Last Updated: July 2023
When Congress created the TANF block grant in 1996, it created the TANF Contingency Fund for states to draw upon during periods of economic distress. This fund was intended to address some of the risks and hardships states would face as a result of the conversion of the former AFDC program — an entitlement whose funding rose automatically in recessions — to a block grant with a fixed federal funding level. However, over time it has simply become an additional source of funding for states that apply and meet the requirements. As of 2023, the Contingency Fund is funded at $608 million per year.
In order to be eligible to apply for Contingency Funds, States must meet a special 100 percent MOE requirements. The 100 percent MOE calculation excludes any MOE funds spent in Separate State Programs (SSP) and on child care. Additionally, states must meet a “needy state trigger” – which every state meets and has met for many years. Lastly, to keep all the funds, states must show that they have spent state funds that are equal to the 100 percent MOE plus an additional amount equal to the amount of Contingency funds they received.
States are eligible to request funds up to 20 percent of the federal block grant allotment, and the payments are calculated and reported as monthly allotments. That means that the monthly payments are equal to 1/12 of 20 percent of the state’s block grant amount. HHS makes payments until the allocated funds are all expended, and this usually occurs by March of every fiscal year. Even if the federal allocation to the Contingency Fund remains the same, the total amount of funds a state receives will vary from year to year because it is dependent on the number of states that request funds.
Key Resources:
Redesigning the TANF Contingency Fund to Make it More Effective | Center on Budget and Policy Priorities (cbpp.org): This CBPP report primarily focuses on the flaws within the Contingency Fund and provides recommendations for changes, but the Appendix provides a detailed description of how the fund works and what states need to do to qualify.
CFR Part 264 Subpart B — What Are the Requirements for the Contingency Fund?: This is the section of the statute that outlines the requirements for the Contingency Fund.
TANF Contingency Fund Final Awards, 2006-2021: This spreadsheet tracks the amount of Contingency Funds awarded to each state from 2006 to 2021. Awards after 2021 can be found in Table E.5 in the HHS Expenditure Data Spreadsheet which can be found at this link.
Finally, you can find the 100% MOE amount in Table C.3 in the HHS Expenditure Data Spreadsheet linked above.