[Federal Register: April 12, 1999 (Volume 64, Number 69)]
[Rules and Regulations]
[Page 17869-17918]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12ap99-26]
[[pp. 17869-17918]] Temporary Assistance for Needy Families Program (TANF)
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work with States if any problem arises. However, if a State has not
filed a complete and accurate TANF Data Report or Financial Report by
the end of the quarter, we would give the State an opportunity to
dispute our determination that it had failed to file a complete and
accurate report and to provide a ``reasonable cause'' explanation. We
would also take into consideration the extent of the incompleteness or
unreliability of the data. See Sec. 262.5, ``Under what general
circumstances will we determine that a State has reasonable cause?''.
(c) Step three: Penalty liability.
We would provide notice to the chief executive officer of the State
if the State has not met the complete, accurate, and timely reporting
requirements without reasonable cause. We would take this action, for
example, following a pattern of serious omissions, chronic delays,
failure to respond, or disregard of requirements. See Sec. 262.6,
``What if a State does not demonstrate reasonable cause?''. The State
may accept the penalty or enter into a corrective compliance plan.
We do acknowledge, however, that it is inevitable that there will
be occasional missing data elements and nonsystemic reporting errors in
any stage of a data reporting system, regardless of how long the system
has been in operation, whether the State reports universe or sampled
data, or how sophisticated or well-operated the system is. We want to
emphasize that it is not our intent to penalize a State for these kinds
of occasional errors.
Changes Made in the Final Rule
We have made two changes in Sec. 265.7 of the final rule. First, in
paragraph (b)(4)(ii), we have deleted the words ``* * * selected in a
sample that meets the minimum sample size requirements * * *'' and
inserted the words ``* * * meets the specifications and procedures in
the TANF Sampling Manual * * *.'' This language clarifies that a State
must meet the sampling requirements as specified in the TANF Sampling
Manual as a part of the definition of a ``complete and accurate'' data
report, not just the minimum sample size requirements.
Second, we have deleted the word ``its'' from the sentences ``The
reported data accurately reflects information available to the State in
its case-records, financial records, and automated data systems'' in
paragraphs (b)(1), (c)(1), and (d)(1). In deleting this word, we intend
to emphasize and clarify that we hold the State accountable for the
correctness of the data reported to us, not just the data that may be
available at the State-level. Some commenters seemed to believe that
States should not be held accountable for data that originated from
local jurisdictions or from other agencies. Our purpose in making this
change is to convey that, regardless of the source, the State is
responsible for reporting complete and accurate data.
We have made several changes in Sec. 265.8 of the final rule.
First, we have revised the title to better comport with the content of
this section. The new title of Sec. 265.8 is ``Under what conditions
will we take action to impose a reporting penalty for failing to submit
quarterly and annual reports?''
Second, in response to commenters' concerns, we have specified in
paragraph (a) of this section the data that are subject to the penalty.
Third, in paragraph (a)(1), in response to requests for greater
clarity and specificity, we have deleted the words ``on a timely
basis'' and inserted the words of the statute ``within 45 days of the
end of the quarter.'' This responds to commenters who were confused by
what they described as ``two due dates'' for these reports.
Finally, we have made editorial changes in paragraph (a)(3) for
clarity; in paragraph (a)(5) to delete references to the annual program
and performance report (which we have eliminated from part 265) and to
reflect the changes made in the annual report under Sec. 265.9; in
paragraph (d) to clarify that we will not impose the reporting penalty
if the State files the quarterly reports or the annual report by the
end of the quarter that immediately succeeds the fiscal quarter for
which the reports were required; and in paragraph (f) to add a
conditional phrase in relation to the application of the penalty.
We did not agree with commenters who recommended that we:
(1) Delete the definition of ``complete and accurate'' in its
entirety;
(2) Delete the proposed definition of ``complete and accurate'' and
enter into discussions with States to develop standards for complete
and accurate reports;
(3) Apply penalties only for the data elements pertaining to the
work participation rates;
(4) Accept the State's best effort to meet reporting requirements
on a temporary basis and apply no penalty;
(5) Automatically assume all reporting errors are in good faith and
forgive them; and
(6) Waive the penalties when a State is in ``substantial
compliance'' even though not all data elements are reported. (It was
not clear what the commenter meant by ``substantial compliance.''
However, if the missing data elements met the limited conditions for
reasonable cause, as specified in Sec. 262.5, the State may provide a
``reasonable cause'' explanation.)
It is important to reiterate that, as we discussed in the preamble
for Secs. 260.40, 262.5, and 265.5, we have added a reasonable cause
criterion at Sec. 262.5(b)(1) that will provide some penalty relief to
States that cannot report their first two quarters of TANF data on time
due to Y2K compliance activities.
Comment: Several commenters asked for clarification of the penalty
provision. They stated it was unclear in the NPRM whether the penalty
was four percent per year or four percent per quarter.
Response: Our interpretation of section 409(a)(2) is that the
Secretary is to reduce the grant payable to a State by four percent for
each quarter that the State does not submit quarterly reports within 45
days of the end of the quarter. The Secretary is to rescind the penalty
if a State submits the data by the end of the quarter.
However, there are other provisions of law that also are applicable
and that must be applied. Under section 409(c) of the Act, the
Secretary may not impose a penalty until after the State has had an
opportunity to correct its noncompliance. If a State submits a
corrective compliance plan, carries it out, and achieves compliance,
the State is not subject to the penalty. If it submits a corrective
compliance plan and fails to carry it out or fails to achieve
compliance, the Secretary shall assess some or all of the penalty.
Therefore, the State has the opportunity to correct its reporting
problems, and the Secretary has the flexibility to reduce the potential
impact of a penalty, based on progress achieved.
If, for example, a State failed to correct its quarterly reporting
noncompliance for a particular quarter, the Secretary could take into
account the State's reporting compliance in other quarters and make an
appropriate reduction of the penalty. On the other hand, if the State
did not make good faith efforts to comply, the Secretary could impose
the full four percent penalty. We have revised paragraph (f) to reflect
this process.
Secton 265.9--What Information Must the State File Annually?
(Sec. 275.9 of the NPRM)
This section of the NPRM proposed two annual reports: one annual
report as an addendum to the fourth quarter TANF Financial Report (or
Territorial Financial Report) and one annual program and performance
report.
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Paragraphs (a) and (b) of the NPRM proposed the information that
States must submit in the annual addendum. Paragraph (a) proposed four
items of information on the TANF program. Paragraph (b) proposed eight
items of information on separate State programs by cross-reference to
Sec. 273.7. Appendix D of the NPRM also contained the proposed content
of the annual addendum.
Paragraph (c) proposed that States submit an annual program and
performance report containing information on the characteristics and
achievements of each State's TANF program, including unique features
and innovations, for the Secretary's report to Congress.
Summary of Comments on This Section
A number of States and national organizations provided a variety of
both general and specific comments and recommendations on the proposed
annual addendum and the annual program and performance report.
Generally, commenters objected to reporting these data, because, as
some believed, we could find most of the TANF program information in
the State TANF plan, and this constituted a duplicate reporting burden.
Others believed there was no statutory basis for requiring these data,
particularly the data on separate State programs. One national
organization representing State interests supported reporting the
information on separate State programs in paragraph (b) as a substitute
for reporting the disaggregated and aggregated data on separate State
programs in the SSP-MOE Data Report. In addition, one State suggested
that we should gather information on separate State programs not from
States but from other sources, as there ``is a wealth of information on
separate State programs from private and academic studies.''
We have made several changes in this section of the final rule,
primarily in response to comments. We have eliminated the proposed
annual program and performance report in paragraph (c) of the NPRM.
(See the detailed discussion of this provision following our discussion
of the annual reporting requirements as they appear in the final rule.)
We summarize the major changes related to the Annual Report and discuss
these and other recommendations in greater detail below.
(1) We no longer require the annual report to be submitted as an
addendum to the TANF Financial Report, and we dropped the term
``addendum'' to refer to the annual report.
(2) For clarity, we consolidated the annual reporting requirements
in this section. This section now includes all but one of the items of
information on the TANF program proposed in paragraph (a) of the NPRM
and the items of information on the State's MOE program(s) proposed in
paragraph (b) of the NPRM by cross-reference to Sec. 273.7.
(3) We deleted one TANF reporting requirement related to child-only
cases in paragraph (a)(1) of the NPRM.
(4) We moved the proposed requirement for information on TANF child
care disregards from the quarterly TANF Data Report to the Annual
Report. (See comments and responses below for further discussion.)
(5) As discussed elsewhere in the preamble, we added new
requirements in paragraphs (b)(5) and (b)(6) for reporting on State
strategies and procedures for serving victims of domestic violence and
on the nature of nonrecurrent, short term benefits provided under the
State's TANF program.
(6) We added an annual reporting requirement for information on
State displacement procedures in paragraph (b)(7); on State programs
and activities directed at the third and fourth purposes of the TANF
program in paragraph (b)(8); and, if available, ``the number of
individuals who participated in subsidized employment under
Sec. 261.30(b) or (c)'' in paragraph (b) (9).
(7) We revised paragraph (c) to clarify that the annual MOE
reporting requirements apply to all State programs for which MOE
expenditures are claimed, i.e., both those in TANF and in separate
State programs.
(8) We added one data element in paragraph (c)(4) to obtain
information on State expenditures claimed as MOE under these programs.
(See comments and responses below for further discussion.)
(9) We added a new paragraph (d) to specify the two circumstances
when we would not require the re-submission of data in the annual
report.
(10) We added a new paragraph (e) to provide that, if a State makes
a substantive change in certain data elements in paragraphs (b) and
(c), it must file a copy of the changed information with the next
quarterly data report or as an amendment to its State Plan. The State
must also indicate the effective date of the change.
(11) We made editorial changes for clarity.
Comment: Several commenters urged that we not require States to
submit the annual addendum as a part of the fourth quarter Financial
Report. They stated that this provision made the State Comptroller
accountable for program data that were outside his or her financial
expertise. They were also concerned that a program addendum might
interfere with a timely filing of the Financial Report, and thus
subject the State to a penalty.
As an alternative, almost all commenters on this section
recommended that the information in the annual report be included in
the TANF State Plan (if it was not already there) or be submitted as a
free-standing report. They based this recommendation on the
programmatic nature of the information, its similarity to other State
Plan information, and the fact that most of the information was
relatively stable over time. They also recommended that, because it was
relatively stable, we should require that States submit this
information on a one-time only basis and allow States to amend it only
if the information changed, rather than requiring its re-submittal
every year.
Response: We agree with these recommendations. First, we defer to
State concerns about the role and responsibility of the State's
Comptroller or Chief Financial Officer and have specified in paragraph
(a) that a State may submit the annual report either as a free-standing
report or as an addendum to the fourth quarter TANF Data Report.
