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Changes in State Spending on Social Services Since the Implementation of Welfare Reform
Finding 10: Unspent TANF funds are very large in Wisconsin by several measures and are
relatively small in Missouri.
The data show that 1998-99 state spending of federal TANF money was than 1994-95 state
spending of federal IV-A and IV-F funds, despite the fact that TANF grants are much larger than the
1994-95 federal grants. This is consistent with what many analysts have found from federal data,
namely that states have not been spending all of their TANF grants, and have been accumulating
unspent balances in the federal treasury - a fact that has aroused the concern of many policymakers.
In aggregate, as of March 1999, states had accumulated $7.6 billion of unspent TANF funds.
States might not have spent their entire TANF grants for several reasons:
It takes time for policymakers and bureaucracies to decide how to respond to new
flexibility such as that al lowed un der TANF. It may be much eas ier to cut back on
cash as sis tance than to de sign new pro grams. This decisionmaking could be com pli-
cated by the sheer size and relatively unexpected nature of funding available for
other pro grams, re sult ing in part from larger-than-expected de clines in case loads. In
other words, eco nomic good news and greater-than-expected re duc tions in wel fare
rolls could con trib ute to un spent bal ances.
State de ci sions to spend avail able funds could be fur ther com pli cated by the un cer-
tain na ture of the fund ing. Some an a lysts have sug gested that states of ten are fis cally
con ser va tive, and re luc tant to com mit to new pro grams if they are un sure that fund-
ing for the pro grams will con tinue at its cur rent level. States might be wor ried that
TANF will be reauthorized af ter 2002 with less fund ing than at pres ent, or even that
fund ing will be re duced be fore then. Thus, state of fi cials may see them selves as fac-
ing a fis cal co nun drum: If they don't spend all their TANF funds, they in crease the
risk that they will lose them; but if they use TANF funds for new pro grams they risk
pres sure to fund these pro grams with their own money if TANF funds are re duced.
An other rea son states might not spend all their TANF funds is that to the ex tent they
wish to set aside funds for a rainy day - for case load in creases that might oc cur in a
re ces sion, for ex am ple - they are not al lowed to do this with TANF funds they have
drawn down from the fed eral trea sury. If funds re main in the fed eral trea sury, they
can be used when needed for that pur pose.
fter states de cide upon pol i cies, there may still be lags in de sign ing and im ple ment-
ing new pro grams, and lags be tween im ple men ta tion and pay ment un der those pro-
grams. Un spent funds aris ing for this rea son might be tran si tory.
Finally, states may simply be unable or unwilling to reach agreement on how to
spend money. For example, some states might not want to spend as much federal
money for TANF pur poses as the TANF pro gram al lows, even if it does not re quire
match ing state funds.
Presumably policymakers are concerned most about continuing inability or unwillingness to
reach agreement on how to spend TANF funds, and less about transitory causes of unspent
balances.
The four states we examined all had unspent TANF funds, although the amounts varied widely
from state to state. The table below gives several measures of unspent balances in the U.S. treasury
for the four states, based on unobligated balances (a subset of total unspent balances) and on total
unspent balances, which in turn can yield insights into how easy or difficult it might be to spend the
20
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"ocrText": "Changes in State Spending on Social Services Since the Implementation of Welfare Reform\nFinding 10: Unspent TANF funds are very large in Wisconsin by several measures and are\nrelatively small in Missouri.\nThe data show that 1998-99 state spending of federal TANF money was than 1994-95 state\nspending of federal IV-A and IV-F funds, despite the fact that TANF grants are much larger than the\n1994-95 federal grants. This is consistent with what many analysts have found from federal data,\nnamely that states have not been spending all of their TANF grants, and have been accumulating\nunspent balances in the federal treasury - a fact that has aroused the concern of many policymakers.\nIn aggregate, as of March 1999, states had accumulated $7.6 billion of unspent TANF funds.\nStates might not have spent their entire TANF grants for several reasons:\nIt takes time for policymakers and bureaucracies to decide how to respond to new\nflexibility such as that al lowed un der TANF. It may be much eas ier to cut back on\ncash as sis tance than to de sign new pro grams. This decisionmaking could be com pli-\ncated by the sheer size and relatively unexpected nature of funding available for\nother pro grams, re sult ing in part from larger-than-expected de clines in case loads. In\nother words, eco nomic good news and greater-than-expected re duc tions in wel fare\nrolls could con trib ute to un spent bal ances.\nState de ci sions to spend avail able funds could be fur ther com pli cated by the un cer-\ntain na ture of the fund ing. Some an a lysts have sug gested that states of ten are fis cally\ncon ser va tive, and re luc tant to com mit to new pro grams if they are un sure that fund-\ning for the pro grams will con tinue at its cur rent level. States might be wor ried that\nTANF will be reauthorized af ter 2002 with less fund ing than at pres ent, or even that\nfund ing will be re duced be fore then. Thus, state of fi cials may see them selves as fac-\ning a fis cal co nun drum: If they don't spend all their TANF funds, they in crease the\nrisk that they will lose them; but if they use TANF funds for new pro grams they risk\npres sure to fund these pro grams with their own money if TANF funds are re duced.\nAn other rea son states might not spend all their TANF funds is that to the ex tent they\nwish to set aside funds for a rainy day - for case load in creases that might oc cur in a\nre ces sion, for ex am ple - they are not al lowed to do this with TANF funds they have\ndrawn down from the fed eral trea sury. If funds re main in the fed eral trea sury, they\ncan be used when needed for that pur pose.\nfter states de cide upon pol i cies, there may still be lags in de sign ing and im ple ment-\ning new pro grams, and lags be tween im ple men ta tion and pay ment un der those pro-\ngrams. Un spent funds aris ing for this rea son might be tran si tory.\nFinally, states may simply be unable or unwilling to reach agreement on how to\nspend money. For example, some states might not want to spend as much federal\nmoney for TANF pur poses as the TANF pro gram al lows, even if it does not re quire\nmatch ing state funds.\nPresumably policymakers are concerned most about continuing inability or unwillingness to\nreach agreement on how to spend TANF funds, and less about transitory causes of unspent\nbalances.\nThe four states we examined all had unspent TANF funds, although the amounts varied widely\nfrom state to state. The table below gives several measures of unspent balances in the U.S. treasury\nfor the four states, based on unobligated balances (a subset of total unspent balances) and on total\nunspent balances, which in turn can yield insights into how easy or difficult it might be to spend the\n20"
}