RD180 - Virginia Independence Program and Other Projects Funded with the Temporary Assistance for Needy Families Block Grant for State Fiscal Year 2008


Executive Summary:
The TANF block grant funds the Virginia Independence Program (VIP), as well as other programs throughout the Commonwealth. VIP consists of two related but distinct sets of requirements for TANF participants: eligibility requirements and work requirements. The policies that mandate eligibility requirements became effective statewide on July 1, 1995. The Virginia Initiative for Employment not Welfare Program (VIEW) is the work-related portion of VIP that requires participants to be employed or engaged in a work activity; federal law requires states to have 50% of their TANF recipients in a work activity. Implementation of VIEW was phased in over a two-year period beginning in July 1995 and ending in October of 1997.

Since VIP was implemented in July 1995, the TANF caseload has dropped from 70,797 to approximately 32,000 in June 2008, a 55% decrease. Of the 132,791 TANF recipients enrolled in VIEW since 1995, more than 97,000 found employment and joined the work force by June 2008. This caseload decline contributed to a net savings in federal and state funds of over $1.2 billion. Virginia has been highly successful in implementing its federal TANF Program. The Commonwealth ranked first in the nation for job entry and second for job retention for Federal Fiscal Year (FFY) 2004 through FFY 2006, based on the most current data available from the United States Department of Health and Human Services.

Item 349 of the 2009 Appropriation Act provides for a spending strategy designed to protect families at risk and facilitate the transition to economic self-sufficiency. Federal TANF funds are being used to finance these strategies through the funding of numerous projects designed to help TANF participants gain and keep employment leading to the elimination of public assistance.

TANF was reauthorized with the passage of the Deficit Reduction Act of 2005 (Pub. L. No. 109-171) on February 8, 2006. Reauthorization of TANF introduced several changes including: the elimination of the high performance bonus, a requirement that state-only funded cases be included in the calculation of the work participation rate, new federal regulations on verifying work participation and defining work activities, and a change in the baseline for the computation of the caseload reduction credit. The caseload reduction credit allows states to reduce their work participation rate target by the same percentage as the caseload reduction.

The most significant change was in the baseline for the caseload reduction credit. Since Virginia’s caseload decreased by 50%, the work participation target was reduced to almost 0.0%. Under the new calculation, the credit decreased significantly, requiring more participants to be engaged in work activities each month in order for Virginia to reach the required work participation rate. New federal and state regulations took effect on October 1, 2006.

Changes due to reauthorization have been fully implemented and have resulted in increasing the Commonwealth’s TANF work participation rate from 28% in September 2006 to 49% in June 2008. While Virginia appears to have met the challenges of the new requirements of TANF reauthorization, there are other challenges that are looming: TANF payments have not been increased since 2000; the struggling economy has limited job opportunities for TANF recipients; the TANF block grant has a structural imbalance with the amount of the expenditures far exceeding the value of the grant; and TANF is due for reauthorization in 2010.