Second, we have specified in paragraph (d) that if the State has
submitted the information required in paragraphs (b) and (c) in the
State Plan, it may meet the annual reporting requirements by reference
in lieu of re-submission.
Third, in paragraph (d), we further provide that if the information
has not changed since the previous annual report, the State may
reference this information in lieu of re-submission.
We would point out, however, that not all information in the annual
report is relatively stable. At a minimum, for example, States will
need to develop annual information on child care disregards required
under paragraph (b)(4), on the annual total number of families served
for which MOE expenditures are claimed in paragraph (c)(5), and on
State and MOE expenditures in each TANF-MOE and SSP-MOE program in
paragraph (c)(4). The annual report is due at the same time as the
fourth quarter TANF Data Report, i.e., November 15 of each year.
Comment: Several commenters urged that we assure that the
information in the annual report is current. They were concerned that
changes could occur in State definitions of services or program
eligibility--information that was important to them for monitoring
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purposes--that would not be known until the following annual report,
perhaps as much as eleven months later.
Response: We agree and have added new paragraph (e) to this section
to require that, if a State makes a substantive change in certain
information required as a part of its annual report, it must file a
copy of the change with the next quarterly Data Report or as an
amendment to its State Plan. The State must also indicate the effective
date of the change. This requirement is applicable only to the
information in paragraphs (b)(1), (b)(2), (b)(3), (c)(1), (c)(2),
(c)(3), (c)(6), (c)(7), and (c)(8).
Comment: As we discussed in the earlier preamble section entitled,
``Child-only Cases,'' a number of commenters objected to reporting the
information on certain families excluded from the State's definition of
families receiving assistance as proposed in Sec. 275.9(a)(1), i.e.,
the number of cases excluded from the calculations of the overall
participation rate, the two-parent work participation rate, and the
time-limit calculations. They believed we had created a time-consuming,
costly reporting burden ``to prevent something that HHS has no
indication that is actually occurring.'' They also cited a number of
legitimate reasons for child-only cases.
Response: We have deleted this provision. However, we will be
collecting case-record information on families receiving assistance
that will help inform us about the number and nature of child-only
cases, as well as new conversions to child-only cases.
Comment: Commenters strongly objected to four items of
disaggregated data in the NPRM on child care services.
Response: Our explanation in the NPRM was that this was a
requirement of the Child Care and Development Block Grant (CCDBG)
statute and that TANF reporting provided the most cost-effective way to
collect these data.
However, we reviewed the CCDBG statute and determined that this was
not a disaggregated data collection requirement, but an annual
aggregate reporting requirement. Therefore, we have removed these data
elements from the TANF Data Report and have added this reporting
requirement in paragraph (b)(4), to more closely follow the specific
provisions of the CCDBG statute. The information in paragraph (b)(4)
that States will report parallels the annual information that the State
Child Care agency will report in ACF-800, State-level Data Standards,
CCIS Technical Bulletin #1, revised January 23, 1998.
Comment: We received many comments on Sec. 273.7 of the NPRM, ``How
will we determine State expenditures?'' Because we have moved the
annual reporting requirements on State MOE program(s), proposed in
Sec. 273.7 to Sec. 265.9(c) of the final rule, we are addressing these
comments here.
Some commenters generally supported the collection of these data.
Other commenters strongly urged that we require additional data,
particularly on expenditures. Others objected to the proposed data
collection on the grounds that MOE expenditures are a financial
commitment on the part of a State, not a program commitment. They
alleged that the program information we proposed to collect went beyond
the requirements in the statute. Alternatively, they recommended that
only financial information on MOE programs be collected. Still other
commenters objected to the reporting burden of specific provisions in
Sec. 273.7.
Response: In Sec. 273.7 of the NPRM, we proposed that the State
must submit eight items of information on its separate State MOE
program(s). This information included descriptive program information,
a definition of work activities under separate State programs,
eligibility criteria, certain expenditure information, and a
certification that families served under separate State programs met
the State's criteria for ``eligible families.''
The preamble to the NPRM explained that these data, in addition to
the data in the TANF Financial Report, were necessary to our ability to
monitor whether State expenditures met the definition of ``qualified
expenditures.'' In addition, Congress recognized that State
contributions would play an important role in making welfare reform a
success. The NPRM and this final rule reflect widespread public
interest in learning about the ways in which States help move families
toward economic self-support and self-sufficiency. Given this interest,
we intend to publish information on our web site regarding State MOE
programs.
We disagree that the MOE requirements represent only a financial
commitment. We continue to believe that minimal program and expenditure
information on State MOE programs is necessary for assessment and
monitoring purposes.
Comment: Several commenters requested that we clarify whether the
annual reporting requirements on MOE programs apply to only those under
the TANF program, to separate State programs, or to both.
Response: We have revised the language in paragraph (c) to clarify
that the annual reporting requirements in paragraph (c) apply to any
MOE program for which the State claims MOE expenditures.
We also want to clarify that the State must report the information
in paragraph (c) only to the extent that the information is applicable
to expenditures claimed as MOE. For example, the State need not report
on the total number of persons served under an MOE program; only on the
number of persons served for whom MOE expenditures are claimed. We
believe we have made this clear throughout paragraph (c).
Comment: Two commenters provided detailed analysis and
recommendations for additional MOE expenditure data. They believed
that, unless the Department obtained these data, we would not be able
to determine whether States met MOE requirements, including whether
State expenditures claimed for MOE purposes met the ``new spending''
requirement in section 409(a)(7)(B)(II) of the Act. (These provisions
limit countable expenditures for certain State or local programs to
spending above FY 1995 levels.)
They recommended that States be required to report:
(1) Expenditure data on MOE programs under both the TANF program
and separate State programs;
(2) Total State expenditures and total expenditures claimed as MOE
under each program for the current year;
(3) Total 1995 expenditures for all programs in which State
spending is claimed toward the MOE requirement;
(4) 1995 State spending on eligible families; and
(5) 1995 State expenditures used to draw down Federal AFDC-related
matching funds.
Response: We reviewed these recommendations, and we have accepted
two of the recommendations as follows:
(1) As noted above, we have revised paragraph (c) to clarify that
the annual report requirements apply to both MOE programs under TANF
and separate State programs.
(2) We have added a new paragraph (c)(4) to require, for each MOE
program, both the total annual State expenditures and total annual
State expenditures claimed as MOE.
We agree, in part, with the third recommendation. The NPRM proposed
to collect FY 1995 expenditures for each program/activity not
authorized and allowable (under title IV-A) as of August 21, 1996. We
have retained this provision in paragraph (c)(8). We intend that this
provision collect expenditure data on all MOE programs not
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previously authorized and allowable under section 403 of prior law and
have added that language to paragraph (c)(8).
We disagree, however, with the recommendation to collect FY 1995
expenditure data on all FY 1995 programs. FY 1995 data on programs
funded under section 403 are only needed to the extent that the
expenditures in the program are claimed for MOE and the ``new
spending'' requirements apply.
We also did not accept recommendations four and five. For a full
discussion of the issues raised by these recommendations, please refer
to the preamble discussion related to Sec. 263.5.
While not accepting all of these recommendations, we have
significantly strengthened the reporting on MOE programs under this
final rule. The MOE requirements in TANF are central to the success of
welfare reform. Under the final rule, we believe that we will be in a
good position to ensure that States maintain the investments in needy
families that Congress intended.
Comment: One commenter recommended that we allow States to report
either the average monthly number or the total number of persons served
under State MOE program(s), given the variation in how States collect
such information.
Response: We agree and have amended paragraph (c)(5) to reflect
this option. The commenter was also concerned that the numbers reported
would not be an unduplicated count of persons served. We believe that a
requirement for an unduplicated count of persons served for purposes of
this report would be unduly burdensome on States and have chosen not to
require it.
Comment: Several commenters questioned the need for the
certification proposed in Sec. 273.7(b)(8) on the grounds that it was
either unnecessary or inappropriate. The NPRM required a certification
that the families served under MOE programs met the State's criteria
for eligible families.
Response: We disagree that a certification is unnecessary. Under
many Federal programs, it is standard procedure to require such a
certification, particularly for critical program information needed for
accountability and for expenditure data.
We agree, however, that the certification as proposed in paragraph
(b)(8) was not intended to apply to all families served under MOE
programs but only to those families for which the State is claiming MOE
expenditures. We have made this change in paragraph (c)(9) of this
section.
We have also accepted the following suggestions for editorial
clarity recommended by commenters:
<bullet> The description of work activities in paragraph (c)(3)
must be reported only if applicable to a State's MOE programs. (Some
commenters appeared to believe that this reporting requirement meant
that the State must offer work activities as a part of their MOE
programs.)
Please note that paragraph (c)(3) is the only requirement in
Sec. 265.9(c) that applies only to separate State MOE programs. That is
because we ask for a description of the work activities under the MOE
program(s) in TANF in paragraph (b)(1).
<bullet> We deleted paragraph (a) as it appeared in Sec. 273.7 of
the NPRM. Paragraph (a) duplicated the requirement that States submit a
quarterly TANF Financial Report in Sec. 265.3(c).
Specific Comments on the Proposed Annual Program and Performance Report
Under section 411(b) of the Act, the Secretary is required to
submit an annual report to Congress six months after the end of fiscal
year 1997 and every year thereafter. The report is to describe whether
the States are meeting the work participation rates; the objectives of
increasing employment and earnings of needy families as increasing
child support collections and decreasing out-of-wedlock pregnancies and
child poverty; the demographic and financial characteristics of
families applying for assistance, families receiving assistance, and
families that became ineligible to receive assistance; the
characteristics of each State program funded under this part; and the
trends in employment and earnings of needy families with minor children
living at home.
In the NPRM, we proposed that States supplement the information
that we would obtain through the TANF Data Reports and TANF Financial
Reports by providing information in an annual program and performance
report. We would include that information in the Department's annual
report to Congress on the TANF program.
We proposed that States would describe the characteristics and
achievements of each State program; the design and operation of the
program; the services, benefits, and assistance provided; and the
extent to which the State has met its goals and objectives for the
program. We also proposed that States could include additional
materials on unique features of their programs, accomplishments and
innovations they wished to highlight, or other information appropriate
to the report to Congress.
Comment: Without exception, all who commented on this section
strongly objected to this requirement. They alleged that we lacked
statutory authority for the proposed report and inappropriately shifted
the burden of the Secretary's report to States. States also believed
that they were also providing much of this information in State plans
or that we could obtain it by more efficient and less costly means,
e.g., we could conduct national sampling studies in cooperation with
the States.
Response: In preparing the NPRM, we were cognizant of the data that
we would obtain from the TANF Data and Financial Reports, as well as
other sources. We found that State plans varied in the amount of
information they contained, and we did not believe we could rely on
them as a source of information for the annual report to Congress. We
believed that other State and national research and evaluation studies
might provide some, but not all, of the information specified in the
statute.
