RD253 - Estimating the Fiscal Impact of the 2009 State Policy Change Regarding TANF Diversionary Assistance

Executive Summary:
Diversionary assistance (DA) provides eligible families or households with short-term assistance to resolve temporary emergencies related to basic needs such as food, shelter, medical expenses, child care, and costs associated with getting or keeping employment (e.g., transportation costs). DA is intended to offer an alternative to receiving longer term assistance, i.e., enrolling in Temporary Assistance to Needy Families (TANF). By accepting DA, the household waives the right to receive ongoing assistance (TANF) for up to 160 days. Compared to TANF, a small proportion of households in Virginia receive DA. In SFY 2011, 60,110 households received TANF (*1) at a total cost of $116.9 million. (*2) In comparison, approximately 3,540 households - nearly 6 percent of the number that received TANF-- received DA. The total costs associated with DA for SFY 2011 was $4.2 million, which is four percent of the total costs associated with TANF. (*2)

In SFY 2009, the Virginia General Assembly passed SB 1045 (*3) that allowed the Virginia Department of Social Services (VDSS) to revise the policy of limiting the receipt of DA from one payment every 60-month period to one payment every 12-month period. The change in policy went into effect on July 1, 2009. The intent was to increase the opportunity for families to receive a lump-sum benefit rather than enroll in ongoing TANF assistance. The legislation required that VDSS report on the cost savings achieved by the policy change in SFY 2010 through SFY 2012.

According to the fiscal impact statement, the policy change was expected to reduce costs by decreasing the number of families who receive ongoing TANF assistance. The policy change was expected to make families more likely to apply for repeated DA and less likely to apply for TANF assistance.
(*1) Source: VDSS, Data Warehouse, ADAPT (Application Benefit Delivery Automation Project) System, SFY locality Program Cube. This is an unduplicated count of households active on TANF at some point during the year.
(*2) Source: VDSS, 2012 Annual Statistical Report ( http://www.dss.virginia.gov/files/about/reports/agency_wide/annual_statistical/pdf_versions/2012.pdf).
(*3) For the full text of the bill, go to Virginia's legislative Information System (LIS): http://lis.virginia.gov/cgi-bin/legp604.exe?091+ful+CHAP0547.