by Category over Time (Based on Real 
Spending): 

[See PDF for image] 

Notes: Each bar represents 100 percent of the TANF and MOE spending for 
nonhealth services captured in our survey in each state for each year. 
Bars may not total to 100 percent due to rounding. To the extent that 
states did not report to us TANF funding spent through the Social 
Services Block Grant and CCDF, as allowed under law, it is not included 
in these data. 

[End of figure] 

This shift to noncash assistance was curtailed somewhat from 2000 to 
2004, when cash assistance caseloads and related spending increased in 
several of the states, associated with a contraction of spending for 
other forms of aid and services, as shown in figure 6. During this 
period, state officials generally had to make different choices about 
what services and programs they could support with TANF and MOE funds 
to ensure they had enough funds to support the core cash assistance 
program. Some state officials told us that they drew down their TANF 
balances or reserves to help them maintain service levels. Regarding 
these TANF balances, most of the nine states followed a pattern of 
initially building up their TANF balances and then drawing them down in 
the 2000-2004 time period to help them maintain services, as shown in 
figure 7. 

Figure 7: TANF Balances as a Percentage of Total TANF Funds Available 
by State in Federal Fiscal Years 2000 and 2004: 

[See PDF for image] 

Note: These data represent the total amount of unspent TANF funds 
(including unliquidated and unobligated funds) as a percentage of the 
total TANF funds available to the state (the state's annual grant 
amount plus any unexpended grant amounts carried over from previous 
years). 

[End of figure] 

Over the decade, we found that the states used their federal and state 
TANF-related funds throughout their budgets for low-income individuals, 
supporting a wide range of state priorities, such as refundable state 
EICs for the working poor, prekindergarten, child welfare services, 
mental health, and substance abuse services, among others. While some 
of this spending, such as that for child care assistance, relates 
directly to helping cash assistance recipients leave and stay off the 
welfare rolls, other spending is directed to a broader population and 
set of state needs. The flexibility afforded states under TANF allows 
them to use these funds toward their state priorities. Some examples 
include the following: 

* Oregon--home to a large refugee resettlement population--spent TANF 
funds on cash benefits and other refugee services. Oregon also spent 
TANF and MOE funds on emergency assistance for survivors of domestic 
abuse. 

* New York and Wisconsin use federal TANF or state MOE funds for 
refundable tax credits. New York has increased the extent to which it 
counts state spending for the refundable portion of its EIC and 
dependent care tax credit to help it meet its MOE requirement. 
Wisconsin has used federal TANF funds to finance the refundable portion 
of its state EIC that previously had been financed with state funds, as 
we reported in our earlier report on these states' use of 
funds.[Footnote 21] 

* Michigan uses TANF funds for emergency homeless shelters and programs 
for runaways. TANF funds are also used for individual development 
accounts, which provide funds to eligible families to match their own 
funds to encourage them to save for educational purposes. 

* According to state officials, Texas used MOE funds for 
prekindergarten for low-income children with low English proficiency. 
Texas also used TANF funds for an employment retention and advancement 
program for working people. 

* California counts state funds used for the California Food Assistance 
Program toward its MOE requirement and uses TANF funds for juvenile 
probation services and fraud prevention incentive grants to counties. 

* Maryland spent TANF funds through the state Department of Education 
for the Children At Risk program. According to the Governor's Budget, 
this program provides services for pregnant and parenting teenagers and 
provides funds to reduce the number of students who drop out of school 
each year, prevent youth suicides, reduce the incidence of child 
alcohol and drug abuse, and reduce AIDS among students. 

* According to state officials, Louisiana, after initially building up 
a large TANF balance, took steps from 2002 to 2004 to spend down these 
funds, in some cases through short-term initiatives to be supported 
only until funding ran out. Some of these spending initiatives included 
prekindergarten, which state officials noted is a priority of the 
governor; funds to address teen pregnancy; and support for child 
welfare advocates. 

Much Remains Unknown about How States Use TANF Funds to Address Federal 
Welfare Reform Goals: 

While current mechanisms in place at the federal level to hold states 
accountable for their use of federal TANF and state MOE funds provide 
useful information, these reporting mechanisms still leave significant 
gaps that hamper oversight. The new federal welfare program goals and 
fiscal structure established in 1996 entailed substantial changes in 
federal oversight and reporting mechanisms. At the federal level, HHS 
is responsible for oversight of the TANF block grant, and states 
provide several types of information for oversight purposes. Key 
oversight and reporting mechanisms are: 

* expenditure reports on the amount and type of federal and state MOE 
spending; 

* plans that each state must file with HHS to outline its TANF programs 
and goals, among other things, for reducing out-of-wedlock pregnancies; 

* annual reports that each state must file with HHS to supplement its 
state plan information; 

* aggregate caseload and individual reporting on demographic and 
economic circumstances and work activities of individuals receiving 
TANF cash assistance; 

* single audit reports conducted as part of governmentwide audits of 
federal aid to nonfederal entities; 

* performance bonuses related to measures of job entry, job retention, 
and wage growth for TANF recipients and also for reducing out-of- 
wedlock births; and: 

* financial penalties in 14 specified areas, including failure to meet 
the state MOE requirement and the minimum work participation rates. 

In addition, HHS funding supports a range of research activities that 
provide additional information on TANF recipients and other low-income 
populations. 

These reporting mechanisms and information sources generally provide 
useful information on states' use of TANF and MOE funds, although key 
information gaps remain. One such gap exists because the key measure of 
the number of people served through the block grant remains focused on 
families receiving TANF assistance, defined in TANF regulations as 
benefits designed to meet a family's ongoing basic needs, which most 
typically occurs through receipt of monthly cash assistance.[Footnote 
22] This measure does not provide a complete picture of the number of 
people receiving other forms of aid or services funded with TANF and 
MOE funds. In 2002, we estimated that in the 25 states we studied, at 
least 46 percent more families than are counted in the TANF caseload 
are provided aid or services with TANF and MOE dollars.[Footnote 23] In 
addition, we reported in June 2005 that the lack of information on the 
numbers of children and families receiving child care subsidies funded 
by TANF and the types of care received leads to an incomplete picture 
of the federal role in providing child care subsidies to low-income 
parents.[Footnote 24] We already said in that report that Congress may 
wish to require HHS to find cost-effective ways to address this 
specific gap to provide additional information of value to policymakers 
and program managers in ensuring the efficiency, effectiveness, and 
accountability of federal supports for child care. 

Additional information on the full range of people served by TANF and 
MOE funds is essential for a better understanding of the true workload 
of the grant. Caseload or workload information is important for 
oversight and policy-making purposes, particularly those related to the 
amount of and needs associated with the block grant. For example, as 
the cash assistance caseload declined by more than half nationwide, it 
raised questions as to whether adjustments were needed to the block 
grant funding levels. At the same time, because the amount of the block 
grant has not been adjusted for inflation since its creation in 1996, 
concerns have been raised about its declining value and the possible 
impact on meeting needs. Better information could inform these 
discussions. 

While having more information on the numbers served is important, it is 
also critical to make a distinction between those receiving cash 
assistance and other types of assistance, because different program 
requirements apply to families in different situations. More 
specifically, under TANF, families receiving ongoing cash assistance 
are generally subject to work requirements, time limits, and other 
requirements, in part to emphasize the transitional nature of 
assistance and to help ensure that recipients take steps to prepare for 
work. Those receiving other forms of aid outside of a state's TANF 
program through a separate state program, such as working parents 
receiving child care subsidies, are not subject to requirements such as 
time limits on aid. 

Another information gap relates to what services are funded and how 
those services fit into a strategy or approach for meeting TANF goals. 
This would include information about intended target populations and 
the strategy or approach for using the funds to further welfare reform 
goals. For example, additional information on the extent to which TANF 
and MOE funds were used to support work requirements for cash 
assistance recipients is important to understanding the costs of 
supporting a state's core TANF program. It is also important to have 
additional information to better understand the costs involved in 
providing aid to those transitioning off of welfare and to a more 
general population, such as for prekindergarten services or to 
supplement a state's refundable EIC program. Such information would be 
useful to congressional policymakers in considering changes to TANF 
work requirements and implications for the provisions of other 
services, a key issue in TANF reauthorization deliberations. 

