Welfare Family Caps and the Zero-Grant Situation

Christopher Dinkel

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I. Introduction

President Clinton enacted “welfare reform” when he signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which abolished Aid to Families with Dependent Children (AFDC) and created Temporary Assistance for Needy Families (TANF).1  PRWORA greatly scaled back the extent of federal welfare assistance and passed significant responsibility from the federal government to the states to design and administer welfare programs for families with children.  Under AFDC, the federal government matched every dollar that a state spent on welfare programs with between one and four dollars of federal funds.2  Under TANF, however, the federal government instead gives each state a fixed block grant that does not change in size, regardless of the amount of money that each state spends.3  As of July 2009, the designated block grant was $16.5 billion per year.  Elizabeth Lower-Basch, Ctr. for Law & Soc. Policy, Looking Ahead to TANF Reauthorization 2 (July 2009), available at http://www.clasp.org/admin/site/publications/files/Looking-Ahead-to-TANF-Reauthorization.pdf.]

Family caps were an important part of the congressional debate regarding welfare reform.  A “family cap” is a welfare provision that prohibits parents who are currently receiving welfare for their child from receiving an increase in their monthly welfare grant following the birth of another child.  Under AFDC, states that wanted to implement family caps had to obtain a waiver from the federal government.  Through its silence regarding family caps, however, PRWORA permitted states to continue to use their existing family cap policies or to adopt new ones under TANF that were free from federal regulation.

Family cap policies and their effects are of particular importance in light of current political debates regarding the proper role of welfare, particularly in states like California that have recently faced significant budget deficits.  The issue also has a considerable national dimension because roughly a third of the states have a family cap provision.  Even though several congressional attempts to prohibit family caps have failed since 1996, there has been sharp criticism of family caps from both Democrats and Republicans.  One significant criticism is that family caps punish welfare recipients for having more children by withholding benefits following the birth of additional children.  Additionally, social science research indicates that welfare recipients do not base their child-bearing decisions on receipt of welfare benefits, thus rendering questionable the effectiveness of family caps in deterring welfare recipients from having more children.  Another prominent criticism is that by reducing the benefits families receive to satisfy basic necessities, family caps are also likely to exacerbate the many mental and physical health problems that children in poverty are already at increased risk of developing.

In the Note on which this Editorial is based, I demonstrate how the operation of family caps can create a situation that completely deprives families of welfare grants when their oldest children leave the household and only capped children remain.  This situation commonly occurs when a noncapped child reaches adult age and becomes ineligible for welfare, or when a noncapped child leaves the household to go into foster care and only capped children remain in the household.  Using California’s family cap, the Maximum Family Grant (MFG) rule, as a case study, I examine what I call the “zero-grant situation,” which arises when families’ monthly welfare grants are $0 as a result of a family cap, even though their capped children technically are welfare participants.  I discuss how completely denying financial assistance to families in need undercuts a central justification of family caps: that families will be able to share the welfare benefits of noncapped children with capped children.  Moreover, I argue that when family caps completely deprive otherwise eligible families of all financial assistance, they thwart the public policy goals of reducing poverty and strengthening families on welfare.  This complete deprivation of welfare funds could have grave health effects for the significant number of capped children in the United States.4

II. Zero-Grant Situation Resulting From the Maximum Family Grant (MFG) Rule

The MFG rule is the family cap in California’s TANF program, CalWORKs.5  CalWORKs provides cash grants to indigent families with children.  Generally, adults in California may receive aid for themselves from CalWORKs for a maximum of sixty months, but their children, if eligible, may continue to receive aid beyond sixty months.  To calculate the cash grant that a family receives each month, one subtracts the family’s reasonably anticipated “Net Nonexempt Income” (NNI) from the Maximum Aid Payment (MAP) for the Assistance Unit (AU), which is the number of family members in the household for purposes of calculating the grant.  For instance, if a family of two has no income and, therefore, an NNI of 0, it will normally receive $627 per month, the MAP for an AU of 2.  Likewise, a family of three with no income will normally receive $776 per month, the MAP for an AU of 3.  The potential CalWORKs grant may vary depending on family size, region, and other factors, such as the MFG rule.

Under the MFG rule, a child born into a family that received CalWORKs cash aid for the ten months prior to that child’s birth without a break in aid for two or more months is not a part of the AU for purposes of determining the family’s MAP to calculate the grant amount.  Children subject to the MFG rule still retain technical eligibility for ancillary CalWORKs benefits.  Ancillary benefits include child care if the parent is working or $10 per month in special needs payments if the child has a qualifying condition, such as special dietary requirements, a medical difficulty requiring special travel expenses, or a hearing impairment that requires telephone services.

