Every Nebraskan deserves financial stability and security for their family. The ongoing COVID-19 public health emergency has affected all Nebraskans but has been especially devastating for families that were already struggling to make ends meet before the start of the crisis. Nebraska can and should act quickly to stabilize families and ensure that children have basic access to shelter, food, and other necessities.
The federal Temporary Assistance for Needy Families (TANF) program is designed to help lower income families with children achieve self-sufficiency and should be activated immediately to respond to growing economic insecurity in Nebraska. The state has saved nearly $79.8 million in federal TANF funds for a rainy day—but has yet to use it in the COVID-19 crisis to help Nebraska children living in poverty. Nebraska should use these funds immediately to help families with children affected by the public health emergency, and to protect children from the harmful effects of poverty in the long-term.
Nebraska’s TANF program provides basic assistance to children in low-income families
States receive annual block grants and have broad flexibility in using TANF funds for assistance and programs. Nebraska uses TANF funds to provide direct cash assistance to children living in poverty through the Aid to Dependent Children (ADC) program. Nearly 80% of ADC recipients in Nebraska are children, and only families with very low incomes can receive assistance—a family of 3 can earn no more than $12,228 annually to be eligible for assistance. [i] Work requirements apply to most adults receiving ADC, with some exemptions for those unable to work and for relative caregivers.
During economic downturns, ADC fails to keep up with child poverty
Very few Nebraska families who fall on hard times and need short-term assistance are eligible for ADC due to low income eligibility requirements. The results of flawed policy in public assistance programs are laid bare during economic downturns, and children and families in crisis pay the price. During the Great Recession, ADC enrollment in Nebraska increased by 6% in 2010. The rise in poverty among Nebraska kids, however, was four times greater, increasing by 24%. By contrast, enrollment in the Supplemental Nutrition Assistance Program (SNAP), which has higher income eligibility standards, increased by 18%.[iii]
While it is still too early to estimate the impact that COVID-19 will have on child poverty, the number of families enrolled in ADC has already increased by 19% from February to May of 2020.[iv] In addition to using TANF flexibly to address the current crisis, Nebraska leaders should consider permanent changes to the ADC program to ensure that state systems are better positioned to help families during hard times.
Nebraska leaves $79.8 million in federal funds for lower income children unspent
Nationally, TANF spending on direct assistance to families has declined over the years. In Nebraska, direct assistance to families only accounted for 25% of all TANF spending in 2018, compared to 66% in 1997.[v]
In 2014, then-State Auditor Mike Foley noted a “significant deficiency” in the use of the TANF Cash Reserve Fund in its regular audit of the Department of Health and Human Services (DHHS).[vii] The audit found that instead of growing an excessive balance of unobligated federal funds, “DHHS could have increased assistance to needy families by increasing benefit amounts or expanded services or eligibility.” In the past decade, Nebraska’s TANF reserve balance has increased by 64% to nearly $79.8 million, while the number of children helped by ADC has failed to keep up with child poverty, decreasing by 30% since 2009.[viii]
TANF rainy day funds must be spent to help Nebraska kids weather the COVID-19 crisis
Nebraska families are suffering. Some have lost loved ones, and many more who have lost their jobs are unsure if they can afford food, rent, and other necessities. The Nebraskans most impacted by the pandemic—particularly American Indian, Black, Latinx, low-income, and immigrant communities—were already facing greater barriers to quality health care, fair jobs, stable housing, healthy food, and reliable transportation before the crisis.[xi]
Workers in lower-wage industries are disproportionately among those affected by layoffs and furloughs, and many have reported waiting over a month to receive unemployment benefits.[xii] Meanwhile, Nebraskans who have continued to show up in workplaces where physical distancing is not implemented by employers, like meat and poultry processing workers, are forced to choose between keeping their jobs and being able to feed their families, or falling ill and putting their family’s health in danger.[xiii] At the same time, workers who would choose to stay home for fear of infecting themselves and their families are likely ineligible for paid sick leave protections or unemployment insurance.[xiv]
This moment is beyond a rainy day; it is a storm that calls on Nebraska leaders to make sure that everyone, especially children, can weather it. Nebraska can start by deploying the nearly $80 million in federal TANF reserve funds intended to help children and families living in poverty. Restarting our state’s economy begins with ensuring that all families can meet their children’s basic needs.
