Tennessee lawmakers weigh how to spend unused funds
Tennessee lawmakers said this week they are weighing new measures to spend recently unearthed federal funding intended to aid working families.
The state has $732 million in unspent funding from the federal government for Temporary Assistance for Needy Families, a program that helps low-income residents with children get back to work.
A separate child care assistance program that provides subsidies for low- and middle-income families failed to distribute up to $300 million in federal funds to Tennessee families.
Danielle Barnes, commissioner of the Tennessee Department of Human Services that manages the funds, has called it prudent to hold the funds in reserve in the event of an economic downturn.
Some lawmakers said they think the state is holding back too many dollars that can be put to use to assist working families and lift children out of poverty now.
“This is money given to us to benefit Tennessee families, and that's what we need to do,” said state Sen. Kerry Roberts, R-springfield. “We can have it both ways. We can leave funds in reserve and we can spend it to help Tennessee families.”
Roberts said he has had a nagging concern about the growing balance held in reserve for several years.
The TANF program, known as Families First in Tennessee, allows states wide flexibility in how they spend federal funding, including shifting funds to other programs that serve low- and middle-income families with child care or to address the opioid crisis. No other state has accumulated a reserve fund as large as Tennessee.
In 2018, Roberts co-sponsored legislation that freed more of those dollars to raise the monthly cash assistance available to families in poverty from $185 for a family of three to $277. At the time, Tennessee's TANF reserves topped $500 million.
Rep. Bryan Terry, R-murfreesboro, said Tuesday he has been working with House Speaker Cameron Sexton, Rcrossville, and other lawmakers to “look for innovative and fiscally responsible ways we can support our Tennessee families who are working to overcome obstacles standing between them and individual prosperity.”
“While we do want to ensure a fiscally sound program and maintain a reserve so we are well positioned to serve a larger population should an economic downturn occur, I do believe that there may be alternative and conservative ways to utilize this funding to better serve our constituents,” Terry said in a statement.
Sexton has been working with lawmakers to gather more information in a process that he plans to continue after the legislature reconvenes in January, he said.
“As a legislative body, our goal is to understand the flexibility of the TANF program and the systemic issues facing our Tennessee families receiving these benefits,” Sexton said in an email. “Our goal is to discover new and innovative ways to help people overcome governmental or life obstacles that stand in their way of achieving freedom from government assistance.”
Lt. Gov. Randy Mcnally promised to “thoroughly vet” any proposals to spend down the reserves during the upcoming legislative session. Stockpiling the funds is the prudent path, Mcnally said.
State Sen. Jeff Yarbro, D-nashville, called it “baffling” that the state has left untapped up to $300 million in federal child care grants.
Unlike TANF funding, the Child Care and Development Fund has a “use it or lose it” provision requiring unspent funding to revert back to the federal government.
The child care grants also give states flexibility in providing subsidies for families who earn higher incomes.
“You can go to any town in Tennessee and find families struggling to pay for child care,” Yarbro said. “It's baffling the state has lost (up to) $300 million that would help Tennessee families.”
There is “some wisdom” in keeping a portion of the TANF funds in reserve in the event of an economic downturn, but “that is not what's happening here,” Yarbro said. “It is not sound economic oversight to stockpile these funds.”
Rep. Robin Smith, R-hixson, noted that hundreds of millions of unused TANF and child care development fund dollars “did not happen in a year.” She said she doesn't believe legislators have a clear understanding yet of how those funds could be put to use and should study the issue.
“The economy is better, but I do think there are ways Tennessee has proven we can innovate and maybe take these monies and get them into the hands that are intended to be the recipients, whether it's in a bad economy or not.
“I don't think it's wise to expand the entitlements, but I do think there are probably people who have barriers to consistent employment that we might be able to be pretty creative and assist them to get over these temporary barriers to be in the workforce, and I think it's a tremendous opportunity we have.”
Gov. Bill Lee initially said he did not plan to dip into the large surplus of Temporary Assistance for Needy Families funds until there is an economic downturn. He has since signaled he is receptive to putting the reserve to use now. He met with Barnes last week to discuss alternatives.
As a preliminary part of the yet-tobe-determined strategy, the Department of Human Services plans to spend an additional $68 million to $70 million on grant awards to nonprofit organizations through the TANF reserve, Lee said.
“That's one piece of it,” Lee said after budget hearings held by his office on Monday. “We need a broader strategy and we'll be working on that.”
Reach Anita Wadhwani at awadhwani@tennessean.com or 615-259-8092 and on Twitter @Anitawadhwani
Reach Mike Reicher at mreicher@tennessean.com or 615-259-8228 and on Twitter @mreicher.
Reach Natalie Allison at nallison@tennessean.com. Follow her on Twitter at @natalie_allison.
Anita Wadhwani, Mike Reicherand Natalie Allison