In creating the TANF block grant, Congress emphasized the importance of 
state flexibility, and to that end, the legislation restricted HHS 
regulatory authority over the states except to the extent expressly 
provided in the law. Regarding collecting additional information about 
services beyond cash assistance, while HHS has acknowledged the value 
of having additional information, it has said that it will not collect 
this information without legislative changes directing it to do so. 

In any effort to get more information or to increase or revise program 
and fiscal reporting requirements, important considerations should be 
taken into account. In our report on the current undercounting of those 
served by TANF, some state officials raised concerns about the 
possibility of additional TANF reporting requirements being imposed on 
states to collect information on families not included in the TANF 
caseload. These concerns included that (1) states lack the information 
systems needed to fulfill additional requirements, (2) fulfilling 
additional requirements will increase administrative costs, (3) 
additional data collection requirements could deter states and service 
providers from offering services because they would not want the 
administrative burden associated with them, and (4) requiring all 
service recipients to provide personal identifying information for 
every service may deter some people from accessing services because of 
the stigma associated with welfare. While many of these concerns are 
legitimate, they do not necessarily outweigh the importance of getting 
needed information for oversight and policy making and can be 
considered in addressing any changes. In addition, there may be a 
variety of ways to get needed information, some more cost-effective 
than others, including relying on existing data sources or special 
studies. Moreover, opportunities may exist to streamline or eliminate 
some reporting requirements to make way for more relevant ones, as 
determined by Congress, HHS, and the states. In the past, Congress has 
included in legislation a requirement that HHS cooperate with states-- 
key stakeholders in welfare reform--in considering aspects of 
monitoring state programs and performance. HHS has worked with state 
and human services professional organizations to discuss and receive 
input on information requirements and performance standards in the 
past. 

National-level data show that the trend away from cash assistance 
spending has occurred nationwide. States are using substantial portions 
of their block grants and MOE funds as large, flexible funding streams 
to meet their priorities in many areas of their budgets for low-income 
families, yet much remains unknown at the national level about how 
these federal TANF and state MOE funds are used to meet the overall 
goals of welfare reform. 

Conclusion: 

Ten years after Congress passed sweeping welfare reforms, much has 
changed in how federal and state dollars support programs for low- 
income and at-risk individuals. Some trends raise issues for the 
future. Overall, spending is up, but state budgets for low-income 
individuals are increasingly dominated by health care spending. To the 
extent that this trend continues or becomes more pronounced, it 
warrants attention as to its effect on state spending to meet other 
needs of low-income individuals. Another key trend was the shift in 
nonhealth spending priorities away from cash assistance to greater 
emphasis on supporting low-income individuals' work efforts. However, 
the greatest increases came right after welfare reform during the 
strong economy, while some contraction in spending was apparent in the 
latter period. This raises questions about the sustainability of this 
shift. 

In addition, in the new welfare environment, too much remains unknown 
about how TANF block grant funds are spent to meet welfare goals. A 
natural tension exists with block grants that is not easily addressed. 
A key challenge is to strike an appropriate balance between flexibility 
for states and accountability for federal goals. This is particularly 
important given the large dollar amount of the TANF block grant--over 
$16 billion in federal funds annually. With the current accountability 
and reporting structure for TANF, the information gaps hamper decision 
makers in making informed choices about how best to spend federal funds 
to assist vulnerable populations cost effectively. At the same time, 
consideration needs to be given to collecting needed information in a 
way that minimizes reporting burden and acknowledges the importance of 
flexibility in addressing state and local needs. 

Matter for Congressional Consideration: 

To better inform its oversight and decision-making process, Congress 
should consider ways to address two key information gaps for the TANF 
block grant: (1) insufficient information on the numbers served by TANF 
funds and (2) limited information on how funds are used--for example, 
on which target populations and as part of what strategies and 
approaches--to meet TANF goals. 

Efforts to obtain more information must take into account how to do so 
in the most cost-effective and least burdensome way. Some options 
include Congress directing the Secretary of HHS to require states to 
include more information in state TANF plans filed with HHS on their 
strategies and approaches for using funds; require states to include 
more information on all aspects of TANF spending in the annual reports 
they must file with HHS; and revise other reporting requirements 
regarding the uses and recipients of TANF-related funds. Congress may 
wish to require the Secretary to consult with key welfare reform 
stakeholders in assessing and revising reporting requirements or 
information-gathering strategies. 

Agency Comments: 

We provided a draft of this report to HHS for review. In its written 
comments, which appear in appendix VI, HHS agreed that additional 
information on states' use of TANF funds would be valuable and that 
expanded data collection requirements should be done in a cost- 
effective manner and in consultation with stakeholders. HHS also 
provided technical comments that we incorporated where appropriate. 

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
after its issue date. At that time, we will send copies of this report 
to the Secretary of Health and Human Services, appropriate 
congressional committees, and other interested parties. We will also 
make copies available to others upon request. In addition, the report 
is available at no charge on GAO's Web site at [Hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact David D. Bellis at (415) 904-2272 or Stanley J. Czerwinski at 
(202) 512-6520. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. GAO staff who made major contributions to this report are 
listed in appendix VII. 

Sincerely yours, 

Signed by: 

David D. Bellis: 
Director: 
Education, Workforce, and Income Security Issues: 

Signed by: 

Stanley J. Czerwinski: 
Director: 
Strategic Issues: 

[End of section] 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

In order to provide information on welfare-related spending over the 
decade since welfare reform, we designed our study to (1) examine 
changes in the overall level of welfare-related spending for nonhealth 
and health services in the periods before and after the recession in 
2001 and over the decade since 1995, (2) examine changes in spending 
priorities for nonhealth welfare-related services during the same time 
periods, and (3) review the contribution of Temporary Assistance to 
Needy Families (TANF) funds to states' spending for welfare-related 
services. To address these objectives, we used a survey instrument to 
collect state spending data from state budget and program officials in 
nine states examined in our prior reports;[Footnote 25] conducted site 
visits in these nine states; and reviewed information available from 
prior GAO work, relevant federal agencies, and other organizations. The 
nine states in our study--California, Colorado, Louisiana, Maryland, 
Michigan, New York, Oregon, Texas, and Wisconsin[Footnote 26]-- 
represent a diverse set of socioeconomic characteristics, geographic 
regions, population sizes, and experiences with state welfare 
initiatives. For the purposes of this report, we focused on spending 
for working-age adults and children and excluded spending for the 
elderly, long-term care, and institutional care. The term welfare- 
related refers to spending for low-income and at-risk individuals, 
including TANF-eligible and non-TANF eligible individuals. Because our 
focus was on states' budgetary decisions, we excluded federal program 
spending about which states do not make key budget decisions, such as 
food stamp benefits, the Earned Income Tax Credit, Supplemental 
Security Income, and other programs; as a result, our data do not 
capture all federal spending for low-income individuals. 

Welfare-Related Spending Survey: 

To obtain data on welfare-related spending over the decade since 
welfare reform, we asked state budget and program officials from each 
state's central budget office and relevant state agencies to identify 
welfare-related spending data using the same survey instrument and 
criteria used in our prior report.[Footnote 27] (See app. V.) We worked 
closely with state officials to complete the survey during our site 
visits and through numerous telephone and e-mail contacts. Because 
parts of the survey were completed by different state officials, we 
also provided the states with the data we compiled for their review as 
well as data summaries of our analysis. We collected budget data and 
program information for three points in time based on state fiscal 
years: for 1995 before the passage of federal welfare reform 
legislation; for 2000; and for 2004, the most recent year for which 
data were available. Consistent with our prior methodology, we used the 
survey to take a comprehensive look at state social service program 
budgets by encouraging states to provide spending data on a broad array 
of programs, rather than just those programs that received federal TANF 
funding. Our study includes federal, state, and local spending 
associated with Medicaid, TANF, housing assistance, child care and 
welfare, and a myriad of other programs aimed at needy populations and 
for which states make key budgetary decisions. 

