[Federal Register: April 12, 1999 (Volume 64, Number 69)]
[Rules and Regulations]
[Page 17769-17818]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ap99-24]
[[pp. 17769-17818]] Temporary Assistance for Needy Families Program (TANF)
[[
Continued from page 17768]]
[[Page 17769]]
option) with respect to any period during the month in which the
individual refused, subject to good cause and other exceptions
determined by the State. These exceptions include the statutory
exception for single custodial parents of children under the age of six
who cannot obtain needed child care, which is included in the
regulations at Sec. 261.15. The State also has the option to terminate
the case.
In addition to the child care exception, each State may establish
its own criteria for determining when not to impose a penalty on an
individual, that is, when an individual has ``good cause'' for not
engaging in work. States may also establish other rules governing
penalties as needed.
Under the Family Violence Option, a State may waive work
requirements in cases where compliance would make it difficult for an
individual to escape domestic violence or would unfairly penalize
individuals who are or have been victimized by such violence or
individuals who are at risk of abuse. The State must determine that the
individual receiving the program waiver has good cause for failing to
engage in work.
The final regulations include a cross-reference to the State
penalty for failure to impose sanctions in accordance with section
407(e) of the Act (at Sec. 261.54). We added this reference for the
convenience of the reader; it does not represent an additional
requirement.
Comment: We received many comments urging us to change the language
of the regulations concerning the pro rata reduction of a recipient's
assistance. The commenters thought that the way in which we paraphrased
the statute altered its meaning and excluded certain types of pro rata
reductions. Most urged us to clarify that a State can make a pro rata
reduction based on any reasonable method; some asked us to indicate
that a pro rata reduction is based on the head-of-household's share of
assistance or on the share of those refusing to work. A few commenters
also noted that States should have the flexibility to define the
timeframe for applying a pro rata reduction. Several commenters
suggested that the NPRM inappropriately restricted a State's ability to
impose a greater penalty.
Response: We recognize that the language we used in the NPRM may
have caused confusion concerning the meaning of a pro rata reduction,
and we have modified the regulations to reflect the statutory language
more closely. It was not our intention to prescribe one method of
proration or to proscribe other legitimate methods; a State may make a
pro rata reduction based on any reasonable method. With respect to
imposing a greater penalty, we think that the NPRM's regulatory text
and preamble were very clear that a State could impose a penalty
greater than a pro rata reduction, up to and including terminating the
case, and thus have not substantially altered the regulations in that
regard.
Comment: One commenter, concerned about the burden on caseworkers
of tracking an individual's participation, urged us to establish
specific, fixed penalties on an individual for certain periods of time
for refusal to work. The commenter gave an example of reducing the
grant by the individual's share for the first month of refusal and
gradually increasing it.
Response: As we indicated above, a State may establish any method
of pro rata reduction that it chooses that comports with section 407(e)
of the Act. Since we do not intend to dictate one proration method over
another, it would not be appropriate to adopt the penalty scheme that
the commenter suggests.
Comment: Several commenters expressed the same concern in this
section that they did in Sec. 261.13 regarding the applicability of
employment protections to welfare recipients. They urged us to ensure
that good cause exceptions in this section protect recipients from
penalty where the individual refused to work due to a violation of
employment laws, such as sexual harassment or other forms of job
discrimination. Others urged us to provide guidance about appropriate
good cause exceptions.
Response: States have the flexibility to define ``good cause'' as
they deem appropriate. Because of the States' extensive experience in
this area, we think it is not necessary to provide specific guidance
regarding what good cause exceptions a State should acknowledge.
However, we have included a new regulatory section at Sec. 260.35 to
reference employment protections under other laws that apply to working
welfare recipients. We certainly agree that welfare recipients should
not have to choose between unsafe or discriminatory working conditions
and losing benefits, especially where there are protections under
Federal law.
Comment: A commenter urged us to exempt from the work requirements
any foster parents with birth children in the home.
Response: The statute does not provide for an exemption from the
work requirements for such individuals; however, States may define
``good cause'' as they find appropriate. Since the statute specifically
gives States the authority to establish good cause and other
exceptions, we do not intend to dictate specific good cause criteria,
other than the child care exception provided for at section 407(e)(2).
Section 261.15--Can a Family Be Penalized if a Parent Refuses To Work
Because He or She Cannot Find Child Care? (Sec. 271.15 of the NPRM)
A State may not reduce or terminate assistance to a single
custodial parent caring for a child under age six for refusing to
engage in required work, if the parent demonstrates an inability (as
determined by the State) to obtain needed child care. This exception
applies to penalties the State imposes for refusal to engage in work in
accordance with either section 407 or section 402(a)(1)(A)(ii) of the
Act. The parent's demonstrated inability must be for one of the
following reasons:
<bullet> Appropriate child care within a reasonable distance from
the individual's home or work site is unavailable;
<bullet> Informal child care by a relative or under other
arrangements is unavailable or unsuitable; or
<bullet> Appropriate and affordable formal child care arrangements
are unavailable.
This penalty exception underscores the pivotal role of child care
in supporting work and also recognizes that the lack of appropriate,
affordable child care can create unacceptable hardships for children
and families.
We have substantially modified this section of the regulations, in
part by moving much of what constituted Sec. 271.15 under the NPRM to a
new section, Sec. 261.56. This new section specifies the State's
responsibilities in carrying out the penalty exception, while
Sec. 261.15 describes the impact of the provision on the individual. We
have also moved the State penalty provision associated with this child
care exception (formerly Sec. 274.20) to a newly created Sec. 261.57.
Our intent in making these changes is to preserve the informational and
contextual nature of subpart A of part 261 and to make the State's
responsibilities and the possible penalty associated with them easier
to follow. In this section of the rule, we have added cross-references
to these two new sections for clarity.
Readers can find all comments associated with this exemption in the
preamble discussion for Sec. 261.56.
Section 261.16--Does the Imposition of a Penalty Affect an Individual's
Work Requirement? (Sec. 271.16 of the NPRM)
Section 408(c) of the Act, as amended by section 5001(h) of Pub. L.
105-33,
[[Page 17770]]
clarifies that penalties against recipients under TANF ``shall not be
construed to be a reduction in any wage paid to the individual.'' In
the NPRM, we indicated that imposing such a penalty does not require
the State to reduce the number of hours of work required, as it would
otherwise do if the individual's wages decreased, due to the provisions
of the Fair Labor Standards Act.
In the final rule, we have modified this section of the regulations
to reflect the statutory language more precisely. This change does not
signify any shift in our interpretation of the provision: we continue
to believe that Congress intended to permit a State to sanction an
individual who is subject to the Fair Labor Standards Act (FLSA)
without also being forced to reduce the individual's required hours of
work. FLSA requirements, including the Federal minimum wage, apply to
any welfare recipients that meet the broad definition of ``employees''
under that law, which includes participants in many work activities. By
indicating that a penalty does not reduce the individual's wages, the
State does not need to recalculate hours of work subject to FLSA. A
State is, of course, free to decide to reduce the work hours of a
sanctioned individual or to reassign the individual to activities that
are not subject to FLSA.
In addition to the comments described below, we received several
comments expressing support for the inclusion of this provision in the
regulations. Others indicated that some readers were confused by the
intent of this section; we hope the explanation above and the change in
the regulatory text have reduced this confusion.
Comment: Some commenters urged us to delete the last clause in
Sec. 271.16 of the NPRM, which indicated that a penalty would not
result in a reduction in the number of hours of required work. Others
asked us to substitute the word ``participation'' for the word ``work''
in that clause.
Response: We have removed the last clause from the regulation
because we did not want to preclude a State from reducing an
individual's hours of work.
Comment: Some commenters thought this provision would act as an
incentive for States to penalize recipients to avoid the minimum wage
requirements and urged us to monitor sanctions under this provision by
collecting data on State sanctions. Another commenter inquired whether
this provision applied where the penalty is disqualification of the
individual from the program, such as for an intentional program
violation.
Response: The commenters seem to be suggesting that a State would
have an incentive to penalize a recipient because this provision
prevents the State from considering the penalty to be a reduction in
wages and therefore it could engage the recipient in hours of work for
which he or she is not compensated. We do not agree. An individual's
hours of work are established in accordance with the FLSA based on the
benefits the family receives, long before and independent of the
sanctioning process. The State may only impose a work sanction for
failure to engage in required work. If an individual thinks that the
State has penalized him or her inappropriately, he or she has recourse
to appeal the sanction decision; section 402(a)(1)(B)(iii) of the Act
requires the State to provide opportunities for recipients who have
been adversely affected to be heard in a State administrative or appeal
process.
With respect to monitoring sanctions and application of this
provision, readers should understand that no individual is sanctioned
``under this provision''; rather, this provision applies to any
recipient who is sanctioned. Thus, no sanctioned recipient is
considered to have had a reduction in wages as a result of the penalty.
Readers should also note that we have improved the information we
are collecting about sanctions and should refer to Appendix A for
further discussion of these data requirements.
Comment: Some commenters urged us to clarify that a penalty against
a family is not a reduction in assistance or other payments. They
thought the phrase ``reduction in any wage paid to the individual''
raised doubt about this point. One commenter specified that States
should be relieved of FLSA liability regardless of whether the
individual is in a wage or nonwage work assignment.
Response: We think the language of the provision is clear and does
not need further interpretation. As we indicated above, the FLSA
requirements apply to any welfare beneficiaries that meet the broad
definition of ``employees'' under that law; thus, the term ``wage'' is
the appropriate one to use.
Comment: One commenter thought we should specifically state that
the FLSA does not apply where the State has sanctioned an individual,
so as to protect a State from reducing an individual's hours out of
fear of violating the FLSA to the point where he or she would no longer
count toward the participation rate. As an alternative, the commenter
suggested that we deem an individual's hours of work, as determined by
the FLSA, as automatically meeting the work requirement or give States
broader authority to include the value of other benefits when
calculating an individual's work obligation.
Response: Because the FLSA includes other provisions not affected
by this provision, it would not be accurate to state that the FLSA does
not apply. We think the regulatory language explains the interaction of
the FLSA and this provision adequately. Regarding the commenter's
suggested alternative, the statute is very clear about the number of
hours an individual must be engaged in work to count toward the
participation rate (see subpart B). Regarding the comment suggesting
broad authority for a State to include other benefits in calculating an
individual's work obligation, this matter is governed by the FLSA and
thus is outside the scope of these regulations.
Comment: One commenter urged us to clarify that, although a
sanction would not result in a reduction in the number of required
hours of work, it might result in a reduction in certain activities, in
order to comply with Federal, State and local labor laws.
