Making tradeoffs in federal block grant programs: Understanding the interplay between SSBG and TANF

Welfare reform gave states the option of transferring up to 10 percent of their annual federal Temporary Assistance for Needy Families (TANF) award to the Social Services Block Grant (SSBG). Drawing on administrative data, we consider the impact of TANF transfers on SSBG. We find evidence suggesting that more innovative states, states that experienced larger TANF caseload declines, and states that transferred a higher percentage of TANF funds to the Child Care Development Fund (CCDF) have transferred higher portions of their TANF allocations to SSBG, all else equal. Preliminary analysis of changes in SSBG expenditure patterns from FY 1995 to FY 2000 indicates that states are transferring significant sums to SSBG, but that TANF transfers do not appear to have a consistent effect on SSBG spending priorities across states.