This month is the 12th anniversary of the federal welfare reform law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which marked a turning point in the political debate about shifting public assistance toward a system of temporary support with a concerted focus on moving recipients into the labor force.

One of the most controversial features of the 1990s welfare reforms was the imposition of time limits on benefit receipt. The landmark 1996 welfare law prohibited states from using federal TANF funds to assist most families for more than 60 months. Proponents of welfare reform argued that the time limits in the new Temporary Assistance for Needy Families (TANF) program, which replaced Aid to Families with Dependent Children (AFDC), would send a firm message to recipients that welfare is intended to be temporary and that, when presented with a deadline, recipients would find jobs or other sources of support. Conversely, critics pointed out that many welfare recipients have low levels of education and skills and other personal and family challenges that make steady work difficult, and they predicted that time limits would cause harm to many vulnerable families.

Under contract to the Administration for Children and Families (ACF) in the U.S. Department of Health and Human Services, The Lewin Group and MDRC have recently published a comprehensive review that offers the latest findings about time limits, which are summarized here.

Federal law affords states great flexibility in setting time-limit policies. The federal 60-month limit does not apply to state-funded benefits; also, states may use federal TANF funds to support up to 20 percent of the caseload beyond 60 months. Thus, states may set a 60-month time limit, a shorter limit, or no time limit, and they may choose to exempt families from time limits. Not surprisingly, time-limit policies vary dramatically from state to state. Other key findings from the study include:

• Nationally, a large proportion of TANF households are not subject to time limits, but time limits play a key role in some states. About 44 percent of TANF households are not subject to federal or state time limits because they are “child-only cases” — typically, children living with a relative or families in which the parent is not eligible for benefits. In addition, about half of TANF families live in states that rarely or never close families’ cases because of time limits. On the other hand, a quarter of TANF families live in states that usually terminate benefits after 60 months, and nearly as many are in states with shorter limits.
  
  
• Nationally, at least a quarter million TANF cases have been closed due to reaching a time limit since 1996, although about one-third of these closures have occurred in New York, which routinely transfers cases to a state and locally funded program that provides the same amount of benefits as TANF. Most other states do not routinely provide such post-time-limit assistance. It is important to note that time-limit closures account for only 2 to 3 percent of all closures in a typical month. Recipients whose cases are closed due to time limits differ from other welfare leavers in key ways; for example, they are less likely to have a high school diploma and are more likely to live in subsidized housing.
  
  
• Many of the families whose TANF cases were closed due to time limits are struggling financially and report being worse off than they were while on welfare. Several state surveys have found that many families whose cases were closed due to time limits are experiencing material hardships and are still relying heavily on other forms of public assistance, such as food stamps. However, it is not clear that families who left TANF because of time limits are struggling more than other welfare leavers, most of whom remain poor as well.

Little is known regarding how families who have reached time limits in the last several years are faring. More research is needed that focuses on different cohorts of leavers to understand whether they are receiving other benefits (such as Medicaid and food stamps), whether they are employed, and whether they are experiencing material hardships.

In addition, states are now responding to the Deficit Reduction Act (DRA) of 2005, which reauthorized the TANF program in early 2006. While DRA did not change time-limit rules, the policy choices made by states in response to other provisions of DRA and to related regulations may affect the number of families who accrue months toward the state and federal time limits. It will be important to track the changes that states make to their policies and implementation practices. In particular, changes made with regard to the operation of separate state programs or the use of segregated TANF funding, earnings disregards or income supplement policies, and changes in the use of sanctioning will affect how many families reach the state or federal time limit.

Additional Resources

For more information about MDRC’s research on welfare, programs for low-wage workers, and interventions for the hard-to-employ, visit the following sections of our site:

Welfare and Barriers to Employment

Low-Wage Workers and Communities