Summary: Welfare reform has left most states with more resources for assistance than they would have received under the old program because the Temporary Assistance for Needy Families (TANF) Block Grant is fixed and most caseloads have fallen. Some states are banking the extra dollars for use in times of economic downturn or growth in caseload. Others are using these resources to promote self-sufficiency. In their budget choices, states have struck a balance between investing in today's caseload and saving for tomorrow. At the outset, five of the 10 states GAO visited planned to use all available TANF funds to invest in programs to promote self-sufficiency with expectations that this would reduce future caseload growth. Four of the other states, however, set aside a portion of their federal and state resources to cover potential future caseload increases and costs. Most states, including seven of the 10 GAO visited, also "rainy day" funds that could be used to augment program spending during an economic downturn, but welfare programs would have to compete for these resources with other state funding priorities. As of September 1997, states had about $1.2 billion in unspent balances in their accounts with the U.S. Treasury, or about nine percent of the total grant. However, this may be less an indication of state contingency planning and more a reflection of the transitional nature of states' first year with welfare reform.
