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Financing

In difficult economic times, states can pursue multiple options for financing policies that create opportunity for low-wage families.

Job Training

Strategies for funding job training:

  • Public-private partnerships for sector-based training. Public-private partnerships can play a major role in financing job training that is focused on industry-specific skills that are in demand by local businesses. For example, to establish 22 career pathways focused on specific industry needs, Kentucky allocated $6.2 million of state money and leveraged an additional $12.7 million from participants, employers, and other sources.[i]

  • Federal funds: Food Stamp Employment and Training (FSET). FSET is a federal program that provides grants to states to provide job training services for food stamp recipients. In addition, this program also provides unlimited 50 percent federal funding match for additional state and local funds invested in training for this population. States that access these uncapped matching funds can leverage significant federal dollars to provide expanded job training and related supports to those at the lowest end of the income scale. See more information and examples of how states are using FSET.

  • Training funded through payroll contributions. Half of states have developed training funds modeled on the unemployment insurance (UI) system of employer contributions. These funds have enhanced job training resources significantly, and provide much greater flexibility than federal funds. See more information on innovative state approaches to these programs.[ii]

  • Federal stimulus provisions. See a description of key stimulus funding for job training and education, and revenue estimates of revenues for each state. It was prepared by the the Center on Budget and Policy Priorities.

Protection Against Predatory Financial Practices

Strategies for funding protections against predatory financial practices:

  • No-cost legal restrictions. Protections such as a 36 percent cap on small loans require very little new costs because states already have systems in place to monitor and enforce compliance with lending laws. These restrictions may actually save money because they can replace more complicated laws that that apply unique restrictions to different types of lenders.

  • Federal funding for free tax preparation. In 2009, for the first time, the Internal Revenue Service (IRS) made $8 million available to government and nonprofit entities across the nation working to raise awareness of the EITC and provide free tax preparation services for low-income people. See a list of 2009 grantees in your state. The IRS posts updated information for this funding source on the IRS Community Service website.

Tax Relief for Low-Wage Working Families

Strategies for funding tax relief for working families:

  • Cost-neutral tax code adjustments. Tax-relief for low-wage working families could be provided at no cost to the state by closing tax loopholes or raising rates in other areas of the tax code.

  • TANF funding for EITC. Several states use TANF funding to help support state EITCs. TANF funds can be used to support the portion of the EITC that is refunded to TANF recipients. There are currently 11 states using TANF funds to help support the state EITC efforts.[iii]

  • Federal funding for EITC outreach. In 2009, for the first time, the Internal Revenue Service made $8 million available to government and nonprofit entities across the nation working to raise awareness of the EITC and provide free tax preparation services for low-income people. See a list of 2009 grantees in your state. The IRS posts updated information for this funding source on the IRS Community Service website.

  • Federal stimulus provisions. See a description of key stimulus funding for the Child Tax Credit and Make Work Pay Tax Credit, and revenue estimates of revenues for each state. It was prepared by the the Center on Budget and Policy Priorities.

Work Support Benefits

Strategies for funding tax relief for working families:

  • Counting program support as maintentance of effort. By providing a TANF or Maintenance of Effort-funded benefit that meets the definition of “assistance” under the TANF rules, a state can count these working families towards its work participation rate and boost the rate it achieves. Thus, the approach can help states meet federal requirements and assist in avoiding federal fiscal penalties, while also supporting low-income families as they transition into employment.[iv]

  • Maximizing federally reimbursed programs. The federal government pays 100 percent of food assistance program benefits. Federal and State governments share administrative costs (with the federal government contributing nearly 50 percent).

  • Federal stimulus provisions. See a description of key stimulus funding for Medicaid, child care, and food assistance, and revenue estimates of revenues for each state. It was prepared by the the Center on Budget and Policy Priorities.


    [i] Amy Ellen Duke and Julie Strawn, 2008. "Overcoming Obstacles, Optimizing Opportunities: State Policies to Increase Postsecondary Attainment for Low-Skilled Adults," Breaking Through: Helping Low-Skilled Adults Enter and Succeed in College and Careers. Boston, MA: Jobs for the Future

    [ii] David Fischer, 2008. "Expanding State Education and Training By Partnering with the Unemployment Insurance Program." New York, NY: National Employment Law Project.

    [iii] Email communications with the Center on Budget and Policy Priorities.

    [iv] Liz Schott, “Using TANF or MOE Funds to Provide Supplemental Assistance to Low-Income Working Families” (Washington DC; Center on Budget and Policy Priorities, September 8, 2025).