States Prepare for Major Decrease in Federal Support

Today marked the end of the state fiscal year as well as the expiration of two very important federal extensions. Since the creation of the Temporary Assistance for Needy Families (TANF) block grant in 1996, Congress has always provided additional support in the form of the Supplemental Grants and the Contingency Fund. The TANF Contingency Fund expired in December 2010, and Supplemental Grants have now expired as well. This marks the first time since the program was created that Congress has not provided additional funding to address the inequities resulting from the funding formula of the TANF block grant. The expiration of the Supplemental Grants will deprive 17 states of roughly $108 million. In anticipation of the expiration of these funds, Representative Lloyd Doggett (D-Texas) introduced H.R. 2277, the TANF Supplemental Grants Extension Act, which would restore funding through the end of the federal fiscal year, and allow time for reauthorization of the TANF program (which is also set to expire September 30).

In addition, the enhanced Federal Medical Assistance Percentages (FMAP) that states were initially provided under the 2009 American Reinvestment and Recovery Act also expired today. This increased match (originally set at 6.2%) was intended to help states support their Medicaid, Title IV-E foster care, adoption assistance and kinship care programs during the recession. Last summer, Congress and President Barack Obama extended this temporary increase through a phased-out formula that provided an increase of 3.2% for the third quarter (January-March 2011) and a 1.2% percentage point increase for the fourth quarter (April-June 2011). Effective July 1, the enhanced FMAP increase will be completely phased out.

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