deral funding. However, under the block grant, there is no assurance that children or their parents will receive cash assistance even if they are poor and meet all state eligibility requirements. States have broad discretion to maintain, broaden or substantially curtail eligibility for income assistance for any poor family or category of poor families. For example, states can deny aid to families with teen parents or two-parent families. In addition, if a state runs out of block grant funds for the fiscal year, they can place new applicants on a waiting list.
The current law institutes a five-year time limit on cash assistance and requires recipients to work after two years. In addition, unless states opt out, they must require parents receiving assistance to participate in community service after just two months. States may set shorter time limits and exempt 20 percent of their case load from the five-year limit.
CBO estimates that between 2.5 million and 3.5 million children could be affected by the law's five-year time limit when it is fully implemented, even after the 20 percent hardship exemption is taken into account. The U.S. Department of Health and Human Services (HHS) estimates that, if all states were to adopt a two-year time limit, 5.5 million children would be denied aid by the year 2006.
The child welfare provisions in the 1996 law maintain the current law and funding for all child welfare programs, including Title IV-B and IV-E training programs. It also allows states to make Title IV-E foster care maintenance payments to for-profit as well as non-profit private child care institutions. Under the current law, IV-E foster care payments only can be made to non-profit private or public child care institutions. In addition, the provisions require states to consider giving preference to an adult relative over a non-related caregiver
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