Recommendation 1: Provide additional assistance to families already receiving ADC
State leaders should make every effort to immediately deploy TANF funds by strengthening benefits to families already receiving ADC by:
- Providing a temporary increase in benefits, such as a one-time payment of $500 per child. A temporary boost in benefits to current recipients would be administratively simple, and effective in helping children living in poverty. West Virginia and North Carolina both issued a one-time payment to TANF families in April.[xv] DHHS should reevaluate continued disbursements as the effects of the pandemic continue.
- Temporarily suspending work requirements, sanctions, and terminations for participants. Nebraska families receiving ADC should not have to worry about losing benefits during this crisis if they are unable to meet work requirements or are concerned about risking their health to seek employment. Many states adopted broad flexibilities at the start of the crisis to ensure that families do not lose benefits for keeping their family safe and healthy.[xvi]
- Temporarily suspending the clock for families subject to a 60-month lifetime limit on benefits. Families lose eligibility for ADC when they receive benefits for the lifetime limit of 60 months, affecting an estimated 36 families each year.[xvii] Several states have acted to prevent loss of benefits,[xviii] and Nebraska should freeze the clock for those families and halt terminations for those who have reached their limit retroactively to the start of the emergency.
Recommendation 2: Provide emergency assistance to non-ADC families in crisis
During an emergency or crisis, states can use TANF funds to help families that would not otherwise be eligible for direct assistance by providing a non-recurrent, short-term (NRST) benefit. Federal law allows for the use of TANF funds for an NRST so long as it is designed to deal with a specific crisis, is not intended to meet recurrent or ongoing needs, and will not extend beyond four months. [xix] State leaders should provide emergency assistance to families in crisis that are not currently eligible for ADC by:
- Prioritizing families in crisis. Nebraska should prioritize NRST benefits for low-income families impacted by the crisis. Eligibility should be closely aligned with the cost of living. Setting eligibility at 213% of FPL, for example, would mirror eligibility for the Children’s Health Insurance Program (CHIP) and create additional opportunities to enroll any newly uninsured children. To demonstrate need, some states have prioritized NRST benefits for families that have experienced a loss of income.[xx] Eligibility should not require an asset test to ensure that families can move quickly from crisis to stability.
- Minimizing administrative requirements for processing. Direct financial relief to low-income Nebraskans must be distributed quickly to be effective. The application for benefits should require only basic information and allow for electronic submission. The state should require minimal verification and allow for self-attestation where possible. Additionally, DHHS should use household data matching from other means-tested programs including the Supplemental Nutrition Assistance Program (SNAP) or Medicaid and CHIP to identify eligible families and streamline their applications.
- Providing benefits to families in need. Nebraska should use TANF reserve funds generously to protect children from the effects of this crisis. State leaders should think boldly today as the full economic impact of the pandemic is yet to be seen. Other states have structured NRST benefits to be fixed based on household size, or to be based on specific needs that the family is unable to pay, such as rent, security deposits, or property tax bills.[xxi] In Appendix 1, we propose 3 income eligibility options that would provide relief to families but still leave the TANF reserve fund in a strong position to continue to support families receiving ADC.
Recommendation 3: Maximize flexible Coronavirus Relief Funds to increase agency capacity
Nebraska should use available federal funds to increase staff and technology capacity within DHHS to handle increased demand for assistance across all public assistance programs. Nebraska should maximize new federal Coronavirus Relief Funds (CRF), which are designed to provide direct fiscal relief to states for pandemic-related expenditures, towards increasing agency capacity. New guidance materials affirm that increased administrative costs for providing emergency assistance to families in response to the crisis is an eligible CRF expenditure.[xxii]
Recommendation 4: Permanently increase basic assistance to struggling families
Nebraska’s ADC program has failed to meet the needs of children living in poverty for well over a decade. All the while, the state has left tens of millions of federal dollars dedicated to helping children untouched year after year. While it is wise to save some level of reserve for future downturns, Nebraska lawmakers should redesign ADC to ensure that the program does what it is intended to do by:
- Increasing eligibility for ADC and eliminating the asset test. Nebraska should allow more children living in poverty to be eligible for ADC benefits and should not punish families for their own rainy-day savings by eliminating the asset test in the program.[xxiii]
- Increasing the benefit level to better meet basic needs. Benefit levels in ADC, at the minimum, should not leave a family in deep poverty and should be raised to at least 50% of the FPL. Over time, ADC benefits have eroded—in 1996, average ADC benefits would cover 75% of rent for an average two-bedroom apartment in Nebraska, but today, it would only be enough for 56% of rent on the same apartment.[xxiv]
In Appendix 1, we estimate that the cost of Recommendations 1 and 2 above would still leave Nebraska’s TANF reserve fund in a healthy position, at 74-81% of the annual block grant, to consider additional assistance to ADC families as the crisis continues. State leaders should move forward with permanent changes to the ADC program by developing a plan to increase basic assistance, spending down the reserve to 50% of the annual block grant, or $28.3 million.