We have accepted the recommendation to delete this provision. We
will also continue to consider and evaluate multiple sources of data in
preparing the report to Congress; for example, we expect to compile
information on program characteristics from State plans. If we identify
substantive weaknesses in the data we have available through this
approach, we will assess our options. We appreciate the offer from
States to work together to collect this information in the most
efficient way possible.
Additional Reporting Requirements
The discussion above relates to the information now included in the
annual report based on the provisions of the NPRM. Following our review
of comments and consideration of policy issues that arose in the
development of the final rule, we have added five new reporting
requirements in Sec. 265.9. While we dropped our proposal for a
separate annual program and performance report, we still need
information on key aspects of State programs in order to prepare the
annual report to Congress. To the maximum extent possible, we will draw
upon data available through the State plans and other reports submitted
by States.
(1) Family Violence Option
If a State has adopted the Family Violence Option and wants Federal
recognition of its good cause domestic
[[Page 17873]]
violence waivers under subpart B of part 260 of this chapter, the State
must provide: (1) A description of the strategies and procedures in
place to ensure that victims of domestic violence receive appropriate
alternative services, and (2) an aggregate figure for the total number
of good cause waivers granted.
This new reporting requirement in paragraph (b)(5) of this section
will tell us and other interested parties about the activities States
are carrying out to ensure that individuals granted waivers receive
appropriate attention from TANF staff, access to services, and
appropriate consideration of their safety issues. In addition, at
Secs. 260.54, 260.58, and 260.59, we have specified that a State may
receive special penalty consideration under these regulatory provisions
if it submits this information.
(2) Nature of Nonrecurrent, Short-Term Benefits
In paragraph (b)(6) of this section, we are asking States to
provide a description of the nonrecurrent, short-term benefits they are
providing, including:
<bullet> The eligibility criteria for these benefits (together with
any restrictions on the amount, duration, or frequency of payments);
<bullet> Any policies they have instituted that limit such payments
to families eligible for assistance or that have the effect of delaying
or suspending eligibility for assistance; and
<bullet> Any procedures or activities developed under the TANF
program to ensure that individuals diverted from TANF assistance
receive appropriate information about, referrals to, and access to
Medicaid, food stamps, and other programs that provide benefits that
could help them successfully transition to work.
To the extent that a State provides the required information,
either in the State plan or in the annual report, it would not have to
duplicate this information.
As discussed earlier in the preamble, we strongly believe that
effective procedures to ensure that diverted individuals access
Medicaid, food stamps, or other programs are critical to the success of
TANF programs in achieving lasting employment for the families they
serve. In addition, such procedures might help States avoid compliance
and legal problems in other programs. Given the importance of this
issue, the additional information on State practices that we are
requiring in the annual report will be extremely helpful in assuring
the role TANF agencies are playing with individuals receiving diversion
benefits.
For more detailed information, see our discussion on
``Nonrecurrent, short-term benefits'' at Sec. 260.31.
(3) Displacement Procedures
We have added a new reporting requirement in paragraph (b)(7) of
this section. Under this provision, each State must include a
description of the grievance procedures that are in place in the State
to resolve complaints that it receives about displacement.
Each State must create displacement procedures under section 407(f)
of the Act. This provision and the related provision at section
403(a)(5)(J) of the Act (which applies to the WtW program) reflects
longstanding concern among unions, labor groups, and others about the
possibility that welfare recipients being placed at work sites could
displace other workers from their jobs. States are also concerned about
displacement because of its potential negative effect on their labor
force and the long-term success of their TANF programs. Given these
multiple concerns, we believe it is important that we monitor State
activity in this area. For further discussion, see the preamble
discussion on ``Recipient and Workplace Protections.''
(4) Activities Directed at Other Purposes of the Act
It is clear from the statement of findings in section 101 of
PRWORA, the stated TANF goals at Sec. 260.20, the preamble discussions
on allowable uses of Federal and MOE funds, and activities underway
outside the scope of these rules that the TANF legislation recognizes
out-of-wedlock pregnancy prevention and family formation as critical
components of welfare reform; and, subject to some general
restrictions, State may spend Federal TANF and State MOE dollars on
such efforts.
Because of the significance of this issue, in paragraph (b)(8), we
are asking States to include a description of the activities that they
provide under their TANF program to address both these purposes. (We
are also asking States annually to provide a break-out of their
expenditures on these activities in the TANF Financial Report.)
(5) Number of Individuals in Subsidized Employment
Given our more narrow definition of assistance, we will not be
collecting disaggregated information from States on the number of
individuals who have participated in subsidized employment under
Sec. 261.30(b) or (c). In paragraph (b)(9), we are asking States to
estimate this information as an annual aggregate number. We believe
this information is highly relevant to understanding the efforts State
are making to move individuals, particularly hard-to-place individuals,
into employment and accomplishing the second goal of the TANF program.
Section 265.10--When Are Annual Reports Due? (Sec. 275.10 of the NPRM)
This section of the NPRM proposed due dates for the annual addendum
and the annual program and performance report. We received no
substantive comments on this section.
In light of the decision to delete the annual program and
performance report in Sec. 265,9, we have deleted paragraph (b) of this
section as it appeared in the NPRM. We have revised the language of
this section to specify that the annual report is due at the same time
as the fourth quarter TANF Data Report, i e., November 15 of each year.
XI. Regulatory Impact Analyses
A. Executive Order 12866
Executive Order 12866 requires that regulations be drafted to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. This
rulemaking implements statutory authority based on broad consultation
and coordination. It reflects our response to comments received both on
the burden estimates for the proposed data collection and on the NPRM
that we issued on November 20, 1997.
The Executive Order encourages agencies, as appropriate, to provide
the public with meaningful participation in the regulatory process. As
described elsewhere in the preamble, ACF consulted with State and local
officials and their representative organizations as well as a broad
range of advocacy groups, researchers and others to obtain their views
prior to the publication of the NPRM.
We also considered comments received in response to the NPRM and
had a small number of meetings with major national organizations that
asked for the opportunity to present their comments in person. We
respond to the comments that we received in the Supplementary
Information section of the preamble and in the discussions of
individual regulatory provisions.
To a considerable degree, these rules reflect the comments that we
received in response to the NPRM. They also reflect the intent of
PRWORA to achieve a balance between granting States the flexibility
they need to develop and operate effective and responsive
[[Page 17874]]
programs and ensuring that they meet the objectives of the statute.
Under the new law, State flexibility is achieved by converting the
welfare program into a block grant and limiting Federal rules; ensuring
that program goals are accomplished is achieved through a number of
penalty and bonus provisions and detailed data collection. The limited
scope of this regulation is also consistent with Administration policy,
as articulated in Executive Order 12866 and its Regulatory Reinvention
initiatives. At the same time, we have created a sufficient regulatory
structure to enable enforcement of key statutory requirements.
We support State flexibility in numerous ways--such as by
exercising regulatory restraint; giving States the ability to define
key program terms; and clarifying that States have the ability to
continue their welfare reform demonstrations, serve victims of domestic
violence and noncustodial parents, use State funds to provide
assistance to certain nonqualified immigrants, provide supports to
working families, and operate separate State programs that are not
subject to all the TANF requirements.
We support the achievement of program goals by ensuring that we
capture key information on what is happening under the State TANF
programs and maintaining the integrity of the work and other penalty
provisions. We take care, in provisions such as the MOE penalty
provisions, sanction penalty provisions, and caseload reduction factor
approval process, to protect against negative impacts on needy
families.
One of our key goals in developing the penalty rules was to ensure
State performance in all key areas provided under statute, including
work participation, time limits, State maintenance-of-effort, proper
use of Federal TANF funds, and data reporting. The law specified that
we should enforce State actions in these areas and also specified the
penalty for each failure. Through the ``reasonable cause'' and
``corrective compliance'' provisions in the rules we give some
consideration to special circumstances within a State to help ensure
that neither the State nor needy families within the State will be
unfairly penalized for circumstances beyond their control.
In the work and penalty areas, this rulemaking provides information
to the States that will help them understand our specific expectations
and take the steps necessary to avoid penalties. These rules may
ultimately affect the number and size of penalties that are imposed on
States, but the basic expectations on States are statutory.
The financial impacts of these rules should be minimal because of
the fixed level of funding provided through the block grant. A State's
Federal grant could be affected by the penalty decisions made under the
law and these rules, and State expenditures on needy families could be
affected indirectly by the rules on caseload reduction. (That is, as
the result of caseload reduction, a State might meet the required
participation rates and expend State funds at the 75-percent MOE level
rather than the 80-percent level.) Otherwise, we do not believe that
the rulemaking will affect the overall level of funding or
expenditures. However, it could have minor impacts on the nature and
distribution of such expenditures.
In the area of data collection, the statutory requirements are
specific--especially with respect to case-record or disaggregated data.
These rules also include data reporting with respect to program
expenditures and characteristics and, under certain circumstances,
disaggregated and aggregated case-record information on SSP cases.
These data collection requirements help ensure that States continue to
contribute meaningful amounts of State dollars to programs that assist
needy families, monies go for the intended purposes, and the financial
integrity of the program is maintained.
We have retained SSP-MOE data collection in order to assess the
overall impact of the program and enable us to determine whether the
creation of separate State programs could undermine the objectives of
the Act. However, consistent with some of the programmatic changes we
have made, we have reduced the amount of case-record data we include in
this SSP-MOE data collection and (in changing the definition of
assistance) have narrowed the types of separate State programs for
which States must provide case-record reporting.
The impacts of these rules on needy individuals and families will
depend on the choices that a State makes in implementing the new law.
Our data collection should enable tracking of these effects over time
and across States. Overall, our assessment of these rules indicates
that they represent the least burdensome approach consistent with the
regulatory objectives.
Based on the comments that we received both on the data collection
burden and the NPRM, we reassessed some of our proposed policies. We
have identified an approach to certain issues that is less burdensome
than we initially proposed, but that is still consistent with our
regulatory objectives.
This is a significant regulatory action under section (3)(f)(1) of
Executive Order 12866 and, therefore, these final rules have been
reviewed by the Office of Management and Budget in accordance with that
Order. This rule also has been determined to be a major rule under the
Small Business Regulatory Enforcement Fairness Act of 1996.
We have estimated the annualized Paperwork Reduction Act costs to
be approximately $30 million, as indicated in section D below, and the
penalty costs to be approximately $50 million, beginning in FY 2001, as
reflected in the Administration's budget.
