ACF-OFA-IM-26-01: Using TANF to Support Child Care and At-Home Parental Caregivers

PURPOSE

To remind states that TANF provides broad flexibility to support children being cared for in their own homes and to encourage the formation and maintenance of two-parent families; to encourage states to consider transferring the maximum amount of TANF funds authorized by law to the Child Care and Development Fund (CCDF); and to clarify that states may provide TANF assistance to married, two-parent families in which one parent remains home as a caregiver, subject to the TANF time-limit and work rules that apply to assistance, while retaining discretion to define needy standards and set benefit levels.

BACKGROUND

A central goal of TANF is to provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives. 42 U.S.C. 601(a)(1). TANF also separately encourages the formation and maintenance of two-parent families. 42 U.S.C. 601(a)(4). States may use TANF funds in any manner reasonably calculated to accomplish one or more of those purposes, and the others outlined at section 601(a), subject to the limitations and requirements of Title IV-A of the Social Security Act. 42 U.S.C. 604(a); 45 CFR § 260.20.

Federal TANF law distinguishes between "assistance" and "nonassistance." Assistance includes cash, payments, vouchers, and other forms of benefits designed to meet a family's ongoing basic needs. 45 CFR § 260.31(a). This distinction matters because TANF assistance to a family is generally associated with the federal 5-year time limit and the work participation rate requirements. 

Under the statute, states also retain substantial discretion in setting TANF financial eligibility and benefit rules for needy families. Title IV-A uses the term "needy" but does not prescribe a single federal income or resource standard, and instead provides that states “shall set forth objective criteria for the delivery of benefits and the determination of eligibility” thus permitting states to establish different income and resource criteria for different benefits and services. See 42 U.S.C. 602(a)(1)(B)((iii). 

INFORMATION

1. TANF transfers to CCDF.

Under section 404(d) of the Act, a state may use up to 30 percent of its annual TANF grant to carry out CCDF or Social Services Block Grant (SSBG) programs, subject to the separate statutory limit on transfers to SSBG. 42 U.S.C. 604(d)(1)-(2). Accordingly, a state that makes no transfer to SSBG may transfer up to 30 percent of the state’s annual TANF grant to CCDF. Amounts transferred to CCDF become subject to CCDF rules. 42 U.S.C. 604(d)(3)(A). Those rules support parental choice through CCDF’s certificate and voucher-based structure, which allows eligible families to select from the full range of child care providers, including faith-based child care providers. At the same time, CCDF provides a child care-specific framework that promotes better accountability for child care expenditures while preserving substantial flexibility for parents to choose care arrangements that meet their families’ needs.

The attachment to this IM identifies FY 2024 TANF transfers to CCDF by state, the maximum amount transferable under the 30 percent authority, and the additional TANF funds that could be made available for CCDF child care through fuller use of that transfer authority.

States collectively transfer only a small share of TANF funds to CCDF. Based on FY 2024 transfer levels, states transferred approximately $1.39 billion to CCDF, or about 9 percent of total TANF block grant funds. If all states were to use the full 30 percent transfer authority, states collectively could transfer approximately $4.86 billion to CCDF, an increase of approximately $3.48 billion above current transfer levels. That additional amount of CCDF funding could support child care for a significant number of additional children. The Office of Family Assistance (OFA), therefore, encourages states to consider transferring the maximum amount authorized by law to CCDF, rather than transferring TANF funds to SSBG or using TANF funds directly for child care within the TANF program, where doing so would help the state better support families with young children and expand child care access. Funds transferred to CCDF operate within a framework that supports parental choice and better accountability for the use of child care funds.

2. TANF assistance for needy married, two-parent families with an at-home parental caregiver.

Two of TANF’s core statutory purposes are especially relevant here. Under the first purpose, TANF is intended to provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives. 42 U.S.C. 601(a)(1). Under the fourth purpose, TANF is intended to encourage the formation and maintenance of two-parent families. 42 U.S.C. 601(a)(4). Read together, these purposes give states broad authority to support needy married, two-parent families with children, including families in which one parent remains home to care for a child.

States may provide TANF cash assistance or other assistance to a needy married, two-parent family with a minor child when one parent remains home to care for the child. Assistance includes cash, payments, vouchers, and other benefits designed to meet a family’s ongoing basic needs. When a state provides such assistance, the family is subject to the federal TANF assistance rules, including the 60-month federal time limit unless an exception applies. 42 U.S.C. 608(a)(7).

For work participation purposes, a two-parent family with two work-eligible individuals counts toward the state's two-parent rate if the parents together participate in work activities for an average of at least 35 hours per week, including at least 30 hours in core activities. 42 U.S.C. 607(c)(1)(B)(i). If the family receives federally funded child care assistance , the combined threshold is 55 hours per week, with at least 50 core hours. 42 U.S.C. 607(c)(1)(B)(ii). 

Thus, if one married parent participates in 35 hours per week of unsubsidized employment and the other married parent remains home caring for the child (obviating the need for federally funded child care, including through CCDF), the family may receive TANF cash assistance and count toward the state's two-parent work participation rate.  Given parents’ preference for at-home child care provided by the child’s own parent, OFA expressly encourages states to utilize TANF and MOE funds to provide assistance to married two-parent families in which one parent is working 35 hours and the other is serving as the child’s primary caregiver in the home. And since these cases need not be served through CCDF, vouchers in that program are preserved for other families. 

Further, OFA reminds states that they have broad flexibility to determine both which families are considered “needy” for TANF purposes and what level of assistance to provide to eligible families. States determine who is needy through their own objective financial eligibility rules. 42 U.S.C. 602(a)(1)(B)(iii). States also retain substantial discretion to set benefit levels for needy families and, consistent with TANF’s statutory purposes, may structure those benefit levels in a manner that deferentially supports married, two-parent families.

Within that framework, states should examine whether their payment structures, assistance units, application forms, notices, staff instructions, and training materials adequately account for married, two-parent families and whether they unintentionally disfavor families with an at-home parent caring for a child. A state therefore may, if it chooses, set higher benefit levels for needy married, two-parent families in which one spouse is working and the other spouse is serving as the child’s primary caregiver in the home, as in the situation described above. In particular, higher benefit levels for such families may further TANF Purpose 4, which encourages the formation and maintenance of two-parent families, while also supporting TANF Purpose 1, by allowing children to be cared for in their own home. 42 U.S.C. 601(a)(1), (4), 604(a).

INQUIRIES

Please direct inquiries to TANFquestions@acf.hhs.gov 

/s/

David Swegle
Director
Office of Family Assistance
Administration for Children and Families 
Department of Health and Human Services

ATTACHMENT: FY24 TANF Transfers to CCDF and Additional Potential CCDF Transfer, by State