* Refocus the goal of the Temporary Assistance to Needy Families program from caseload reduction to poverty reduction and establish state performance indicators that measure poverty reduction.

* Adopt a balanced work-first principle to increase and strengthen education and training opportunities and promote sustained employment.

* Provide resources to increase childcare capacity, including funding for the Child Care Development Block Grant and expanding training for child care workers.

* Encourage states to promote access to benefits, especially for families making the transition from welfare to work.

* Affirm the critical role of transportation in the successful transition from welfare to work by pursuing policies that address the transportation needs of low-income families, including supporting access to viable transportation and car ownership.

Issue Background

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) stated that the purposes of the program were to assist needy families, discourage welfare dependency by promoting work and marriage, reduce nonmarital births, and encourage the formation and maintenance of two-parent families. In spite of these honorable goals, families continue to be burdened by the increasing demands placed upon them as they work to fulfill their family and employment responsibilities. The Alliance for Children and Families recognizes the need for policies that promote meaningful work, incentives, and ongoing intensive support services for at-risk families as they attempt to become self-sufficient.

Results to Date

PRWORA, aided by the robust economy, has resulted in an impressive decline in welfare caseloads. By December 1999, the national cash welfare caseload had declined by over 50 percent from its peak in 1994. In addition, the welfare rolls have declined for five consecutive years. It is still uncertain if former recipients are securing financial security and moving toward self-sufficiency. Therefore, it is imperative that we continue to examine the employment, income and poverty level of families that are no longer receiving cash assistance.

Temporary Assistance to Needy Families

The TANF block grant was established with a fixed sum of $16.5 billion per year through 2002. The Alliance recommends maintaining and/or increasing the current level of federal support by indexing for inflation. This safety measure would protect low-income and welfare families when the economy slumps, as has been predicted.

The current TANF flexibility must also be preserved. It is important to note that until the Social Services Block Grant is restored to its entitlement level of $2.38 billion, the transfer of TANF funds allows states to supplement this worthy program.

States with high levels of poverty and growth rates should continue to receive additional funds through the Contingency Fund. This provision, which expired on September 30, 2001, allows 17 states to receive supplemental funds but is not accounted for in the CBO baseline.

Child Care

The 1996 reforms terminated many child care programs in favor of increasing the Child Care and Development Block Grant (CCDBG) to roughly $4.5 billion from 1997 to 2002. States were also allowed to transfer funds from TANF to CCDBG. It is essential to:

* continue funding the CCDBG at $2 B in discretionary funds and $2.7 B in entitlement funding

* preserve the ability to spend TANF funds directly on child care

* preserve state authority to transfer up to 30 percent from TANF to CCDBG.

The Alliance supports increased funding for the following programs to adequately meet the needs of children and families:

* The Child Care and Development Block Grant, the primary federal program for low-income working families needing child care assistance.

* The Dependent Care Tax Credit provides tax relief to taxpayers with children under age 13 to help offset child care costs.

* The Social Services Block Grant, Title XX of the Social Security Act, which supports a variety of human services programs, including child care.

* Head Start, an educational enrichment program for low-income children and their families.

* 21st Century Community Learning Centers, funded through grants to schools to provide after-school educational and recreational activities for youth.

The Alliance believes national child care policy must ensure that there are adequate funds for child care and regulations that provide not only for numbers of child care slots but also for quality, developmentally-appropriate child care arrangements from infancy through school-age.

Earned Income Tax Credit Promotes Work and Reduces Poverty

The Earned Income Tax Credit (EITC) is a federal tax benefit designed to help low-income workers increase their financial stability. The EITC is intended to reduce taxes for these workers to supplement wages and to make work more attractive than welfare. The size of the credit families receive depends on household income and the number of workers and dependent children. In 1999, workers with one child received up to $2,312, and workers with two or more children received up to $3,816 in earned income tax credits. A proposal to expand the EITC by $21 billion over ten years would provide tax relief to 6.4 million low-income working families and increase the maximum credit for families by an average of $544.

The Alliance supports an increase to the EITC to help assure working families a living wage above the poverty line.

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