Response: As we have indicated, this provision is intended to avoid
forcing a State to reduce the hours an individual must work because his
or her benefits decreased as a result of a penalty imposed under TANF,
as it would otherwise have to do in accordance with Federal labor law.
If the State chooses to reduce the individual's hours of work, or to
shift the individual to other appropriate activities, it has the
flexibility to do so. If there are State or local labor laws that
restrict the State's actions in this area, it is the State's
responsibility to adhere to applicable laws.
Subpart B--What Are the Provisions Addressing State Accountability?
Section 261.20--How Will We Hold a State Accountable for Achieving the
Work Objectives of TANF? (Sec. 271.20 of the NPRM)
Work is the cornerstone of welfare reform. Research has
demonstrated that early connection to the labor force helps welfare
recipients make important steps toward self-sufficiency. The rigorous
work participation requirements embodied in the legislation provide
strong incentives to States to concentrate their resources in this
crucial area.
This summary section makes the legislation's focus on work and the
requirements for work clear, while other sections address each of these
areas in more detail.
[[Page 17771]]
This section describes what a State must do to meet the overall and
two-parent work participation rates. It explains that a State must
submit data to allow us to measure each State's success with the work
participation rates. It notes that a State meeting the minimum rates
will have a reduced MOE requirement, while a State failing to meet them
risks a financial penalty.
We received only one comment relating to this section alone.
Comment: Regarding the reference to data that a State must submit
for us to calculate the participation rates, the commenter contended
that the process for calculating the participation rates is too
complicated. As an alternative the commenter suggested that a State
should calculate its own participation rate, which we should then
review.
Response: Section 411(a) of the Act requires States to report to us
various data necessary to calculate the participation rates. Therefore,
we think that it is clear that Congress intended us to make the
calculations of the participation rates and gives us the authority to
specify the data elements we need. As we have done prior to the
publication of final regulations, we will continue to work in
partnership with States to ensure that data are accurate and correctly
portray their participation rates.
Section 261.21--What Overall Work Rate Must a State Meet? (Sec. 271.21
of the NPRM)
Section 407(a) of the Act establishes two minimum participation
rates that a State must meet beginning with FY 1997.
The first, the overall work rate, is the percentage of all families
receiving assistance who must participate in work activities by fiscal
year. This section lists the statutory overall participation rate that
applies to each fiscal year.
The second is the work rate for two-parent families, which we
address at Secs. 261.23 and 261.24.
We received no comments concerning this section.
Section 261.22--How Will We Determine a State's Overall Work Rate?
(Sec. 271.22 of the NPRM)
This section of the regulation restates in clear terms the
participation rate calculation specified in the statute. In particular,
without changing its meaning, we have phrased the denominator in a way
that we think is easier to understand than the statutory language.
We received many requests for guidance concerning how, for purposes
of the participation rates, we treat a family that the State exempts
from work requirements.
A State has the flexibility to establish any exemptions it chooses;
however, with two exceptions (discussed below), the legislation offers
no room to remove categories of recipients from the denominator, as
prior law did. PRWORA embodies the views that: (1) Work is the best way
to achieve independence; and (2) each individual should participate to
his or her greatest ability. As waiver projects have demonstrated,
innovative State programs can often find meaningful ways for nearly
every recipient to participate in work-related activities. Therefore,
the statute and the regulation require nearly all families to be
included in the calculation of the participation rates.
The two exceptions to this requirement are certain families that
are subject to a penalty and, at State option, families in which a
single custodial parent is caring for a child under 12 months of age.
When directed by the State's reported data to do so, we will disregard
from the calculation for a month--that is, not include in either the
numerator or the denominator--families: (1) Receiving assistance that
are subject to a penalty for refusing to engage in work required in
accordance with section 407 of the Act, but that have not been subject
to a penalty for more than three of the last 12 months; and (2) in
which a single custodial parent is caring for a child under one year of
age. The latter exception is limited by statute to a maximum of 12
months for any parent. Although the first exception is not a State
option under the statute, a State may choose to include a sanctioned
family in the rate even though it has been subject to a penalty for
three or fewer months in the last 12 because the family is nevertheless
working enough hours to count toward the participation rate. In such a
situation, we would include the family in both the numerator and
denominator of the calculation.
The policy described above with respect to families subject to a
penalty is slightly different from that of the NPRM. We are removing
``excepted'' families from the entire calculation, rather than just the
denominator. We have made this change after reexamining Congressional
intent. We think it unlikely that very many individuals would have been
subject to a sanction while still working sufficient hours to count in
the numerator, but we believe it would not be consistent with
Congressional intent to permit inclusion in the numerator but not in
the denominator. By creating the exception to inclusion in the
denominator, Congress intended to avoid penalizing a State when it
tries to get a nonparticipating individual to participate. However,
Congress did not intend to create an advantage for such a State by
allowing ``excepted'' individuals to be included in the numerator when
they were not in the denominator. Therefore, if a State wishes to count
a family in the numerator, that family must also appear in the
denominator.
The regulation makes clear that a State may count as a month of
participation any partial months of assistance, if, in each full week
of assistance in that month, an adult in the family is engaged in work
for the minimum weekly average number of hours. These families are
already included in the denominator since they are recipients of
assistance in that month.
This provision ensures that a State receives credit for its efforts
in the first and last months that a family receives assistance. Without
it, a State would have an inadvertent incentive to start and end
assistance as close as possible to the beginning of the month, rather
than as families need it. We think that measuring work in full weeks of
assistance during a partial month is consistent with the spirit of
PRWORA. We have established the same policy for partial months of
assistance under the two-parent rate at Sec. 261.24.
In the preamble to the proposed regulation for this section, we
included a significant discussion about the relationship among waivers
granted under the Family Violence Option (FVO), work participation
rates, and a State's access to penalty forgiveness under ``reasonable
cause.'' We recognized that there were circumstances under which a
State should and would temporarily waive work requirements for domestic
violence victims. Two questions we considered were: (1) How such
waivers would affect the calculation of the participation rates; and
(2) how they would affect a State's penalty liability.
As we discussed earlier in the preamble, instead of changing the
basic calculation of the work participation rates, we chose to address
this situation through our penalty liability determinations. We chose
this targeted approach so as not to provide blanket exemptions for
those who have ever suffered domestic violence, but instead to provide
appropriate protections and supports for TANF recipients who need them.
Because of the nature of the comments we received on the domestic
[[Page 17772]]
violence provisions in the proposed rule, we decided to consolidate the
discussion of those comments in the preamble and to consolidate the
regulatory provisions in a new subpart B of part 260. You can find the
consolidated preamble discussion in the earlier section entitled
``Treatment of Domestic Violence Victims.''
As the result of the comments and the changes we made to part 260
of the rule, we have also revised the language that was proposed at
Sec. 271.52(b)(1). Under the revised language, we no longer define the
criteria for ``reasonable cause'' related to federally recognized
domestic violence waivers in this section, but cross-reference the
regulatory provisions in part 260. Also, we have added language to
Sec. 261.52 indicating we would take waivers of work requirements
granted under subpart B of part 260 into account in deciding if a State
is eligible for a penalty reduction based on the degree of its
noncompliance. Please see Sec. 261.52 for further discussion of these
issues.
We received many comments concerning our proposal to redefine
``family'' to include in the participation rate any families the State
has excluded (based on defining a family as ``child-only'') for the
purpose of avoiding a penalty. We have removed this provision from this
section, as well as from Sec. 261.24 describing the two-parent
participation rate. Please refer to the earlier preamble discussion in
the section entitled ``Child-Only Cases'' for further discussion of
this decision and the comments that relate to it.
Comment: One commenter thought that the overall participation rate
as we described it in this section could be interpreted as either
having a State average the 12 monthly rates or calculate a weighted
average, taking caseload size into account.
Response: The statute does not provide for a weighted average in
calculating the participation rates; rather, it specifically states
that the annual rate is the average of the State's monthly rates for
the fiscal year. Moreover, readers should understand that States are
not responsible for calculating the participation rates. We calculate
the rates based on the data that States report to us. For further
discussion of the required data and reporting provisions, please refer
to part 265 of this chapter.
Comment: Several commenters suggested that we exclude certain
groups of individuals from the participation rate, in addition to those
specified in the regulations. In particular, various commenters urged
us to remove from the rate calculation: women in the third trimester of
a pregnancy; cases that include a child and a grandparent who is over
60 years of age; families not receiving cash assistance; individuals
working for employers that engage in discriminatory conduct; cases
engaged in federally mandated administrative reviews prior to a
sanction; and individuals who have received assistance for fewer than
60 days and therefore are not required to participate. Another
commenter agreed with our statement that States should establish
whatever exemptions they choose, but thought those State-exempted
individuals should be removed from the rate calculation.
Response: As we indicated in the NPRM and the above discussion, we
believe the statute is very clear regarding the calculation of the
participation rates and does not give us the flexibility to exclude
additional categories of individuals from the calculations. The
participation rates are written in terms of ``families receiving
assistance'' that include an adult, thus we could not limit the rates
to those receiving cash assistance. (For further discussion of the
definition of assistance, please refer to Sec. 260.30 of this chapter.)
Concerning individuals in work activities where the employer
engages in discriminatory conduct, again, we do not think we have the
latitude to remove such families from the denominator; however, we
fully expect States to conduct programs that are lawful and uphold
employment laws that apply to working welfare recipients. Please refer
to the section entitled ``Recipient and Worker Protections'' for a more
detailed discussion of this issue.
It is not entirely clear to us what the commenter means by
``federally mandated administrative review process prior to being
placed in sanction.'' There is no longer a federally mandated
conciliation process, as there was under the JOBS program. It is
possible that the commenter is referring to the provision at section
402(a)(1)(B)(iii) of the Act, requiring an explanation in the State
plan of how the State will provide opportunities for recipients who
have been adversely affected to be heard in a State administrative or
appeal process. If so, recipients appealing an adverse action may
already be under a sanction and therefore would not be included in the
rate, if they have not been subject to one for more than three months
in the last 12. Further, there is nothing in the statute to suggest
that State administrative or appeal process should be lengthy; on the
contrary, we hope States will establish expedited processes, in the
interests of both the families and the State. We think there is neither
the need nor the authority to remove such families from the
participation rates.
Regarding the commenter's concern that individuals are not required
to participate in work activities until they have received 60 days of
assistance, the commenter is confusing the requirement on individuals
to work with the requirement on States to achieve certain participation
rates. Although the activities may be the same, they are separate
requirements under the law. Please refer to the discussion at
Sec. 261.10 for further explanation of this distinction.
The statute is clear in giving a State the flexibility to establish
``such good cause and other exceptions'' as it chooses, but does not
remove those with good cause exceptions from the rate calculations. We
encourage States to adopt fair and practical good cause exceptions.
