Cracking Down on TANF Fraud: New $10M Watchdog Unit & States to Pay Back Misused Funds Directly to Families

This bill, the "TANF State Expenditure Integrity Act of 2025," is all about making sure federal money intended for families in need actually gets used correctly. It sets up a new federal watchdog, the TANF Program Integrity Unit, backed by an extra $10 million a year, to keep a closer eye on how organizations handling these funds at the local level are spending them. The main goal is to spot and stop anyone intentionally misusing Temporary Assistance for Needy Families (TANF) money.

Keeping a Closer Tab: New Federal Unit to Oversee TANF Spending

Alright, so picture this: federal dollars for TANF (that's Temporary Assistance for Needy Families – the program helping families make ends meet) go to states, and then states often pass them to local groups, or "subrecipients," to do the actual work. This bill says we need a better way to track that money. It's setting up a brand-new "TANF Program Integrity Unit" right within the federal Administration for Children and Families. Their job? To develop a system (as per amendments to Section 417 of the Social Security Act) that keeps tabs on how these subrecipients are using the funds, working alongside existing state audits (currently done under chapter 75 of title 31, United States Code). The goal is to sniff out any "intentional misuse" – basically, to make sure the money is going where it's supposed to, without making life harder for the legit groups doing good work. And to show they're serious, this unit gets a dedicated $10 million boost each year (from an increase in section 403(a)(1)(C) funds) and has to report to Congress annually on what they've found.

Payback with a Purpose: When Funds Go Astray

Here’s where this bill throws a curveball – in a good way for folks who need help. If this new Integrity Unit catches a subrecipient intentionally playing fast and loose with TANF money, the state that passed them the funds is on the hook. They don't just face the usual slap on the wrist. According to the changes to section 409(a)(1)(B) of the Act (that's 42 U.S.C. 609(a)(1)(B)), the state has to find an amount of money equal to what was misused and give it out as direct cash assistance. And who gets it? Families living with incomes below 100 percent of the federal poverty line. So, instead of just recouping losses, the bill aims to channel that same amount directly to people who are struggling.

The Nitty-Gritty: Rules, Regs, and Rollout

This whole system won't just pop up tomorrow. The Secretary of Health and Human Services gets two years from when the bill becomes law to draw up the official playbook – the "notice of rulemaking" – detailing exactly how this new monitoring and penalty system will operate. Once those rules are set, the changes will officially go live. The bill says this will be on the first day of the fifth calendar quarter after it's enacted, or the first day of the first federal fiscal year after enactment – whichever date comes later. So, there's a built-in period for everyone to get ready for the new way of doing things.