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Journal Issue: Welfare to Work Volume 7 Number 1 Spring 1997

Introduction to the AFDC Program
Stephen B. Page Mary B. Larner

The AFDC Program

AFDC was a federally mandated program that guaranteed cash assistance to families with needy children. Needy children were defined as having been "deprived of parental support or care because their father or mother is absent from the home continuously, is incapacitated, is deceased, or is unemployed."1 The program was designed as a federal-state partnership in which both costs and rule-making authority were shared. Federal legislation required states to provide cash assistance to all eligible families. Working within federal limitations, the states administered the program, established the income level below which families qualified for assistance in that state, and set the level of benefits that eligible families would receive there. The federal government monitored the states' administration and matched state funds for the program.

Eligibility

Typically, only very poor families composed of single mothers and their children qualified for AFDC. This feature led some to argue that the program discouraged marriage and work. To be eligible for AFDC, a family had to include a dependent child who was under age 18, was a citizen or permanent legal resident, and could be considered deprived of parental support—usually because no father lived in the home. In 1992, some 48% of households receiving AFDC were headed by an unmarried adult, 23% had experienced a divorce or separation, 7% included two adults, and in 15% of the households, only the child was supported by AFDC (often living in a foster home).2

In addition, the states established income levels below which a family was considered entitled to cash assistance, and in many states these levels were lower than the federal poverty level—so conceivably, a family could be below the federal poverty level and still not qualify for AFDC.3 Reflecting the program's emphasis on children, states factored in family size when computing eligibility standards. In 1994, a one-parent family of three could not earn more than $938 per month to be eligible for AFDC in a typical state.4 Moreover, since most states did not routinely adjust their standards of need to keep up with inflation, a family in 1994 had to be considerably poorer to qualify for AFDC than a qualifying family was in 1970.

Cash Grants

AFDC provided a monthly cash grant to those families who could show that they met the eligibility criteria set in their state. Typically, state officials computed the size of a family's cash grant in a given month based on family size, earned income, and certain expenses. A large family with no income received the largest possible grant, and a small family with earnings that approached or exceeded the state standard of need received the smallest possible grant. While such a system reserved public funds for the most needy families, it clearly discouraged parents from working, since most of their earnings were offset by reductions in the family's AFDC grant.

Like the standards of need governing eligibility, AFDC grant levels varied widely from state to state. In 1994, the median state grant for a family of three with no earned income was $366 per month. The least generous state benefit was Mississippi's $120 per month for a family of that size, and the most generous was Alaska's $923 per month. Despite these state-by-state differences, no state's grant level kept pace with inflation, and the median state grant declined in value by 47% between 1970 and 1994.5

Other Benefits

In addition to cash grants, many families enrolled in AFDC received other benefits such as Medicaid, child care assistance, food stamps, and subsidized housing through a variety of related programs. For example, families receiving AFDC were automatically eligible for Medicaid, the federal-state partnership program that pays the cost of health care services for individuals with low incomes. Beginning in 1988, child care subsidies were guaranteed for recipients who participated in work and training programs. (In this journal issue, the article by Moffit and Slade discusses Medicaid, and the article by Kisker and Ross discusses child care.)

Their low incomes qualified most families receiving AFDC for the federal Food Stamp Program, which provides coupons redeemable for food to all individuals whose incomes fall below a cutoff established by the federal government. In 1992, approximately 87% of AFDC families received food stamps, which added significantly to their purchasing power by reducing the portion of the cash grant that parents had to spend on food.6 For a family of three in the median state in 1994, the maximum food stamp allotment was $295 per month, added to the maximum AFDC grant of $366 per month. However, even a family receiving both maximum benefits had a total income equaling only 69% of the federal poverty level.7

Government housing assistance is another benefit intended for poor families, but it is not guaranteed. In 1993, only 9% of AFDC recipients lived in public housing, and another 12% received federal rent subsidies.8