Direct assistance to families would improve outcomes for children in poverty and stimulate the state economy
All children need stability to thrive, and Nebraska families should be able to meet their children’s basic needs when they fall on hard times. By strengthening the ADC program, we can better shield children from the long-term harms of living in poverty.[xxv] Targeted relief to help low-income families, who are more likely to immediately use the extra income to meet basic needs and pay bills or debts, will provide an added boost to the state’s economy.[xxvi]
Nebraska children and families need relief now. Over the years, the state has saved TANF funds to be spent on low-income Nebraska children during hard times, and the economic impact of the COVID-19 crisis is the rainy day that Nebraska has been saving for.
Appendix 1. Providing Direct Assistance to Help Families Affected by COVID-19 Would Leave Sufficient TANF Reserves
Recommendation 1. Emergency assistance to ADC families would provide $500 to each child enrolled in ADC.
Recommendation 2. Emergency assistance to non-ADC families would provide $500 to each child, and contemplates a program that is available to families who have lost a job or income as a result of the pandemic, and meet income eligibility requirements at the following levels:
- Option 1: Families with incomes under 200% of the FPL ($43,440 annually for a family of 3);
- Option 2: Families with incomes that meet income eligibility for CHIP, or 213% of the FPL ($46,264 annually for a family of 3); or
- Option 3: Families with incomes under 185% of the FPL ($40,182 annually for a family of 3).
This cost estimate is intended to provide state lawmakers with a framework of what can be accomplished in the strategic use of federal TANF reserve funds. This estimate only captures the cost of benefits provided, and does not reflect an increase in agency administrative costs, which we should be funded using the state’s Coronavirus Relief Fund as a necessary expenditure incurred due to the public health emergency (Recommendation #3).
Assumptions for Recommendation 2
The cost estimate for Recommendation #2, emergency assistance to non-ADC families, is based on several data sets and assumptions:
- Income eligibility. We recommend that the state apply income eligibility standards that indicate whether a family can meet their children’s basic needs and have offered 3 options that best reflect self-sufficiency for most families in Nebraska. Data on the number of children at each income level are from Table B17024 of the U.S. Census Bureau American Community Survey (2018 1-Year Estimates) and Medicaid/CHIP enrollment FY 2018 averages obtained from the Nebraska Department of Health and Human Services. Both figures are reduced by the number of children currently enrolled in ADC.
- Job or income loss eligibility. We recommend that the state target families in crisis by making assistance available to those who have recently experienced a job or income loss. State-level estimates of job and income losses, stratified by income level, are not yet available. For this cost estimate, we assume that 52% of income-eligible families will have experienced a qualifying job or income loss based on a recent national survey conducted by the Pew Research Center.[xxvii] Nebraska has generally fared better than national averages in economic downturns and recovery, and early forecasts suggests the same may be true for the ongoing crisis.[xxviii] As a result, eligibility for emergency assistance is likely an overestimate, and the actual cost of emergency assistance may be lower than the estimate provided.
- Participation rate. Finally, we assume that not all families who meet eligibility requirements will apply for emergency assistance. We apply an 80% participation rate, based on state-level estimates of participation in SNAP among those eligible for the program.[xxix]
[i] Voices for Children in Nebraska, Kids Count in Nebraska 2019 Report, https://kidscountnebraska.com/economic-stability/. Income eligibility includes a 20% earned income disregard. 468-000-209 Neb. Admin. Code.
[ii] Data obtained by Voices for Children in Nebraska from the Nebraska Department of Health and Human Services. Figures are averages from state fiscal year 2018.
[iii] Kids Count in Nebraska 2011 Report, Voices for Children in Nebraska, https://voicesforchildren.com/wp-content/uploads/2017/01/2011-Kids-Count-Report-Web.pdf.
[v] “TANF Financial Data – FY 2018,” U.S. Department of Health and Human Services, Administration for Children and Families, September 6, 2019, https://www.acf.hhs.gov/ofa/resource/tanf-financial-data-fy-2018. Spending data from 1997 obtained from the Center on Budget and Policy Priorities analysis of TANF Financial Data from the U.S. Department of Health & Human Services.
