NCPA - National Center for Policy Analysis

Welfare Reform

February 6, 2001

The 1996 welfare reform law replaced Aid to Families with Dependent Children (AFDC) with Temporary Assistance to Needy Families (TANF). This program change converted welfare from an entitlement that paid mostly cash benefits to needy parents into a benefit contingent on meeting work or work preparation requirements.

Based on a number of studies, it is clear that most states have dramatically revamped their welfare programs, with local offices no longer being simply check-writing operations, but instead helping people prepare for and find jobs. Most revealing, the spending patterns found in the budgets of state and local offices have changed dramatically.

  • Before welfare reform, state and local offices typically spent around 80 percent of their welfare money on cash benefits, with the rest going to administration, education, training and child care.
  • Now states often spend 50 percent or less of their funds on benefits while their spending on job search, education, training, child care and other work-related activities has expanded and diversified.

Also, state welfare caseloads have declined. More than half the states were implementing their own welfare reform programs under waivers from federal law by 1994, so caseload reductions were already under way prior to 1996. By the end of 1999, the national cash welfare caseload had declined by more than 50 percent from its 1994 peak.

Studies of mothers who have left welfare generally have found about 60 percent of mothers are employed at the time of the interview and about 75 percent have been employed at some time since leaving welfare.

As the welfare caseload has declined each year, so have overall child poverty and black child and Hispanic child poverty.

Source: Ron Haskins, Isabel Sawhill and Kent Weaver, "Welfare Reform: An Overview of Effects to Date," Welfare Reform & Beyond, Policy Brief No. 1, January 2001, Brookings Institution, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036, (202) 797-6105.


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