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Pursuant to a congressional request, GAO reviewed the states' fiscal decisions for the Temporary Assistance for Needy Families (TANF) block grant and whether states are taking steps to prepare for the effects of future economic downturns on their welfare programs, focusing on: (1) how state budgetary resources, including federal aid, have been allocated since states have had access to TANF funds; (2) what plans states are making to ensure programmatic stability in times of fiscal and economic stress; and (3) the extent to which states have used, or plan to use, the program's federal Contingency Fund for State Welfare Programs and the Federal Loans for State Welfare Programs (Loan Fund) which are available for downturns or other emergencies affecting states.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services The Secretary of Health and Human Services should consult with the states and explore various options to enhance information regarding states' plans for their unused TANF balances. Such information might include explicit state plans for setting aside TANF-funded reserves for the future. Allowing for more transparency regarding states' fiscal plans for TANF funds could enhance congressional oversight over the multi-year timeframe of the grant and provide states with an opportunity to more explicitly consider their long-term fiscal plans for the program.
Closed - Implemented
The Department of Health and Human Services (HHS) concurred with GAO's recommendation. Since the issuance of the report, the Department's Administration for Children and Families (ACF) has compiled data concerning state expenditures for the TANF program for fiscal years 1997 and 1998. HHS/ACF is also working through its regional offices to request data from the 13 states with the largest TANF balances to learn more about the states' plans for using these balances in the future.

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