Improve Transparency and Stability for Families and Children Act
- Sponsor
- Rep. Carey, Mike [R-OH-15]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 26, 2025
Bottom line
This bill aims to enhance state flexibility in managing TANF funds through reserve accounts while also imposing deadlines to ensure timely expenditure of federal aid for needy families.
What it actually does
This bill amends the Social Security Act to establish new deadlines for states to obligate and expend funds received under the Temporary Assistance for Needy Families (TANF) block grant program. It mandates that states must obligate funds by the end of the fiscal year succeeding their payment and expend them by the end of the second succeeding fiscal year. Crucially, it also allows states to reserve up to 15 percent of annual TANF funds for future use, with a total reserve limit of 50 percent of the prior year's grant, effectively creating a 'rainy day fund' for state TANF programs.
Proponents argue
Supporters argue this bill provides states with crucial flexibility to manage TANF funds more effectively, allowing them to save for economic downturns or unexpected increases in need, thereby ensuring program stability and better long-term planning for vulnerable families. They also contend that the established deadlines promote fiscal responsibility and prevent the indefinite accumulation of unspent funds.
Opponents contend
Opponents might argue that allowing states to reserve funds could lead to less immediate assistance for needy families, potentially exacerbating current poverty issues by delaying the distribution of aid. They might also contend that the deadlines, while present, are still too generous, allowing states to sit on funds for too long when immediate needs are pressing.
The bill is very short and clearly written, making it highly accessible for a quick and informed evaluation by any interested reader.
Section 2(a), amending Section 404(e)(1) of the Social Security Act
Establishes Deadlines for TANF Fund Obligation and Expenditure
This provision mandates that states must obligate funds received under the Temporary Assistance for Needy Families (TANF) block grant program no later than the end of the fiscal year immediately succeeding the fiscal year in which the funds were paid. Furthermore, states must expend these funds no later than the end of the second succeeding fiscal year. For example, funds paid in Fiscal Year 2025 must be obligated by the end of Fiscal Year 2026 and expended by the end of Fiscal Year 2027.
Supporters argue
Supporters argue these deadlines promote fiscal discipline and ensure that funds intended for needy families are put to use within a reasonable timeframe, preventing indefinite accumulation of unspent funds and ensuring program responsiveness.
Critics contend
Some might argue that strict deadlines, even with the reserve exception, could limit a state's ability to respond to unforeseen, longer-term needs or to implement complex, multi-year programs without interruption, potentially forcing suboptimal spending decisions.
Tradeoffs
This provision balances the need for states to have operational flexibility with the desire to ensure federal funds are used in a timely manner for their intended purpose, addressing concerns about large unspent state TANF balances.
Section 2(a), amending Section 404(e)(2) of the Social Security Act
Allows States to Establish TANF Rainy Day Funds
This provision creates an exception to the expenditure deadlines, allowing states to reserve a portion of their annual TANF block grant funds for future use. States may set aside up to 15 percent of the funds paid for a fiscal year. However, there is an overall cap: the total amount held in reserve by a state cannot exceed 50 percent of the total amount paid to that state in the immediately preceding fiscal year. States are required to notify the Secretary of their intent to reserve funds.