Tennessee officials hope plan addressing welfare-to-work program's $700 million surplus is 'transformational' for families

State Sen. Bo Watson, R-Hixson, fourth from left, speaks with colleagues in Nov. 19, 2020, GOP Caucus meeting in Nashville. (Andy Sher/Times Free Press)

NASHVILLE - Changes are in the works for Tennessee's temporary assistance program for working-poor and unemployed families after embarrassing revelations that state government was sitting atop a $732 million-plus pile of federal block-grant cash.

Under a bill moving in the General Assembly, hammered out by Republican Gov. Bill Lee's administration and state legislators including Senate Finance Committee Chairman Bo Watson, R-Hixson, monthly payments to the state's estimated 15,000 families in the Temporary Assistance to Needy Families (TANF) program would rise.

For example, the monthly amount for a family of three would increase from $277 to $387.

But that's hardly all that's in the Republican governor's proposal for the state's TANF program, called Families First here. And elements of the program go beyond just those in the Families First program.

The bill, dubbed the TANF Opportunity Act, also seeks to boosts incentives for families to achieve self-sufficiency with new educational support and other measures. At the same time, anti-fraud, waste and abuse penalties are increased.

And it's also intended to benefit some of the hundreds of thousands of low-income Tennessee families who aren't quite poor enough to qualify for TANF cash assistance but receive other benefits such as food stamps.

Yet another bill provision that Watson and other lawmakers including Rep. Yusuf Hakeem, D-Chattanooga, see as key to real success calls for putting $182 million into seven pilot projects. One will be a statewide program administered by the state Department of Human Services. There are also six regional pilot projects - two in each of the state's three grand divisions.

The pilots are aimed at blazing new "pathways" for families to find ways out of poverty. And experts will be looking into whether the programs are working as pitched.

"This is truly what I believe to be transformational," Watson enthused last week of the legislation as the measure, Senate Bill 751/House Bill 142, won unanimous approval by the Senate Health and Welfare Committee members.

The bill also moved through the House Government Operations Committee on which Hakeem sits. The legislation has several other committees to go through before heading to Senate and House floor votes.

One goal of the pilot projects is examining the efficacy of "two-generation" approaches to break cycles of family poverty and improve education, heath and economic outcomes for a family by combining parent and child interventions.

"To me, it's all geared toward people getting back on their feet," said Hakeem, a member of the House Government Operations Committee.

Another $50 million would go into community grants, which Hakeem said is important.

The main TANF fund would retain an annual $191 million balance. In recent years, about $70 million to $80 million has been spent a year. The surplus began accumulating as the economy recovered after the 2007-2009 "Great Recession."

The impetus for change came after the Nashville-based Beacon Center, a nonprofit free-market research institution, revealed the massive reserve fund in a 2019 report.

Watson and Rep. David Hawk, R-Greeneville, led hearings in 2020 and early 2021 on the surplus and steps the state could take to improve the program. The lawmakers and Lee administration agreed to merge their respective plans. That's the bill now moving through committees.

$182 million to find what really works

In Watson's view, a major component of the bill plan is the $182 million investment in a statewide pilot project and six regional pilot projects. Each of the state's three grand divisions would have two regional projects. The goal is finding successful models for moving adults from poverty toward self sufficiency. Grants would cover a three-year period. But the money could be yanked if a program is shown to be failing in its goals.

"There are two things that are really different from anything we've been asked before," Watson said last week in committee. "First is we're going to challenge Tennesseans to come up with some really big ideas on how to solve these problems."

At the same time, Watson said, the legislation directs an academic study be conducted on how well or not the pilot projects are working.

"Too many times, we invest lots of money in programs without knowing if they work or not," said Watson, who complimented Lee and Finance Commission Butch Eley for agreeing. "We pushed really hard to take a long, hard look."

He added: "Let's swing for the fences and let's go big and let's put it against academic rigor and see if it works."

During her Senate testimony last week, Human Services Chief of Staff Whitney Page said the amended bill was the result of "huge collaboration" among Watson, Hawk and nonprofit groups.

Other provisions of the bill, she said, include "pathways of prosperity" to provide ways toward self sufficiency for families in the TANF program. The bill creates a two-year pilot project providing enhanced cash assistance to those actively pursuing educational opportunities.

The idea, Page said, is encouraging TANF recipients to pursue degrees and training.

The bill sets up a 21-member Families First Community Advisory Board that will approve retention of research partners, review and approve the selection of the pilots' recipients of planning and implementation grants, and provide input on effectiveness of existing Families First and two-generation program policies.

The board, which includes state officials, legislators, representatives of local government, private and nonprofit organizations, faith-based groups and businesses, also would approve any potential reallocation of the planning grants that don't appear to be working out.

Tennessee's Families First's five-year lifetime cap on programs for adults will remain.

The provision raising the monthly allotment to families is important, Hakeem said.

For 24 years - from 1996 until 2020 - Tennessee's maximum monthly TANF payment for a family of three in Tennessee was $185 a month. In 2019, it was the second lowest amount in the nation, with only Mississippi's $170 a month being lower than Tennessee's amount, according to the Center on Budget and Policy Priorities, a liberal research institution.

In 2020, Tennessee raised the allotment to $277 a month.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550. Follow on Twitter @AndySher1.


Gov. Bill Lee has proposed the bill to overhaul portions of the state's Temporary Assistance to Needy Families for low-income families following revelations the state program had built up a $732 million surplus. In Tennessee, TANF is operated as Families First. Here are some of the key elements of the bill now moving in the General Assembly: * Requires the state Department of Human Services dedicate $182 million from the surplus reserve to establish three-year Tennessee Opportunity Pilot Programs in six communities and one DHS-administered pilot to demonstrate the efficacy of well-implemented, two-generation approaches to improving education, heath, and economic outcomes. * Requires DHS to initially award planning grants from these funds to no more than 50 applicants, and to select six grantees from those applicants to receive the full Pilot funding of up to a total of $25 million each over three years. * Requires DHS to select and fund a research partner or partners that will support the research and evaluation of the Pilots. * Creates a Families First Community Advisory Board to oversee elements of the effort. * Boosts monthly payments to families on TANF, an example being that the allotment for a family of three would increase from $277 to $387. * Increases TANF, food stamp fraud penalties. Current fines of $1,000 to $5,000 would rise to $2,500 to $10,000 for fraudulently obtaining temporary cash or food assistance of $100 or more provided the fraud is perpetrated by "willfully false impersonation, assumption of a false identity, or presentation of a false identification." * Prohibits DHS from keeping more than $191 million in its TANF reserve fund. Source: General Assembly's Fiscal Review Committee