While we understand the commenter's concern that a State has no
incentive to create good cause exceptions if the excepted families
remain in the denominator, it is worth noting that the overall
participation rate leaves room to grant good cause exceptions under a
variety of different circumstances.
Comment: A commenter suggested that there should be follow-up on
individuals for three months following employment and that such
individuals should be included in the participation rate as an
incentive to States to find employment for recipients. The commenter
stated that currently individuals are not included in the rate once
they become employed.
Response: Neither the statute nor the regulations excludes employed
recipients from the participation rate, as long as they are still
actually receiving TANF assistance. In fact, unsubsidized employment is
the first work activity that permits TANF recipients to be considered
``engaged in work'' and other forms of employment immediately follow
it. Moreover, recognizing that the participation rate calculations did
not give States credit for those who became employed and left the
welfare rolls, Congress created a ``caseload reduction credit'' for
that purpose. (See subpart D for discussion of the Caseload Reduction
Credit.)
We do require States to collect data on families no longer
receiving assistance (please refer to Sec. 265.3), but we believe it is
burdensome and impractical to require all States to follow such
families for any period of time. We do agree that this is important
information in understanding the effect of the TANF program and
encourage States to
[[Page 17773]]
conduct follow-up studies where possible. Also, we have designed the
initial high performance bonus system to give us follow-up information
on the employment of recipients without imposing a substantial new
burden on State TANF agencies.
Comment: One commenter stated that the denominator of the
participation rate changes daily and that we need a standardized
formula to allow programs to meet their goals. Another asked whether
the rate is calculated based on a sample or the universe of cases,
suggesting that the universe was preferable where feasible.
Response: While the denominator of the participation rate can
change from month to month, States will have ongoing access to
information about their caseloads, which should enable them to adjust
for shifts in the number and types of cases. The participation rates
are based on monthly data of families receiving assistance that include
an adult. Therefore, a family that receives assistance for even one day
in a month contributes to the total number of families receiving
assistance in that month. We think the participation rate calculations
are quite clear. However, we have incorporated some opportunities in
the penalty relief provisions to consider a State's special
circumstances. For example, in reducing the work participation penalty,
the final rule adds a new adjustment factor that could help States that
substantially increase the number of participants, but fail the
participation rate because they are experiencing significant caseload
increases.
Regarding whether a State should report the universe of caseload
data, Sec. 265.5 permits a State to report participation and other data
for the universe or a sample of cases and outlines acceptable sampling
methods. States should weigh the advantages and disadvantages of
sampling and make their own decisions about whether to report on a
universe or sample basis.
Comment: One commenter urged modifying the regulations to ensure
that, if one parent in a two-parent family is subject to a penalty but
the other parent continues to work the minimum hours required for the
overall participation rate, the family should count toward the overall
rate. If the second parent subsequently is subject to a penalty, the
commenter thought we should measure the months of sanction in the last
12 months separately for each parent, thus maximizing the time a family
would be excluded from one or both participation rates.
Response: First, we think it is clear in both the statute and these
regulations that families, and not individuals, are subject to
penalties. The State has the flexibility to determine the amount of the
penalty, up to and including terminating the case, but must impose a
penalty that is at least a pro rata reduction of the family's
assistance (see Sec. 261.14 for further discussion of pro rata
reductions). Thus, we would look at whether the family, not the
individual, is a sanction case.
If the family continues to receive assistance and meets the
standard for being ``engaged in work'' under the overall rate while
being sanctioned, as it would in the commenter's example, then the
State may choose to count that family in the numerator and denominator
of the calculation. However, since it is a family and not an individual
that is subject to a penalty, should the other parent subsequently
refuse to work and the State take action, it would simply be a second
sanction for the family and does not call for separate tracking for
purposes of calculating the denominator.
Comment: One commenter objected to the fact that two-parent
families are counted twice, once in the two-parent participation rate,
and once as part of the overall rate. The commenter thought that two-
parent families should be counted only in their own rate.
Response: The composition of the overall participation rate is
statutory. The two-parent rate measures State success with that sub-
population, while the overall rate measures success with the entire
caseload of families that include an adult.
Comment: Several commenters expressed support of the provision
excluding a single custodial parent caring for a child under 12 months
of age from the participation rate calculation. However, some
commenters thought that we should not tie the exclusion from the rate
to whether the State has adopted the option not to require the parent
to engage in work. In essence, they argue that there are two separate
decisions: whether to require the parent to work and whether to exclude
the parent from the rate. Others questioned whether this provision
allows for a one-time exclusion of up to 12 months or whether the
parent could be excluded again should he or she be caring for another
child under one year old.
Response: Based on the comments and after reexamining the statutory
provision, we agree that we need not link the State's option not to
require a single custodial parent of a child under 1 to work to the
exclusion of such parents from the rate calculations. The State can
make separate decisions about exempting and excluding a family from its
rate. The statute describes a certain individual, that is, ``a single
custodial parent caring for a child who has not attained 12 months of
age'' and then separately indicates that ``such an individual'' may be
disregarded in calculating the participation rates. We have re-written
the regulation to allow disregard of a family with such an individual,
since the rates actually measure families and not individuals.
Regarding whether this is a one-time provision or is renewable, the
law plainly states that a parent may be disregarded from the rate for
not more than 12 months. We interpret this language to mean a
cumulative, lifetime limit of 12 months for any single custodial
parent, but not necessarily a one-time disregard. Thus, if a parent
were disregarded from the rate for four months while caring for one
child under a year old, he or she could be disregarded for as much as 8
months with a subsequent baby.
Comment: We received many comments in support of the provision to
give a State credit for a month of participation if the individual is
engaged in work for the minimum average number of hours in each full
week the family receives assistance in a partial month; however, some
commenters found the provision too narrow to accommodate States that
assign an individual to an activity weeks after the beginning of a
benefit period. Some urged us to count an individual's time in
assessment toward the participation rate. Another suggestion was that
we should only consider a month of assistance (partial or full) to
begin from the time the individual is assigned to a countable activity.
One commenter thought we should only count families in the denominator
from the first full month of assistance. One commenter asserted that we
should include only recipients, and no applicants, in the participation
rate; thus, this provision would affect only partial months following
approval of assistance.
Response: The law and these regulations permit participation in
only 12 specific work activities to count toward the participation
rates. (Please refer to subpart C.) While we appreciate the time it
takes a State to assess an individual and assign him or her to an
activity, we do not have the flexibility to add assessment to the list
of allowable activities. By the same token, we cannot simply decide
that some period of time for which an individual receives assistance--
such as time prior to assignment in a work activity or a partial month
of assistance--should not
[[Page 17774]]
be considered a period of assistance and therefore exclude the
individual's family from the participation rate for that month. On the
contrary, if a family receives assistance for any portion of a month,
then we must include the family in the denominator of the participation
rate for that month, subject to the caveat in the paragraph below.
With respect to the assertion that we should not include applicants
in the participation rate, we agree that States should not be forced to
count individuals in the participation rates while their applications
are pending. At the same time, we do not want to deny States that are
successful in moving applicants into work activities credit for their
efforts. It is for this very reason that we wanted to give States
credit in the participation rates for a partial month of assistance
where an adult works at a level equivalent to the standard for a full
month. Further, under these final rules, we will give States some
discretion to decide when a family begins to receive assistance, for
the purposes of the participation rates. If a State pays benefits
retroactively, i.e., for the period between application and approval,
the State would have the option to consider the family to be receiving
assistance either during the retroactive period or only during the
month of payment.
This comment included an example in which the State ``prorated
[benefits] from the date of application,'' even though it did not
approve the application until about four weeks later. Each State has
some flexibility to decide when benefits begin; in this example, the
State chose the date of application. The statute is unclear whether
receipt of assistance for a prior period is assistance in that prior
month or only during the month of payment. Thus, when a State chooses
to pay retroactively back to the date of application, it has the option
to choose whether the recipient is receiving assistance during the
month or part of the month covered by the retroactive payment. Because
many States require applicants to engage in some form of work, such as
job search, this partial month provision should prove to be an
advantage for States that pay benefits retroactively for the
application period.
Section 261.23--What Two-Parent Work Rate Must a State Meet?
(Sec. 271.23 of the NPRM)
As in Sec. 261.21, this section restates the minimum work
participation rates for two-parent families established in the statute.
As States are aware, the two-parent participation rate increases
sharply. Congress has high expectations that States will help the vast
majority of adults in two-parent families find jobs or participate in
other work activities. We note that most States had difficulty meeting
the less ambitious JOBS participation rates for unemployed parent
families (UPs), the primary two-parent cases under AFDC, and about half
the States subject to the rates in FY 1997 failed the two-parent TANF
participation rate. For several reasons, the new rates under TANF are
much more demanding than they were under JOBS. First, the TANF rate is
a ``two-parent'' rate, not a rate just for UPs. Secondly, the
denominator includes much more of the caseload; it recognizes many
fewer exemptions. Finally, PRWORA lifted the restrictions on providing
assistance to two-parent families. Thus, in some States, many more two-
parent families could be eligible for assistance and subject to the
work requirements than under prior law.
We strongly encourage each State to consider carefully what it must
do to get two-parent families working. In some cases, States may need
to make substantial changes to their program designs. In the first few
years of operating TANF, the participation rates are at their lowest
and caseload reduction credits may significantly reduce the minimum
required rates. We think it is important for States to capitalize on
this initial period to invest in program designs that will allow them
to achieve the higher participation rates in effect in later years. We
intend to assist States in this endeavor through technical assistance
and by sharing promising models as they emerge.
We received only one comment relating to this section.
Comment: A commenter urged us to eliminate the two-parent
participation rate once the two-parent caseload represents less than
five percent of a State's overall caseload.
Response: We do not have the authority to eliminate the
participation requirement related to the two-parent caseload. The
statue is very clear about the required minimum rates that States must
achieve and the penalty associated with failing to meet participation
rates. We have tried to give States some relief with respect to the
demanding two-parent participation rate through both the structure of
the caseload reduction credit and the penalty reduction provisions.
Please refer to subparts D and E for further discussion of these areas.
Section 261.24--How Will We Determine a State's Two-Parent Work Rate?
(Sec. 271.24 of the NPRM)
The regulations express the two-parent work participation rate in
terms very similar to those we used for the overall rate. Any family
that includes a disabled parent is not considered a two-parent family
for purposes of the participation rate. Thus, we do not include such a
family in the numerator or denominator of the two-parent rate.
It is important to note that, in accordance with the statute, we
calculate both participation rates in terms of families, not
individuals. Whether we include the family in the numerator depends on
the actions of individuals, but an entire family either counts toward
the rate or does not. In the case of a two-parent family, whether a
family counts may depend on the actions of both parents.
