During the 2023 session, the Nebraska Legislature took action to spend a greater portion of our annual Temporary Assistance for Needy Families (TANF) block grant and to spend down a portion of the TANF rainy day fund…but not in a way that will directly benefit the state’s lowest income families with children. When we say “lowest income families with children” or “extreme poverty,” we are talking about a household of three with an income under $1,000 per month.
As described in a commentary published by the Nebraska Examiner earlier this year, Nebraska started the year with a TANF rainy day fund with a balance of over $130 million. Our state has under-spent our TANF block grant over the course of the last few years by approximately $11 million dollars per year. Nebraska Appleseed advocated for several options in front of the Legislature’s Health and Human Services Committee that would have directed those funds towards direct cash assistance for Nebraska’s lowest income families with children, through improvements in the state’s Aid to Dependent Children (ADC) program.
A growing body of research has shown that direct cash assistance has an immediate and long-lasting positive impact for families. Over 50,000 Nebraska children are living in poverty; approximately 21,827 are living in extreme poverty (below 50% of the federal poverty line). And yet, in June 2023, only 5,157 children in Nebraska received TANF cash assistance funds.
So… what happened in the 2023 session?
Senators spent a significant amount of time in hearings, in both the Health and Human Services and the Appropriations Committees, and on the floor, discussing Nebraska’s use of TANF funds and possibilities for our ADC program. What did they discuss, and where did things land? Let’s dive in.
Health and Human Services Committee
In January 2023, the following bills were introduced:
- LB233 would have ensured that child support is used to support kids by eliminating child support income as a factor in determining families’ eligibility for Aid to Dependent Children (ADC) benefits. ADC is the direct cash assistance program funded by the Temporary Assistance for Needy Families (TANF) Block Grant.
- LB290 would have put more money in the pockets of families who need it by increasing the eligibility limit for ADC. A similar bill, LB310 would have increased the ADC maximum benefit level.
The Legislature took no action on these bills. The Health and Human Services Committee decided that figuring out how to provide direct cash assistance to Nebraska’s lowest income families with children was not a high priority this year.
Appropriations Committee
In January 2023, the following bills were introduced:
- LB112 would have increased the use of General Funds for the state’s child advocacy centers. General Funds are currently used to fund the child advocacy centers’ statutorily obligated duties, which include protecting children from further trauma when they have been abused.
- LB739 would have increased the use of General Funds for domestic violence service providers. General Funds are currently used to fund the domestic violence service providers’ work to prevent domestic violence and support survivors. Domestic violence service providers experienced a significant decrease in federal funding, which led to an urgent need for an increase in state funding.
- LB763 would have increased the use of General Funds for food banks and other organizations to provide emergency food assistance, to address alarming rates of food insecurity that many Nebraska families are facing.
The organizations advocating for these bills (LB112, LB739, and LB763) testified at hearings in front of the Appropriations Committee and requested the use of General Fund dollars for these incredibly important programs. The Appropriations Committee and the Governor decided that providing direct cash assistance to our state’s lowest income families with children (in other words, addressing one of the root causes that leads people to need assistance from those organizations in the first place – poverty) was not their highest priority for our state’s use of TANF funds. These bills were incorporated into LB814, the mainline budget bill. The Legislature passed a budget that used TANF funds instead of General Funds for the child advocacy centers, domestic violence providers, and food banks.
Where we’re at now with the annual TANF block grant:
Nebraska receives a federal TANF block grant award of $56,627,234 every year. Nebraska had been under-spending our TANF block grant by an average of $11 million per year over the past 5 years – that is how our state accumulated such a large balance in our TANF rainy day fund. According to expenditure data provided by DHHS in response to an Open Records Request, in Federal Fiscal Year (FFY) 2022 Nebraska only spent $33,340,376 of the TANF funds. Between FFY2018 to FFY2022, Nebraska spent, on average, $45,326,503 per year.
With the changes made in the budget this year, Nebraska will likely spend the full amount of our annual TANF block grant in the years to come. While there is some degree of flexibility for the Legislature to continue to consider additional proposals, that will require some amount of reassessing the allocation of the annual TANF block grant to ensure that it is sustainable. This reassessment should explicitly consider whether our current TANF expenditures are benefitting Nebraska’s lowest income families with children more than an increase in direct cash assistance would.
Where we’re at now with the TANF rainy day fund:
This still leaves a significant amount of money in the TANF rainy day fund. Before the 2023 session, the fund held $131,634,734. After the Legislature’s action this past session, and accounting for the need to maintain a six month sufficient reserve, the TANF rainy day fund currently has $92,321,117 that should be put to use.
Here is the math on the Legislature’s actions this year:
- One-time expenditures of TANF funds: The Legislature approved $11 million in one-time expenditures for emergency food assistance and a facility to house pregnant and parenting homeless youth. See page 86 of the 2023 budget report and page 1731 of the Legislative Journal.
- New, ongoing TANF expenditures: The Legislature also appropriated $11.9 million in ongoing TANF spending. See page 86 of the 2023 budget report and page 1731 of the Legislative Journal.
- The child advocacy centers will receive $8 million on an ongoing basis
- The domestic violence providers will receive $3 million on an ongoing basis.
- DHHS will spend $900,000 on an ongoing basis for the expansion of home visitation (another switch from General Funds to TANF funds, according to the Governor’s LB 814 veto letter).
According to these anticipated expenditures, we will only spend down the rainy day fund by $599,269 each year. At this rate, it would take over 150 years to spend down the rainy day fund! This is not an effective use of taxpayer dollars, and would do little to nothing to address the critical needs of Nebraska’s lowest income families with children.
What’s next for Nebraska’s TANF rainy day funds?
On Friday, October 27, the Legislature’s Appropriations Committee is holding an interim study hearing to examine the long-term fiscal sustainability of and how to best direct funding towards the most effective uses of Nebraska’s federal TANF funds (LR167). We hope this hearing will include a serious discussion about increasing funding for direct cash assistance to Nebraska’s lowest income families with children. We also hope the hearing will address what evidence there is (if any) that other proposed TANF expenditures will benefit Nebraska’s lowest income families with children more than an increase in direct cash assistance would.
We know that providing direct cash assistance to our state’s lowest income families with children is one of the most effective ways to address economic injustice. This money should go to the Nebraska families who need it most.