[vi] “TANF Financial Data – FY 2018,” U.S. Department of Health and Human Services, Administration for Children and Families.
[vii] Nebraska Auditor of Public Accounts Mike Foley to Kerry Winterer, CEO, Nebraska Department of Health and Human Services, “Employment First Aid to Dependent Children CAFR Single Management Letter,” December 10, 2014, https://auditors.nebraska.gov/APA_Reports/2014/SA25-12102014-Employment_First_Aid_to_Dependent_Children_CAFR_Single_Management_Letter.pdf.
[viii] The reserve balance was $79,796,813 as of September 30, 2019 as reported by the Nebraska Legislative Fiscal Office, “LB 1049 Fiscal Note,” February 13, 2020, https://nebraskalegislature.gov/FloorDocs/106/PDF/FN/LB1049_20200220-125705.pdf.
[ix] Voices for Children in Nebraska calculations based on data from the Nebraska Department of Health and Human Services and Table B17024 of the U.S. Census Bureau American Community Survey 1-Year Estimates. U.S. Department of Health & Human Services, “Annual Update of the HHS Poverty Guidelines,” Federal Register 85, no. 12, January 17, 2020 (3060), https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00858.pdf.
[x] Voices for Children in Nebraska analysis of TANF Financial Data from the U.S. Department of Health & Human Services, U.S. Census Bureau ACS data, and data obtained from the Nebraska Department of Health and Human Services.
[xi] Michael Karpman et al., “The COVID-19 Pandemic Is Straining Families’ Abilities to Afford Basic Needs: Low-Income and Hispanic Families the Hardest Hit,” Urban Institute Health Policy Center, April 2020, https://www.urban.org/sites/default/files/publication/102124/the-covid-19-pandemic-is-straining-families-abilities-to-afford-basic-needs_3.pdf. “The Unequal Impact of the COVID-19 Crisis on Households’ Financial Stability: Who Is More Likely to Be Immediately Hurt and Why,” Prosperity Now Scorecard, April 2020, https://prosperitynow.org/sites/default/files/PDFs/Scorecard%202020/Unequal_Impact_of_COVID-19.pdf.
[xii] “COVID-19 & Initial Unemployment Claims in NE,” Nebraska Department of Labor, https://public.tableau.com/profile/rachel.stevens2440#!/vizhome/COVID-19InitialUnemploymentClaimsinNETest/DashMain. Matt Olberding, “Lost Your Job or Hours Cut Back? Long Wait for Many Nebraskans for Government Help,” Lincoln Journal Star, May 7, 2020, https://journalstar.com/business/local/lost-your-job-or-hours-cut-back-long-wait-for-many-nebraskans-for-government-help/article_3f8ba7cd-ca0d-592a-93e7-e39d14674b0c.html.
[xiii] The U.S. Centers for Disease Control reported on May 1, 2020, that 588 Nebraska meat processing workers have tested positive for COVID-19, including 1 death to date. Jonathan W. Dyal et al., “COVID-19 Among Workers in Meat and Poultry Processing Facilities—19 States, April 2020,” Morbidity and Mortality Weekly Report 69, no. 18 (2020): 557-561, http://dx.doi.org/10.15585/mmwr.mm6918e3.
[xiv] “All Nebraska Workers Must Have Paid Sick Days to Open the Economy Safely,” National Partnership for Women and Families, https://www.nationalpartnership.org/our-work/economic-justice/frontline-workers/nebraska.html. Martha Stoddard, “Nebraska, Iowa Tell Workers to Return to Jobs if Called or Lose Unemployment Benefits,” Omaha World-Herald, April 28, 2020, https://www.omaha.com/news/state_and_regional/nebraska-iowa-tell-workers-to-return-to-jobs-if-called-or-lose-unemployment-benefits/article_9ede645f-5d37-5b26-a5ea-472caffa073f.html.
[xv] West Virginia issued a one-time payment of $500 to all TANF families. “DHHR to Issue One-Time Payment to TANF Recipients During COVID-19 Response,” West Virginia Department of Health & Human Resources, April 13, 2020, https://dhhr.wv.gov/News/2020/Pages/DHHR-to-Issue-One-Time-Payment-to-TANF-Recipients-During-COVID-19-Response.aspx. North Carolina issued a one-time payment of $265 for each eligible TANF child. “DSS to Issue One-Time COVID-19 Benefit for Work First,” Mecklenburg County News, May 7, 2020, https://www.mecknc.gov/news/Pages/DSS-to-Issue-One-Time-COVID-19-Benefit-Payments-for-Work-First-Cash-Assistance.aspx.