State budget structures differ across states. Some states in our 
analysis used biennial budgets, others used annual budgets. States can 
place employment and training programs primarily in their social 
services departments; other states can place these programs in their 
economic development departments. Some states place responsibility for 
welfare programs with county governments. These differences make 
comparisons of state budgets and spending difficult. In asking states 
to report spending on individual programs, regardless of which state 
agency oversaw these programs, and then aggregating the spending into 
the same categories for each state, we were able to compare state 
spending trends across all of the states. As figure 8 shows, we 
classified spending data in several key ways, including nonhealth 
spending--cash assistance (Category 1), employment services and 
training (Category 2), work and other supports (Category 3), and aid 
for the at-risk (Category 4)--and health spending (Category 5), which 
we generally separated from nonhealth spending in our analysis. 

Figure 8: Welfare-Related Spending Categories Used in Our Analysis: 

[See PDF for image] 

[End of figure] 

Our first spending category includes state spending for ongoing cash 
assistance payments with federal or state moneys under the Aid for 
Families with Dependent Children (AFDC), TANF, or other state programs. 
This category corresponds most closely with traditional monthly cash 
assistance payments under the AFDC program. Our second spending 
category includes spending for job and training programs that seek to 
prepare people for employment. Our third spending category includes 
programs that seek to support low-income people with other forms of aid 
or services, including helping families move from welfare to work or 
avoid welfare altogether. For example, child care subsidies and rental 
assistance payments can help parents remain employed even if they are 
working in low-wage jobs. Our fourth spending category recognizes the 
range of programs that states can use to develop strategies to achieve 
TANF's goals. These spending areas include child welfare programs, 
substance abuse programs, mental health programs, and programs that 
help the developmentally disabled attain a level of self-sufficiency, 
and exclude spending for any individuals in institutions. While many of 
these state spending areas may not have income standards to determine 
eligibility, a state can claim TANF funds for expenditures in these 
areas if the state is able to certify that participants in these 
programs meet the eligibility requirements set forth in the state's 
TANF plan. Our fifth spending category includes spending for health 
services aimed at low-income people but excludes spending for the 
elderly, long-term care, and institutional care. Analyzing health care 
spending helps recognize a state's true and substantial investment in 
spending to support these low-income and needy populations. In general, 
our spending categories were designed to cover all areas of a state's 
budget associated with the TANF-eligible population and allowable 
expenses under TANF as well as for other low-income children and 
individuals of working age. 

We analyzed state spending of both federal and state funds on a wide 
array of programs aimed at providing services to the needy and that 
flowed through the state budget. In this analysis, federal spending is 
not defined by the level of a federal grant allocated to a state, but 
rather by how much of the grant the state chooses--or in some cases is 
required--to spend on a particular activity. For this reason we did not 
consider a number of 100 percent federally funded programs that do not 
flow through the state budget. For example, the food stamp program is 
administrated by the state and the shared administrative costs are 
included in the survey, but the value of the food stamp coupons 
disbursed in the fiscal year, borne 100 percent by the federal 
government, is not. Likewise, if a state budget action prompted local 
spending in these areas, through incentives like a state-local match, 
then local spending was included in our analysis. 

We converted state spending data to real 2004 dollars in order to make 
our spending more comparable over time. 

State Site Visits: 

To obtain program description and recipient eligibility information on 
the spending data we collected, we also spoke with budget and program 
officials in these nine states knowledgeable about state TANF programs, 
Medicaid programs, and other state programs supporting the spending we 
captured in our survey. We also gathered information about the fiscal 
and economic environment in each state since state fiscal year (SFY) 
2000, the last data year in our prior report, and a period that 
included a national recession in 2001. We worked closely with state 
officials to complete the survey. Once the state program and budget 
officials identified the program spending to include in the survey, we 
verified through program documentation and discussions with these state 
officials that the program descriptions, targeted beneficiaries, and 
program goals met the survey criteria. 

Review of Related Reports and Data: 

To obtain information about policy and program developments for welfare 
and other related program spending data collected in our survey, we 
reviewed reports and information readily available from our prior work, 
relevant federal agencies, state governments, and local advocacy 
groups. 

Reliability of Data Obtained from States and HHS: 

We took several steps to determine the completeness and accuracy of 
data obtained from states. We reviewed related documentation and 
examined the data for obvious omissions and errors and to have 
reasonable assurance that the spending data were comparable over the 
three years in our analysis. We also collected information and audit 
reports on the systems state officials used to provide state spending 
data. We did not test the data systems ourselves. In some cases, state 
auditors found weaknesses with relevant agency data systems or internal 
controls. However, for the purposes of examining aggregate welfare- 
related spending across state budgets, and identifying the purposes of 
spending within these aggregates, we found the survey data we collected 
to be sufficiently reliable for use in this report. 

We determined the completeness and accuracy of data obtained from the 
Department of Health and Human Services (HHS) based on interviews and 
related documentation and determined that the data were sufficiently 
reliable for use in this report. 

[End of section] 

Appendix II: Federal and State AFDC, TANF, and MOE Spending as a Share 
of Total Welfare-Related Nonhealth Spending: 

Percentage based on 2004 dollars. 

California; 
SFY: 1995: 47; 
SFY: 2000: 27; 
SFY: 2004: 23. 

Colorado; 
SFY: 1995: 44; 
SFY: 2000: 22; 
SFY: 2004: 21. 

State: Louisiana; 
SFY: 1995: 23; 
SFY: 2000: 14; 
SFY: 2004: 21. 

State: Maryland; 
SFY: 1995: 22; 
SFY: 2000: 17; 
SFY: 2004: 12. 

State: Michigan; 
SFY: 1995: 29; 
SFY: 2000: 15; 
SFY: 2004: 15. 

State: New York; 
SFY: 1995: 35; 
SFY: 2000: 27; 
SFY: 2004: 23. 

State: Oregon; 
SFY: 1995: 29; 
SFY: 2000: 29; 
SFY: 2004: 25. 

State: Texas; 
SFY: 1995: 23; 
SFY: 2000: 16; 
SFY: 2004: 18. 

State: Wisconsin; 
SFY: 1995: 32; 
SFY: 2000: 27; 
SFY: 2004: 28. 

Median; 
SFY: 1995: 29; 
SFY: 2000: 22; 
SFY: 2004: 21. 

Low; 
SFY: 1995: 22; 
SFY: 2000: 14; 
SFY: 2004: 12. 

High; 
SFY: 1995: 47; 
SFY: 2000: 29; 
SFY: 2004: 28. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. The nonhealth category reflects total spending from the 
following previously defined GAO categories: cash assistance, 
employment services and training, work and other supports, and aid for 
the at-risk. See app. I for a further explanation of these categories. 

[End of table] 

[End of section] 

Appendix III: Total Welfare-Related Health and Nonhealth Spending from 
Federal and State Sources: 

Table 13: Total Welfare-Related Health Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $7,676; 
SFY: 2000: $7,827; 
SFY: 2004: $10,796; 
Percentage change: 1995-2000: 2; 
Percentage change: 2000-2004: 38; 
Percentage change: 1995-2004: 41. 

State: Colorado; 
SFY: 1995: $651; 
SFY: 2000: $1,493; 
SFY: 2004: $1,969; 
Percentage change: 1995-2000: 129; 
Percentage change: 2000-2004: 32; 
Percentage change: 1995-2004: 202. 

State: Louisiana; 
SFY: 1995: $1,838; 
SFY: 2000: $1,989; 
SFY: 2004: $2,952; 
Percentage change: 1995-2000: 8; 
Percentage change: 2000-2004: 48; 
Percentage change: 1995-2004: 61. 

State: Maryland; 
SFY: 1995: $1929; 
SFY: 2000: $2,093; 
SFY: 2004: $3,038; 
Percentage change: 1995-2000: 8; 
Percentage change: 2000-2004: 45; 
Percentage change: 1995-2004: 58. 

