Nebraska’s TANF Rainy Day Fund Update: A TANF Expenditure Plan Deep Dive

On Friday, October 27, 2023, Nebraska’s Department of Health and Human Services (DHHS) released a Temporary Assistance for Needy Families (TANF) expenditure plan for Federal Fiscal Years 2024 through 2027. DHHS stated that they are “committed to utilizing TANF funds to ensure needed services are delivered in an effective way to help Nebraskans achieve self-sufficiency.” 

Does the plan include an increase in the eligibility and assistance levels for the Aid to Dependent Children (ADC) program?” Unfortunately, no. Despite the fact that a growing body of research has shown that direct cash assistance has an immediate and long-lasting positive impact for families, by enabling families to better access resources and address their own basic needs, the Department’s plan does not include any significant increase in the amount of ADC spending. An increase in ADC eligibility and benefit levels would require legislative action. Unfortunately, DHHS opposed multiple bills being considered by the Nebraska Legislature this session that would have authorized these changes. The Legislature, starting with the Health and Human Services Committee, will have another opportunity to consider these proposals in the 2024 session.

The Department must have some other plan for increasing the percentage of Nebraska’s TANF spending that goes towards direct cash assistance… right? Nope. In fact, the Department’s TANF expenditure plan would reduce the percentage of Nebraska’s TANF spending that goes towards direct cash assistance. That amount has already dropped from 35.9% in Federal Fiscal Year 2019 to 21.4% in Federal Fiscal Year 2023, and would drop to 19.6% in Federal Fiscal Year 2027, if all goes according to the Department’s plan. 

Again, remember that cash assistance has an immediate positive impact by helping families afford the basic essentials their kids need such as food, rent, utilities, and diapers. Evidence links more cash assistance with healthier birthweights, better childhood nutrition, higher school enrollment, higher reading and math test scores, higher high school graduation rates, higher rates of college entry, and other benefits. Higher rates of success are linked to higher cash assistance amounts.

If they aren’t planning on spending Nebraska’s Temporary Assistance for Needy Families funds to provide temporary assistance to Nebraska’s lowest income families with children…what are they planning to spend it on? A variety of new and existing programs and services, some of which are more clearly related to the statutory purposes of TANF than others. 

Okay, but surely the plan explains what these programs and services are, and why they’re being prioritized over direct cash assistance… right? Again, no. The proposed TANF spending plan still doesn’t include any justification for prioritizing non-cash assistance programs as a more beneficial use of TANF funds than cash assistance. The plan includes a short paragraph each for multiple programs that will be receiving millions of dollars of taxpayer funds. There is not even enough information in the plan to get a clear picture of how the programs and services relate to the purposes of TANF. There is no information at all to explain how the programs will help Nebraska’s lowest income families with children achieve economic mobility and self-sufficiency more than an increase in direct cash assistance would.

Hey, at least they’re going to spend down the TANF rainy day fund, right? While the Department’s TANF expenditure plan does claim that the “unobligated reserves” (which currently amount to $125,896,578) will be reduced to $42 million by Federal Fiscal Year 2028, the plan also acknowledges that “the plan may have to be adjusted due to future federal regulation changes, actual program expenditures, and evaluation of program effectiveness.” There is already one proposed federal regulation change that could have a significant impact on the Department’s proposed TANF spending. Actual program expenditures in Federal Fiscal Year 2023 were lower than the Department’s estimated expenditures in all but four categories (for example, the Department estimated $15.5 million for ADC, but only spent $13.3 million). As noted previously, the plan is pretty light on information about how some of the programs relate to the purposes of TANF, so it isn’t hard to imagine that an assessment a year or two down the road will show little to no impact on helping families achieve economic mobility and self-sufficiency. 

This would not be the first time the Department has claimed to have a plan for spending down the TANF rainy day fund, without actually spending TANF funds at the expected levels. In fact, 2023 was the first time since Federal Fiscal Year 2017 the Department spent the full amount of the TANF block grant ($56.6 million). That was only accomplished by spending $4.7 million more than anticipated on Child Care, which the Department was only able to do because they didn’t spend any TANF funds on Child Care the previous year.

Year in and year out, advocates have come before the Health and Human Services Committee in support of proposals to spend down the TANF rainy day fund. Every year, the Department says that they have a plan for the funds, that a portion of the funds are already obligated, and that the Legislature shouldn’t get involved. The next year it turns out that those funds that were supposedly obligated have not actually been spent, and the cycle continues and the reserve fund grows. Only time will tell; we do not know if that cycle will continue, or if the Department’s plan truly will spend down the rainy day fund. In the meantime, over 50,000 Nebraska children are living in poverty; approximately 21,827 are living in extreme poverty.

What we do know is that providing direct cash assistance to our state’s lowest income families with children is one of the most effective ways to help Nebraskans achieve self-sufficiency. Increasing the eligibility and benefit levels for the ADC program should be the top priority for TANF spending, to ensure that these resources go directly to the Nebraska families who need them the most.

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