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The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 made sweeping changes to the nation's key welfare program for needy families. It established the $16.5 billion Temporary Assistance for Needy Families (TANF) block grant, which provides to the states federal funds to support low-income families and help these families reduce their dependence on welfare. TANF provides states significant flexibility--within federal guidelines--to determine who is to be served and what services to provide. The welfare legislation also fundamentally changed how the federal government funds assistance for low-income families, shifting much of the fiscal risk for welfare programs to the states. Under TANF, states receive a fixed amount of TANF funds each year and, if costs rise, states must find a way of financing the additional costs. To better understand states' spending patterns for TANF funds as the Congress debates the program's reauthorization, the Chairman of the House Subcommittee on Human Resources, Committee on Ways and Means, asked us to provide information on (1) TANF balances, including the amount of funds transferred to states' child care and social services block grants, that remain unspent and (2) the extent to which these balances reflect reserves available for future use.

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