A family could have children who are eligible for CalWORKs yet still receive a monthly cash grant of $0 because of the MFG rule.  To illustrate this zero-grant situation, suppose that a family satisfies the income and eligibility requirements for CalWORKs.  The mother does not qualify for CalWORKs because, for instance, she has already received aid under the program for sixty months.  She therefore does not count as a member of her family’s AU for purposes of determining the MAP.  She has one child for whom she is receiving aid.  She then has a second child while continuously receiving aid for the first child during the ten months prior to the birth of the second child.  The second child is subject to the MFG rule and is therefore not a part of the AU for purposes of determining the MAP.  Suppose then that the first child reaches the CalWORKs age limit or leaves the home and goes into foster care.  The first child’s CalWORKs eligibility does not transfer to the second child because the second child is considered a capped child.  The mother is not working, so she cannot receive benefits to cover child care for the second child.  The second child does not have any qualifying “special needs” to receive the $10 per month in special needs payments.  In this situation, the AU to determine the MAP is zero, and the MAP is therefore zero.  Consequently, the family’s monthly CalWORKs grant is $0 even though there is one child in the household who is otherwise eligible for CalWORKs.

III. Problems with Family Caps in the Zero-Grant Situation

A.     Flawed Legal Reasoning

When a family cannot receive any aid because of a family cap even though the family has children who are otherwise eligible for welfare funds, the operation of the family cap creates a situation that contradicts the reasoning that courts use to justify upholding the constitutionality of family caps.

1.   Not Completely Depriving Families of Welfare Benefits

Courts often assert that because the effect of the family cap is only to make a family share the welfare resources of noncapped children with capped children, the family cap does not completely deprive families of welfare funds.  For instance, in an Indiana case, N.B. v. Sybinski, the court stated that “the family cap does not punish children for the behavior of their parents, nor does it completely deprive children of benefits they might otherwise receive.”6  Yet, as illustrated above, a family cap does completely deprive a family of benefits in the zero-grant situation, contradicting the reasoning that courts have used to uphold family caps.

2.   Putting Families on Welfare on Par with Working Families

Courts also frequently analogize the situation of a family receiving welfare to that of a working family to justify upholding the constitutionality of family caps.  For example, a federal district court in C.K. v. Shalala stated: “Placing welfare households on a par with working families is a reasonable and appropriate goal of welfare reform. . . .  The Family Cap, by maintaining the level of AFDC benefits despite the arrival of an additional child, puts the welfare household in the same situation as that of a working family, which does not automatically receive a wage increase every time it produces another child.”7

This analogy is misleading because working families are in a drastically different situation from families on welfare.  When working families do not receive wage increases upon having additional children, they likely can still manage to get by because they can use their income to care for those children.  Families on welfare, on the other hand, receive barely enough to survive and are often desperately struggling to avoid suffering a serious illness or becoming homeless.8  Adding the costs of having another child to a family that is already living on the edge—perhaps on as little as a few hundred dollars a month—could seriously jeopardize that family’s ability to buy enough food or pay its rent.

Another problem with the courts’ analogy is that not receiving an increase in wages for a working family is a very different situation from not receiving any wages at all.  Likewise, not receiving an increase in welfare benefits is much different from not receiving any welfare benefits at all.  The analogy fails when family caps completely deny any welfare benefits to families rather than simply make families share the benefits of noncapped children with capped children.

B.     Flawed Public Policy

Courts have articulated certain public policy goals as legitimate state interests in their decisions upholding the constitutionality of family caps.  In the zero-grant situation, whether completely depriving a family of benefits furthers a legitimate state interest is questionable.  The application of family caps in the zero-grant situation more likely frustrates, rather than supports, these public policy goals.

1.   Reducing Poverty

Courts have claimed that there is a legitimate state interest in reducing poverty and that family caps are rationally related to that interest.  For instance, a New Jersey court in Sojourner A. v. New Jersey Department of Human Services found family caps to be rationally related to the legitimate state interest of “breaking the cycle of poverty.”9

It is difficult to see, however, how family caps can promote this legitimate state interest in the zero-grant situation.  That families will actually be able to escape poverty or the need for welfare when they do not receive any cash assistance to purchase the basic necessities of life is unlikely.  Even when family caps do not completely deprive capped families of welfare benefits, the effects of poverty on their children are profound.  Research indicates that children in poverty are more likely to suffer adverse health and physiological effects.  Children in poverty are also more likely to suffer severe cognitive defects and develop social problems.  Consequently, these grave effects could have serious consequences for the capped children’s ability to contribute to society.  Studies have found that every dollar a state eliminates from a welfare grant results in an expected future economic loss by at least that amount due to diminished future productivity.10  According to one estimate, for each year that children remain impoverished, society loses $130 billion in future economic output over those children’s lifetime.11