In response to issues raised by the comments, and questions raised
by States dealing with interim participation rate calculations, we have
added language to the final regulations clarifying what constitutes a
two-parent family in the two-parent participation rate calculation. We
have found that States had divergent readings of which parents to
consider in determining whether a family was a two-parent family.
Therefore, we included this provision to ensure greater consistency
across States in measuring participation among two-parent families.
The final regulations state that, for the purposes of this
calculation, a two-parent family includes, at a minimum, all families
with two natural or adoptive parents (of the same minor child)
receiving assistance and living in the home, unless both are minors and
neither is a head-of-household.
The preamble to the NPRM indicated that providing a noncustodial
parent with TANF services need not cause a State to consider the family
a two-parent family for the participation rate. This policy has not
changed in the final regulations and is consistent with the new
definition of a two-parent family. A State may, but is not required to,
treat a family in which a noncustodial parent receives TANF assistance
as a two-parent family.
As in Sec. 261.22, where States direct us to, we exclude from the
participation rate calculation for a month the families that are
subject to a penalty for refusing to engage in work required in
accordance with section 407 of the Act, but have not been subject to a
penalty for more than three of the last 12 months. This is a change
from the NPRM, which only excluded them from
[[Page 17775]]
the numerator of the calculation. Please refer to the discussion at
Sec. 261.22 for an explanation of this change.
Section 408(a)(7) of the Act limits the receipt of Federal TANF
assistance to 60 months for any family, unless the family qualifies for
a hardship exception or disregard of a month of assistance. (In our
discussion of Sec. 264.1, we explain that months of receipt are
disregarded when the assistance was received either: (1) by a minor
child who was not the head of a household or married to the head of a
household; or (2) while an adult lived in Indian country or in an
Alaska Native Village with 50 percent or greater unemployment.) We have
received inquiries concerning the effect of a time-limit exception or
disregard on the participation rates. In fact, the time limit does not
have a bearing on the calculation of the participation rate. All
families must be included in the participation rate, unless they have
been removed from the rate for one of the two work-related exemptions
(i.e., the family is subject to a penalty, but has not been sanctioned
for more than three of the last 12 months; or the parent is a single
custodial parent of a child under one year of age and the State has
opted to remove the family from the rate).
We received many of the same comments about the calculation of the
two-parent participation rate that we received in connection with the
calculation of the overall participation rate. In particular, please
refer to the preamble for Sec. 261.22 for discussion of the comments
and our responses about excluding groups of recipients from the
participation rate and counting partial months of participation.
As we indicated in Sec. 261.22, we have not kept in the final rules
our proposal to redefine families to include in the participation rate
any families that the State has excluded (based on its defining a
family as a child-only family) for the purpose of avoiding a penalty.
Please refer to the earlier preamble section entitled ``Child-Only
Cases'' for further discussion of this decision and the comments that
relate to it.
Comment: One commenter asked what the definition of a two-parent
family is and whether it includes a household in which both parents are
not available for work. Another commenter stated a family's status as
two-parent or not often changes in the course of a month and that,
therefore, a family should not be considered a two-parent family in a
month in which its status change.
Response: We believe that Congress did not intend to exclude from
the definition of a two-parent family a family with two parents
receiving assistance, neither of whom is disabled, even if they are
``not available for work'' or the family's status changed during the
month. We interpret the statute to mean that, if a State grants
assistance for both parents in a family (and neither is disabled), then
it must be considered and reported as a two-parent family. If one
parent is coming and going from the family in the month and the State
does not provide assistance for that parent, then it seems reasonable
not to consider it a two-parent family.
Comment: Several commenters noted that the NPRM did not define the
term ``disabled parent,'' thus making it unclear which families should
be excluded from the two-parent participation rate. Some urged us to
leave the definition to States or to define it broadly to accommodate
State policy. Others specifically urged defining it to include people
who are temporarily disabled or incapacitated.
Response: We have not defined the term ``disabled parent'' in the
final regulations so that each State may define the term as it deems
appropriate.
Comment: Commenters urged removing from the denominator all persons
exempt from work requirements based on valid State welfare reform
waivers in effect prior to enactment of PRWORA.
Response: Please refer to subpart C of part 260 for discussion of
how we will treat welfare reform waivers under the participation rates.
Comment: One commenter thought that we should remove families that
are subject to a penalty from the calculation for the entire duration
of a penalty rather than only if they have been in penalty status for
less than three of the last 12 months. Alternatively, the commenter
thought we should remove such a family if it has been subject to a
penalty for less than three months in a fiscal year instead of the
preceding 12 months.
Response: We do not have the authority to make either of the
changes the commenter suggested because the statute is very precise
about this provision. It specifies that sanctioned families are removed
from the rate, but not if the family has been subject to the penalty
for more than three months within the preceding 12-month period.
Section 261.25--Does a State Include Tribal Families in Calculating
These Rates? (Sec. 271.25 of the NPRM)
States have the option of including in the participation rates
families in the State that are receiving assistance under an approved
Tribal family assistance plan or under a Tribal work program. If the
State opts to include such families, they must be included in the
denominator as well as the numerator.
Comment: A commenter urged that any rewards or bonuses a State
receives due to including Tribal participants in the calculations
should be shared with the Tribes in question.
Response: Nothing in these regulations precludes a State from
sharing rewards or bonuses with Tribes; however, we do not have the
authority to require a State to do so.
Comment: One commenter was confused by our discussion in the
preamble to the NPRM. We said that where the State opts to include
families receiving assistance under a Tribal TANF or Tribal NEW
program, the families must be in the denominator as well as the
numerator ``where appropriate.'' The commenter asked us to clarify
whether a State is free to include or exclude such families from the
numerator and denominator. The commenter also asked us to clarify the
standards of participation and activities that applied for a State to
count such a Tribal family.
Response: A State may, at its option, include or exclude families
receiving assistance under a Tribal TANF or Tribal NEW program from the
denominator of the State TANF participation rates. To be included in a
State participation rate numerator for a month, a family must meet the
standards for counting a family in that rate, both with respect to
hours of participation and allowable activities. These standards apply
whether the family receives assistance under a State TANF program, a
Tribal TANF program, or a Tribal NEW program. We realize that many
Tribal programs will have different standards of work and different
activities, but to count toward a State rate, the family must meet the
standards associated with that rate.
We wanted to be clear that, if a State did plan to count a family
receiving assistance in a Tribal program, that family had to be
included in just the same way that a State TANF family would be
included, that is, in the denominator of the rate as well as the
numerator. But since inclusion in the numerator is not automatic
(because the family must meet the hours of participation in allowable
activities), we added the phrase ``where appropriate.'' Since this was
confusing, we modified the preamble discussion in the final rules.
[[Page 17776]]
Subpart C--What Are the Work Activities and How Do They Count?
Section 261.30--What Are the Work Activities? (Sec. 271.30 of the NPRM)
Section 407(d) of the Act specifies the 12 work, training, and
education activities in which individuals may participate in order to
be ``engaged in work'' for the purpose of counting toward the work
participation rate requirements. Congress did not define these
activities further. While some have commonly understood meanings from
their use over time or from prior employment and training programs,
several of the activities, such as ``vocational educational training''
and ``job readiness assistance,'' are subject to interpretation.
In considering whether to provide greater definition of the
activities as part of the NPRM, we examined legislative intent and
sought the views of a variety of groups on the matter. Most groups
urged us to leave further definition to the States. Some urged us to
define work activities in ways that fostered education while promoting
work, emphasizing the importance of education and training in
empowering many recipients to find meaningful employment, let alone to
advance. Ultimately, we chose not to define the individual work
activities in the NPRM in favor of giving States greater flexibility;
we have not changed that position in the final regulations.
Because this flexibility could also be used in ways that do not
further Congressional intent, under the data collection requirements at
Sec. 265.9, we are requiring each State to provide us with its
definitions of work activities for its TANF program and with a
description of work activities for any separate State program that
requires them. We are concerned that different TANF definitions could
affect the vulnerability of States to penalties for failure to meet the
participation rate. This data collection will help us determine whether
this is in fact a serious problem; to the extent possible, we want to
ensure an equitable and level playing field for the States. Over the
next several years, we will carefully assess the types of programs and
activities States develop and will share the results of our findings.
If necessary at some time in the future, we will initiate further
regulatory action.
We would also like to remind States about some key research
findings from prior welfare-to-work programs. According to the Manpower
Demonstration Research Corporation's publication, Work First, the most
successful work first programs have shared some characteristics: a
mixed strategy including job search, education and training, and other
activities and services; an emphasis on employment in all activities; a
strong, consistent message; a commitment of adequate resources to serve
the full mandatory population; enforcement of participation
requirements; and a cost-conscious management style.
While the most successful programs consistently and strongly
emphasize work, the actual program designs recognize and address the
critical role education plays in preparing adults for work. As more and
more recipients engage in work, State caseloads may reflect higher
proportions of the educationally disadvantaged. In combination with
other work activities, education may become more important in improving
basic communication, analytical, and work-readiness skills of
recipients. Thus, States may need to integrate adult basic skills,
secondary education, and language training with high-quality,
vocational education programs. Such program designs encourage
recipients to continue acquiring educational skills necessary for
higher-skill, higher-wage jobs.
We encourage States to adopt program designs that take advantage of
existing educational opportunities. States may use the statutory
flexibility to design programs that promote educational principles by:
<bullet> Actively encouraging adults and children to finish high
school or its equivalent;
<bullet> Expecting family members to attain basic levels of
literacy and to supplement their education in order to enhance
employment opportunities;
<bullet> Encouraging family literacy; and
<bullet> Promoting community-based work-related vocational
education classes, created in collaboration with employers.
States could also make it easier for individuals to combine school
and work. For example, they could develop on-campus community work
experience program positions, where child care is also available. They
could also encourage schools to use work-study funds for students on
welfare and then count the hours worked in those programs toward work
requirements.
While we have not regulated the definition of work activities, we
want to ensure that recipients and children both experience positive
outcomes. This is a particularly significant issue when child care is
the work activity. For this to happen, child care arrangements should
be well developed, implemented and supported.
Research has found that quality child care is critical to the
healthy development of children and that providers who choose to care
for children create more nurturing environments than those who feel
they have no choice and are providing care only out of necessity. Thus,
States should assess whether recipients have an interest in providing
child care before assigning them to this activity.
In addition, States should provide training, supervision and other
supports to enhance caregiving skills if they wish recipients to attain
self-sufficiency. Such supports, including training in health and
safety (e.g., first aid and CPR), nutrition, and child development,
would assist the development of both the caregivers and the children in
care.
