Guide to Financing Supportive Housing:
Department of Health and Human Services-Temporary Assistance for Need Families (TANF)

Introduction
Regulations/Guidelines
Administrative Agencies
Eligibility Information
Grant/Loan Terms
Application Process
CFDA Code
Authorizing Legislation/Statute
Additional Resources

In 1996, Congress established the Temporary Assistance for Needy Families program (TANF), creating a flexible block grant that replaced the former cash assistance entitlement program, Aid to Families with Dependent Children (AFDC). TANF provides funds that must be matched by the states for income support and a wide range of service for eligible needy families and individuals.

There are two sources of TANF program spending, each with its own requirements and restrictions: (1) the federal TANF block grant to the states; and, (2), state TANF spending required to match the Federal block grant called "maintenance of effort" (MOE) spending. (States must spend 75 - 80% of the fiscal year 1994 state spending level they had spent under the AFDC program.) TANF and MOE funds are disbursed to subdivisions of government, usually counties.

Federal TANF funds are provided to states with different restrictions on use, depending on what types of benefits are provided. Regulations impose time limits on aid (generally 18 months for a single period of assistance and not more than 5-years lifetime for most welfare recipients) as well as work and child support requirements for any family receiving benefits from TANF funds. Welfare benefits and Medicaid are de-linked as well.

States are afforded a great deal of flexibility in deciding how to spend TANF funds as long as the expenditure is reasonably calculated to accomplish a purpose of the TANF program, as follows:

• assisting needy families so that children can be cared for in their own homes;
• reducing dependency of needy parents by promoting job preparation, work and marriage;
• preventing out-of-wedlock pregnancies; and,
• encouraging the formation and maintenance of two-parent families.

In general, states have more discretion in spending MOE funds than Federal TANF funds as follows: state MOE funds may be used for more flexible purposes, but must serve a more limited pool of TANF-eligible families; Federal TANF funds can serve a broader population but may have more restrictions or prohibitions regarding allowable uses.

While benefits provided under the first two TANF purposes are limited to parents and families that meet the state's definition of "needy" (defined as financially deprived according to income and related criteria), Federal TANF funds may be used to provide services that are not considered "assistance" to a broader population of families (e.g., non-custodial parents).

That is, under certain circumstances states do not have to limit services to the "needy." Under TANF purposes 3 and 4, states may use Federal TANF funds to extend benefits that are not considered "assistance" to individuals or family members regardless of their income or household composition (i.e., who are not "needy"), but who meet other objective eligibility criteria established by the state.

Nevertheless, when either Federal TANF or state MOE funds are used to provide "assistance," applicable TANF requirements pertain. When making plans to use TANF funds for a particular service, the state determines whether Federal or state funds are the most appropriate source for that activity. (For further details on the definition of "assistance" see the final TANF regulations 45 CFR 260.31.)

Annual TANF block grant allocations to the states are based on federal funding levels from 1994 or 1995 (by choice of the state), when welfare caseloads were much higher.  Due to dramatic declines in caseloads and fixed funding levels, states across the nation have had surplus TANF dollars.  These excess funds gave states new opportunities to provide a wide range of needed work supports to eligible families, including transportation and child care assistance, substance abuse and mental health treatment, domestic violence and housing assistance.

As such, TANF (and state MOE spending) can be an important revenue source for housing assistance and services in supportive housing for homeless families, non-custodial parents, and transition-aged youth, subject to certain limitations. The purposes of supportive housing -- providing stable, affordable housing coupled with the services necessary to promote long-term self-sufficiency -- complement and reinforce the purposes of the TANF program. Unfortunately, in the last two years TANF surpluses have dwindled due to rising caseloads because of the down turn in the economy and states are using TANF funds to supplant other declines in social services funding. 

Annual adjustments to TANF levels are entirely on a state-by-state basis.  Consult the state’s department of social services to determine the historical trends in benefits increases to assist in projecting incomes based on TANF.

TANF Final Rule, published in Federal Register on April 12, 1999 (Vol. 64, No 69). Program rules for State programs found at 45 CFR Parts 260 - 265. Tribal TANF Final Rule, published in Federal Register on February 18, 2000 (Vol. 65, No. 34). Tribal program rules found at 45 CFR Part 286.

Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, (202) 401-5139 www.acf.hhs.gov/programs/ofa/index.htm

ELIGIBILITY INFORMATION

Eligible Target Populations:

States determine eligible target populations within Federal guidelines that provide:

• Low-income families who meet the state's income guidelines, have a minor child living with an adult relative in the home, and have not exceeded their five-year lifetime limit for receiving TANF assistance (i.e., "needy" families with children.)
• Former recipients of TANF cash assistance (for certain TANF activities)
• Non-custodial parents of TANF-eligible families (for certain TANF activities)
• Non-needy families or individuals (who don't meet the state's TANF income level or certain other restrictions) for activities related to prevention of out-of-wedlock pregnancy and encouragement of the formation and maintenance of two-parent families.