2.   Strengthening Families

Courts have also claimed that family caps are rationally related to the legitimate state interest of strengthening families on welfare.  In C.K. v. New Jersey Department of Human Services, the Third Circuit Court of Appeals concluded that “promoting . . . family stability” was a legitimate state interest.12  Similarly, the court in Sojourner A. v. New Jersey Department of Human Services found “strengthening families” to be a legitimate state interest.[13. Sojourner A., 794 A.2d at 824.]

Yet, it is difficult to understand how there can be any measure of family stability in the zero-grant situation.  When a family has no cash resources to purchase essential items such as shoes, clothing, or school supplies, this lack of income can lead to further familial instability due to any number of difficulties.  Most prominent are problems resulting from the effects on children’s health, as well as their diminished developmental and social capacities.  Furthermore, some families in the zero-grant situation will suffer another source of familial instability as a result of family caps: Even though they desperately want to keep their family together, they will have to give up their children to foster care simply because they do not have the financial resources to care for them.  When this happens, rather than supporting the public policy goal of strengthening families, family caps lead to increased instability among those families in the zero-grant situation.

IV. Potential Legal Solutions

Congress should make a number of changes to TANF to demonstrate its commitment to caring for America’s neediest residents.  One change should be to enact a congressional prohibition on family caps.  If Congress is unwilling to enact a complete ban on family caps, however, it should at least create an exception for the zero-grant situation.  This exception would leave a family cap intact but would provide some amount of cash aid to families when they have otherwise eligible capped children but no longer receive any aid for the children for whom they were originally receiving aid.  This exception would help to safeguard against the most extreme health effects that children suffer when their families cannot afford the basic necessities of life.

States could also ban family caps on their own.  Illinois, Maryland, and Nebraska have discontinued their family caps, and other states could follow their lead.  One likely hurdle, however, is that many states currently face record deficits and may be unwilling to discontinue their family caps if the elimination of those family caps would have any immediate impact on their state budgets.  For this reason, a congressional prohibition on states’ use of family caps is potentially a more viable solution—at least until states realize that a healthy population ultimately creates net gains.  Like the federal legislative exception, if state leaders are unwilling to enact a complete ban on family caps, however, they should still create an exception for the zero-grant situation.  Again, this exception would not eliminate a family cap, but it would permit families to receive some amount of cash aid when they have otherwise eligible children who are subject to the family cap but no longer receive aid for the children for whom they were originally receiving aid.  This exception would likewise help to safeguard against the most severe health effects that children suffer when their families cannot afford basic necessities.


Christopher Dinkel is a 2011 J.D. candidate at Cornell Law School.

This editorial is based on Mr. Dinkel’s Note: Christopher Dinkel, Note, Welfare Family Caps and the Zero-Grant Situation, 96 CORNELL L. REV. 365 (2011).

Copyright © 2011 Cornell Law Review

  1. Pub. L. No. 104-193, 110 Stat. 2105; see Rebekah J. Smith, Family Caps in Welfare Reform: Their Coercive Effects and Damaging Consequences, 29 HARV. J.L. & GENDER 151, 153 (2006).
  3. Id. at xvi.
  4. See THE HENRY J. KAISER FAMILY FOUND., WELFARE POLICY AND REPRODUCTIVE HEALTH: CAPPING A FAMILY’S BENEFITS 3 (2003), available at http://www.kff.org/womenshealth/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=13282.
  5. See WELF. & INST. CODE § 11450.04; MANUAL OF POLICIES AND PROCEDURES: ELIGIBILITY AND ASSISTANCE STANDARDS § 44-314.2 (2009) (establishing the MFG rule).
  6. N.B. v. Sybinski, 724 N.E.2d 1103, 1113 (Ind. Ct. App. 2000).
  7. C.K. v. Shalala, 883 F. Supp. 991, 1014 (D. N.J. 1995).
  8. See Smith, supra note 1, at 158–59.
  9. See Sojourner A. v. N.J. Dep’t of Human Servs., 794 A.2d 822, 824 (N.J. Super. Ct. App. Div. 2003).
  12. C.K. v. N.J. Dep’t of Human Servs., 92 F.3d 171, 195 (3d Cir. 1996) (quoting Shalala, 883 F. Supp. at 1015).

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