Even More TANF Hoarding

by Tom Yamachika, President, Tax Foundation Hawaii

This week we revisit Temporary Assistance for Needy Families, or TANF.  Under TANF, the federal government provides a block grant to the states, which then use these funds to run their own programs for relief of the poor.  To receive federal funds, states must also spend some of their own dollars on those programs, known as the “maintenance of effort” (MOE) requirement, or face severe fiscal penalties if they fail to do so.  The federal government has given Hawaii a shade less than $100 million a year.

But we haven’t used it.  We have let it pile up. 

We pointed out that in federal fiscal year 2020, we had an “unobligated balance,” namely authorized federal money that we haven’t spent, of $364 million.  The next year, fiscal year 2021, that balance crept up to $378 million.  In 2022, we enacted a law  (Act 237, Session Laws of Hawaii 2022) that allowed TANF funds to be used for more things.  But did that bring the balance down?  No!  At the end of fiscal 2023, the balance was $452 million.  That is 4.59 years’ worth of federal grants, by far the highest in the nation.  (The next three states are Tennessee, 3.94 years; Montana, 1.98 years; and Mississippi, 1.81 years.)

When Hawaii Public Radio asked our Department of Human Services what was going on, they said that they were looking at expanding their programs to Compact of Free Association (COFA) residents.  But they needed to think twice about expanding their programs because of the MOE requirement, that pulling down federal money would require allocations of additional state money.

But hold on a cotton-pickin’ minute!  It turns out that there are several categories of programs where (1) federal funds are available, but (2) we are spending only state money.  Obviously, we are contributing our share.  Can someone tell us why we are not pulling down any federal funds for these activities?

For example:  Basic Assistance.  Poor people need help.  We give them some money.  We spent $23.6 million of state money in federal fiscal year 2023.  We spent zero federal funds.  Nationwide, $3.3 billion of federal money was spent on basic assistance.

Or how about education and training activities?  We can teach poor people job skills so they can go into the workforce.  We spent $41 million of state money in federal fiscal year 2023.  We spent zero federal funds.  Nationwide, $810 million of federal money was spent on education and training.

Subsidized employment counts too.  We help pay the salaries of eligible folks who are hired into the workforce so they can get real life experience.  We spent about $200,000 in state money with not a dime from Uncle Sam.  $105 million was spent nationally.

And did you know that TANF money is available to subsidize refundable earned income tax credits?  Nationwide, $305 million of federal money was spent to do this in federal fiscal year 2023, none in Hawaii.  Yet we have a refundable earned income tax credit in Hawaii (it was made refundable in 2022 by Act 114, Session Laws of Hawaii 2022) and taxpayers claimed $19.8 million of credits for calendar year 2022.

The moral of the story is that we in Hawaii had better start pulling down some of that free federal money.  If we don’t, there are plenty of bureaucrats with chainsaws and sharp axes who are more than willing to cut off the funding because we apparently don’t need it…and, by the way, we happen to be a blue state. 

In 2016, the first Trump Administration noted that the Department of Hawaiian Home Lands receives annual Native Hawaiian block grants but hadn’t been spending the money. The Administration cut off the grants. Our Congressional delegation had to scramble big time to get them restored.

Let’s learn from our mistakes, folks!