State: Michigan; 
SFY: 1995: $3,029; 
SFY: 2000: $3,113; 
SFY: 2004: $4,106; 
Percentage change: 1995-2000: 3; 
Percentage change: 2000-2004: 32; 
Percentage change: 1995-2004: 36. 

State: New York; 
SFY: 1995: $15,468; 
SFY: 2000: $17,217; 
SFY: 2004: $24,035; 
Percentage change: 1995-2000: 11; 
Percentage change: 2000-2004: 40; 
Percentage change: 1995-2004: 55. 

State: Oregon; 
SFY: 1995: $632; 
SFY: 2000: $1,411; 
SFY: 2004: $1,726; 
Percentage change: 1995-2000: 123; 
Percentage change: 2000-2004: 22; 
Percentage change: 1995-2004: 173. 

State: Texas; 
SFY: 1995: $3,930; 
SFY: 2000: $5,983; 
SFY: 2004: $9,713; 
Percentage change: 1995-2000: 52; 
Percentage change: 2000-2004: 62; 
Percentage change: 1995-2004: 147. 

State: Wisconsin; 
SFY: 1995: $1,694; 
SFY: 2000: $1,954; 
SFY: 2004: $3,100; 
Percentage change: 1995-2000: 15; 
Percentage change: 2000-2004: 59; 
Percentage change: 1995-2004: 83. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the health category, 
which excludes spending for long-term care, institutional care, and the 
elderly. 

[End of table] 

Table 14: Total Welfare-Related Nonhealth Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $15,970; 
SFY: 2000: $17,717; 
SFY: 2004: $20,768; 
Percentage change: 1995-2000: 11; 
Percentage change: 2000-2004: 17; 
Percentage change: 1995-2004: 30. 

State: Colorado; 
SFY: 1995: $692; 
SFY: 2000: $952; 
SFY: 2004: $967; 
Percentage change: 1995-2000: 38; 
Percentage change: 2000-2004: 2; 
Percentage change: 1995-2004: 40. 

State: Louisiana; 
SFY: 1995: $1,041; 
SFY: 2000: $920; 
SFY: 2004: $1,060; 
Percentage change: 1995-2000: -12; 
Percentage change: 2000-2004: 15; 
Percentage change: 1995-2004: 2. 

State: Maryland; 
SFY: 1995: $2,178; 
SFY: 2000: $2,218; 
SFY: 2004: $2,725; 
Percentage change: 1995-2000: 2; 
Percentage change: 2000-2004: 23; 
Percentage change: 1995-2004: 25. 

State: Michigan; 
SFY: 1995: $4,626; 
SFY: 2000: $4,576; 
SFY: 2004: $4,930; 
Percentage change: 1995-2000: -1; 
Percentage change: 2000-2004: 8; 
Percentage change: 1995-2004: 7. 

State: New York; 
SFY: 1995: $14,622; 
SFY: 2000: $14,413; 
SFY: 2004: $16,493; 
Percentage change: 1995-2000: -1; 
Percentage change: 2000-2004: 14; 
Percentage change: 1995-2004: 13. 

State: Oregon; 
SFY: 1995: $892; 
SFY: 2000: $1,002; 
SFY: 2004: $1,047; 
Percentage change: 1995-2000: 12; 
Percentage change: 2000-2004: 4; 
Percentage change: 1995-2004: 17. 

State: Texas; 
SFY: 1995: $3,371; 
SFY: 2000: $3,930; 
SFY: 2004: $4,122; 
Percentage change: 1995-2000: 17; 
Percentage change: 2000-2004: 5; 
Percentage change: 1995-2004: 22. 

State: Wisconsin; 
SFY: 1995: $1,473; 
SFY: 2000: $1,523; 
SFY: 2004: $1,730; 
Percentage change: 1995-2000: 3; 
Percentage change: 2000-2004: 14; 
Percentage change: 1995-2004: 17. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. The nonhealth category reflects total spending from the 
following previously defined GAO categories: cash assistance, 
employment services and training, work and other supports, and aid for 
the at-risk. See app. I for a further explanation of these categories. 

[End of table] 

Table 15: Welfare-Related Health Spending from Federal and State 
Sources: 

2004 dollars in millions. 

State: California; 
SFY: 1995: Federal: $3,774; 
SFY: 1995: State: $3,902; 
SFY: 2000: Federal: $3,807; 
SFY: 2000: State: $4,020; 
SFY: 2004: Federal: $5,595; 
SFY: 2004: State: $5,201. 

State: Colorado; 
SFY: 1995: Federal: $347; 
SFY: 1995: State: $304; 
SFY: 2000: Federal: $742; 
SFY: 2000: State: $750; 
SFY: 2004: Federal: $1,053; 
SFY: 2004: State: $916. 

State: Louisiana; 
SFY: 1995: Federal: $1,337; 
SFY: 1995: State: $501; 
SFY: 2000: Federal: $1,398; 
SFY: 2000: State: $591; 
SFY: 2004: Federal: $2,206; 
SFY: 2004: State: $746. 

State: Maryland; 
SFY: 1995: Federal: $941; 
SFY: 1995: State: $987; 
SFY: 2000: Federal: $1,033; 
SFY: 2000: State: $1,059; 
SFY: 2004: Federal: $1,653; 
SFY: 2004: State: $1,385. 

State: Michigan; 
SFY: 1995: Federal: $1,684; 
SFY: 1995: State: $1,345; 
SFY: 2000: Federal: $1,682; 
SFY: 2000: State: $1,431; 
SFY: 2004: Federal: $2,373; 
SFY: 2004: State: $1,734. 

State: New York; 
SFY: 1995: Federal: $6,548; 
SFY: 1995: State: $8,920; 
SFY: 2000: Federal: $8,561; 
SFY: 2000: State: $8,656; 
SFY: 2004: Federal: $11,828; 
SFY: 2004: State: $12,207. 

State: Oregon; 
SFY: 1995: Federal: $392; 
SFY: 1995: State: $239; 
SFY: 2000: Federal: $858; 
SFY: 2000: State: $553; 
SFY: 2004: Federal: $1,112; 
SFY: 2004: State: $614. 

State: Texas; 
SFY: 1995: Federal: $2,487; 
SFY: 1995: State: $1,442; 
SFY: 2000: Federal: $3,682; 
SFY: 2000: State: $2,302; 
SFY: 2004: Federal: $5,885; 
SFY: 2004: State: $3,828. 

State: Wisconsin; 
SFY: 1995: Federal: $968; 
SFY: 1995: State: $726; 
SFY: 2000: Federal: $1,126; 
SFY: 2000: State: $828; 
SFY: 2004: Federal: $1,858; 
SFY: 2004: State: $1,242. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the health category, 
which excludes spending for long-term care, institutional care, and the 
elderly. 

[End of table] 

Table 16: Welfare-Related Nonhealth Spending from Federal and State 
Sources: 

2004 dollars in millions. 

State: California; 
SFY: 1995: Federal: $7,297; 
SFY: 1995: State: $8,666; 
SFY: 2000: Federal: $7,883; 
SFY: 2000: State: $9,834; 
SFY: 2004: Federal: $9,138; 
SFY: 2004: State: $11,631. 

State: Colorado; 
SFY: 1995: Federal: $346; 
SFY: 1995: State: $346; 
SFY: 2000: Federal: $373; 
SFY: 2000: State: $580; 
SFY: 2004: Federal: $474; 
SFY: 2004: State: $493. 

State: Louisiana; 
SFY: 1995: Federal: $764; 
SFY: 1995: State: $277; 
SFY: 2000: Federal: $476; 
SFY: 2000: State: $444; 
SFY: 2004: Federal: $611; 
SFY: 2004: State: $449. 

State: Maryland; 
SFY: 1995: Federal: $905; 
SFY: 1995: State: $1,273; 
SFY: 2000: Federal: $939; 
SFY: 2000: State: $1,279; 
SFY: 2004: Federal: $1,220; 
SFY: 2004: State: $1,505. 

