Opening Statement of Hon. Benjamin L. Cardin, M.C., Maryland,
Hearing on "Rainy Day" and Other Special TANF Funds
April 26, 2001
Mr. Chairman, I want to thank you for calling us together today to consider how the States and the Federal government should respond to the obvious pressures that a recession would impose on our Nation's ongoing efforts to reform welfare. I don't think there is any doubt that the strength of our economy -- which has seen the lowest unemployment levels in three decades -- has played a critical role in helping people leave welfare for work.Should the recent slowdown in our economy turn into a recession, it will have an immediate impact on the TANF program. In fact, it has been projected that welfare caseloads will increase by five to seven percent for every single percentage point increase in our Nation's unemployment rate.
Both the States and the Federal government have a role in planning for this possibility. States should reserve a sensible amount of TANF funding to meet the challenges of an economic downturn. This of course does not mean that States should leave vast amounts of TANF funds untapped when there are current, pressing needs for those resources. There is currently about $3 billion in unobligated Federal TANF spending nationwide, and we should have a discussion about whether that amount is too high, too low, or about right.
Needless to say, any analysis of this issue must recognize the enormous variation between the States in how much they are reserving in "rainy day" funds. I would note that my home State of Maryland has both a reserve of Federal TANF funds (about $50 million) and a dedicated reserve fund of State dollars for TANF purposes (about $80 million).
In support of State efforts to plan for the future, the Federal government can do two things. First, we must stop threatening to take back Federal money that States are holding in reserve. During past Congressional debates about the budget, there have been proposals to raid TANF surplus dollars, which obviously has a chilling effect on State plans to save money for a possible recession.
And second, recognizing that we need a Federal backstop to help States encountering economic difficulties, we should extend and improve the Federal contingency fund. This fund expires in only five months, meaning we need to move quickly to reauthorize it. We also should consider making changes to the current contingency fund, such as better triggers and more realistic maintenance-of-effort requirements, to make it more accessible to States that need help.
Before I conclude, let me mention one other important issue that our Subcommittee will consider today - the TANF Supplemental Grants, which go to States with low Federal funding per poor person and/or population increases. If our Subcommittee does not extend these grants, which expire at the end of this fiscal year, 17 States will have their annual TANF allocations cut by up to 10 percent.
Whether we are talking about helping States meet current needs or plan for the future, a cut in their TANF funding is clearly a step in the wrong direction. On this issue, I would like to place in the record a letter urging the extension of the TANF Supplemental Grants from Governor Rick Perry, who succeeded President Bush as the Governor of Texas.
Thank you.