Please note:  TANF imposes complex requirements regarding the immigration status of TANF recipients.  (Consult PRWORA.)

Supportive housing sponsors serving TANF-eligible families and/or non-custodial parents of TANF-eligible families who have multiple barriers to work or transition-aged youth have the best case for getting surplus TANF funds based on their ability to meet fundamental TANF purposes, i.e., stable affordable housing improves employment outcomes; housing and services to transition-aged youth to prevent and end homelessness can meet the goal of preventing out of wedlock births.

Eligible Use of Funds & Use Restrictions:

In addition to cash benefits, states may spend their TANF funds on job training, employment services (e.g., job search, job placement, work subsidies, etc.), childcare assistance (e.g., child care, subsidies, after-school and summer activities, etc.), transportation, education and training, substance abuse counseling, mental health services, non-medical substance abuse services (e.g., counseling, room and board costs at residential treatment programs), vocational rehabilitation services, housing/rental assistance (including security deposits, payments of back rent to prevent evictions, subsidies, loans, etc.), case management services, and other supportive services in support of TANF's program purposes. States also may transfer a limited portion of their assistance grant funds to the Child Care and Development Block Grant (CCDBG) and the Social Services Block Grant (SSBG) Programs. States may not use TANF funds for capital costs or medical services.

In general, TANF funds and/or state funds used to match them may be used to pay for many of the services that would be included in a supportive housing project for eligible families, particularly if the services are designed to help families participate in welfare to work activities or address barriers to employment.  TANF funds may also be used for some services in projects serving youth leaving the foster care system.  As a general matter, the populations to be served and the types of services to be offered will determine the most appropriate source of funds (TANF or MOE) and the requirements that must be met.

While TANF funds may also be used for time-limited assistance with housing operating costs (e.g., rent subsidies), there are complex issues involved with this strategy.  Many of the provisions that apply to TANF and state MOE funding may make it easiest to use this as a source of funding in transitional housing programs, but there are opportunities in permanent supportive housing as well. (See citations below in Additional Resources.)

Eligible Applicants/Sponsors:

State governments, Territories, the District of Columbia, and all federally recognized Tribes in the lower 48 states and 13 specified entities in Alaska are eligible.

GRANT/LOAN TERMS

Minimum/Maximum Awards: N/A

Average Awards: N/A

Term of Awards: Annual awards

Matching Requirements:

The TANF program has an annual cost-sharing requirement, referred to as "maintenance of effort" (MOE). Every fiscal year, each state must spend a certain minimum amount of its own resources to help eligible families in ways that are consistent with the purposes of the TANF program. The rate is determined by whether the state meets the work participation rates:  if it does, it must match TANF funds with an amount equal to 75% of what it spent for fiscal year 1994 or 1995 (by choice of state) on AFDC and AFDC-related programs; if it does not, it must provide an 80% match.

Formula: TANF funding is allocated to states based on a formula that matches state spending for AFDC in fiscal year 1994 or 1995 (by choice of state). (See Matching Requirements above.) 

APPLICATION PROCESS

States and others that operate TANF programs must develop a State plan that must be approved by the Department of Health and Human Services.  Federal and state matching funds are generally administered by local government welfare departments.

Supportive housing sponsors serving tenants who are TANF-eligible will, in most instances, need to advocate at the state and local levels to access TANF funds for services in supportive housing. The leverage (or "selling point") for supportive housing sponsors is the comprehensive, wraparound support provided in supportive housing for people with multiple barriers to work.

Social Security Act, Title IV, Part A, as amended: Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), Public Law 104-193; Balanced Budget Act of 1997, Public Law 105-33.

ADDITIONAL RESOURCES

• "Using TANF Funds to Finance Essential Services in a Supportive Housing Program for Homeless Families and Young Adults," Doreen Straka, Constance Tempel, Corporation for Supportive Housing, and Karen Lipson, Kalkines, Arky, Zall & Bernstein LLP.
•  "The Increasing Use of TANF and State Matching Funds to Provide Housing Assistance to Families Moving from Welfare to Work - 2001 Supplement", Barbara Sard and Tim Harrison, The Center for Budget and Policy Priorities, www.cbpp.org/12-3-01hous.pdf
• "Helping Families Achieve Self-Sufficiency:  A Guide on Funding Services for Children and Families through the TANF Program," Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, www.acf.hhs.gov/programs/ofa/funds2.htm
•  The State Policy Documentation Project is a joint project of the Center for Law and Social Policy and the Center on Budget and Policy Priorities, which monitors states’ policies on TANF and Medicaid and maintains a database on benefit levels and eligibility requirements by state. See their page for TANF cash assistance categorical and financial eligibility rules.
• The Economic Success Clearinghouse (formerly Welfare Information Network) is another useful source of information on state TANF benefits, rules and eligibility. Their website maintains a State Plan Database that offers a series of matrices by state and topic.
• NAEH's summary of how Massachusetts is using TANF resources more effectively to end family homelessness (Jan 2005).

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