These final rules implement the new welfare reform block grant
program, the Temporary Assistance for Needy Families program. The
legislation and these rules reflect new Federal, State, and Tribal
relationships in the administration of welfare programs; a new focus on
moving recipients into work; and a new emphasis on program information,
measurement, and performance. These rules also strengthen State efforts
to develop creative and diverse responses to help recipients become
self-sufficient; provide recipients with child care, transportation,
and other supportive services they need as they move from welfare to
work; and address the many factors that contribute to poverty and
dependency.
We believe these objectives are reflected in these final rules and
that the benefits to families and children, as well as to States, far
outweigh the costs, as reflected in the preamble sections that address
the substantive provisions of this rule.
In assessing the potential costs and benefits--both quantitative
and qualitative--of these final regulations, the Secretary has
determined that the benefits of these regulations justify the costs.
The Secretary has also determined that this regulatory action does not
unduly interfere with State, local, and Tribal governments in the
exercise of their governmental functions.
B. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the
Federal government to anticipate and reduce the impact of rules and
paperwork requirements on small businesses and other small entities.
Small entities are defined in the Act to include small businesses,
small nonprofit organizations, and small governmental entities. This
rule will affect primarily the 50 States, the District of Columbia,
[[Page 17875]]
and certain Territories. Therefore, the Secretary certifies that this
rule will not have a significant impact on small entities.
C. Assessment of the Impact on Family Well-Being
We certify that we have made an assessment of this rule's impact on
the well-being of families, as required under section 654 of The
Treasury and General Government Appropriations Act of 1999. The purpose
of the TANF program is to strengthen the economic and social stability
of families, in part by supporting the formation and maintenance of
two-parent families and reducing out-of-wedlock child-bearing. As
required by statute, this rule gives flexibility to States to design
programs that can best serve this purpose.
D. Paperwork Reduction Act
This rule contains information collection requirements that have
been submitted to the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1995 (PRA). Under this Act, no persons are
required to respond to a collection of information unless it displays a
valid OMB control number. If you have any comments on these information
collection requirements, please submit them to OMB within 30 days. The
address is: Office of Management and Budget, Paperwork Reduction
Project, 725 17th Street N.W., Washington, D.C. 20503, Attn: ACF/DHHS
Desk Officer. The public will have an opportunity to provide comments
before OMB makes a final decision.
This final rule incorporates our response to comments regarding the
reporting burden that we received in response to the NPRM and the
Paperwork Notice we published November 27, 1997. It requires States to
submit three quarterly reports and one annual report. In addition,
States must provide documentation in support of or related to caseload
reduction credit, the reasonable cause/corrective compliance process,
the Governor's certification on State waiver programs, and the domestic
violence good cause waiver redetermination process.
We are publishing in this issue of the Federal Register the
quarterly data reports and instructions (including the specific data
elements); the quarterly financial report and instructions; and two
reporting forms: the Annual Report on State Maintenance-of-Effort
Programs and instructions (a part of the annual report information
specified in Sec. 265.9(c)) and the Caseload Reduction Report and
instructions. We discussed the burden of the content of the latter two
reporting forms in the NPRM, but we are publishing the report forms
themselves to facilitate compliance.
Quarterly Data and Financial Reports
The three quarterly reports required are the TANF Data Report
(Appendices A through C), the SSP-MOE Data Report (Appendices E through
G), and the TANF Financial Report (Appendix D) (or, as applicable, the
Territorial Financial Report). The TANF Data Report and SSP-MOE Data
Report consist of three sections each. Two of the three sections of
each Data Report contain disaggregated data elements, and one section
of each Data Report contains aggregated data elements.
We need this information collection to meet the requirements of
section 411(a) and to implement other sections of the Act, including
sections 407 (work participation requirements), 409 (penalties), and
413 (annual rankings).
In the final rule, we have significantly reduced the burden on
States of collecting case-record information on current recipients and
closed cases. As discussed in the preamble section regarding part 265,
we accepted many of the commenters' recommendations to reduce or
eliminate burden. For example, we reduced the number of data elements
in each Data Report; clarified that States are not required to track
closed cases but report only data from the month of closure; and
reduced the type of SSP-MOE programs subject to case-record reporting
under the revised definition of assistance. At the same time, we also
modified, revised, or expanded a very few data elements for clarity or
specificity, e.g., adding break-out items on case closure. In deciding
which changes to make, we focused on the statutory requirements and the
importance of the data in informing us about what was happening to
needy families under TANF.
States are required to report MOE expenditure data on the TANF
Financial Report; case-record reporting in the SSP-MOE Data Report is
optional. However, if a State claims MOE expenditures under a separate
State program and wishes to receive a high performance bonus or qualify
for caseload reduction credit, it must file disaggregated and
aggregated information on a separate State program(s) that is similar
to the data reported for the TANF program.
In response to comments and as a consequence of our more narrow
definition of ``assistance,'' we have reduced the number of data
elements in the SSP-MOE Data Report and the number of TANF and separate
State programs that are covered by the SSP-MOE Data Report. (See
Appendices E through G for the data elements.)
The TANF Financial Report consists of one form. (See Appendix D.)
We need this report to meet the requirements of sections 405(c)(2),
411(a)(2), 411(a)(3), and 411(a)(5) and to carry out our other
financial management and oversight responsibilities. These
responsibilities include providing information that could be used in
determining whether States are subject to penalties under section
409(a)(1), 409(a)(3), 409(a)(7), 409(a)(9), or 409(a)(14); tracking
expenditures under our definition of ``assistance''; learning the
extent to which recipients of benefits and services are covered by
program requirements, and helping to validate the disaggregated data we
receive on TANF and SSP cases.
Annual Report
Based on comments, we eliminated the proposed Annual Program and
Performance Report (Sec. 275.9(c) of the NPRM) and the Addendum to the
Fourth Quarter Financial Report (Sec. 275.9(a) and (b) of the NPRM).
However, the content of the proposed Addendum is now contained in and
required to be reported as a part of the Annual Report in Sec. 265.9.
In addition, Sec. 265.9 requires States to report more detailed
information on the State's MOE program(s), strategies to implement the
Family Violence Option, State diversion programs, and other program
characteristics. (We have developed a form for reporting the
information on State MOE programs; see Appendix I.)
Other Information Collection Requirements
There are four other circumstances in this rulemaking that will
create a reporting burden. The first circumstance concerns instances in
which a State wants to qualify for caseload reduction credit. The
second addresses a situation in which a State is subject to a penalty
under section 409 and wishes to avoid the penalty or receive a reduced
penalty. The third is the Governor's certification with respect to
waivers, and the fourth is the domestic violence good cause waiver
redetermination process.
<bullet> If a State elects to request a pro-rata reduction in the
minimum participation rates, based on caseload reduction, Sec. 261.41
requires that it must file certain data. We have developed a form for
States to report these data at Appendix H.
<bullet> If a State wishes to dispute a penalty determination or
wants to be considered for a waiver of a penalty based on ``reasonable
cause'' or
[[Page 17876]]
corrective compliance, Sec. 262.4 requires that the State provide us
with certain information. A State must use a similar process if it is
seeking a reduced penalty for failure to meet the work participation
rates, as discussed at Sec. 261.51.
<bullet> If a State is claiming a waiver inconsistency for work
requirements or time limits, the Governor must provide a certification
(and documentation) to the Secretary on the nature and scope of the
waiver and the inconsistency. See Sec. 260.75.
<bullet> If a State wants recognition of good cause domestic
violence waivers it issues under the Family Violence Option (subpart B
of Sec. 260), it must conduct a redetermination of the need for any
waivers extending beyond six months. (We estimate that 45 States will
conduct between 500 and 600 redeterminations annually. Only a portion
of cases receiving waivers will need redeterminations. We estimate that
each determination and redetermination will take approximately one
hour.)
Changes in the Estimate of Burden
In the NPRM, the respondents for the TANF Financial Report were
listed as the 50 States of the United States and the District of
Columbia. (We proposed that the Territories would report expenditure
data on the Territorial Financial Report.) The respondents for the
remaining reporting requirements, i.e., the TANF Data Report, the SSP-
MOE Data Report, the annual program and performance report, the
Caseload Reduction Credit documentation process, and the Reasonable
Cause/Corrective Compliance documentation process, were listed as the
50 States of the United States, the District of Columbia, Guam, Puerto
Rico, and the United States Virgin Islands. (American Samoa is eligible
for the TANF program and could use funds that it receives under section
1108 to operate the TANF program. However, it did not elect to operate
a TANF program, and we did not include this jurisdiction in our
calculation of State burden.)
In the final rule, we have generally assumed the same number of
respondents for most of the quarterly Data Reports, the quarterly
Financial Report, and the new Annual Report. However, because we
reduced the scope of the SSP-MOE reporting, we also reduced the number
of respondents to the SSP-MOE Data Report from 54 to 17. This is the
current number of States that we believe will have programs that meet
the definition of ``assistance.''
In addition, we have estimated 32 States as possible respondents to
the Governor's certification on waivers because there are 32 States
that currently operate programs under approved waivers.
We have estimated that 45 States will be respondents under the
domestic violence good cause waiver redetermination process because the
majority of States have implemented the Family Violence Option, and
many others are taking the legislative or administrative steps
necessary to implement this provision.
While the statute requires Tribal organizations with TANF programs
to submit some of the same data as States, we have not calculated the
burden for the Tribal organizations in this rule. The reporting burden
of Tribal organizations is addressed in the Tribal Work and TANF NPRM
published July 22, 1998 (63 FR 39366).
Burden Estimates
In estimating the reporting burden in the NPRM, we pointed out that
some of the reporting burden that used to exist in the AFDC program had
disappeared. We also pointed out that most of the data elements
required under the TANF Data Report were similar to previous data
elements required in the AFDC or JOBS program and built upon the data
elements in the Emergency TANF Data Report. However, States alleged
that our assumptions in this area were not totally valid.
In addition, we assumed that most States would collect the data by
means of a review sample. In the NPRM, we used as a starting point the
OMB-inventoried QC burden hours as a standard for estimating the TANF
burden. We also assumed that when a State provided us the information
for their entire caseload, there would be a one-time burden and cost of
developing or modifying its automated system.
These assumptions were based on a belief that the proposed
information was currently being collected and could be extracted from
State automated data systems. State commenters challenged both of these
assumptions and the burden estimates we derived from them. They
asserted that a significant amount of the proposed information was not
available and would require manual collection from TANF recipients. (We
note that 30 States are currently reporting data on their entire
caseload in the quarterly Emergency TANF Data Report.)
We considered these comments and recalculated what the burden
estimate would have been assuming that we had the same number of data
elements and respondents as originally proposed in the NPRM. Based on
these assumptions, the overall burden estimate would have increased
from 241,128 hours (the total burden estimate in the NPRM) to 1,153,944
hours. However, this increase has been offset significantly by the
changes we have made in the final rule, e.g., the decrease in the total
number of data elements and the substantial reduction in the number of
SSP-MOE respondents. These reductions were in large part the result of
our response to comments on the NPRM. The estimated total annual burden
hours have been reduced to 583,912.