Finally, the stability of child care arrangements affects outcomes
for both parents and the children in care. When parents feel
comfortable with their child care arrangements, their own participation
in the work force becomes more stable. This stability, in turn, fosters
emotional security for children. Thus, States should take stability
into account when assigning participants to child care as a work
activity.
The majority of those who commented on this section of the proposed
regulations supported our decision not to define work activities beyond
the statutory list. We discuss other comments below.
Comment: Several commenters made suggestions about the content of
work activities. Some urged us generally to ensure the quality of work
activities by establishing minimum standards for the activity and for
the provider. Others made suggestions about specific activities, urging
us to give guidance or make requirements concerning particular elements
of an activity. For example, one commenter thought that vocational
educational training should conform to the definition of vocational
education in the Carl D. Perkins Vocational Education Act; another
suggested discontinuing on-the-job contracts with employers that do not
provide long-term employment. In essence, these commenters wanted us to
define certain of the activities or ensure that certain activities
would be counted as work.
Response: We appreciate and share the commenters' concerns that
work activities be designed to meet the needs of recipients and be
effective in helping them become self-sufficient. However, we think
that the goals and objectives of the legislation will be better served
by having each State define the work activities. We believe States will
use the flexibility of the statute to formulate a variety of reasonable
interpretations leading to greater innovation,
[[Page 17777]]
experimentation, and success in helping families become self-sufficient
quickly. It is true that States could conceivably include a range of
activities that may not enhance work skills or might not be considered
valid work experience by potential employers. However, in light of the
five-year time limit and the criteria for the high performance bonus,
we expect that States will work to establish programs that promote a
family's long-term success in the workplace.
Comment: One commenter pointed out that we omitted the statute's
limitation of the activity of ``work experience'' to instances where
sufficient private-sector employment is not available.
Response: We have amended the regulations to reflect the statute's
limitation.
Comment: A couple of commenters urged us to require that work
activities comport with Federal employment laws in order to count for
participation. One suggested that we require employers to post
appropriate nondiscrimination notices. Another stated that Congress
failed to include any provision limiting work activities to work at the
minimum wage.
Response: We agree fully with the commenters that all TANF work
activities should be lawful and should not subject participants to
discrimination, unsafe working conditions or other circumstances
prohibited by employment law. Nevertheless, we do not think the
appropriate way to address the issue is to exclude certain work
activities from the participation rate calculation in some States.
Adjusting the rates would be administratively cumbersome and not
necessarily equitable. As we have discussed earlier in the section of
the preamble entitled ``Recipient and Workplace Protections,'' there
are other entities, such as the EEOC, DOL and our Office of Civil
Rights, that enforce compliance with civil rights and employment laws.
Their mechanisms for monitoring and enforcing compliance are not linked
to the timing of the participation rate calculation. In other words, a
finding of noncompliance that they might issue would not necessarily be
available within our timeframes for calculating participation rates.
Moreover, even if we did receive timely information about noncompliance
with employment requirements, because the participation rates may be
based on sample data, it might be very difficult to determine the
appropriate adjustments to make to the rates based on such findings.
Given these complications, we have not modified the regulation as
the commenters suggest. We think it makes better sense to support the
enforcing entities in carrying out their responsibilities. If, over
time, we find significant problems that could warrant adjustments
within the TANF program, we will consult with States, labor interests,
Congress, and other interested parties about the appropriate steps to
address these problems.
We have also included a new regulatory section at Sec. 260.35 that
addresses employment protections available to TANF recipients. Please
refer to the preamble section entitled ``Recipient and Workplace
Protections'' for a discussion of additional comments related to this
issue.
We have addressed the Fair Labor Standards Act (FLSA) at
Sec. 260.35 of the final rule, in the preamble to Sec. 261.16, and in
the preamble discussion entitled ``Recipient and Workplace
Protections.'' Please refer to those preamble sections for further
discussion of the application of FLSA, including the minimum wage
requirement, to TANF work activities.
Comment: We received support from a number of commenters for the
discussion of the importance of education to TANF recipients that we
included in the preamble to the NPRM. In response, we have repeated
much of that discussion in this preamble to the final rule. We also
received support for our guidance concerning the provision of child
care as a work activity.
A couple of commenters urged us to incorporate that discussion,
particularly our program design suggestions, into the text of the
regulation itself. They argued that States would not create broader
activities that combine work and education unless we specifically
regulated in this area. Similarly, one commenter urged us to specify
that we would not penalize a State for including a range of educational
activities, from literacy programs through post-secondary education, in
its definitions of work activities.
One commenter thought the proposed rule did not truly support the
integration of work and education because it allowed each State to
define the work activities. Instead, the commenter urged us to provide
definitions that guide States in integrating work and education.
Response: We have not included our discussion of program designs
within the text of the regulation. That discussion is intended to spark
creative thinking about State choices in implementing TANF, rather than
to prescribe a particular design for all States. It is also intended to
underscore the important role we think education can play in TANF.
We have not included the kind of blanket statement the commenter
suggests absolving States of any potential penalty liability for
including a wide array of educational components in its work
definitions. There are statutory limits on counting educational
activities in the participation rates; a State that exceeded those
limits could be subject to a penalty. Readers should refer to
Sec. 261.33 for a discussion of the limits on counting participation in
educational activities in the participation rates.
As we indicated above, we have opted not to define the work
activities to a greater degree than the statute does. We think that the
preamble discussion gives States ample suggestions of ways to integrate
education with work activities. We are also available to work with any
State and its education community to help them design programs that
will meet their particular needs.
Comment: One commenter stated that there is no provision to count
participants in a GED program, adult basic education or English as a
Second Language (ESL) in the participation rates and urged making them
countable work activities. Another commenter urged adding a basic
skills ``refresher'' course for those already holding a GED. A third
commenter encouraged us to include student internships as a work
activity.
Response: While we have no authority to add to the list of 12 work
activities, a State could provide the education programs described in
the first two comments under the existing activities. In particular, we
point out that GED is explicitly part of the eleventh activity:
``satisfactory attendance at secondary school or in a course of study
leading to a certificate of general equivalence for a recipient who has
not received a high school diploma or a certificate of high school
equivalency.'' Similarly, student internships, depending on their
content, may well meet a State's definition of one or another of its
work activities. We would be glad to provide technical assistance to a
State that has questions about incorporating activities such as these
into its program design.
Comment: One commenter urged us to require States to include
vocational educational training among their work activities.
Response: We understand the commenter's interest in seeing that
recipients have the opportunity to enroll in training programs that
will give them the skills to qualify for and keep higher paying jobs;
however, we do not have
[[Page 17778]]
the authority to require a State to provide any specific work
component.
Comment: One commenter expressed support for the development of
micro-enterprises and other forms of self-employment, particularly in
rural settings. The commenter urged increasing flexibility in this area
by counting the period necessary to develop a business as
participation.
Response: Again, the State has the flexibility to design and define
work activities that meet the needs of its caseload, including creating
a micro-enterprise development program. It is unclear from the comment
precisely what activities the commenter believes should be considered
work that are excluded either by statute or by a State's policies. We
agree that any legitimate hours of work in the development of a
business could contribute to the participation rate; however, for
example, if the recipient is waiting for a loan approval, but not
otherwise participating, it hardly seems reasonable to count that time
as participation. The fact that something has value or is integral to a
countable activity does not necessarily mean it can count as
participation. We would be happy to work with States that would like
technical assistance in this area.
Comment: One commenter expressed support for the requirement that a
State provide us with its work definitions, citing its value for
research into effective employment-related services. Another commenter
objected to this requirement, maintaining that States must already
submit this information as part of the State TANF plans.
Response: We think it is important to know how States are defining
the activities because of the implications they have for penalties. We
want to ensure that we enforce the requirements of TANF in a way that
is as equitable to States as possible. We also agree that the
definitions will help with research into effective program designs. We
think it is reasonable to collect these definitions as an annual
addendum to other data collection. Unfortunately, the TANF State plans
do not necessarily include a State's work activity definitions.
However, we have revised the reporting requirements at Sec. 265.9(d) to
allow a State that included such information in its plan to reference
the plan or attach the appropriate plan pages.
Comment: One commenter objected to ``such a restricted list of
countable work activities'' protesting that low-grant States will not
be able to make use of several of the components because recipients
will have too much income to continue receiving assistance. The
commenter also stated that low-grant States will be adversely affected
by the minimum wage requirements of the Fair Labor Standards Act
(FLSA).
Response: States must weigh carefully their decisions about grant
amounts and earnings disregards as they formulate State policy. The
commenter is correct that a State's benefit rules may have implications
for its participation rates, as well as for a family's time limit and
for State budgets. However, these are largely matters of State
discretion; the regulations reflect the statutory work activities.
Readers should refer to the preamble at Sec. 261.16 for a more detailed
discussion of the FLSA and its effect on TANF work activities.
Section 261.31--How Many Hours Must an Individual Participate To Count
in the Numerator of the Overall Rate? (Sec. 271.31 of the NPRM)
Section 407(c) of the Act specifies the minimum hours an individual
must participate to count in the State's overall participation rate
calculation. There are two related requirements. First, there is a
minimum average number of hours per week for which a recipient must be
engaged in work activities. The average weekly hours are reflected in
the following table:
------------------------------------------------------------------------
Then the
minimum
If the fiscal year is: average
hours per
week is:
------------------------------------------------------------------------
1997....................................................... 20
1998....................................................... 20
1999....................................................... 25
2000 or thereafter......................................... 30
------------------------------------------------------------------------
Second, the law requires that at least an average of 20 hours per
week of the minimum average must be attributable to certain specific
activities. These activities are:
<bullet> Unsubsidized employment;
<bullet> Subsidized private-sector employment;
<bullet> Subsidized public-sector employment;
<bullet> Work experience;
<bullet> On-the-job training;
<bullet> Job search and job readiness assistance for no more than
four consecutive weeks and up to six weeks total in a year;
<bullet> Community service programs;
<bullet> Vocational educational training not to exceed 12 months;
<bullet> Provision of child care services to an individual who is
participating in a community service program.
(Note: the limitation that at least 20 hours come from certain
activities does not apply to teen heads of households; however,
there are other limitations related to teen heads of households.
Please refer to Sec. 261.33 below.)
After an individual meets the basic level of participation, the
following activities may count toward the total work requirement hours
of work:
<bullet> Job skills training directly related to employment;
<bullet> Education directly related to employment for those without
a high school diploma or equivalent;
<bullet> Satisfactory attendance at a secondary school or GED
course for those without a high school diploma or equivalent.
