Welfare dollars help fund college scholarships for children of middle-class families

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In 2017, Mississippi reported TANF spending of $18.8 million on state scholarships serving 13,675 people.

Mississippi spends one-sixth of its funding for welfare, a program reserved for the most vulnerable residents, on a college scholarship program benefiting thousands of middle class families.

In January and February, Mississippi Today published an investigation into state financial aid, which detailed an outdated program plagued by a lack of awareness surrounding need-based scholarships and barriers to aid for the neediest citizens, such as adult learners and low-income families.

Adding to doubts about how the state doles out financial aid dollars is the little-known fact that Mississippi reported almost half of all state-funded scholarships it awarded in 2017 as welfare spending.

In 1996, at the height of welfare reform, Congress created Temporary Assistance for Needy Families, a safety net program that replaced the previous cash assistance entitlement program called Aid to Families with Dependent Children.

Instead of an entitlement, the federal government block granted this new pot of welfare dollars — $31.1 billion total in 2017 — to states, giving the local governments broad discretion on how to spend them.

Since then, states have spent the money in wildly different ways. Mississippi’s annual TANF budget is about $108 million, including its 20 percent required state match.

Nationally, states spent just under a fourth of their TANF funds on basic cash assistance, what many people think of as the “welfare check,” for deeply impoverished families.

Mississippi, consistently among those most impoverished states, spent 7.2 percent, or $8.6 million of its welfare funds on these direct cash payments to poor families in 2017, the most recent year for which federal spending data is available. Mississippi Department of Human Services administers the program.

To draw down roughly $86 million in federal welfare funds every year, Mississippi must spend $21.7 million in direct state dollars on one of the four federally-established missions of TANF: provide assistance to needy families so children can be cared for in their home; reduce the dependency of needy parents by promoting job preparation, work and marriage; prevent out-of-wedlock pregnancies; and encourage two-parent families.

This match, called the “maintenance of effort,” may be money the state is already spending on related programs, such as on state financial aid.

In 2017, Mississippi reported TANF spending of $18.8 million on state scholarships serving 13,675 people, up significantly from the $10 million serving 8,987 people it reported in 2016.

According to the state’s rules, these welfare expenditures can pay for scholarships for families up to 350 percent of the poverty line, which is a four-person household income of $90,125 — over double the median household income in the state.

There is no process to target these scholarships to the neediest citizens; in fact, at least 78 percent of the scholarship recipients Mississippi reports serving through TANF in 2017 were from families who would not qualify for TANF, according to a Mississippi Today analysis.

“What they’re doing is perfectly legal. There’s no restriction on it,” said Ife Floyd, Center on Budget and Policy Priorities senior analyst. “What it does show is the state has invested very little from their own coffers for these type of services … It’s a deinvestment in families in poverty.”

This isn’t unusual. Since TANF’s creation, the federal government has allowed states to spend the block grant on activities for folks not otherwise classified as needy — such as marriage counseling for young professionals.

Jacob Black, human services’ deputy administrator of programs, told Mississippi Today in October the agency has used the state scholarships to satisfy its TANF match since the 1990s.

“It’s achieving one of the tenets of TANF, which is the promoting education piece, which is how we can count it,” Black said.

“Promoting education” is not one of the four purposes of TANF, though advocates have said that it should be, and have criticized the program for limiting TANF participants’ engagement in education, focusing solely on employment.

Those receiving the scholarships also do not have to abide by the same work requirements and other eligibility restrictions as a traditional TANF recipient would.

Mississippi Today requested four times for an interview from six agency officials for this story. Three days after the first request, an attorney with the department said, “Due to the late notice of your request, unfortunately our schedules are unavailable to coordinate.” Mississippi Today moved its deadline and asked for an interview three more times. Attorney Dewitt Fortenberry asked the news organization to send written questions by email “per our Media Policy” — a new policy established in March after months of inquiry from Mississippi Today about its administration of public assistance. Mississippi Today, which has sent at least five written questions to the department and received no response, declined to send questions for this story.