The annual burden estimates include any time involved pulling
records from files, abstracting information, returning records to
files, assembling any other material necessary to provide the requested
information, and transmitting the information.
Table A contains our burden estimates for the final rule and
revised estimates for the NPRM. The columns entitled ``Final''
incorporate the estimates of the burden associated with the
requirements in the final rule. These estimates reflect both the
revised assumptions and the overall reductions in burden. The columns
entitled ``NPRM As Revised'' provide revised estimates of the burden
associated with the requirements in the NPRM, i.e., assuming we
retained all the data elements proposed in the NPRM. All numbers have
been rounded where indicated.
A. Recalculated Burden Estimates for the Final Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of respondents Average burden hours per Total burden hours
-------------------------- response -------------------------
Instrument or requirement Yearly --------------------------
NPRM as Final submittals NPRM as NPRM as Final
revised \1\ revised \1\ Final revised \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
TANF Data Report--Sec. 265.3(b)............................. \2\ 54 \2\ 54 4 3,185 2,183 687,960 471,528
SSP--MOE Data Report--Sec. 265.3(d)......................... \3\ 54 \3\ 17 4 2,041 664 440,856 45,152
TANF Financial Report--Sec. 265.3(c)........................ \4\ 51 \4\ 51 4 12 30 2,448 6,120
[[Page 17877]]
Annual Report--Sec. 265.9(b)-(c)6........................... \5\ NA \2\ 54 1 \5\ NA 128 \5\ NA 6,912
Caseload Reduction Documentation Process--Sec. 261.41 & Sec. \2\ 54 \2\ 54 1 100 160 5,400 8,640
261.44.....................................................
Reasonable Cause/Corrective Compliance Documentation Process-- \1\ 54 \1\ 54 2 160 160 17,280 17,280
Secs. 262.4, 262.6, & 262.7; Sec. 261.51..................
Governor's Waiver Certification Process--Sec. 260.75........ \5\ NA 32 1 \5\ NA 40 \5\ NA 1,280
Domestic Violence Good Cause Waiver Redetermination Process-- \5\ NA 45 600 \5\ NA 1 \5\ NA 27,000
Sec. 260.55................................................
------------------------------------------------------------------------------------------
Estimated Total Annual Burden Hours: \7\............... ........... ........... ........... ........... ........... 1,153,944 583,912
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This column reflects what the burden estimate would have been assuming we retained all data elements proposed in the NPRM.
\2\ The 50 States, the District of Columbia, Guam, Puerto Rico, and the United States Virgin Islands will be respondents.
\3\ We estimate that 17 States will be respondents based on the number of States that currently have SSP-MOE programs.
\4\ The 50 States and the District of Columbia will be respondents.
\5\ Not applicable. These reporting requirements did not appear in the NPRM.
\6\ In the NPRM, the annual report referred to the Annual Program and Performance Report, now eliminated.
\7\ The total burden estimate for the NPRM (using the original assumptions) was 241,128.
Therefore, while the burden estimate would have increased by
approximately 140 percent (based on the provisions in the NPRM), the
actual burden decreased by approximately 50 percent.
We did not consider the burden for the Territorial Financial Report
because it has fewer than ten respondents and, therefore, is not
covered by the PRA. Also, we no longer require an annual addendum to
the fourth quarter TANF Financial Report (the burden for the addendum
was estimated in the NPRM as a part of the financial report). We now
include the content and burden of the Addendum as a part of the Annual
Report requirement.
Finally, in the NPRM, we proposed a caseload reduction process
requiring 40 annual burden hours per respondent. In response to
comments on the caseload reduction process and the revisions we have
made, we increased the estimated annual burden to 160 hours per
respondent and developed a form for reporting this information. (See
Appendix H.)
Cost Estimates
Many commenters expressed the opinion that we had greatly
underestimated the costs associated with significant systems overhaul
and redesign that would require substantial investment in staff and
resources, as well as the costly ongoing operations and reporting
efforts.
We have reconsidered the costs in light of these comments and have
revised our estimates accordingly. Specifically, we have increased the
estimate of the annualized cost of the hour burden from $3,520,469 to
$17,050,230. This figure is based on an estimated average hourly wage
of $29.20 (including fringe benefits, overhead, and general and
administrative costs) for the State staff performing the work
multiplied by 583,912 burden hours. (If we had not reduced the actual
burden by approximately 50 percent, the estimated cost of the hour
burden would have been $33,695,164 ($29.20 times 1,153,944 burden
hours).)
We had originally estimated average annualized capital/start-up and
operational and maintenance costs (CSO&M) to be $2,700,000 across all
States, or $50,000 per respondent. Many States expressed the opinion
that the data collection will require costly systems overhaul and
redesign and that the overall burden should be anywhere from 5 to 20
times our original estimate.
As indicated above, we have made a substantial upward adjustment in
the annualized cost of the hour burden. In addition, we have calculated
a substantial increase of 500 percent in the annualized CSO&M based on
the assertions of the States. Therefore, we have estimated annualized
CSO&M cost to be $13,500,000. When added to the $17,050,230 estimate of
the annualized cost of the hour burden, it yields a total estimated
annualized cost of $30,550,230, or an average of $565,745 per
respondent. Without the actual reduction in burden, the cost would have
been $47,195,164, or an average of $873,985 per respondent.
We considered comments by the public on these collections of
information in:
<bullet> Evaluating whether the collections are necessary for the
proper performance of our functions, including whether the information
will have practical utility;
<bullet> Evaluating the accuracy of our estimate of the burden of
the collections of information, including the validity of the
methodology and assumptions used, and the frequency of collection;
<bullet> Enhancing the quality, usefulness, and clarity of the
information to be collected; and
<bullet> Minimizing the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technology, e.g., the
electronic submission of responses.
E. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded
Mandates Act) requires that a covered agency prepare a budgetary impact
statement before promulgating a rule that includes any Federal mandate
that may result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year.
If a covered agency must prepare a budgetary impact statement,
section 205 further requires that it select the most cost-effective and
least burdensome alternative that achieves the objectives of the rule
and is consistent with the statutory requirements. In addition, section
203 requires a plan for informing and advising any small government
that may be significantly or uniquely impacted by the rule.
We have determined that the rules will not result in the
expenditure by State, local, and Tribal governments, in
[[Page 17878]]
the aggregate, or by the private sector, of more than $100 million in
any one year. Accordingly, we have not prepared a budgetary impact
statement, specifically addressed the regulatory alternatives
considered, or prepared a plan for informing and advising any
significantly or uniquely impacted small government.
List of Subjects in 45 CFR Parts 260 Through 265
Administrative practice and procedure, Day care, Employment, Grant
programs--social programs, Loan programs--social programs, Manpower
training programs, Penalties, Public assistance programs, Reporting and
recordkeeping requirements, Vocational education.
(Catalogue of Federal Domestic Assistance Programs: 93.558 TANF
programs--State Family Assistance Grants, Assistance grants to
Territories, Matching grants to Territories, Supplemental Grants for
Population Increases and Contingency Fund; 93.559--Loan Fund;
93.595--Welfare Reform Research, Evaluations and National Studies)
Dated: March 26, 1999.
Olivia A. Golden,
Assistant Secretary for Children and Families.
Approved: March 29, 1999.
Donna E. Shalala,
Secretary, Department of Health and Human Services.
For the reasons set forth in the preamble, we are amending 45 CFR
chapter II by adding parts 260 through 265 to read as follows:
PART 260--GENERAL TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF)
PROVISIONS
Subpart A--What Provisions Generally Apply to the TANF Program?
Sec.
260.10 What does this part cover?
260.20 What is the purpose of the TANF program?
260.30 What definitions apply under the TANF regulations?
260.31 What does the term ``assistance'' mean?
260.32 What does the term ``WtW cash assistance'' mean?
260.33 When are expenditures on State or local tax credits
allowable expenditures for TANF-related purposes?
260.35 What other Federal laws apply to TANF?
260.40 When are these provisions in effect?
Subpart B--What Special Provisions Apply to Victims of Domestic
Violence?
260.50 What is the purpose of this subpart?
260.51 What definitions apply to this subpart?
260.52 What are the basic provisions of the Family Violence Option
(FVO)?
260.54 Do States have flexibility to grant good cause domestic
violence waivers?
260.55 What are the additional requirements for Federal recognition
of good cause domestic violence waivers?
260.58 What penalty relief is available to a State whose failure to
meet the work participation rates is attributable to providing
federally recognized good cause domestic violence waivers?
260.59 What penalty relief is available to a State that failed to
comply with the five-year limit on Federal assistance because it
provided federally recognized good cause domestic violence waivers?
Subpart C--What Special Provisions Apply to States That Were Operating
Programs Under Approved Waivers?
260.70 What is the purpose of this subpart?
260.71 What definitions apply to this subpart?
260.72 What basic requirements must State demonstration components
meet for the purpose of determining if inconsistencies exist with
respect to work requirements or time limits?
260.73 How do existing welfare reform waivers affect the
participation rates and work rules?
260.74 How do existing welfare reform waivers affect the
application of the Federal time-limit provisions?
260.75 If a State is claiming a waiver inconsistency for work
requirements or time limits, what must the Governor certify?
260.76 What special rules apply to States that are continuing
evaluations of their waiver demonstrations?
Authority: 42 U.S.C. 601, 601 note, 603, 604, 606, 607, 608,
609, 610, 611, 619, and 1308.
Subpart A--What Rules Generally Apply to the TANF Program?
Sec. 260.10 What does this part cover?
This part includes regulatory provisions that generally apply to
the Temporary Assistance for Needy Families (TANF) program.
Sec. 260.20 What is the purpose of the TANF program?
The TANF program has the following four purposes:
(a) Provide assistance to needy families so that children may be
cared for in their own homes or in the homes of relatives;
(b) End the dependence of needy parents on government benefits by
promoting job preparation, work, and marriage;
(c) Prevent and reduce the incidence of out-of-wedlock pregnancies
and establish annual numerical goals for preventing and reducing the
incidence of these pregnancies; and
(d) Encourage the formation and maintenance of two-parent families.
Sec. 260.30 What definitions apply under the TANF regulations?
The following definitions apply under parts 260 through 265 of this
chapter:
ACF means the Administration for Children and Families.
Act means Social Security Act, unless otherwise specified.
Adjusted State Family Assistance Grant, or adjusted SFAG, means the
SFAG amount, minus any reductions for Tribal Family Assistance Grants
paid to Tribal grantees on behalf of Indian families residing in the
State and any transfers to the Social Services Block Grant or the Child
Care and Development Block Grant.
Administrative costs has the meaning specified at Sec. 263.0(b) of
this chapter.