In our consultations prior to drafting the NPRM, several people
asked whether a State may average the hours of participation of
different recipients to reach the minimum average hours required by the
work participation rate, as they could in the JOBS program. PRWORA does
not permit combining and averaging the hours of work of different
individuals. However, the regulation and the statute permit averaging
an individual's weekly work hours over the month to reach the minimum
average number of hours per week required for that individual to be
engaged in work.
We have reorganized the regulatory text slightly from the way it
appeared in the NPRM for the sake of clarity, but this section still
paraphrases the statute in simple, understandable terms.
The final regulations do not contain the chart we included in the
NPRM depicting which work activities count in the first 20 hours and
which count thereafter. We decided the chart no longer added to
readers' understanding of the provision since legislative changes
simplified the rules and its inclusion disrupted the regulatory text,
making the policy more difficult to follow.
Comment: We received several comments expressing support for our
clarification in the NPRM that a State may average an individual's
weekly hours of work over a month. One commenter supported averaging,
but without reference to an individual's hours in a month.
Response: For clarity, we would like to reiterate that the statute
does not permit combining and averaging of hours of work of different
individuals in the overall participation rate. Rather, it is an
individual's hours of work from different weeks within a month that may
be averaged.
Comment: Several commenters expressed concern about the effects of
the FLSA in restricting the number of hours a State may require an
individual to participate in certain work activities,
[[Page 17779]]
particularly work experience and community service. They emphasized the
importance of these activities to individuals not ready for
unsubsidized employment.
Concerned that the FLSA will impede a State's ability to meet the
participation rate requirements, some commenters urged us to exempt
these activities from the wage and hour requirements of the FLSA.
Response: We have no authority to exempt an activity from the
requirements of the FLSA. We have tried to explain the basic effect of
the requirements on TANF work activities in the preamble to
Sec. 261.16, but we urge interested parties to consult the Department
of Labor's guidance entitled ``How Workplace Laws Apply to Welfare
Recipients (May 1997)'' for more information. We would also like to
point out that States have the option of increasing the amount of a
family's grant and thus permitting an individual to engage in more
hours of work in accordance with the FLSA. States should weigh policy
decisions in this area very carefully; the interrelated effects on
participation rates, a family's remaining months under the Federal time
limit, and State spending on the TANF program are crucial aspects of
TANF program design.
Comment: A couple of commenters expressed opposition to separating
the work activities into those that count for the first 20 hours and
those that count thereafter, questioning the regulation's support for
educational attainment despite the preamble's discussion of its
importance.
Response: The requirement that the three education-based activities
can only count for participation after the first 20 hours is a
statutory one; thus, we have no authority to alter it. That fact does
not change our commitment to education for recipients who need it. We
have suggested several possible models for combining education with
other activities and stand ready to help States that would like
technical assistance in this area.
Comment: A commenter urged us to make GED preparation and English
as a Second Language (ESL) ``stand alone, countable'' activities
because substantial portions of some State caseloads need basic
education and language skills before they can hold even entry-level
jobs.
Response: Clearly, both GED preparation and ESL fit within the list
of 12 work activities enumerated in the statute.
We presume that the commenter's real concern is that the State
cannot receive full participation credit for such educational
activities because of the requirement that the first 20 hours of
participation be attributable to the noneducational activities. This is
a statutory requirement that we have no authority to change in the
regulations. We urge States and localities to consider combining work
and educational activities where it is appropriate in order to maximize
participation credit. Although some individuals will not be able to
engage in multiple activities, this could be a viable solution for many
recipients.
Comment: One commenter, in stressing the importance of education to
permanent self-sufficiency, urged us to include time spent on homework
and fieldwork when calculating an individual's hours of participation.
Response: As we have indicated, it is each State's responsibility
to define its work activities in a reasonable manner; thus a State
could choose to include homework time as part of an activity. However,
we encourage States to consider carefully how Congress intended to
treat homework in determining ``engaging in work'' to ensure that its
interpretation is reasonable.
It is unclear to us exactly what the commenter means by
``fieldwork''; if this refers to practical, career-based experience
within the context of an educational activity, it might meet a State
work activity definition. We have spoken to this issue in response to a
comment about student internships above in the comments to Sec. 261.30.
Comment: A commenter urged us to give partial credit for placing
individuals in countable activities for fewer than the minimum average
number of hours. For example, if the required hours are 20 and the
individual participates for 10 hours per week, the commenter would have
us count the case as 0.5 in the participation rate for that month.
Another urged us to develop a means of giving a State credit for an
individual's participation over a longer period of time than one month.
Response: The statute does not provide for counting a portion of a
case in the participation rate and measures participation on a monthly
basis; either the adult is engaged in work and the family counts in the
rate or it does not and is not in the rate.
Comment: One commenter urged us to modify this section to include
the provisions of Sec. 261.35 or to include a cross-reference to it.
That section indicates that we will count a single custodial parent
caring for a child under the age of six as engaged in work if the
parent participates in work activities for an average of at least 20
hours per week.
Response: The language of this section is consistent with the
statute and does not need to incorporate the provisions of Sec. 261.35
to take into account the full range of ways in which a family may meet
the participation rate. We have tried to make these regulations easy to
read. This means, in part, keeping sections reasonably short and
separating different ideas into new sections. In this subpart in
particular, we have tried to group all the provisions that relate to
counting hours of work; it would be simply impractical to include all
these provisions in one section.
We have decided not to reference Sec. 261.35 to avoid multiple
references to the other sections in subpart C, which we think readers
will readily notice due to their proximity.
Comment: A couple of commenters urged us to give a State credit for
an individual's ``excused'' absences from work, such as holidays or
jury duty, as opposed to counting only actual hours of work. They
thought that an absence beyond the individual's control should count as
participation. Another commenter suggested that we count at least a
portion of an individual's commute time when he or she must travel an
extended distance to reach the job.
Response: The statute specifies the standard by which we must
measure whether an individual is engaged in work. That standard is that
a recipient ``is participating in work activities for at least the
minimum average number of hours per week'' specified in the table in
this section. Although the JOBS program gave us the discretion to
establish a participation standard that considered scheduled hours and
actual hours worked, TANF does not provide that flexibility.
However, consistent with ordinary practice for counting work time,
a State could base the hours of work it reports on an employer's record
of hours for which an employee is paid, thus accounting for paid
holidays and jury duty days. Similarly, consistent with the ordinary
practice for counting work time, we do not believe that commuting time
can reasonably be considered ``engaging in work'' for any activity and
therefore will not count it toward the participation rates.
Section 261.32--How Many Hours Must an Individual Participate To Count
in the Numerator of the Two-Parent Rate? (Sec. 271.32 of the NPRM)
For two-parent families, section 407(c) of the Act specifies that
the parents must be participating in work activities for a total of at
least 35 hours per week and that a specified number of
[[Page 17780]]
hours be attributable to specific work activities. A State may have one
parent participate for all 35 hours, or both parents may share in the
work activities. If the family receives federally-funded child care
assistance and an adult in the family is not disabled or caring for a
severely disabled child, then the parents must be participating for a
total of at least 55 hours per week. As before, a specified number of
hours must be attributable to certain activities (listed below).
In the first situation (where the weekly total must be at least 35
hours), at least 30 hours must be attributable to the same narrow group
of activities that applies to the 20-hour standard in the overall rate.
In the second situation (where the weekly total must be at least 55
hours), 50 hours must be attributable to this narrow group of
activities. Again, these are:
<bullet> Unsubsidized employment;
<bullet> Subsidized private sector employment;
<bullet> Subsidized public sector employment;
<bullet> Work experience;
<bullet> On-the-job training;
<bullet> Job search and job readiness assistance for no more than
four consecutive weeks and up to six weeks total in a year;
<bullet> Community service programs;
<bullet> Vocational educational training (for not more than 12
months);
<bullet> Provision of child care services to an individual who is
participating in a community service program.
Therefore, no more than five of the relevant minimum hours may be
attributable to education related to employment, high school (or
equivalent), or job skills training activities.
During our consultations prior to developing the NPRM, many thought
it was unclear whether the 35-hour requirement was a minimum for each
week or a minimum weekly average, as is the case in the overall rate.
For example, if a parent participated 40 hours one week and 30 hours
the next, the question arose whether he or she would meet the minimum
requirement for both weeks. To provide maximum flexibility for States
to meet the program goals, we clarified in the proposed rule and have
maintained in the final regulations that, as long as the parents'
average total hours equal at least 35 hours per week, the individual
meets the participation requirement.
Other than this clarification, we have mirrored the statute. As in
Sec. 261.31, we have reorganized the regulatory text slightly from the
way it appeared in the NPRM to make it clearer, but this section still
paraphrases the statute in simple, understandable terms.
The majority of the comments on this section expressed support for
our interpretation that the weekly hours requirement was a weekly
average within a month and not a fixed number of hours for each week.
Commenters emphasized that this will help States work flexibly with
families and respond to emergencies or other family needs that affect
hours of work in a particular week.
We also received many of the same comments in this section that we
received in connection with the hours of work required for the overall
participation rate. In particular, please refer to the preamble for
Sec. 261.31 for discussion of the comments and our responses about: the
requirements of the FLSA; counting ``excused'' absences from work
toward the participation rate; giving partial participation credit for
participating below the hours of work standard; and reporting
requirements for a week that spans two months.
Comment: A commenter noted that this section refers to ``an
individual'' counting as engaged in work and urged us to substitute the
word ``family'' instead.
Response: We recognize that both parents may actually be
participating and contributing to the total number of hours required to
be engaged in work, 35 or 55 hours depending on whether they receive
federally-funded child care. We used the word ``individual'' because
the statute, at section 407(c)(1)(B), uses that term. While this is not
necessarily strictly accurate, it is no more accurate to describe the
``family'' as working; a family is counted in the participation rate,
but it is one or two individuals who engage in work. We thought that
relying on the language of the statute would be less confusing in this
case.
Comment: One commenter advised us to modify this section to
indicate that a family with a disabled parent should not be considered
a two-parent family for the purposes of the participation rate
calculations in accordance with the statute.
Response: The commenter is correct that the statute excludes
families with a disabled parent from the two-parent participation rate
calculation. We included this provision in subpart B where we describe
the calculations for the participation rates. Please refer to
Sec. 261.24(d).
Section 261.33--What Are the Special Requirements Concerning
Educational Activities in Determining Monthly Participation Rates?
(Sec. 271.33 of the NPRM)
Section 407(c)(2)(C) of the Act provides that a teen who is married
or the single head-of-household is deemed to be engaged in work for a
month if he or she maintains satisfactory attendance at a secondary
school or the equivalent or participates in education directly related
to employment for an average of at least 20 hours per week. Paragraph
(b) of this section paraphrases the language of this statutory
provision.