State: Michigan; 
SFY: 1995: Federal: $2,455; 
SFY: 1995: State: $2,171; 
SFY: 2000: Federal: $2,312; 
SFY: 2000: State: $2,265; 
SFY: 2004: Federal: $2,674; 
SFY: 2004: State: $2,256. 

State: New York; 
SFY: 1995: Federal: $4,776; 
SFY: 1995: State: $9,846; 
SFY: 2000: Federal: $5,488; 
SFY: 2000: State: $8,926; 
SFY: 2004: Federal: $7,153; 
SFY: 2004: State: $9,340. 

State: Oregon; 
SFY: 1995: Federal: $540; 
SFY: 1995: State: $352; 
SFY: 2000: Federal: $604; 
SFY: 2000: State: $398; 
SFY: 2004: Federal: $634; 
SFY: 2004: State: $413. 

State: Texas; 
SFY: 1995: Federal: $1,722; 
SFY: 1995: State: $1,649; 
SFY: 2000: Federal: $2,193; 
SFY: 2000: State: $1,737; 
SFY: 2004: Federal: $2,393; 
SFY: 2004: State: $1,729. 

State: Wisconsin; 
SFY: 1995: Federal: $578; 
SFY: 1995: State: $895; 
SFY: 2000: Federal: $660; 
SFY: 2000: State: $863; 
SFY: 2004: Federal: $804; 
SFY: 2004: State: $926. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. The nonhealth category reflects total spending from the 
following previously defined GAO categories: cash assistance, 
employment services and training, work and other supports, and aid for 
the at-risk. See app. I for a further explanation of these categories. 

[End of table] 

Table 17: Percentage Change in Welfare-Related Health Spending from 
Federal and State Sources: 

Based on 2004 dollars. 

State: California; 
1995-2000: Federal: 1; 
1995-2000: State: 3; 
2000-2004: Federal: 47; 
2000-2004: State: 29; 
1995-2004: Federal: 48; 
1995-2004: State: 33. 

State: Colorado; 
1995-2000: Federal: 114; 
1995-2000: State: 147; 
2000-2004: Federal: 42; 
2000-2004: State: 22; 
1995-2004: Federal: 203; 
1995-2004: State: 201. 

State: Louisiana; 
1995-2000: Federal: 5; 
1995-2000: State: 18; 
2000-2004: Federal: 58; 
2000-2004: State: 26; 
1995-2004: Federal: 65; 
1995-2004: State: 49. 

State: Maryland; 
1995-2000: Federal: 10; 
1995-2000: State: 7; 
2000-2004: Federal: 60; 
2000-2004: State: 31; 
1995-2004: Federal: 76; 
1995-2004: State: 40. 

State: Michigan; 
1995-2000: Federal: 0; 
1995-2000: State: 6; 
2000-2004: Federal: 41; 
2000-2004: State: 21; 
1995-2004: Federal: 41; 
1995-2004: State: 29. 

State: New York; 
1995-2000: Federal: 31; 
1995-2000: State: -3; 
2000-2004: Federal: 38; 
2000-2004: State: 41; 
1995-2004: Federal: 81; 
1995-2004: State: 37. 

State: Oregon; 
1995-2000: Federal: 119; 
1995-2000: State: 131; 
2000-2004: Federal: 30; 
2000-2004: State: 11; 
1995-2004: Federal: 183; 
1995-2004: State: 156. 

State: Texas; 
1995-2000: Federal: 48; 
1995-2000: State: 60; 
2000-2004: Federal: 60; 
2000-2004: State: 66; 
1995-2004: Federal: 137; 
1995-2004: State: 165. 

State: Wisconsin; 
1995-2000: Federal: 16; 
1995-2000: State: 14; 
2000-2004: Federal: 65; 
2000-2004: State: 50; 
1995-2004: Federal: 92; 
1995-2004: State: 71. 

Median; 
1995-2000: Federal: 16; 
1995-2000: State: 14; 
2000-2004: Federal: 47; 
2000-2004: State: 29; 
1995-2004: Federal: 81; 
1995-2004: State: 49. 

Maximum; 
1995-2000: Federal: 119; 
1995-2000: State: 147; 
2000-2004: Federal: 65; 
2000-2004: State: 66; 
1995-2004: Federal: 203; 
1995-2004: State: 201. 

Minimum; 
1995-2000: Federal: 0; 
1995-2000: State: -3; 
2000-2004: Federal: 30; 
2000-2004: State: 11; 
1995-2004: Federal: 41; 
1995-2004: State: 29. 

[End of table] 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the health category, 
which excludes spending for long-term care, institutional care, and the 
elderly. 

Table 18: Percentage Change in Welfare-Related Nonhealth Spending from 
Federal and State Sources: 

Based on 2004 dollars. 

State: California; 
1995-2000: Federal: 8; 
1995-2000: State: 13; 
2000-2004: Federal: 16; 
2000-2004: State: 18; 
1995-2004: Federal: 25; 
1995-2004: State: 34. 

State: Colorado; 
1995-2000: Federal: 8; 
1995-2000: State: 67; 
2000-2004: Federal: 27; 
2000-2004: State: -15; 
1995-2004: Federal: 37; 
1995-2004: State: 42. 

State: Louisiana; 
1995-2000: Federal: -38; 
1995-2000: State: 60; 
2000-2004: Federal: 28; 
2000-2004: State: 1; 
1995-2004: Federal: -20; 
1995-2004: State: 62. 

State: Maryland; 
1995-2000: Federal: 4; 
1995-2000: State: 0; 
2000-2004: Federal: 30; 
2000-2004: State: 18; 
1995-2004: Federal: 35; 
1995-2004: State: 18. 

State: Michigan; 
1995-2000: Federal: -6; 
1995-2000: State: 4; 
2000-2004: Federal: 16; 
2000-2004: State: 0; 
1995-2004: Federal: 9; 
1995-2004: State: 4. 

State: New York; 
1995-2000: Federal: 15; 
1995-2000: State: -9; 
2000-2004: Federal: 30; 
2000-2004: State: 5; 
1995-2004: Federal: 50; 
1995-2004: State: -5. 

State: Oregon; 
1995-2000: Federal: 12; 
1995-2000: State: 13; 
2000-2004: Federal: 5; 
2000-2004: State: 4; 
1995-2004: Federal: 18; 
1995-2004: State: 17. 

State: Texas; 
1995-2000: Federal: 27; 
1995-2000: State: 5; 
2000-2004: Federal: 9; 
2000-2004: State: 0; 
1995-2004: Federal: 39; 
1995-2004: State: 5. 

State: Wisconsin; 
1995-2000: Federal: 14; 
1995-2000: State: -4; 
2000-2004: Federal: 22; 
2000-2004: State: 7; 
1995-2004: Federal: 39; 
1995-2004: State: 4. 

State: Median; 
1995-2000: Federal: 8; 
1995-2000: State: 8; 
2000-2004: Federal: 18; 
2000-2004: State: 1; 
1995-2004: Federal: 35; 
1995-2004: State: 17. 

Maximum; 
1995-2000: Federal: 27; 
1995-2000: State: 67; 
2000-2004: Federal: 30; 
2000-2004: State: 18; 
1995-2004: Federal: 50; 
1995-2004: State: 62. 

Minimum; 
1995-2000: Federal: -38; 
1995-2000: State: -9; 
2000-2004: Federal: 5; 
2000-2004: State: -15; 
1995-2004: Federal: -20; 
1995-2004: State: -5. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. The nonhealth category reflects total spending from the 
following previously defined GAO categories: cash assistance, 
employment services and training, work and other supports, and aid for 
the at-risk. See app. I for a further explanation of these categories. 

[End of table] 

[End of section] 

Appendix IV: Welfare-Related Nonhealth Spending by Spending Category: 

Table 19: Total Cash Assistance Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $6,903; 
SFY: 2000: $3,174; 
SFY: 2004: $3,213; 
Percentage change: 1995-2000: -54; 
Percentage change: 2000-2004: 1; 
Percentage change: 1995-2004: -53. 

