Tennessee had a $100 million reserve for poor families in 2000. Why lawmakers passed a law to spend it – The Tennessean
As lawmakers and the governor’s office attempt to develop a plan for how to use a portion of the state’s sizable reserve of federal block grants intended to help the working poor, it’s not the first time this scene has played out in Tennessee.
After findings by the conservative Beacon Center of Tennessee and reporting by The Tennessean on the state’s $732 million in unspent Temporary Assistance for Needy Families funds, the General Assembly is expected to address the issue in the coming months.
It also happened in 2000, when the Democratic-controlled legislature at the time thought the TANF reserve had grown too high.
Tennessee’s unspent TANF balance had hit $103.6 million by the end of fiscal year 1999, spurring lawmakers to write a bill to address what it referred to as “substantial amounts” of TANF block grant funds left over from 1998 and 1999.
The federal TANF block grant program had been implemented in 1997.
After the legislature in 2000 passed a law directing the state to spend the excess TANF funds, Tennessee steadily began drawing down its balance through new programs outlined in the legislation.
The reserve dropped to $10.4 million by the end of fiscal year 2002, and after fiscal 2003, the state recorded no unspent federal funds, according to figures compiled by the U.S. Department of Health and Human Services.
“I think that at that particular time, under a different speaker and of course different dynamics in the legislature, that was what the concern was, that that money needed to be put to use,” said Rep. John DeBerry, D-Memphis, who was one of the sponsors of the 2000 bill.
By contrast, the state’s current TANF reserve is seven times the size of the reserve the legislature was concerned about nearly 20 years ago, when Rep. Jimmy Naifeh, a Democrat, was speaker, Democrats controlled the state Senate and Republican Gov. Don Sundquist was in office.
DeBerry and Rep. Larry Miller, another Memphis Democrat who was a sponsor of the bill, say they barely remember the legislation.
But both representatives are in favor of lawmakers once again taking action to address Tennessee’s growing TANF reserve, which is larger than any other state’s.
Legislature said in 2000 that $100M was unnecessary for TANF reserve
While Gov. Bill Lee and the Department of Human Services, which oversees the TANF grant through its Families First program, initially said the hundreds of millions of dollars in reserve funds were needed for an economic downturn, the legislature in 2000 argued that even $100 million was unnecessary for that purpose.
The legislation stated that the prior two years’ unspent TANF money “significantly exceeds the amount that reasonably needs to be reserved as a rainy-day fund for future unexpected program needs, such as the need to expand assistance to needy families with children in the event of an economic downturn.”
Although the governor in recent weeks has said he is now in favor of finding ways to use more of the TANF surplus to meet needs — including announcing that roughly $70 million will be allocated from the reserve for nonprofit grants — Lee has not yet said what he believes is an appropriate reserve amount.
Stephanie Whitt, executive vice president at the Beacon Center, said the organization believes between $200 million and $250 million is an appropriate rainy-day amount.
The TANF reserves rebounded soon after the bill reached its sunset in 2002. By fiscal year 2006, the unspent amount had climbed to $160.2 million.
What Tennessee’s 2000 legislation did to spend down TANF reserve
The bill called for DHS to implement pilot programs and make grant funding available to local governments and community organizations for programs including:
- After-school and summer recreation activities for children of low-income families while their parents work;
- Substance abuse services;
- “Micro-enterprise development initiatives”;
- Helping victims of domestic violence relocate to find employment and safe housing;
- Pregnancy prevention.
The legislation specified that DHS was to notify potentially interested parties about the availability of the grants, including groups that had never before had partnerships with the department. The bill also spells out that those grants were not intended to reduce any of the department’s existing funding of community groups.
The bill also mandated a pilot program in Davidson and Shelby counties, along with a rural county, to provide financial assistance and other services to adults caring for other family members’ children.
Whitney Page, an assistant commissioner with the Department of Human Services, said another pilot program implemented as a result of the 2000 law was “Individual Development Accounts,” which were piloted in 12 counties.
“These accounts allowed Families First recipients to deposit up to $5,000 into a savings account for career development goals that would not be counted when looking at resource limits,” Page wrote in an email about the program.
Democrats vow to file legislation addressing TANF reserve
Democrats in the General Assembly now once again say legislation should be filed to quickly address the large TANF reserve.
Senate Minority Leader Jeff Yarbro, D-Nashville, said the legislature needs to “take a more active and more consistent role” in overseeing the TANF program.
“I think the fact that we’ve seen this problem before, and now we have this massive amount of dollars that have not been spent, it’s clear that we need to consider what we’re trying to achieve as a state and to direct resources accordingly and not take a hands-off attitude,” Yarbro said.
He said the legislature should be given information annually about the availability and use of federal funds. He is drafting a bill to ensure that departments report that data to lawmakers.
House Democratic Caucus Chairman Mike Stewart said he expects Democrats will file some type of legislation to address the unspent funds.
“Over and over again now, we are seeing that the legislature is going to have to step in and force the administration to spend money that’s supposed to be spent automatically,” Stewart said Friday.
Reach Natalie Allison at nallison@tennessean.com. Follow her on Twitter at @natalie_allison.
Reach Mike Reicher at mreicher@tennessean.com or 615-259-8228 and on Twitter @mreicher.
Published 7:00 AM EST Nov 16, 2019
