Tennessee once stockpiled $732M earmarked for needy families; state leaders say it’s down to $305M

Department of Human Services Commissioner Clarence Carter told lawmakers the state had reduced a $734 million surplus in the Temporary Assistance for Needy Families down to $305 million. (Photo: Michael Loccisano/Getty Images)

Seven years ago, the revelation that Tennessee had stockpiled $732 million earmarked for low-income Tennessee families drew a near-universal outcry that united fiscal conservatives and progressive advocates in questioning the state’s spending decisions.

On Wednesday, leaders of the Tennessee Department of Human Services told lawmakers that the state’s reserve for Temporary Assistance for Needy Families, or TANF, now stands at $305 million with a plan in place to expend the excess funds. 

TANF is a federal block grant program that delivers dollars to each state to provide temporary financial assistance and programs such as job training and child care to families that have fallen on hard times. Tennessee receives $191 million annually. 

Years after public outcry over unspent funds for needy families, Tennessee has $717M stockpile

After years of underspending the funding, Tennessee had accrued the $732 million balance, dwarfing nearly every other state in the nation and prompting lawmakers to enact legislation requiring expenditures of the funding by the end of 2026. The legislature also enacted a law setting a ceiling of $191 million for TANF reserves.

Clarence Carter, who leads the Tennessee Department of Human Services, told lawmakers the state had successfully implemented a plan to spend down the funds after distributing millions to seven community based organizations that implemented pilot projects intended to break generational cycles of poverty. 

The agency now spends all of its annual federal allotment each year, Carter said. Funds not spent directly to aid needy families are now offered as grants to nonprofits. Last year, the agency directed $27 million of its $191 million TANF grant to nonprofits.