State: Colorado; 
SFY: 1995: $171; 
SFY: 2000: $49; 
SFY: 2004: $62; 
Percentage change: 1995-2000: -71; 
Percentage change: 2000-2004: 26; 
Percentage change: 1995-2004: -64. 

State: Louisiana; 
SFY: 1995: $195; 
SFY: 2000: $80; 
SFY: 2004: $78; 
Percentage change: 1995-2000: -59; 
Percentage change: 2000-2004: -2; 
Percentage change: 1995-2004: -60. 

State: Maryland; 
SFY: 1995: $380; 
SFY: 2000: $119; 
SFY: 2004: $128; 
Percentage change: 1995-2000: -69; 
Percentage change: 2000-2004: 7; 
Percentage change: 1995-2004: -66. 

State: Michigan; 
SFY: 1995: $1,183; 
SFY: 2000: $360; 
SFY: 2004: $406; 
Percentage change: 1995-2000: -70; 
Percentage change: 2000-2004: 13; 
Percentage change: 1995-2004: -66. 

State: New York; 
SFY: 1995: $4,887; 
SFY: 2000: $3,341; 
SFY: 2004: $2,179; 
Percentage change: 1995-2000: -32; 
Percentage change: 2000-2004: -35; 
Percentage change: 1995-2004: -55. 

State: Oregon; 
SFY: 1995: $230; 
SFY: 2000: $87; 
SFY: 2004: $89; 
Percentage change: 1995-2000: -62; 
Percentage change: 2000-2004: 3; 
Percentage change: 1995-2004: -61. 

State: Texas; 
SFY: 1995: $574; 
SFY: 2000: $270; 
SFY: 2004: $215; 
Percentage change: 1995-2000: -53; 
Percentage change: 2000-2004: -20; 
Percentage change: 1995-2004: -62. 

State: Wisconsin; 
SFY: 1995: $416; 
SFY: 2000: $82; 
SFY: 2004: $128; 
Percentage change: 1995-2000: -80; 
Percentage change: 2000-2004: 56; 
Percentage change: 1995-2004: -69. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the cash assistance 
category. 

[End of table] 

Table 20: Total Employment Services and Training Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $843; 
SFY: 2000: $1,463; 
SFY: 2004: $1,381; 
Percentage change: 1995-2000: 74; 
Percentage change: 2000-2004: -6; 
Percentage change: 1995-2004: 64. 

State: Colorado; 
SFY: 1995: $11; 
SFY: 2000: $11; 
SFY: 2004: $31; 
Percentage change: 1995-2000: 0; 
Percentage change: 2000-2004: 173; 
Percentage change: 1995-2004: 172. 

State: Louisiana; 
SFY: 1995: $162; 
SFY: 2000: $105; 
SFY: 2004: $142; 
Percentage change: 1995-2000: -35; 
Percentage change: 2000-2004: 35; 
Percentage change: 1995-2004: -13. 

State: Maryland; 
SFY: 1995: $109; 
SFY: 2000: $156; 
SFY: 2004: $63; 
Percentage change: 1995-2000: 43; 
Percentage change: 2000-2004: -59; 
Percentage change: 1995-2004: -42. 

State: Michigan; 
SFY: 1995: $283; 
SFY: 2000: 400; 
SFY: 2004: $263; 
Percentage change: 1995-2000: 41; 
Percentage change: 2000-2004: -34; 
Percentage change: 1995-2004: -7. 

State: New York; 
SFY: 1995: $1,222; 
SFY: 2000: $1,149; 
SFY: 2004: $1,502; 
Percentage change: 1995-2000: -6; 
Percentage change: 2000-2004: 31; 
Percentage change: 1995-2004: 23. 

State: Oregon; 
SFY: 1995: $71; 
SFY: 2000: $90; 
SFY: 2004: $67; 
Percentage change: 1995-2000: 28; 
Percentage change: 2000-2004: -26; 
Percentage change: 1995-2004: -5. 

State: Texas; 
SFY: 1995: $527; 
SFY: 2000: $541; 
SFY: 2004: $639; 
Percentage change: 1995-2000: 3; 
Percentage change: 2000-2004: 18; 
Percentage change: 1995-2004: 21. 

State: Wisconsin; 
SFY: 1995: $69; 
SFY: 2000: $165; 
SFY: 2004: $93; 
Percentage change: 1995-2000: 138; 
Percentage change: 2000-2004: -44; 
Percentage change: 1995-2004: 34. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the employment services 
and training category. 

[End of table] 

Table 21: Total Work and Other Supports Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $2,812; 
SFY: 2000: $4,765; 
SFY: 2004: $5,605; 
Percentage change: 1995-2000: 69; 
Percentage change: 2000-2004: 18; 
Percentage change: 1995-2004: 99. 

State: Colorado; 
SFY: 1995: $158; 
SFY: 2000: 383; 
SFY: 2004: $360; 
Percentage change: 1995-2000: 143; 
Percentage change: 2000-2004: -6; 
Percentage change: 1995-2004: 129. 

State: Louisiana; 
SFY: 1995: $383; 
SFY: 2000: $265; 
SFY: 2004: $329; 
Percentage change: 1995-2000: -31; 
Percentage change: 2000-2004: 24; 
Percentage change: 1995-2004: -14. 

State: Maryland; 
SFY: 1995: $451; 
SFY: 2000: $622; 
SFY: 2004: $773; 
Percentage change: 1995-2000: 38; 
Percentage change: 2000-2004: 24; 
Percentage change: 1995-2004: 71. 

State: Michigan; 
SFY: 1995: $1,365; 
SFY: 2000: $1,429; 
SFY: 2004: $1,567; 
Percentage change: 1995-2000: 5; 
Percentage change: 2000-2004: 10; 
Percentage change: 1995-2004: 15. 

State: New York; 
SFY: 1995: $3,246; 
SFY: 2000: $3,221; 
SFY: 2004: $4,748; 
Percentage change: 1995-2000: -1; 
Percentage change: 2000-2004: 47; 
Percentage change: 1995-2004: 46. 

State: Oregon; 
SFY: 1995: $214; 
SFY: 2000: $351; 
SFY: 2004: $402; 
Percentage change: 1995-2000: 64; 
Percentage change: 2000-2004: 15; 
Percentage change: 1995-2004: 88. 

State: Texas; 
SFY: 1995: $887; 
SFY: 2000: $1,412; 
SFY: 2004: $1,469; 
Percentage change: 1995-2000: 59; 
Percentage change: 2000-2004: 4; 
Percentage change: 1995-2004: 66. 

State: Wisconsin; 
SFY: 1995: $576; 
SFY: 2000: $760; 
SFY: 2004: $1,002; 
Percentage change: 1995-2000: 32; 
Percentage change: 2000-2004: 32; 
Percentage change: 1995-2004: 74. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the work and other 
supports category. 

[End of table] 

Table 22: Total Aid for the At-Risk Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $5,413; 
SFY: 2000: $8,314; 
SFY: 2004: $10,569; 
Percentage change: 1995-2000: 54; 
Percentage change: 2000-2004: 27; 
Percentage change: 1995-2004: 95. 

State: Colorado; 
SFY: 1995: $352; 
SFY: 2000: $508; 
SFY: 2004: $513; 
Percentage change: 1995-2000: 44; 
Percentage change: 2000-2004: 1; 
Percentage change: 1995-2004: 46. 

State: Louisiana; 
SFY: 1995: $300; 
SFY: 2000: $470; 
SFY: 2004: $512; 
Percentage change: 1995-2000: 57; 
Percentage change: 2000-2004: 9; 
Percentage change: 1995-2004: 71. 

State: Maryland; 
SFY: 1995: $1,237; 
SFY: 2000: $1,322; 
SFY: 2004: $1,761; 
Percentage change: 1995-2000: 7; 
Percentage change: 2000-2004: 33; 
Percentage change: 1995-2004: 42. 

State: Michigan; 
SFY: 1995: $1,794; 
SFY: 2000: $2,387; 
SFY: 2004: $2,694; 
Percentage change: 1995-2000: 33; 
Percentage change: 2000-2004: 13; 
Percentage change: 1995-2004: 50. 