Adult means an individual who is not a ``minor child,'' as defined
elsewhere in this section.
AFDC means Aid to Families with Dependent Children.
Aid to Families with Dependent Children means the welfare program
in effect under title IV-A of prior law.
Assistance has the meaning specified at Sec. 260.31.
Basic MOE means the expenditure of State funds that must be made in
order to meet the MOE requirement at section 409(a)(7) of the Act.
Cash assistance, when provided to participants in the Welfare-to-
Work program (WtW), has the meaning specified at Sec. 260.32.
CCDBG means the Child Care and Development Block Grant Act of 1990,
as amended, 42 U.S.C. 9858 et seq.
CCDF means the Child Care and Development Fund, or those child care
programs and services funded either under section 418(a) of the Act or
CCDBG.
Commingled State TANF expenditures means expenditures of State
funds that are made within the TANF program and commingled with Federal
TANF funds.
Contingency fund means Federal TANF funds available under section
403(b) of the Act, and contingency funds means the Federal monies made
available to States under that section. Neither term includes any State
funds expended pursuant to section 403(b).
Contingency fund MOE means the MOE expenditures that a State must
make in order to meet the MOE requirements at sections 403(b)(6) and
409(a)(10) of the Act and subpart B of part 264 of this chapter and
retain contingency funds made available to the State. The only
expenditures that qualify for Contingency Fund MOE are State TANF
expenditures.
Control group is a term relevant to continuation of a ``waiver''
and has the meaning specified at Sec. 260.71.
[[Page 17879]]
Countable State expenditures has the meaning specified at
Sec. 264.0 of this chapter.
Discretionary fund of the CCDF refers to child care funds
appropriated under the CCDBG.
EA means Emergency Assistance.
Eligible State means a State that, during the 27-month period
ending with the close of the first quarter of the fiscal year, has
submitted a TANF plan that we have determined is complete.
Emergency assistance means the program option available to States
under sections 403(a)(5) and 406(e) of prior law to provide short-term
assistance to needy families with children.
Expenditure means any amount of Federal TANF or State MOE funds
that a State expends, spends, pays out, or disburses consistent with
the requirements of parts 260 through 265 of this chapter. It may
include expenditures on the refundable portions of State or local tax
credits, if they are consistent with the provisions at Sec. 260.33. It
does not include any amounts that merely represent avoided costs or
foregone revenue. Avoided costs include such items as contractor
penalty payments for poor performance and purchase price discounts,
rebates, and credits that a State receives. Foregone revenue includes
State tax provisions--such as waivers, deductions, exemptions, or
nonrefundable tax credits--that reduce a State's tax revenue.
Experimental group is a term relevant to continuation of a
``waiver'' and has the meaning specified at Sec. 260.71.
FAG has the meaning specified at Sec. 264.0(b) of this chapter.
Family Violence Option (or FVO) has the meaning specified at
Sec. 260.51.
FAMIS means the automated statewide management information system
under sections 402(a)(30), 402(e), and 403 of prior law.
Federal expenditures means expenditures by a State of Federal TANF
funds.
Federal TANF funds means all funds provided to the State under
section 403 of the Act except WtW funds awarded under section
403(a)(5), including the SFAG, any bonuses, supplemental grants, or
contingency funds.
Federally recognized good cause domestic violence waiver has the
meaning specified at Sec. 260.51.
Fiscal year means the 12-month period beginning on October 1 of the
preceding calendar year and ending on September 30.
FY means fiscal year.
Good cause domestic violence waiver has the meaning specified at
Sec. 260.51.
Governor means the Chief Executive Officer of the State. It thus
includes the Governor of each of the 50 States and the Territories and
the Mayor of the District of Columbia.
IEVS means the Income and Eligibility Verification System operated
pursuant to the provisions in section 1137 of the Act.
Inconsistent is a term relevant to continuation of a ``waiver'' and
has the meaning specified at Sec. 260.71.
Indian, Indian Tribe and Tribal Organization have the meaning given
such terms by section 4 of the Indian Self-Determination and Education
Assistance Act (25 U.S.C. 450b), except that the term ``Indian tribe''
means, with respect to the State of Alaska, only the Metlakatla Indian
Community of the Annette Islands Reserve and the following Alaska
Native regional nonprofit corporations:
(1) Arctic Slope Native Association;
(2) Kawerak, Inc.;
(3) Maniilaq Association;
(4) Association of Village Council Presidents;
(5) Tanana Chiefs Council;
(6) Cook Inlet Tribal Council;
(7) Bristol Bay Native Association;
(8) Aleutian and Pribilof Island Association;
(9) Chugachmuit;
(10) Tlingit Haida Central Council;
(11) Kodiak Area Native Association; and
(12) Copper River Native Association.
Individual Development Account, or IDA, has the meaning specified
at Sec. 263.20 of this chapter.
Job Opportunities and Basic Skills Training Program means the
program under title IV-F of prior law to provide education, training
and employment services to welfare recipients.
JOBS means the Job Opportunities and Basic Skills Training Program.
Minor child means an individual who:
(1) Has not attained 18 years of age; or
(2) Has not attained 19 years of age and is a full-time student in
a secondary school (or in the equivalent level of vocational or
technical training).
MOE means maintenance-of-effort.
Needy State is a term that pertains to the provisions on the
Contingency Fund and the penalty for failure to meet participation
rates. It means, for a month, a State where:
(1)(i) The average rate of total unemployment (seasonally adjusted)
for the most recent 3-month period for which data are published for all
States equals or exceeds 6.5 percent; and
(ii) The average rate of total unemployment (seasonally adjusted)
for such 3-month period equals or exceeds 110 percent of the average
rate for either (or both) of the corresponding 3-month periods in the
two preceding calendar years; or
(2) The Secretary of Agriculture has determined that the average
number of individuals participating in the Food Stamp program in the
State has grown at least 10 percent in the most recent 3-month period
for which data are available.
Noncustodial parent means a parent of a minor child receiving
assistance who:
(1) Lives in the State; and
(2) Does not live in the same household as the child.
Prior law means the provisions of title IV-A and IV-F of the Act in
effect as of August 21, 1996. They include provisions related to Aid to
Families with Dependent Children (or AFDC), Emergency Assistance (or
EA), Job Opportunities and Basic Skills Training (or JOBS), and FAMIS.
PRWORA means the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, or Pub. L. 104-193, 42 U.S.C. 1305 note.
Qualified Aliens has the meaning prescribed under section 431 of
PRWORA, as amended, 8 U.S.C. 1641.
Qualified State Expenditures means the total amount of State funds
expended during the fiscal year that count for basic MOE purposes. It
includes expenditures, under any State program, for any of the
following with respect to eligible families:
(1) Cash assistance;
(2) Child care assistance;
(3) Educational activities designed to increase self-sufficiency,
job training, and work, excluding any expenditure for public education
in the State except expenditures involving the provision of services or
assistance of an eligible family that is not generally available to
persons who are not members of an eligible family;
(4) Any other use of funds allowable under subpart A of part 263 of
this chapter; and
(5) Administrative costs in connection with the matters described
in paragraphs (1), (2), (3) and (4) of this definition, but only to the
extent that such costs do not exceed 15 percent of the total amount of
qualified State expenditures for the fiscal year.
Secretary means Secretary of the Department of Health and Human
Services or any other Department official duly authorized to act on the
Secretary's behalf.
Segregated State TANF expenditures means expenditures of State
funds within the TANF program that are not commingled with Federal TANF
funds.
Separate State program, or SSP, means a program operated outside of
[[Page 17880]]
TANF in which the expenditures of State funds may count for basic MOE
purposes.
SFAG means State family assistance grant, as defined in this
section.
SFAG payable means the SFAG amount, reduced, as appropriate, for
any Tribal Family Assistance Grants made on behalf of Indian families
residing in the State and any penalties imposed on a State under this
chapter.
Single audit means an audit or supplementary review conducted under
the authority of the Single Audit Act at 31 U.S.C. chapter 75.
Social Services Block Grant means the social services program
operated under title XX of the Act, pursuant to 42 U.S.C. 1397.
SSBG means the Social Services Block Grant.
State means the 50 States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the United States Virgin
Islands, Guam, and American Samoa, unless otherwise specified.
State agency means the agency that the Governor certifies as the
administering and supervising agency for the TANF program, pursuant to
section 402(a)(4) of the Act.
State family assistance grant means the amount of the basic block
grant allocated to each eligible State under the formula at section
403(a)(1) of the Act.
State MOE expenditures means the expenditure of State funds that
may count for purposes of the basic MOE requirements at section
409(a)(7) of the Act and the Contingency Fund MOE requirements at
sections 403(b)(4) and 409(a)(10) of the Act.
State TANF expenditures means the expenditure of State funds within
the TANF program.
TANF means The Temporary Assistance for Needy Families Program.
TANF program means a State program of family assistance operated by
an eligible State under its State TANF plan.
Territories means the Commonwealth of Puerto Rico, the United
States Virgin Islands, Guam, and American Samoa.
Title IV-A refers to the title and part of the Act that now
includes TANF, but previously included AFDC and EA. For the purpose of
the TANF program regulations, this term does not include child care
programs authorized and funded under section 418 of the Act, or their
predecessors, unless we specify otherwise.
Tribal family assistance grant means a grant paid to a Tribe that
has an approved Tribal family assistance plan under section 412(a)(1)
of the Act.
Tribal grantee means a Tribe that receives Federal TANF funds to
operate a Tribal TANF program under section 412(a) of the Act.
Tribal TANF program means a TANF program developed by an eligible
Tribe, Tribal organization, or consortium and approved by us under
section 412 of the Act.
Tribe means Indian Tribe or Tribal organization, as defined
elsewhere in this section. The definition may include Tribal consortia
(i.e., groups of federally recognized Tribes or Alaska Native entities
that have banded together in a formal arrangement to develop and
administer a Tribal TANF program).
Victim of domestic violence has the meaning specified at
Sec. 260.51.
Waiver, when used in subpart C of this part, has the meaning
specified at Sec. 260.71.
We (and any other first person plural pronouns) means the Secretary
of Health and Human Services or any of the following individuals or
organizations acting in an official capacity on the Secretary's behalf:
the Assistant Secretary for Children and Families, the Regional
Administrators for Children and Families, the Department of Health and
Human Services, and the Administration for Children and Families.
Welfare-to-Work means the new program for funding work activities
at section 403(a)(5) of the Act.
WtW means Welfare-to-Work.
WtW cash assistance has the meaning specified at Sec. 260.32.
Sec. 260.31 What does the term ``assistance'' mean?
(a)(1) The term ``assistance'' includes cash, payments, vouchers,
and other forms of benefits designed to meet a family's ongoing basic
needs (i.e., for food, clothing, shelter, utilities, household goods,
personal care items, and general incidental expenses).
