State Variation in Child Care Spending Under the Temporary Assistance for Needy Families Federal Block Grant in the United States: Policy Design and Political Representation

This study investigates why U.S. states vary in their spending of federal funds under the Temporary Assistance for Needy Families (TANF) block grant, the primary federal program grant to support low-income families with children. Grounded in fiscal federalism and state welfare politics, the study examines how political and institutional settings shape states’ spending decisions, using panel data from all 50 states from fiscal year 2004 to 2016 and a two-way fixed effects model. The results indicate that policy and political factors significantly impact states’ spending decisions, whereas most socioeconomic indicators do not. In particular, states with a TANF job-search requirement allocate a larger share of TANF funds to child care than those without such requirements. However, this positive effect becomes negative when female legislative representation exceeds a certain threshold. These findings demonstrate that policy design and political representation interact to shape the implementation of federal grants at the state level. The study suggests that state allocation decisions under federal block grants are closely tied to institutional design and political context, with broader implications for welfare governance under federalism.