States may spend TANF dollars on resources to prevent folks from needing TANF, such as work supports to help them maintain employment, but each state can determine for itself who is at risk of falling into deep poverty.

Some states define that line at 200 percent of poverty; some define it as high as 350 percent.

“I have not come across any expert in the policy space — when we’re talking about anti-poverty programs — I have not seen 350 percent of the poverty level be designated as representing the marker for low-income,” Floyd said. “It’s another way they justify that spending.”

Eric J. Shelton, Mississippi Today/Report For America

Student financial aid director Jennifer Rogers asked the data research center at Mississippi State University to measure the effectiveness of financial aid in the state. The State Aid Redesign Study Committee will decide what to do with the findings.

Mississippi also awarded two nonprofits, Mississippi Community Education Center and Family Resource Center of Northeast Mississippi, which together make up an entity called Families First, $27.6 million, or over 25 percent of annual TANF dollars, in 2018 to create resource centers to serve people up to 350 percent of the poverty line, Black said.

While Mississippi’s portion of TANF spending on cash assistance is low, it spends significantly more, 78 percent, than many states on “core services,” such as child care and work activities and supports, though that includes the scholarships and resource centers. The largest expenditures outside of core services are $12.8 million, 10.7 percent, for child welfare and $9 million, 7.6 percent, for “Fatherhood and Two-Parent Family Formation and Maintenance Programs.”

Matt Williams, director of research for Mississippi Low-Income Child Care Initiative, said considering budget constraints, his nonprofit supports the state drawing funds from any available sources to meet matching requirements, as opposed to leaving federal money on the table. Williams authored a 2017 report detailing the spending trends of TANF’s 20-year history in Mississippi.

“When we use state spending on financial aid to help us draw down federal TANF dollars, we also need to ensure these state-funded financial aid and scholarship opportunities are prioritizing moms who are receiving TANF or the many more who are eligible for TANF, but are not currently being served,” Williams said in an email.

In reports to the federal government, Mississippi said the scholarships satisfied the first three goals of TANF. “These programs provide safe and stable environments which help children succeed and allow their parents to work,” the report states.

In 2017, the vast majority of all state scholarships recipients, 96 percent, were traditional students between ages 17 and 24, according to the Mississippi Office of Student Financial Aid annual report. Eighty-nine percent were dependents, meaning they were still supported by their parents or another guardian. And the vast majority, 73 percent, were white, even though the state TANF population is 78 percent African American.

“You’re not investing in families of color, families in poverty. You’re bolstering not only families with higher incomes, but families that are predominately white,” Floyd said.

Assuming the 13,675 served by the state scholarships that Mississippi calls welfare are the poorest recipients, just one-third of those came from families who make under $30,000 in 2017.

Forty percent of those recipients came from households who make over $48,000, well in the national middle class, according to Pew Research Center.

“A lot of our aid goes to students with financial resources and that is because of the way that the programs are designed,” State Financial Aid director Jennifer Rogers said.

The state’s financial aid programs were created in the mid-1990s, Rogers said, when the Pell Grant, a federal need-based financial aid program, went further in covering the cost of college for low-income students.

“Obviously the cost of college has grown significantly since the 1990s and more students are going to college, so the purchasing power of the Pell Grant is nowhere near where it used to be,” Rogers said. “Times have changed.”

Rogers has no control over the the state’s TANF spending, but her office does supply the data human services uses in TANF spending reports to the federal government. A review of the data shows “the reporting that we’re doing is 100 percent within the guidelines of what’s required,” Rogers said.

Meanwhile, the number of poor families receiving cash assistance — $170 a month for a family of three — is shrinking, from over 10,000 in 2013 to under 4,500 in 2018.

Only 7,112 Mississippi children, on average, received TANF each month in 2018, less than four percent of the roughly 200,000 children in the state who live in poverty.

Since October, Mississippi Today has reached out to several agency officials about the state’s TANF spending, garnering no response.