Before 1996, states had discretion about how much money they would offer, but who was eligible and other general policies were set by the federal government.
"Most of the money went directly to cash benefit for families," says Liz Schott, senior fellow at the Center on Budget and Policy Priorities. "Now states can spend in all kinds of ways," including job programmes and childcare, but also transfers to other state programmes, like foster care payments and child protection services.
States now get the same amount of money they did in 1996.
In 2015, an average of 25% of the funds went to cash assistance, external, although this - like many other elements of a programme whose policies are set on a state-by-state basis - varies widely.
But there are now also stricter requirements about what percent of aid recipients needed to be involved in some sort of work activity. Failure to hit those targets means states are penalised, so some avoid them by limiting how many people are eligible for welfare in the first place.
The result is a "tremendous differentiation of the safety net" in the US, Schott says.
The amount an average TANF family - a single parent with two children - receives is also set by each state. In Mississippi, they would receive $153 a month (£115). In Alaska, the average benefit was $642 a month.
The US has other social benefit schemes, including food stamps, disability payments and Medicaid - healthcare for the poor.
But in the twenty years since TANF was made law, enrolments in food stamps has been expanded significantly as direct welfare payments have dropped.
So what does the current US welfare system look like in comparison to countries with similar economies?
America's northern neighbour's basic cash assistance programme looks the most like the US in comparison to other developed economies - but the details are very different.
Around the same time as TANF, was passed, Canada was dealing with a budget deficit. In response, the Canadian federal government reduced the amount given to provinces for basic aid, but gave most of the responsibility for administering the programme to each province.
Provinces also ask those receiving the benefit look for work if they are able to, and the benefit is available to people without children.
Unlike the US, almost all the federal requirements were dropped and there was no lifetime limit on receiving the benefit.
"It was a quid pro quo," Dr Daniel Beland, a professor of public policy at the University of Saskatchewan. "Here is less money but in return we will give you more autonomy at the provincial level."
The amount provinces provide do vary, but they are generally more generous than the US, while still remaining under Canada's low-income cut-off level. A single person with one child in Ontario would receive a benefit of just less than $1,000 Canadian dollars a month says Beland.
If someone is disabled or unable to work, their payment is higher.
Both the US and Canada have seen enrolment numbers drop in these programmes, and in the US, experts point to the new restrictions as a key reason.
In both North American countries, Beland says "reducing welfare rolls became a goal in and of itself, rather than focusing on ending poverty".
"But in the US it's worse."