Last Updated: 09/13/2023
A state that does not meet the work participation rate for a year faces a penalty of up to 5 percent of the state’s TANF block grant. The penalty amount grows by two percentage points each year for subsequent failures, up to a maximum of 21 percent of a state’s block grant funding. States that are penalized must spend additional state funds to make up the amount of the federal penalty; any state that fails to do so is subject to an additional fiscal penalty and loses even more of its TANF block grant funds.
A state’s penalty can be reduced in some circumstances to reflect the extent to which it fell short in meeting the work participation rate — for example, if a state fails only the two-parent work rate, the penalty amount is prorated to reflect the share of the state’s caseload that consists of two-parent families. Federal law also provides relief from penalties based on reasonable cause or extraordinary circumstances, which are narrowly defined in federal rules. Finally, HHS does not impose a penalty against a state if the state corrects the violation — that is, if it meets the work participation rate (WPR) within the period covered by an HHS-approved corrective action plan. Unfortunately, HHS does not publish data on penalties that have been imposed on states, but experience suggests that few states ever face a penalty and when they do the penalties are small.
These two documents provide useful information on penalties states may face for failure to meet TANF requirements:
Q & A: Penalty Process | The Administration for Children and Families (hhs.gov)