American Business


Aid to Families with Dependent Children (AFDC)

The Aid to Families with Dependent Children (AFDC) program was a federal welfare program that originated during the Great Depression as part of the 1935 Social Security Act. The Social Security Act provided funds for the states to help the elderly, the blind, and underprivileged children. The provision to help states provide support for children was contained in Title IV of the act, and participation by any state was voluntary. With the original title “Aid to Dependent Children,” the initial purpose of Title IV was to provide financial assistance for disadvantaged dependent children and did not provide assistance for parents or guardians involved in the child’s raising. (There was, however, a requirement that the child live with an adult in order to be eligible for aid.) It was not until 1950 that the government began to provide funds to aid in the care of the adults responsible for the children. In 1960 states were allowed to claim federal reimbursement for funds used to aid the child of an unemployed parent and the unemployed parent, and in 1962 aid was allowed for a second parent in the family. Hence the name of the program was changed to “Aid to Families with Dependent Children.”

Instead of setting apart a fixed amount of money each year to be divided among the states, Congress approved reimbursement of a certain percentage of state expenditures without any limit on the total amount. Originally each state with an approved plan was reimbursed by the Secretary of the Treasury for one-third of its benefit payments, up to maximum federal payment of $6 per month for the first child plus $4 for each additional child. This general plan went through several changes over the years, but the basic method of funding remained the same until the passage of the Temporary Assistance to Needy Families Act (TANF) in 1996.

In 1967 a set of formal rules for the program was published in the Code of Federal Regulations. This stated that each state was required to assign a single agency to be in charge of the administration of the program, that the state’s program be available in all parts of the state, and that the rules be universally enforced. This prevented local governments from having the power to impose local rules and regulations. The states were also required to “provide an opportunity for anyone to apply for aid, to furnish aid with reasonable promptness to all eligible persons, and to provide the opportunity for a fair hearing to those denied assistance or not given a response within a reasonable period of time.”

Eligibility for the program was regulated by the particular state of residence. Each state was required to establish a “standard of need” or maximum amount of income and other resources a family could have and be eligible for assistance. These standards of need varied by the size of the family. Each state determined eligibility by comparing family income to the state’s need standard. If the family had gross income that did not exceed 85 percent of the state’s need standard, and gross income (less specified deductions) that did not exceed 100 percent of the need standard, then the family was eligible for assistance. All children through the age of 15 were eligible for assistance. Each state had the option of aiding children older than 15 if certain conditions were met. Children aged 16–17 had to be attending school regularly, students aged 18–20 had to be in high school or a course of vocational or technical training, and students aged 18–20 had to be in college or university. In 1981 changes were made which ended a child’s eligibility on his or her 18th birthday or, if the state chose, on his 19th if still in high school. Also in 1981, Congress required states to calculate the income of a child’s stepparent when figuring a family’s needs, income, and resources, and allowed states to claim federal reimbursement for aid to an unborn child in the last trimester of pregnancy.

In 1962, for states that included unemployed parents in the program, Community Work and Training (CWT) programs were established for federally aided recipients age 18 and over. These programs were to pay wages comparable to those present in the community and were required to ensure that appropriate standards of health and safety were followed. In 1964, under Title V of the Economic Opportunity Act, Congress allowed the formation of CWT projects in states that had not yet included the unemployed parents category in their AFDC programs. In 1968, in conjunction with the Department of Health, Education, and Welfare (HEW) and the Department of Labor, Work Incentive (WIN) programs were created for certain AFDC recipients; all unemployed fathers had to be referred to the program. In 1971 the government required that all AFDC parents register for work or training with the WIN program (except for mothers of children under age six). Finally, in 1988 WIN was replaced by the Job Opportunities and Basic Skills Training (JOBS) program in a new part IV-F of the Social Security Act. This mandated that states engage most mothers with no children below age three in education, work, or job training.

Originally, in 1935, Congress set the federal share of AFDC payments at 33 percent, up to individual payments of $18 for the first child and $12 for additional children. As stated previously, this comes to a maximum federal share of $6 for the first child. Over the years matching maximums were increased and based on average spending per recipient. In 1956 variable rates were established, providing more generous federal reimbursement for states with lower per capita income. In 1965, with the creation of Medicaid, federal matching for each state dollar spent on the AFDC program was provided. Each state that implemented Medicaid was allowed to use the open-ended matching formula for claiming federal reimbursement of a portion of total AFDC benefits as well. Numbers provided for the years between 1971 and 1996 show that expenditures rose from $6 billion to $24 billion in actual dollars, however, when adjusted for inflation, total expenditures increased very slightly. In constant 1996 dollars, the amount spent on benefits actually declined from a high of $26 billion in 1976 to $20.4 billion in 1996 (Office of ASPE website, 2001).

Critics of the AFDC argue that the program created a set of incentives that were harmful to the nation’s “social fabric.” The welfare system was allegedly dehumanizing; encouraged dependency; supported female-headed families, divorce, and unmarried childbearing; and encouraged low levels of work effort among recipients. Supporters argue that the AFDC program helped to reduce poverty and provided work and skill training, in addition to its success in keeping intact poor female-headed families with young children.

On August 22, 1996, President Bill Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 (Public Law 104- 193). PRWORA replaced the AFDC program that had been in existence for 60 years.

Further reading

Brandon, Peter D. “Did the AFDC Program Succeed in Keeping Mothers and Young Children Living Together?” Social Service Review 74, no. 2 (June 2000): 214; Office of the Assistant Secretary for Planning & Evaluation. “Aid to Families with Dependent Children: The Baseline,” Human Services Policy, June 1998. Available on-line. URL: Downloaded on October 31, 2001; Social Security Administration. Social Security Bulletin (Annual 1994 57n SUPP): 114–37.

April Miller