[xvii] Data obtained by Voices for Children in Nebraska from the Nebraska Department of Health and Human Services.
[xix] “Questions and Answers about TANF and the Coronavirus Disease 2019 (COVID-19) Pandemic,” U.S. Department of Health and Human Services, Administration for Children and Families, Office of Family Assistance, TANF-ACF-PI-2020-01, March 24, 2020, https://www.acf.hhs.gov/ofa/resource/tanf-acf-pi-2020-01.
[xx] Pennsylvania is issuing two months of TANF benefits to families under 150% of FPL who have lost at least 50% of income for two weeks or more. “Human Services Launches Emergency Assistance Program to Help Low-Income Families Amidst COVID-19,” Pennsylvania Department of Human Services, May 8, 2020, https://www.media.pa.gov/Pages/DHS_details.aspx?newsid=529. West Virginia is issuing benefits relative to the family’s needs, up to four times the maximum TANF benefit amount by household size. “DHHR to Offer Special Assistance Payment Due to COVID-19,” West Virginia Department of Health & Human Resources, April 22, 2020, https://dhhr.wv.gov/News/2020/Pages/DHHR-to-Offer-Special-Assistance-Payment-Due-to-COVID-19.aspx.
[xxi] Tennessee is issuing two monthly cash payments of up to $1,000 for households of five or more that have lost at least 50% of their income because of the pandemic, up to 85% of the state median income. “Financial Aid Available for Certain Families That Lost Employment Due to COVID-19,” Tennessee Department of Human Services, March 25, 2020, https://www.tn.gov/content/tn/humanservices/news/2020/3/25/financial-aid-available-for-certain-families-that-lost-employment-due-to-covid-19.html. Franklin County in Ohio is providing up to $1,500 per family for the next 12 months to cover basic expenses for households up to 165% of the FPL. “Prevention, Retention, and Contingency (PRC) Plan,” Franklin County Board of Commissioners, Job & Family Services, March 30, 2020, http://jfs.ohio.gov/OWF/prc/county/FranklinCountyPRC.pdf.
[xxii] “Coronavirus Relief Fund: Guidance for State, Territorial, Local, and Tribal Governments, April 22, 2020, U.S. Department of the Treasury, https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-State-Territorial-Local-and-Tribal-Governments.pdf. “Coronavirus Relief Fund: Frequently Asked Questions, Updated as of May 4, 2020,” U.S. Treasury Department, https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Frequently-Asked-Questions.pdf.
[xxiii] Families are currently ineligible for ADC if they have more than $4,000 in resources for a single individual or $6,000 for a household of two or more. 468 Neb. Admin. Code 2-008.08.
[xxiv] Ashley Burnside and Ife Floyd, “More States Raising TANF Benefits to Boost Families’ Economic Security,” Center on Budget and Policy Priorities, December 9, 2019, https://www.cbpp.org/sites/default/files/atoms/files/10-30-14tanf.pdf.
[xxv] National Academies of Sciences, Engineering, and Medicine, “Consequences of Child Poverty,” in A Roadmap to Reducing Child Poverty (Washington, DC: The National Academies Press, 2019), 67-96, https://doi.org/10.17226/25246.
[xxvii] Kim Parker, Juliana Menasche Horowitz, and Anna Brown, “About Half of Lower-Income Americans Report Household Job or Wage Loss Due to COVID-19,” Pew Research Center, April 21, 2020, https://www.pewsocialtrends.org/2020/04/21/about-half-of-lower-income-americans-report-household-job-or-wage-loss-due-to-covid-19/.
[xxviii] University of Nebraska Bureau of Business Research and the Nebraska Business Forecast Council, “The Nebraska Economy Responds to the COVID-19 Pandemic,” Business in Nebraska 74, no. 726 (2020): 1-7, https://business.unl.edu/outreach/bureau-of-business-research/bureau-reports/business-in-nebraska/documents/BIN_May_2020.pdf.
[xxix] Karen Cunnyngham, “Reaching Those in Need: Estimates of State Supplemental Nutrition Assistance Program Participation Rates in 2016,” Mathematica Policy Research for the U.S. Department of Agriculture, Food and Nutrition Service, March 2019, https://fns-prod.azureedge.net/sites/default/files/resource-files/Reaching2016.pdf.