Congress approved a $2 billion block grant program in September for displaced Gulf Coast families, regardless of income, to help them get back on their feet after the Aug. 29 storm.
But only 11 states have made requests totaling $25.5 million in aid so far, according to the Health and Human Services Department. Several states said they didn't want the bureaucratic hassle, or weren't certain if displaced families qualified for aid under the program.
"The funds are there, and it's deeply troubling they're not being used," said Mark Greenberg, executive director of the Task Force on Poverty at the Washington-based Center for American Progress. "These funds could be used right now to help families in tremendous need."
It's unclear how many displaced families are missing out on the funds from the Temporary Assistance for Needy Families program. Several states say they are opting to provide assistance out of their own pockets, while in other cases families with higher incomes who are eligible aren't seeking the aid.
According to HHS, about 420,000 families were displaced by the Gulf Coast hurricanes. About 50,000 were low-income families who generally aren't eligible because they were already receiving TANF aid before Katrina hit.
Wade Horn, assistant secretary for HHS, said many needy families also may be receiving federal disaster aid through other agencies, including the Federal Emergency Management Agency and the Housing and Urban Development Department.
"It's important to keep in mind that the $25 million drawn down doesn't mean that's the sum total to help evacuees," he said. "States don't tend to leave money lying on the table if they need it. They still have until Aug. 31 to apply, so perhaps more states will come in between now and then."
Typically, TANF funds, which are provided by the federal government and administered by the states, are doled out to low-income families in special times of need, such as a spike in unemployment.
Congress loosened the eligibility rules so evacuees who lost their homes, jobs and cars could get cash payments regardless of their income level over a 12-month period until Aug. 31, if they weren't already receiving TANF funds somewhere else. Funds that are unclaimed by the end of August go back into the federal coffers.
Several states, including Florida, Louisiana and Texas, have quickly taken advantage. Texas, which houses many of the displaced evacuees, has been awarded $7.13 million from the federal fund to help 6,200 evacuee families.
But many others, including New York, are doling out aid from their own coffers, saying the federal aid isn't worth the hassle. The states say they don't have enough qualifying families to justify the amount of paperwork needed to document the claims.
"We did an analysis, and the amount of people we had that was eligible wasn't worth it administratively," said Michael Hayes, a spokesman for New York's Office of Temporary and Disability Assistance, which spent $667,000 of its state TANF funds for 1,575 families.
In Maryland, officials decided to submit a bill to the federal government after the fact, rather than request money upfront, to avoid having to return funds in case some families were deemed ineligible.
"We wanted to wait and see to what extent we'd need those funds," said Elyn Jones, a spokeswoman for the Maryland Department of Human Resources, which has given out $1.1 million in state aid to 3,860 families. "For accounting purposes, we wanted to submit it one time only."
But Deborah Weinstein, executive director of the Coalition on Human Needs, an alliance of religious and other national groups that advocates for poor people, said some states may be finding excuses not to request money because serving the poor is "not enough of a priority."
"The people we are talking about are those in New Orleans whose incomes were not high, but they weren't rock-bottom poor," she said. "Now they've lost everything, so they ought to get this help. That is the population that I think has fallen through the cracks."
The 11 states who have requested funding, according to HHS, are Alabama, Florida, Georgia, Louisiana, Michigan, Minnesota, Mississippi, Rhode Island, Texas, Utah and Wisconsin.
The findings on unused TANF funds were first reported by the Center for Public Integrity watchdog group.