(2) It includes such benefits even when they are:
(i) Provided in the form of payments by a TANF agency, or other
agency on its behalf, to individual recipients; and
(ii) Conditioned on participation in work experience or community
service (or any other work activity under Sec. 261.30 of this chapter).
(3) Except where excluded under paragraph (b) of this section, it
also includes supportive services such as transportation and child care
provided to families who are not employed.
(b) It excludes:
(1) Nonrecurrent, short-term benefits that:
(i) Are designed to deal with a specific crisis situation or
episode of need;
(ii) Are not intended to meet recurrent or ongoing needs; and
(iii) Will not extend beyond four months.
(2) Work subsidies (i.e., payments to employers or third parties to
help cover the costs of employee wages, benefits, supervision, and
training);
(3) Supportive services such as child care and transportation
provided to families who are employed;
(4) Refundable earned income tax credits;
(5) Contributions to, and distributions from, Individual
Development Accounts;
(6) Services such as counseling, case management, peer support,
child care information and referral, transitional services, job
retention, job advancement, and other employment-related services that
do not provide basic income support; and
(7) Transportation benefits provided under a Job Access or Reverse
Commute project, pursuant to section 404(k) of the Act, to an
individual who is not otherwise receiving assistance.
(c) The definition of the term assistance specified in paragraphs
(a) and (b) of this section:
(1) Does not apply to the use of the term assistance at part 263,
subpart A, or at part 264, subpart B, of this chapter; and
(2) Does not preclude a State from providing other types of
benefits and services in support of the TANF goal at Sec. 260.20(a).
Sec. 260.32 What does the term ``WtW cash assistance'' mean?
(a) For the purpose of Sec. 264.1(b)(1)(iii) of this chapter, WtW
cash assistance only includes benefits that:
(1) Meet the definition of assistance at Sec. 260.31; and
(2) Are directed at basic needs.
(b) Thus, it includes benefits described in paragraphs (a)(1) and
(a)(2) of Sec. 260.31, but excludes benefits described in paragraph
(a)(3) of Sec. 260.31.
(c) It only includes benefits identified in paragraphs (a) and (b)
of this section when they are provided in the form of cash payments,
checks, reimbursements, electronic funds transfers, or any other form
that can legally be converted to currency.
Sec. 260.33 When are expenditures on State or local tax credits
allowable expenditures for TANF-related purposes?
(a) To be an allowable expenditure for TANF-related purposes, any
tax credit program must be reasonably calculated to accomplish one of
the purposes of the TANF program, as specified at Sec. 260.20.
(b)(1) In addition, pursuant to the definition of expenditure at
Sec. 260.30, we
[[Page 17881]]
would only consider the refundable portion of a State or local tax
credit to be an allowable expenditure.
(2) Under a State Earned Income Tax Credit (EITC) program, the
refundable portion that may count as an expenditure is the amount that
exceeds a family's State income tax liability prior to application of
the EITC. (The family's tax liability is the amount owed prior to any
adjustments for credits or payments.) In other words, we would count
only the portion of a State EITC that the State refunds to a family and
that is above the amount of EITC used as credit towards the family's
State income tax liability.
(3) For other refundable (and allowable) State and local tax
credits, such as refundable dependent care credits, the refundable
portion that would count as an expenditure is the amount of the credit
that exceeds the taxpayer's tax liability prior to the application of
the credit. (The taxpayer's liability is the amount owed prior to any
adjustments for credits or payments.) In other words, we would count
only the portion of the credit that the State refunds to the taxpayer
and that is above the amount of the credit applied against the
taxpayer's tax bill.
Sec. 260.35 What other Federal laws apply to TANF?
(a) Under section 408(d) of the Act, the following provisions of
law apply to any program or activity funded with Federal TANF funds:
(1) The Age Discrimination Act of 1975;
(2) Section 504 of the Rehabilitation Act of 1973;
(3) The Americans with Disabilities Act of 1990; and
(4) Title VI of the Civil Rights Act of 1964.
(b) The limitation on Federal regulatory and enforcement authority
at section 417 of the Act does not limit the effect of other Federal
laws, including Federal employment laws (such as the Fair Labor
Standards Act (FLSA), the Occupational Safety and Health Act (OSHA) and
unemployment insurance (UI)) and nondiscrimination laws. These laws
apply to TANF beneficiaries in the same manner as they apply to other
workers.
Sec. 260.40 When are these provisions in effect?
(a) In determining whether a State is subject to a penalty under
parts 261 through 265 of this chapter, we will not apply the regulatory
provisions in parts 260 through 265 of this chapter retroactively. We
will judge State actions that occurred prior to the effective date of
these rules and expenditures of funds received prior to the effective
date only against a reasonable interpretation of the statutory
provisions in title IV-A of the Act.
(b) The effective date of these rules is October 1, 1999.
Subpart B--What Special Provisions Apply to Victims of Domestic
Violence?
Sec. 260.50 What is the purpose of this subpart?
Under section 402(a)(7) of the Act, under its TANF plan, a State
may elect to implement a special program to serve victims of domestic
violence and to waive program requirements for such individuals. This
subpart explains how adoption of these provisions affects the penalty
determinations applicable if a State fails to meet its work
participation rate or comply with the five-year limit on Federal
assistance.
Sec. 260.51 What definitions apply to this subpart?
Family Violence Option (or FVO) means the provision at section
402(a)(7) of the Act under which a State certifies in its State plan if
it has elected the option to implement comprehensive strategies for
identifying and serving victims of domestic violence.
Federally recognized good cause domestic violence waiver means a
good cause domestic violence waiver that meets the requirements at
Secs. 260.52(c) and 260.55.
Good cause domestic violence waiver means a waiver of one or more
program requirements granted by a State to a victim of domestic
violence under the FVO, as described at Sec. 260.52(c).
Victim of domestic violence means an individual who is battered or
subject to extreme cruelty under the definition at section
408(a)(7)(C)(iii) of the Act.
Sec. 260.52 What are the basic provisions of the Family Violence
Option (FVO)?
Section 402(a)(7) of the Act provides that States electing the FVO
certify that they have established and are enforcing standards and
procedures to:
(a) Screen and identify individuals receiving TANF and MOE
assistance with a history of domestic violence, while maintaining the
confidentiality of such individuals;
(b) Refer such individuals to counseling and supportive services;
and
(c) Provide waivers, pursuant to a determination of good cause, of
normal program requirements to such individuals for so long as
necessary in cases where compliance would make it more difficult for
such individuals to escape domestic violence or unfairly penalize those
who are or have been victimized by such violence or who are at risk of
further domestic violence.
Sec. 260.54 Do States have flexibility to grant good cause domestic
violence waivers?
(a) Yes; States have broad flexibility to grant these waivers to
victims of domestic violence. For example, they may determine which
program requirements to waive and decide how long each waiver might be
necessary.
(b) However, if a State wants us to take the waivers that it grants
into account in deciding if it has reasonable cause for failing to meet
its work participation rates or comply with the five-year limit on
Federal assistance, has achieved compliance or made significant
progress towards achieving compliance with such requirements during a
corrective compliance period, or qualifies for a reduction in its work
penalty under Sec. 261.51 of this chapter, the waivers must be
federally recognized good cause domestic violence waivers, within the
meaning of Secs. 260.52(c) and 260.55, and the State must submit the
information specified at Sec. 265.9(b)(5) of this chapter on its
strategies and procedures for serving victims of domestic violence and
the number of waivers granted.
Sec. 260.55 What are the additional requirements for Federal
recognition of good cause domestic violence waivers?
To be federally recognized, good cause domestic violence waivers
must:
(a) Identify the specific program requirements that are being
waived;
(b) Be granted appropriately based on need, as determined by an
individualized assessment by a person trained in domestic violence and
redeterminations no less often than every six months;
(c) Be accompanied by an appropriate services plan that:
(1) Is developed by a person trained in domestic violence;
(2) Reflects the individualized assessment and any revisions
indicated by the redetermination; and
(3) To the extent consistent with Sec. 260.52(c), is designed to
lead to work.
Sec. 260.58 What penalty relief is available to a State whose failure
to meet the work participation rates is attributable to providing
federally recognized good cause domestic violence waivers?
(a)(1) We will determine that a State has reasonable cause if its
failure to meet the work participation rates was attributable to
federally recognized good cause domestic violence waivers granted to
victims of domestic violence.
[[Page 17882]]
(2) To receive reasonable cause under the provisions of
Sec. 262.5(b) of this chapter, the State must provide evidence that it
achieved the applicable rates, except with respect to any individuals
who received a federally recognized good cause domestic violence waiver
of work participation requirements. In other words, it must demonstrate
that it met the applicable rates when such waiver cases are removed
from the calculations at Secs. 261.22(b) and 261.24(b) of this chapter.
(b)(1) We will reduce a State's penalty based on the degree of
noncompliance to the extent that its failure to meet the work
participation rates was attributable to federally recognized good cause
domestic violence waivers.
(2) To receive a reduction based on degree of noncompliance under
the provisions of Sec. 261.51 of this chapter, a State granting
federally recognized good cause domestic violence waivers of work
participation requirements must demonstrate that it achieved
participation rates above the threshold at Sec. 261.51(b)(3) of this
chapter, when such waiver cases are removed from the calculations at
Secs. 261.22(b) and 261.24(b) of this chapter.
(c) We may take federally recognized good cause domestic violence
waivers of work requirements into consideration in deciding whether a
State has achieved compliance or made significant progress towards
achieving compliance in meeting the work participation rates during a
corrective compliance period.
(d) To receive the penalty relief specified in paragraphs (a), (b),
and (c) of this section, the State must submit the information
specified at Sec. 265.9(b)(5) of this chapter.
Section 260.59--What Penalty Relief is Available to a State That Failed
To Comply With the Five-Year Limit on Federal Assistance Because It
Provided Federally Recognized Good Cause Domestic Violence Waivers?
(a)(1) We will determine that a State has reasonable cause if it
failed to comply with the five-year limit on Federal assistance because
of federally recognized good cause domestic violence waivers granted to
victims of domestic violence.
(2) More specifically, to receive reasonable cause under the
provisions at Sec. 264.3(b) of this chapter, a State must demonstrate
that:
(i) It granted federally recognized good cause domestic violence
waivers to extend time limits based on the need for continued
assistance due to current or past domestic violence or the risk of
further domestic violence; and
(ii) When individuals and their families are excluded from the
calculation, the percentage of families receiving federally funded
assistance for more than 60 months did not exceed 20 percent of the
total.
(b) We may take federally recognized good cause domestic violence
waivers to extend time limits into consideration in deciding whether a
State has achieved compliance or made significant progress towards
achieving compliance in meeting the five-year limit on Federal
assistance during a corrective compliance period.