State: New York; 
SFY: 1995: $5,268; 
SFY: 2000: $6,702; 
SFY: 2004: $8,063; 
Percentage change: 1995-2000: 27; 
Percentage change: 2000-2004: 20; 
Percentage change: 1995-2004: 53. 

State: Oregon; 
SFY: 1995: $377; 
SFY: 2000: $474; 
SFY: 2004: $488; 
Percentage change: 1995-2000: 26; 
Percentage change: 2000-2004: 3; 
Percentage change: 1995-2004: 30. 

State: Texas; 
SFY: 1995: $1,383; 
SFY: 2000: $1,707; 
SFY: 2004: $1,799; 
Percentage change: 1995-2000: 23; 
Percentage change: 2000-2004: 5; 
Percentage change: 1995-2004: 30. 

State: Wisconsin; 
SFY: 1995: $412; 
SFY: 2000: $516; 
SFY: 2004: $507; 
Percentage change: 1995-2000: 25; 
Percentage change: 2000-2004: -2; 
Percentage change: 1995-2004: 23. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. See app. I for a further explanation of the aid for the at-risk 
category. 

[End of table] 

Table 23: Total Noncash Assistance Spending: 

2004 dollars in millions. 

State: California; 
SFY: 1995: $9,067; 
SFY: 2000: $14,543; 
SFY: 2004: $17,555; 
Percentage change: 1995-2000: 60; 
Percentage change: 2000-2004: 21; 
Percentage change: 1995-2004: 94. 

State: Colorado; 
SFY: 1995: $521; 
SFY: 2000: $902; 
SFY: 2004: $904; 
Percentage change: 1995-2000: 73; 
Percentage change: 2000-2004: 0; 
Percentage change: 1995-2004: 74. 

State: Louisiana; 
SFY: 1995: $845; 
SFY: 2000: $840; 
SFY: 2004: $983; 
Percentage change: 1995-2000: -1; 
Percentage change: 2000-2004: 17; 
Percentage change: 1995-2004: 16. 

State: Maryland; 
SFY: 1995: $1,797; 
SFY: 2000: $2,100; 
SFY: 2004: $2,597; 
Percentage change: 1995-2000: 17; 
Percentage change: 2000-2004: 24; 
Percentage change: 1995-2004: 45. 

State: Michigan; 
SFY: 1995: $3,442; 
SFY: 2000: $4,216; 
SFY: 2004: $4,524; 
Percentage change: 1995-2000: 22; 
Percentage change: 2000-2004: 7; 
Percentage change: 1995-2004: 31. 

State: New York; 
SFY: 1995: $9,736; 
SFY: 2000: $11,072; 
SFY: 2004: $14,313; 
Percentage change: 1995-2000: 14; 
Percentage change: 2000-2004: 29; 
Percentage change: 1995-2004: 47. 

State: Oregon; 
SFY: 1995: $662; 
SFY: 2000: $915; 
SFY: 2004: $957; 
Percentage change: 1995-2000: 38; 
Percentage change: 2000-2004: 5; 
Percentage change: 1995-2004: 44. 

State: Texas; 
SFY: 1995: $2,797; 
SFY: 2000: $3,660; 
SFY: 2004: $3,907; 
Percentage change: 1995-2000: 31; 
Percentage change: 2000-2004: 7; 
Percentage change: 1995-2004: 40. 

State: Wisconsin; 
SFY: 1995: $1,057; 
SFY: 2000: $1,441; 
SFY: 2004: $1,602; 
Percentage change: 1995-2000: 36; 
Percentage change: 2000-2004: 11; 
Percentage change: 1995-2004: 52. 

Source: GAO survey and analysis of state spending data. 

Notes: Includes federal, state, and local spending captured in our 
survey. Noncash assistance spending reflects total spending from the 
following previously defined GAO categories: employment services and 
training, work and other supports, and aid for the at-risk. See app. I 
for a further explanation of these categories. 

[End of table] 

[End of section] 

Appendix V: Survey Instrument: 

[See PDF for image] 

[End of figure] 

[End of section] 

Appendix VI: Comments from the Department of Health and Human Services: 

DEPARTMENT OF HEALTH & HUMAN SERVICES: 
Office of Inspector General: 
Washington, D.C. 20201: 

FEB 24 2006: 

Mr. David D. Bellis: 
Director, Education, Workforce, and Income Security Issues: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Bellis: 

Enclosed are the Department's comments on the U.S. Government 
Accountability Office's (GAO) draft report entitled, "WELFARE REFORM: 
Better Information Needed to Understand Trends in States' Uses of the 
TANF Block Grant" (GAO-06-414). These comments represent the tentative 
position of the Department and are subject to reevaluation when the 
final version of this report is received. 

The Department provided several technical comments directly to your 
staff. 

The Department appreciates the opportunity to comment on this draft 
report before its publication. 

Sincerely, 

Signed by: 

Daniel R. Levinson: 
Inspector General: 

Enclosure: 

The Office of Inspector General (OIG) is transmitting the Department's 
response to this draft report in our capacity as the Department's 
designated focal point and coordinator for U.S. Government 
Accountability Office reports. OIG has not conducted an independent 
assessment of these comments and therefore expresses no opinion on 
them. 

COMMENTS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES ON THE U.S. 
GOVERNMENT ACCOUNTABILITY OFFICE'S DRAFT REPORT ENTITLED, "WELFARE 
REFORM: BETTER INFORMATION NEEDED TO UNDERSTAND TRENDS IN STATES' USES 
OF THE TANF BLOCK GRANT" (GAO-06-414): 

The Department of Health and Human Services (HHS) appreciates the 
opportunity to comment on the U.S. Government Accountability Office's 
(GAO) draft report. 

GAO Conclusion: 

To better inform its oversight and decision-making process, Congress 
should consider ways to address two key information gaps for the 
Temporary Assistance for Needy Families (TANF) block grant: (1) 
insufficient information on the numbers served by TANF funds, and (2) 
limited information on how funds are used - for example, on which 
target populations and as part of what strategies and approaches - to 
meet TANF goals. 

Efforts to obtain more information must take into account how to do so 
in a cost-effective and least burdensome way. Some options include 
Congress directing the Secretary of HHS to: require States to include 
more information in State TANF plans filed with HHS on their strategies 
and approaches for using funds; require States to include more 
information on all aspects of TANF spending in the annual report they 
must file with HHS; and revise other reporting requirements regarding 
the uses and recipients of TANF-related funds. Congress may wish to 
require the Secretary to consult with key welfare reform stakeholders 
in assessing and revising reporting requirements or information 
gathering strategies. 

HHS Comments: 

The GAO report contends that there are gaps in the information 
collected at the Federal level "to ensure State accountability." It 
explains that these gaps occur because existing data collection 
mechanisms focus on cash assistance, which no longer represents the 
major source of expenditures for the TANF program. The report also 
elaborates on the many reasons why such gaps exist. In particular, it 
notes that the legislation creating the TANF program "restricted HHS 
regulatory authority over the States" and the need for additional 
legislative authority to collect more detailed information about 
services other than cash assistance. It also cites various barriers to 
collecting such information, including problems with State information 
systems, increased administrative costs, data reporting burdens placed 
on States and service providers, and potential deterrence effects from 
new requirements to provide personal identifying information. We agree 
with GAO that additional information would be valuable, and if data 
requirements are to be expanded, that they be done in a cost-effective 
manner in consultation with stakeholders. 

The title of the GAO report, "WELFARE REFORM: Better Information Needed 
to Understand Trends in States' Uses of the TANF Block Grant," reflects 
a relatively small part of GAO's report. It seems that the real story 
from the report is that, despite predictions of a "race to the bottom" 
when TANF was passed, States have increased substantially their 
spending on low-income families. Moreover, this increase in State 
expenditures came about during a time when the child poverty rate 
declined (from 20.8 percent in 1995 to 17.8 percent in 2004) and 
welfare cash assistance caseloads dropped by approximately 60 percent. 
These trends in low-income spending are not reflected in the report's 
title. 

