Report: Tennessee has $730 million in unused block grant funds for poor working families

Natalie Allison
The Tennessean

Tennessee is sitting on more than $730 million in unused federal block grant funds designed to help poor working families, a figure the conservative Beacon Center of Tennessee says is concerning.

The nonpartisan but fiscally conservative think tank discovered the substantial reserve money this month while conducting research on Tennessee's public assistance programs for its report, "Poverty to Prosperity."

Tennessee receives $190.9 million each year through the federal government's Temporary Assistance for Needy Families program. Last year, Beacon found the state spent just $71.1 million of that money, or 37% of the annual block grant amount.

The remaining funds are placed in a reserve fund, which as of September had grown to $732.7 million. By contrast, the state just set aside roughly $225 million to bring its general rainy day reserve fund to a record high of $1.1 billion.

"I haven't seen a plan put out on how to utilize that funding, and if we don’t come up with some type of plan, then we probably shouldn’t continue getting $190 million each year," said Stephanie Whitt, the Beacon Center's executive vice president.

A runner uses the steps leading up to the Tennessee state Capitol for his exercise Thursday, Aug. 22, 2019, in Nashville, Tenn.

State does not have plan to use 'surplus' TANF funds

Through its Families First program, Tennessee receives TANF block grant funds to provide temporary cash assistance, transportation, child care assistance, job training and other support services to help low-income working families.

Families participating in the program received an average of $243 in cash assistance during August, according to state data. Employed participants in the program make an average of $927 per month.

The state's Families First program in August assisted 19,119 families consisting of 40,914 individuals.

"The Families First program emphasizes work, training and personal responsibility," the Department of Human Services states on its website. "It is temporary and has a primary focus on gaining self-sufficiency through employment."

DHS spokesman Sky Arnold said the department refers to the leftover block grant money as a "surplus" rather than "reserves," and "has chosen to take a careful, fiscally responsible and strategic approach to utilize these funds to strengthen Tennessee families."

The department does not have any formal plans for how it is going to disperse the large sum of money in the near future.

In response to a question about whether Gov. Bill Lee had concerns about the sum of TANF money remaining in the bank, press secretary Laine Arnold said the surplus money could be held for a rainy day.

"Federally funded programs like TANF experience fluctuations in case load based on the economy," Laine Arnold said. "A surplus in funding provides a cushion for potential economic downturn and the higher case load that could ensue, and also affords the opportunity to fund additional programming that meets federal requirements."

The governor's office did not list any new programs it plans to implement through the funds.

Sky Arnold pointed to DHS electing earlier this year to increase the monthly allotment to participating families by 20%, as well as DHS' partnership with organizations around the state through its "two-generation" approach to address poverty by supporting both children and parents.

The state's Families First program, implemented in 1996, has to date awarded $36 million to groups such as Project Return, the United Way of Metro Nashville, and Gideon's Army.

But Whitt projects that if the state continues to only spend around $70 million of its annual $190 million TANF block grant, the fund will quickly reach a balance of nearly $1 billion in unused money. 

"Our concern is that is a lot money to have sitting there, especially when we have people we can help," said Whitt, who worked for DHS as an assistant commissioner between 2015 and 2017.

Beacon Center recommends state create new programs with TANF money

According to U.S. Census data, Tennessee's 16.7% poverty rate is above the national average. The rate is even higher for children, 28% of whom are living in poverty.

Because the state receives TANF funds as a block grant with significantly more flexibility on administration and eligibility requirements than other federal entitlement money, Beacon is suggesting Tennessee use the funds to create innovative programs to provide more help for working families.

Whitt suggested using that money to provide transportation and childcare supplements for families as they continue to move up the economic ladder, providing incentives for adults to grow their incomes and maintain jobs.

Beacon's report, which examined whether Tennesseans are able to use public assistance programs to escape poverty, also looked at Tennessee's Supplemental Nutrition Assistance Program and TennCare, the state's Medicaid program.

The group found that while the number of SNAP and TANF cases in Tennessee have decreased in the years since the nation's economic recession, the number of TennCare cases has still grown amid low unemployment rates in the state.

Reach Natalie Allison at nallison@tennessean.com. Follow her on Twitter at @natalie_allison.

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