Lump sum payment programs are one of the formal program options states have established to divert families from the TANF rolls. Lump sum payments are generally made available to TANF applicants with short-term emergency needs that can be solved permanently with the payment. It is anticipated that these applicants will not require further TANF assistance after the immediate need is resolved. In almost one-half of the states with this program, eligible applicants must have work-related needs directly affecting their ability to obtain or maintain employment such as loss of transportation due to needed car repairs. In the remaining states, eligible applicants can have a range of short-term or emergency needs such as overdue rent or utilities bills and child care problems that, if left unaddressed, will shortly put them at risk for requiring TANF assistance.
Under lump sum payment diversion programs, caseworkers screen TANF applicants to determine if a lump sum payment can address the immediate reason for the TANF application and will likely resolve the crisis permanently. Caseworkers must either find potential recipients of a lump sum payment eligible for TANF, or have gathered enough information during the initial application process to presume TANF eligibility. Accepting the lump sum payment in lieu of TANF benefits is not mandatory. On the other hand, accepting this diversion payment generally results in the applicant being ineligible to reapply for TANF benefits for a certain period of time. Although a number of states do allow recipients of lump sum payments to reapply for TANF benefits before the period of ineligibility has expired, such situations usually result in some type of penalty such as a requirement that a portion of the lump sum payment be repaid or a reduction in the applicant's lifetime TANF limit based on the amount of the lump sum.