[End of section] 

Appendix VII: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

David D. Bellis (415) 904-2272 or [Hyperlink, bellisd@gao.gov], Stanley 
J. Czerwinski (202) 512-6520 or [Hyperlink, czerwinskis@gao.gov]. 

Acknowledgments: 

In addition to the contacts named above, Paul Posner, Gale Harris, Tom 
James, Sandra Beattie, Rebecca Hargreaves, Cheri Harrington, Dorian 
Herring, Brittni Milam, and Keith Slade made key contributions to this 
report. In addition, Gregory Dybalski and Jerry Fastrup provided key 
analytical and technical support; Wesley Dunn provided legal support; 
and Katherine Bittinger, Allen Chan, Reid Jones, Tahra Nichols, Rudy 
Payan, John Rose, and Suzanne Sterling-Olivieri assisted with fieldwork 
in states. 

(450358): 

FOOTNOTES 

[1] See GAO, Welfare Reform: Challenges in Maintaining a Federal-State 
Fiscal Partnership, GAO-01-828 (Washington, D.C.: Aug. 10, 2001), and 
Welfare Reform: Early Fiscal Effects of the TANF Block Grant, GAO/AIMD- 
98-137 (Washington, D.C.: Aug. 18, 1998). 

[2] Although Connecticut was part of our 2001 report, it is not 
included in this update because state spending data and supporting 
documentation were not adequate for completing the analysis (which was 
modified from the approach used in the 2001 report). 

[3] Pub. L. No. 104-193, 110 Stat. 2105, August 22, 1996. 

[4] States' MOE requirements are based on their own spending in federal 
fiscal year 1994 on AFDC, Job Opportunities and Basic Skills Training 
(JOBS); Emergency Assistance (EA); and AFDC-related child care 
programs: AFDC/JOBS child care program, Transitional Child Care, and At-
Risk Child Care programs. A state that does not meet the act's work 
participation rates must maintain at least 80 percent MOE. A state that 
meets its work participation rate must maintain at least 75 percent of 
its MOE. For more information, see GAO/AIMD-98-137. 

[5] GAO-01-828. 

[6] The elderly make up the remainder of the Medicaid caseload and 
expenditures, but they are excluded from this study. 

[7] For more information see GAO, Medicaid Enrollment: Amid Declines, 
State Efforts to Ensure Coverage After Welfare Reform Vary, GAO/HEHS- 
99-163 (Washington, D.C.: Sept. 10, 1999). 

[8] For more information see Elicia J. Herz, Congressional Research 
Service, Coverage of the TANF Population Under Medicaid and SCHIP, 
RS22035 (Washington, D.C.: Jan. 27, 2005). 

[9] For more information, see GAO, Means-Tested Programs: Information 
on Program Access Can Be an Important Management Tool, GAO-05-221 
(Washington, D.C.: Mar. 11, 2005). 

[10] One of the design features of the Medicaid program is the nature 
of the cost-sharing arrangement between states and the federal 
government. The federal share is guided by a matching rate related to 
the per capita income for each state. 

[11] We asked each state to provide cash assistance spending and 
caseload data for any income support programs available in the state. 
TANF-funded cash assistance is only available to families with 
children. While some states reported all cases to us, including those 
that are 100 percent state funded, some states did not. This does not 
affect the overall trends we identified. 

[12] For more information, see GAO, Welfare Reform: More Information 
Needed to Assess Promising Strategies to Increase Parents' Incomes, GAO-
06-108 (Washington, D.C.: Dec. 2, 2005). 

[13] See GAO, Supports for Low-Income Families: States Serve a Broad 
Range of Families Through a Complex and Changing System, GAO-04-256 
(Washington, D.C.: Jan. 26, 2004). 

[14] Declining food stamp caseloads during this time period were not 
unique to Louisiana. For more information, see GAO, Food Stamp Program: 
Various Factors Have Led to Declining Participation, GAO/RCED-99-185 
(Washington, D.C.: July 2, 1999), and Food Stamp Program: Steps Have 
Been Taken to Increase Participation of Working Families, but Better 
Tracking of Efforts is Needed, GAO-04-346 (Washington, D.C.: Mar. 5, 
2004). 

[15] For more information on recent changes in federal and state child 
care subsidy programs, see GAO, Child Care: Additional Information Is 
Needed on Working Families Receiving Subsidies, GAO-05-667 (Washington, 
D.C.: June 25, 2005), and Child Care: Recent State Policy Changes 
Affecting the Availability of Assistance for Low-Income Families, GAO- 
03-588 (Washington, D.C.: May 5, 2003). 

[16] Our study includes the refundable portion of state EICs. A 
refundable tax credit provides a payment to those eligible applicants 
when the amount of the credit is greater than the taxpayer's tax 
liability. Federal EICs were not included because they do not flow 
through the state budget. 

[17] For more information on the nation's child welfare system, see 
GAO, Child Welfare: Improved Federal Oversight Could Assist States in 
Overcoming Key Challenges, GAO-04-418T (Washington, D.C.: Jan. 28, 
2004). 

[18] While the major focus of the AFDC program was monthly cash 
assistance, states could spend some federal and state AFDC-related 
funds on work preparation, child care, emergency assistance payments, 
and some child welfare-related activities. These program components are 
related to spending in the noncash categories in our analysis-- 
employment services and training, work and other supports, and aid for 
the at-risk. However, states may not use TANF-related funds to pay for 
most medical services, which restricts their ability to supplement 
Medicaid spending. 

[19] In August 2005, we recommended that HHS take steps to help improve 
the quality and comparability of the work participation rate data to 
improve this measure's usefulness in assessing states' performance. See 
GAO, Welfare Reform: HHS Should Exercise Oversight to Help Ensure TANF 
Work Participation Is Measured Consistently across States, GAO-05-821 
(Washington, D.C.: Aug. 19, 2005). 

[20] Some of the costs of such welfare-to-work programs are included in 
the employment services and training category and in the cash 
assistance category (for payments to TANF recipients; costs of 
caseworkers; and job placements, for example), while other costs, such 
as child care assistance paid for with TANF and MOE funds, are included 
in the work and other supports category. The states may vary in how 
they classify some of the costs of operating welfare-to-work programs. 

[21] GAO-01-828. 

[22] TANF regulations state that the term "assistance" includes cash, 
payments, vouchers, and other forms of benefits designed to meet a 
family's ongoing basic needs, such as for food, clothing, shelter, and 
other items. It excludes other forms of aid, including supportive 
services such as child care and transportation provided to employed 
families and refundable EICs. 

[23] See GAO, Welfare Reform: States Provide TANF-Funded Work Support 
Services to Many Low-Income Families Who Do Not Receive Cash 
Assistance, GAO-02-615T (Washington, D.C.: Apr. 10, 2002). 

[24] See GAO, Child Care: Additional Information Is Needed on Working 
Families Receiving Subsidies, GAO-05-667 (Washington, D.C.: June 29, 
2005). 

[25] GAO, Welfare Reform: Challenges in Maintaining a Federal-State 
Fiscal Partnership, GAO-01-828 (Washington, D.C.: Aug. 10, 2001), and 
Welfare Reform: Early Fiscal Effects of the TANF Block Grant, GAO/AIMD- 
98-137 (Washington, D.C.: Aug. 18, 1998). 

[26] Although Connecticut was part of our 2001 report, it is not 
included in this update because state spending data and supporting 
documentation were not adequate for completing the analysis (which was 
modified from the approach used in the 2001 report). 

[27] GAO-01-828. Specifically, we adapted a fiscal survey developed by 
the Nelson A. Rockefeller Institute of Government. See Deborah Ellwood 
and Donald Boyd, Changes in State Spending on Social Services since 
Implementation of Welfare Reform: A Preliminary Report (Albany, N.Y.: 
Rockefeller Institute, February 2000). 

GAO's Mission: 

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading. 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov 

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director, 

NelliganJ@gao.gov 

(202) 512-4800 

U.S. Government Accountability Office, 

441 G Street NW, Room 7149 

Washington, D.C. 20548: