PA changes in TANF support transition from welfare to work

silhouette of person sitting on cliffJust Harvest is very excited about a new policy the PA Department of Human Services started September 28, 2020, that will allow certain welfare participants who are employed to keep more of their benefits and face less of a “cliff” – a sudden sharp drop in their benefits income. This will help them to gradually increase their reliance on employment earnings and make it more likely they can eventually be self-sufficient.

The trouble with TANF

TANF (the federal Temporary Assistance for Needy Families Program) is supposed to provide cash assistance to help families with children as they learn new skills and find jobs that can support their family without the need for government aid.  However, the way Pennsylvania administers the program has too often pushed families into dead-end minimum wage work, and cut folks off of support while they were still in severe poverty.

Another major failing is TANF in Pennsylvania has for many years made it difficult for program recipients to transition to employment. TANF has what is called a 50% Earned Income Disregard. This means the state only counts half of your job earnings as income when determining what you’re eligible to receive in TANF benefits.

The new Work Expense Disregard

This new policy creates an additional $200 Work Expense Deduction on top of the 50% earned income disregard. This will allow the same family to keep up to $200 more each month when they are working.

Here’s how this would work for a family of three:

Example 1: Imagine you are a mom taking care of two kids, and receiving cash assistance. You receive $403 a month – the maximum TANF benefit for a household that size. You get a job working 20 hours a week at minimum wage, making $580 a month (before taxes are taken out).

Under the old policy: The state only counts half or your earned income – $290 – towards your TANF eligibility.  But you will only get enough in cash assistance – $113 – to bring you up to your benefit amount of $403 per month.  This $113 plus your job earnings of $580 brings your total income up to $693 for the month. For every dollar you made at your job, you lost .50 cents in cash assistance, as does every TANF recipient under the 50% disregard.

With the new Work Expense Disregard: Only half of your earned income – $290 – is counted and then $200 of that is subtracted as a work expense disregard. So now only $90 of your job earnings are counted against you. You will only get enough in cash assistance – $313 – to bring you up to the maximum TANF benefit amount for your family of three of $403 per month. This $313 plus your job earnings of $580 brings your total income up to $893 for the month. Under the new policy, you get to keep $200 more in your pocket every month.

Example 2: Your employer is able to give you more hours – 30 hours a week – and you make $870 a month.

Under the old policy: Half of your income – $435 – is counted and you are officially making too much money to receive TANF benefits. However, you might be eligible for transitional cash assistance, which is a three month benefit of $100/month in cash. Your income is $970/month for your family of three for three months, and then $870 after that.

With the new Work Expense Disregard: Half of your income – $435 – minus an additional $200 is counted. With only $235 of your job earnings counted against you, you are still eligible to continue receiving TANF benefits of $168 per month to bring you up to the maximum TANF benefit for a family of three of $403. This $403 plus your job earnings of $870 brings your total income up to $1,038 for the month.

Other TANF improvements

Other policy changes the Wolf administration made to TANF this year will help more TANF families access the training and education needed to qualify for jobs with higher wages. The state has eased restrictions on who can count participation in GED and KEYS education programs, or other skills programs, towards federal TANF work requirements. These opportunities should make it easier for TANF families to transition to jobs that pay family-sustaining wages.

We know these changes alone will not make TANF a perfect program. Families receiving TANF benefits are still experiencing deep poverty. But we hope these changes will make it easier for TANF recipients to learn new skills and transition to better jobs.

(As a reminder, TANF is only for families with minor children.  The PA legislature ended General Assistance in a very heated and partisan battle in 2019, and there is no longer a cash assistance program for adults without children in Pennsylvania.)


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