To reinforce the emphasis on work, section 407 of the Act limits
educational activities in two ways:
(1) An individual's participation in vocational educational
training may count for participation rate purposes for a maximum of 12
months; and
(2) For each participation rate, not more than 30 percent of
individuals determined to be engaged in work for a month may count by
reason of participation in vocational educational training. In fiscal
year 2000 and thereafter, this 30-percent limit also includes the teens
deemed to be engaged in work by reason of maintaining satisfactory
attendance at secondary school (or the equivalent) or participating in
education directly related to employment, whom we described above.
When PRWORA was enacted, there was substantial controversy about
precisely how the second limitation would apply. However, Pub. L. 105-
33 modified this provision, making the limitation much clearer. The
description above and the regulation at Sec. 261.33 reflect the new
provision, as amended by Pub. L. 105-33.
Based on some of the comments we received, we have made some minor
modifications to the regulatory language as it appeared in the NPRM.
The proposed regulatory language inadvertently suggested that only
married heads-of-households, as opposed to any married teen, could be
deemed to be engaged in work by virtue of this provision. In addition
to correcting that error, we have modified the wording of the 30-
percent cap to reflect the statute more closely.
We also want to explain the technical details of how we will
interpret the provision relating to counting teens in educational
activities for the purposes of calculating the participation rates. We
are interpreting the deeming of teens as engaged in work based on
satisfactory attendance in secondary school (or the equivalent) or 20
hours per week of
[[Page 17781]]
education directly related to employment to apply to both participation
rates. While the provision might appear at first glance to apply to the
overall rate alone, after considering Congressional intent and the
legislative history, we think it is appropriate to apply it in the two-
parent rate as well.
Because the two-parent rate, as amended by Pub. L. 105-33, permits
the hours of the two parents to be combined to achieve the required
weekly average, we needed to determine how many, if any, additional
hours the parents would need to work in order to count in the two-
parent rate when one parent was maintaining satisfactory attendance in
high school or the equivalent. It seemed unreasonable and contrary to
the spirit of the law to count the family without any additional hours;
for example, that would allow a two-parent family to count based solely
on the attendance of one parent in a GED class. Such a policy would
support neither the educational welfare of the other parent nor the
economic self-sufficiency of the family, faced with time-limited
benefits.
To address these concerns, our rules incorporate the following
policy for two-parent families: (1) we will consider satisfactory
attendance at secondary school or the equivalent of a single head-of-
household or married recipient under the age of 20 to equate to 20
hours per week of participation; thus, the parents would need a
combination of 15 or 35 additional average hours per week (depending on
which standard of hours applied to them) to count for the two-parent
participation rate; and (2) if both parents in the family are under 20
years of age, we will consider them to be engaged in work if both meet
the conditions of Sec. 261.33(b), that is, if both are either
satisfactorily attending school or equivalent or participating in
education directly related to employment for at least 20 hours per
week. Our rationale for equating satisfactory attendance in secondary
school with 20 hours of participation is that the statute makes the
presumption that such attendance is equivalent to 20 hours in education
directly related to employment.
Comment: One commenter, while acknowledging the statutory origin of
the 30-percent cap, nevertheless objected to the provision as it
relates to teens in secondary education. The commenter stated that a
mandated activity cannot have a cap.
Response: The commenter is correct that the 30-percent limitation
is required by the statute; however, we would like to address the
question of secondary education as a mandated activity. The commenter
is referring to section 408(a)(4) of the Act, which prohibits a State
from using TANF funds to assist a single parent under the age of 18 who
has not completed high school (or equivalent) unless he or she attends
high school (or equivalent) or a State-approved alternative education
or training program. Both provisions underscore the importance of basic
education for teens but are distinct in their effects within TANF. Even
if the teen populations and the activities described were identical,
which they are not, the central difference between the two provisions
is that one mandates what the teens must do and the other restricts
what a State receives credit for in the participation rate.
Comment: We received several comments urging us to count post-
secondary education toward the participation rate and recommending that
the regulations explicitly indicate that it is a TANF work activity.
Response: As we have indicated above, we do not have the authority
to create additional work activities beyond the 12 statutory
activities. Nevertheless, depending on whether and how the State chose
to incorporate it into its TANF structure, post-secondary education
could fit within the definition of 1 or more of the 12 activities. The
appropriateness of categorizing it as one activity versus another would
depend on the nature of the post-secondary program, such as whether it
were vocational training.
We would also like to emphasize that States have the flexibility to
design programs that allow recipients to combine school and work. We
have suggested some possible models for this in the preamble to
Sec. 261.30 and are ready to work with States that want help in
pursuing such program designs.
Comment: A couple of commenters objected to the limitations on
vocational educational training, both an individual's limit to 12
months and the 30-percent cap. They stressed that States should be free
to design vocational programs that are effective in moving participants
into permanent employment, which may require more than one year of
training.
Response: States are free to design and operate vocational programs
that take longer than one year to complete; the limitation is strictly
about the period of time for which a State could receive credit for a
recipient's participation in that program. The limitation, while
potentially discouraging States from designing certain long-term
programs, is statutory and beyond our authority to modify. Again, we
would like to point out that combining vocational training with
practical experience that could count as another activity may be a
viable approach in many cases. Moreover, States should consider that
effective vocational education programs, or other programs that succeed
in moving recipients from welfare to work, will contribute to the
likelihood that the State will qualify for a high performance bonus or
caseload reduction credit. We are awarding the high performance bonuses
based on several criteria, including the number of new hires, increases
in earnings and job retention. Thus, in spite of the limits on counting
vocational educational training as participation, there are other
incentives to designing effective vocational education programs.
Comment: A commenter noted that the proposed regulations and
preamble did not indicate that a State has discretion to determine how
to measure the 12-month limit on counting an individual's participation
in vocational educational training.
The commenter also urged us to amend the regulations to indicate
that a State that combines education with other activities would
necessarily be able to count these activities in the participation
rates.
Response: States have limited flexibility in this area. If a family
is included in the numerator of a participation rate for a month by
virtue of participation in vocational educational training, then that
month counts against the 12-month limit for that individual.
If a State reports hours of participation in an activity that meet
the requirements of this subpart, then the hours would count in the
participation rates, and the month would count as a month or
participation in the activity, regardless of whether the individual
performed them in combination or separately.
We have stressed the possibility of combining education and work
activities in part because of the statutory limits, reflected in these
regulations, on how educational activities may count for participation
purposes. In addition, we believe that encouraging recipients to
acquire new and more advanced skills after they have entered the work
world will help them attain and keep higher-paying jobs, leading to
more economic security for families.
Section 261.34--Are There Any Limitations in Counting Job Search and
Job Readiness Assistance Toward the Participation Rates? (Sec. 271.34
of the NPRM)
Section 407(c)(2)(A)(i) of the Act limits job search and job
readiness assistance in several ways.
[[Page 17782]]
First, an individual generally may not count as engaged in work by
virtue of participation in job search and job readiness assistance for
more than six weeks. No more than four of these weeks may be
consecutive. During our consultations prior to drafting the NPRM, we
were asked whether these limitations applied for the lifetime of the
individual, per spell of assistance, or per fiscal year.
Based on those consultations, after an analysis of the statute, we
decided in the NPRM to interpret it as a fiscal-year limit for two
policy reasons. First, since the participation rate itself is tied to
the fiscal year, it makes sense to apply the limitation to the same
timeframe. Second, a different policy could force States to place
individuals in other, less appropriate activities just to meet the
participation rate. Moreover, research indicates that job search
activities are an instrumental component in effective work program
designs.
The statutory language supports the fiscal-year interpretation. The
job search language at section 407(c)(2)(A)(i) of the Act limiting the
weeks of participation states that the limit is ``notwithstanding
paragraph (1).'' Paragraph (1) refers to the determination of whether a
recipient is engaged in work for a month ``in a fiscal year.'' Thus the
reference to paragraph (1) puts the job search limitation in the
context of a calculating whether an individual is engaged in work in
the fiscal year. Based on these considerations, we clarified in the
proposed rules that the six-week limitation applies to each fiscal year
and have not changed that interpretation in the final regulations.
The legislation and our rules allow the 6-week limit on job search
and job readiness assistance to extend to 12 weeks if the unemployment
rate of a State exceeds the national unemployment rate by at least 50
percent, or if the State could qualify as a needy State for the
Contingency Fund.
Finally, our rules paraphrase the statute (at section
407(c)(2)(A)(ii) of the Act) in allowing a State to count three or four
days of job search and job readiness assistance during a week as a full
week of participation on one occasion for the individual.
Comment: We received many comments in support of our interpretation
that the job search and job readiness limit applies on a fiscal-year
basis. However, one commenter thought we were too specific and should
allow States to interpret the limitation.
Response: We have not modified the regulation as the commenter
suggests. We think it is reasonable to apply one standard to all
States. Given the overwhelming support for the fiscal-year
interpretation and the statutory and policy support we provided for it
above, the final regulations maintain that policy. This policy only
limits the maximum job search and job readiness that count for
participation purposes. States still have flexibility in determining
how much an individual should actually participate in such activities,
including the flexibility to apply the job search and job readiness
limit on a lifetime basis for an individual if they so choose.
Comment: A commenter thought that the way in which we paraphrased
the statute's limit on job search and job readiness to not more than
four consecutive weeks was confusing and urged us to use the statutory
wording.
Response: We have modified this section to follow the statute's
language more closely. We have left the provision limiting the number
of consecutive weeks separate in paragraph (c) because we think it is
easier to follow this way, but have changed the wording within the
paragraph in response.
Comment: A few commenters objected to limiting job search and job
readiness to four consecutive weeks, arguing that there is no rationale
for stopping at that point or that it is simply too short a period of
time to ensure that recipients will find jobs. A couple of other
commenters objected to the six-week total limitation for essentially
the same reasons and urged us to create a longer time period.
Response: There is no limit on the amount of job search and job
readiness a State may require of an individual. However, the statute
imposes limitations on how much the activity counts toward the
participation rate. We have no authority to extend the it counts, other
than when a State meets the criteria for counting 12 weeks of job
search and job readiness assistance instead of 6.
Comment: Two commenters recommended that we separate job search
assistance from job readiness assistance and establish separate limits
on each activity.
Response: In determining whether an individual is ``engaged in
work'' for the participation rates, the statute provides for 12
different work activities. One of those activities is ``job search and
job readiness assistance''; the statute does not recognize them as
separate components. As we indicated in the discussion at Sec. 261.30,
we do not have the discretion to add to those activities or to separate
job search from job readiness. If a State has two different activities
as part of its TANF program, it would have to count an individual's
participation in either one toward the limits described in this
section.
