The Department of Health and Human Services has released financial data for states use of federal Temporary Assistance for Needy Families (TANF) and state maintenance of effort (MOE) funds for the 2002 fiscal year (FY). Drawing from this federal financial reporting, we describe here how TANF and MOE funds were used in FY 2002 and we discuss policy implications. An appendix provides details about rules relating to the use and spending of TANF and MOE funds. Our key findings and conclusions include:

Spending and use of funds continued to grow in FY 2002. The amount of funds spent and transferred in FY 2002 exceeded the amount of annual block grants states received. This means that without additional funding, states will be forced to cut levels for TANF-funded benefits and services in future years.

Spending on basic assistance continued to decline and now represents only about one third of TANF and MOE spending. The great majority of TANF and MOE funds are now being used for benefits and services other than cash assistance.

Child care continues to be the second largest use of TANF funds after basic assistance, representing nearly one-fifth of TANF and MOE funding, though the share of TANF and MOE funding committed to child care was not substantially different in FY 2002 than in FY 2000.