Comment: A commenter suggested that we clarify the regulations to
allow a State to apply the extended job search and job readiness
provision to a ``needy political subdivision'' as it would if the State
were a ``needy State.''
Response: The statute is very specific in describing the two
conditions under which 12, rather than 6, weeks of job search and job
readiness can count toward the participation rates. One of those
conditions is when the ``State'' qualifies as ``needy'' under the
Contingency fund definition. That definition applies to a State as a
whole; therefore, there is no mechanism by which to apply it to a
political subdivision.
Comment: One commenter recommended that the regulations ensure that
a State has advance notice of whether it qualifies to count individuals
for the extended 12 weeks of job search and job readiness in a fiscal
year. The commenter argued that this would let the State plan which
activities to make available to its recipients in order to meet its
work participation rate.
Response: As we indicated above, there is no limit on the amount of
job search and job readiness a State may require of an individual; the
limitation is on how many hours of the activity count toward the
participation rates. We hope that a State would not, as the commenter
suggests, withhold access to job search and job readiness--or any
activity, if it were the most appropriate for a recipient--and require
participation in another activity, solely for the purpose of meeting
the participation rate. The participation rates represent a requirement
on the State, not a requirement on specific individuals, and the State
can inherently meet the participation rates even if every individual is
not in a countable activity.
Further, we have no ability to make an advance determination that a
State qualifies for a 12-week job search limit because the data are not
available in advance and the statute authorizes the 12-week limit based
on a State's current situation.
Comment: One commenter objected to the provision permitting a State
to count three or four days of job search and job readiness assistance
as a full week of participation because the data collection system in
the commenter's State does not allow it to count hours of participation
on that basis.
Response: This provision is not a requirement. Any State that does
not wish to count three or four days of this
[[Page 17783]]
activity as a full week of participation is not required to do so. The
origin of the provision is statutory; we presume the intent was simply
to make it easier for States to receive participation credit for this
activity.
Section 261.35--Are There Any Special Work Provisions for Single
Custodial Parents? (Sec. 271.35 of the NPRM)
Section 407(c)(2)(B) of the Act provides a special participation
rule for single parents or caretakers with young children. A single
parent or caretaker with a child under the age of six will be deemed to
be engaged in work for a month if he or she participates in work
activities for an average of at least 20 hours per week.
This provision has little relevance in FYs 1997 and 1998, when, for
the overall rate, the required number of hours for all individuals is
20 hours per week. But, when the required number of hours rises to 25
hours per week in FY 1999 and to 30 hours per week thereafter, this
provision allows single parents or caretakers to spend time with
younger children. It also may enable those with young children to
fulfill their work obligations while their children are in preschool
activities.
The regulations paraphrase this statutory provision.
There were no substantive comments on this section.
Section 261.36--Do Welfare Reform Waivers in a State Affect the
Calculation of a State's Participation Rates? (Sec. 271.36 of the NPRM)
This section is simply a cross-reference to subpart C of part 260,
which addresses welfare reform demonstration waivers. We thought it
would be helpful to include it so that readers would know to refer to
this important exception to the work activities and hours specified in
subpart C. We have changed the reference from what it was in the NPRM,
in light of our consolidation of the regulatory provisions relating to
waivers under part 260.
There were no comments on this section.
Subpart D--How Will We Determine Caseload Reduction Credit for Minimum
Participation Rates?
Section 261.40--Is There a Way for a State to Reduce the Work
Participation Rates? (Sec. 271.40 of the NPRM)
To ensure that States receive credit for families that have become
self-sufficient and left the welfare rolls, Congress created a caseload
reduction credit. The credit reduces the required participation rate
that a State must meet for a fiscal year. It reflects the reduction in
the State's caseload in the prior year compared to its caseload under
the title IV-A State plan in effect in FY 1995, excluding reductions
due to Federal law or to State changes in eligibility criteria.
This provision enhances the inherent interest of States to help
families become independent. As a State reduces its caseload, its risk
of incurring a penalty lessens because lower work participation rates
are easier to achieve. This provision also increases a State's chance
of qualifying for a lower basic MOE requirement, which would reduce its
risk of incurring an MOE penalty.
To establish the caseload base for FY 1995, we proposed using the
number of AFDC cases and AFDC Unemployed Parents reported on ACF-3637.
To avoid artificial reductions in the minimum participation rates, the
NPRM included cases in any separate State program used to meet the
maintenance-of-effort (MOE) requirement in determining the prior-year
caseload. Under the proposed rules, we would not have granted a
caseload reduction credit unless the State reported case-record
information for its separate State programs.
Comment: Some commenters suggested that allowing States to reduce
their work participation rates emphasizes caseload reduction over the
goal of self-sufficiency. Others strongly supported the caseload
reduction concept.
Response: By including this provision in the statute, Congress
sought to recognize State success in moving individuals off assistance.
We believe this provision comports closely with both statutory language
and intent.
Comment: One commenter asked us to include explicit language to the
effect that we would apply the caseload reduction credit to reduce the
participation standards before evaluating State performance.
Response: Different groups will evaluate State performance in a
variety of ways. For purposes of determining potential penalty
liability, we will compare a State's actual participation rates with
the rates that apply following any adjustments due to caseload
reduction credits.
Comment: A substantial number of comments addressed our proposed
method of using reported AFDC data to establish the 1995 caseload
baseline. First, several correctly pointed out that the Statistical
Report on Recipients Under Public Assistance is ACF-3637, not ACF-3697.
In addition, many commenters thought that, to conform to the statute,
the base-year calculation should include not only the AFDC population,
but also recipients of assistance under the Emergency Assistance
program (EA) funded under title IV-A and cases receiving At-Risk and
transitional child care benefits.
Other commenters suggested that two-parent families receiving TANF
assistance are not comparable to AFDC Unemployed Parent (AFDC-UP) cases
because TANF does not restrict two-parent families as AFDC-UP
eligibility rules did. They argued that, to be fair, we ought to
compare ``apples to apples'' and ``oranges to oranges.'' Most
recommended either not counting two-parent cases at all or allowing
States to adjust the base-year caseload reports to include any two-
parent cases that were not AFDC-UP cases. They also recommended
adjusting the reports to correct inaccuracies.
Response: We agree with these commenters that, to some extent, our
proposal compared ``apples to oranges.'' In developing the NPRM, we
recognized that the calculation should reflect an unduplicated count of
cases receiving ``assistance'' under either AFDC or EA. However, from
the data reported to us, we could not unduplicate the AFDC and EA case
counts or determine which, if any, of the EA benefits constituted
``assistance.'' In our consultations, many State staff told us that
they would also not now be able to unduplicate AFDC and EA cases for
fiscal years 1995 and 1996. Thus, for consistency, we limited the base-
year data to AFDC cases reported on the ACF-3637. Based on the comments
and further internal discussion, however, we believe it would be fairer
to afford States the opportunity to adjust and correct baseline data if
they can do so because adjustments would make the base-year and prior-
year caseload figures more comparable. For example, it would not be
appropriate to include certain EA cases in the base-year caseload
because, as recipients of ``one-time, short-term'' benefits, such cases
would not be receiving TANF ``assistance'' and do not show up in the
prior-year TANF caseload. However, if there were EA cases in 1995 that
received ``assistance'' and that did not receive both EA and AFDC
benefits, it would be appropriate to include those cases in the base-
year caseload.
To allow for more comparable caseload data, we have modified the
final rule. We will adjust the base-year case count for any State that
can provide accurate adjustment data or unduplicated case counts, for
example, through a computer match of each month's 1995 AFDC and EA
caseload and subsequent years. This includes reliable information on
the actual
[[Page 17784]]
number of two-parent cases in its AFDC caseload for applicable years.
However, we will only include EA cases to the extent that the
assistance provided under EA would meet the TANF definition of
assistance.
Comment: Some commenters suggested that some types of cases from FY
1995, such as State General Assistance (GA) cases, are not included in
the baseline, but should be. They argued that analogous cases are
served in separate State programs and thus will be included in the
comparison year.
Response: We appreciate the commenter's point and agree that, in
this regard, we are not comparing like cases. However, we cannot
include GA or similar cases in the base-year because the statute
specifies that we compare cases ``that received aid under the State
plan approved under part A (as in effect on September 30, 1995) during
fiscal year 1995.'' To the extent that such cases are in the prior-year
caseload, but not in the 1995 base because the State has expanded its
eligibility criteria since 1995, the net caseload decrease calculation
will adjust for this difference. Please refer to Sec. 261.42 for
additional discussion.
Section 261.41--How Will We Determine the Caseload Reduction Credit?
(Sec. 271.41 of the NPRM)
In the proposed rule, we explained how difficult it was to develop
an appropriate methodology to quantify the different types of caseload
reductions. We had considered and rejected two alternatives, i.e., the
use of Medicaid records to estimate the effect of eligibility changes
(since Medicaid eligibility is based on the July 1996 AFDC eligibility
rules) and a computer simulation model. Neither alternative could
produce reasonably accurate estimates of the effect of eligibility
changes on the caseload size. Nor did our extensive consultations
provide a straightforward methodology that could be universally
applied.
As a result, the NPRM proposed a caseload reduction methodology
based on State-submitted information and estimates. These regulations
incorporate the same basic approach. Under the final rules, we
determine the appropriate caseload reduction for each State using the
following process:
Step 1--We compare 1995 AFDC and Unemployed Parent caseload data
to State-reported TANF and SSP-MOE caseload data for the prior-year.
Step 2--The State submits a Caseload Reduction Report that
provides: a complete listing and implementation dates of State and
Federal eligibility changes since FY 1995; a numerical estimate of
the impact on the caseload since 1995 of each eligibility change; an
overall estimate of the net cases diverted from assistance as a
result of eligibility changes; an estimate of the State's caseload
reduction credit; the number and distribution of caseload closures
and application denials, by reason; a description of the methodology
for the estimate, as well as supporting data to document the
information in the report; a certification that it incorporated all
net reductions, there was an opportunity for public comment on the
content of the report, and it considered such comments; and a
summary of all public comments. (We have included the Caseload
Reduction Report form and instructions at Appendix H.)
Step 3--We compare and analyze each State's methodology,
estimates, and data to determine whether they are plausible. We may
request that a State submit additional information within 30 days to
support the estimates. In addition, we will conduct periodic on-site
visits and examine case records to validate the information we have
received.
Because eligibility changes often affect two-parent cases
differently from the overall caseload and the two-parent rates are
distinct, the NPRM required States to submit separate estimates and
information for the overall and two-parent rates to receive a caseload
reduction credit.
Comment: Many comments noted how difficult it is to measure the
impacts of policy changes and achieve comparability or equity among
States. One suggested that the o 
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