(c) To receive the penalty relief specified in paragraphs (a) and
(b) of this section, the State must submit the information specified at
Sec. 265.9(b)(5) of this chapter.
Subpart C--What Special Provisions Apply to States that Were
Operating Programs Under Approved Waivers?
Sec. 260.70 What is the purpose of this subpart?
(a) Under section 415 of the Act, if a State was granted a waiver
under section 1115 of the Act and that waiver was in effect on August
22, 1996, the amendments made by PRWORA do not apply for the period of
the waiver, to the extent that they are inconsistent with the waiver
and the State elects to continue its waiver.
(b) Identification of waiver inconsistencies is relevant for the
determination of penalties in three areas:
(1) Under Sec. 261.50 of this chapter for failing to meet the work
participation rates at part 261 of this chapter;
(2) Under Sec. 264.2 of this chapter for failing to comply with the
five-year limit on Federal assistance at subpart A of part 264 of this
chapter; and
(3) Under Sec. 261.54 of this chapter for failing to impose
sanctions on individuals who fail to work.
(c) This subpart explains how we will determine waiver
inconsistencies and apply them in the penalty determination process for
these penalties.
Sec. 260.71 What definitions apply to this subpart?
(a) Inconsistent means that complying with the TANF work
participation or sanction requirements at section 407 of the Act or the
time-limit requirement at section 408(a)(7) of the Act would
necessitate that a State change a policy reflected in an approved
waiver.
(b) Waiver consists of the work participation or time-limit
component of the State's demonstration project under section 1115 of
the Act. The component includes the revised AFDC requirements indicated
in the State's waiver list, as approved by the Secretary under the
authority of section 1115, and the associated AFDC provisions that did
not need to be waived.
(c) Control group and experimental group have the meanings
specified in the terms and conditions of the State's demonstration.
Sec. 260.72 What basic requirements must State demonstration
components meet for the purpose of determining if inconsistencies exist
with respect to work requirements or time limits?
(a) The policies must be consistent with the requirements of
section 415 of the Act and the requirements of this subpart.
(b) The policies must be within the scope of the approved waivers
both in terms of geographical coverage and the coverage of the types of
cases specified in the waiver approval package.
(c) The State must have applied its waiver policies on a continuous
basis from the date that it implemented its TANF program, except that
it may have adopted modifications that have the effect of making its
policies more consistent with the provisions of PRWORA.
(d) An inconsistency may not apply beyond the earlier of the
following dates:
(1) The expiration of waiver authority as determined in accordance
with the demonstration terms and conditions; or
(2) For any specific inconsistency, the date upon which the State
discontinued the applicable waiver policy.
(e) The State must submit the Governor's certification specified in
Sec. 260.75.
(f) In general, the policies in this subpart do not have the effect
of delaying the date when a State might be subject to the work or time-
limit penalties at Secs. 261.50, 261.54, and 264.1 of this chapter or
the data collection requirements at part 265 of this chapter.
Sec. 260.73 How do existing welfare reform waivers affect the
participation rates and work rules?
(a) If a State is implementing a work participation component under
a waiver, in accordance with this subpart, the provisions of section
407 of the Act will not apply in determining if a penalty should be
imposed, to the extent that the provision is inconsistent with the
waiver.
(b) For the purpose of determining if the State's demonstration has
a work participation component, the waiver list for the demonstration
must include one or more specific provisions that directly correspond
to the work policies in section 407 of the Act (i.e., change
[[Page 17883]]
allowable JOBS activities, exemptions from JOBS participation, hours of
required JOBS participation, or sanctions for noncompliance with JOBS
participation).
(c) Corresponding to the inconsistencies certified by the Governor
under Sec. 260.75:
(1) We will calculate the State's work participation rates, by:
(i) Excluding cases exempted from participation under the
demonstration component and, if applicable, experimental and control
cases not otherwise exempted, in calculating the rate;
(ii) Defining work activities as defined in the demonstration
component in determining the numerator; and
(iii) Including cases meeting the required number of hours of
participation in work activities in accordance with demonstration
component policy, in determining the numerator.
(2) We will determine whether a State is taking appropriate
sanctions when an individual refuses to work based on the State's
certified waiver policies.
(d) We will use the data submitted by States pursuant to Sec. 265.3
of this chapter to calculate and make public a State's work
participation rates under both the TANF requirements and the State's
alternative waiver requirements.
Sec. 260.74 How do existing welfare reform waivers affect the
application of the Federal time-limit provisions?
(a)(1) If a State is implementing a time-limit component under a
waiver, in accordance with this subpart, the provisions of section
408(a)(7) of the Act will not apply in determining if a penalty should
be imposed, to the extent that they are inconsistent with the waiver.
(2) For the purpose of determining if the State's demonstration has
a time-limit component, the waiver list for the demonstration must
include provisions that directly correspond to the time-limit policies
enumerated in section 408(a)(7) of the Act (i.e., address which
individuals or families are subject to, or exempt from, terminations of
assistance based solely on the passage of time or who qualifies for
extensions to the time limit).
(b)(1) Generally, under an approved waiver, except as provided in
paragraph (b)(3) of this section, a State will count, toward the
Federal five-year limit, all months for which the head-of-household or
spouse of the head-of-household subject to the State time limit
receives assistance with Federal TANF funds, just as it would if it did
not have an approved waiver.
(2) The State need not count, toward the Federal five-year limit,
any months for which a head-of-household or spouse of the head-of-
household receives assistance with Federal TANF funds while that
individual is exempt from the State's time limit under the State's
approved waiver.
(3) Where a State has continued a time limit under waivers that
only terminates assistance for adults, the State need not count, toward
the Federal five-year limit, any months for which an adult subject to
the State time limit receives assistance with Federal TANF funds.
(4) The State may continue to provide assistance with Federal TANF
funds for more than 60 months, without a numerical limit, to families
provided extensions to the State time limit, under the provisions of
the terms and conditions of the approved waiver.
(c) Corresponding to the inconsistencies certified by the Governor
under Sec. 260.75, we will calculate the State's time-limit exceptions
by:
(1) Excluding, from the determination of the number of months of
Federal assistance received by a family:
(i) Any month in which the adult(s) were exempt from the State's
time limit under the terms of an approved waiver or any months in which
the children received assistance under a waiver that only terminated
assistance to adults; and
(ii) If applicable, experimental and control group cases not
otherwise exempted; and
(2) Applying the State's waiver policies with respect to the
availability of extensions to the time limit.
Sec. 260.75 If a State is claiming a waiver inconsistency for work
requirements or time limits, what must the Governor certify?
(a) The Governor of the State must certify in writing to the
Secretary that:
(1) The applicable policies have been continually applied in
operating the TANF program, as described in Sec. 260.72(c);
(2) The inconsistencies claimed by the State are within the scope
of the approved waivers, as described in Sec. 260.72(b);
(b) The certification must identify the specific inconsistencies
that the State chooses to continue with respect to work and time
limits.
(1) If the waiver inconsistency claim includes work provisions, the
certification must specify the standards that will apply, in lieu of
the provisions in subparts B and C of part 261 of this chapter, to
determine:
(i) The number of two-parent and all-parent cases that are exempt
from participation, if any, for the purpose of determining the
denominator of the work participation rate;
(ii) The number of nonexempt two-parent and all-parent cases that
are participating in work activities for the purpose of determining the
numerator of the work participation rate, including standards
applicable to;
(A) Countable work activities; and
(B) Required hours of work for participation for individual
participants; and
(iii) The penalty against an individual or family when an
individual refuses to work.
(2) If the waiver inconsistency claim includes time-limit
provisions, the certification must include the standards that will
apply, in lieu of the provisions in Sec. 264.1 of this chapter, in
determining:
(i) Which families are counted toward the Federal time limit; and
(ii) Whether a family is eligible for an extension of its time
limit on federally funded assistance.
(3) If the State is continuing policies for evaluation purposes in
accordance with Sec. 260.76:
(i) The certification must specify any special work or time-limit
standards that apply to the control group and experimental group cases;
and
(ii) The State may choose to exclude cases assigned to the
experimental and control groups, which are not otherwise exempt, for
the purpose of calculating the work participation rate or determining
State compliance related to limiting assistance to families including
adults who have received 60 months of Federal TANF assistance. In doing
so, the State may effectively exclude all experimental group cases and/
or control group cases, not otherwise exempt, but may not exclude
individual cases on a selective basis.
(c) The certification may include a claim of inconsistency with
respect to hours of required participation in work activities only if
the State has written evidence that, when implemented, the waiver
policies established specific requirements related to hours of work for
nonexempt individuals.
(d)(1) The Governor's certification must be provided no later than
October 1, 1999.
(2) If a State modifies its waiver policies in a way that has a
substantive effect on the determination of its work sanctions, or the
calculation of its work participation rates or its time-limit
exceptions, it must submit an amended certification no later than the
end of the fiscal quarter in which the modifications take effect.
[[Page 17884]]
Sec. 260.76 What special rules apply to States that are continuing
evaluations of their waiver demonstrations?
If a State is continuing research that employs an experimental
design in order to complete an impact evaluation of a waiver
demonstration, the experimental and control groups may continue to be
subject to prior AFDC law, except as modified by the waiver.
PART 261--ENSURING THAT RECIPIENTS WORK
Sec.
261.1 What does this part cover?
261.2 What definitions apply to this part?
Subpart A--What Are the Provisions Addressing Individual
Responsibility?
261.10 What work requirements must an individual meet?
261.11 Which recipients must have an assessment under TANF?
261.12 What is an individual responsibility plan?
261.13 May an individual be penalized for not following an
individual responsibility plan?
261.14 What is the penalty if an individual refuses to engage in
work?
261.15 Can a family be penalized if a parent refuses to work
because he or she cannot find child care?
261.16 Does the imposition of a penalty affect an individual's work
requirement?
Subpart B--What Are the Provisions Addressing State Accountability?
261.20 How will we hold a State accountable for achieving the work
objectives of TANF?
261.21 What overall work rate must a State meet?
261.22 How will we determine a State's overall work rate?
261.23 What two-parent work rate must a State meet?
261.24 How will we determine a State's two-parent work rate?
261.25 Does a State include Tribal families in calculating these
rates?
Subpart C--What Are the Work Activities and How Do They Count?
261.30 What are the work activities?
261.31 How many hours must an individual participate to count in
the numerator of the overall rate?
261.32 How many hours must an individual participate to count in
the numerator of the two-parent rate?
261.33 What are the special requirements concerning educational
activities in determining monthly participation rates?
261.34 Are there any limitations in counting job search and job
readiness assistance toward the participation rates?
261.35 Are there any special work provisions for single custodial
parents?
261.36 Do welfare reform waivers affect the calculation of a
State's participation rates?
Subpart D--How Will We Determine Caseload Reduction Credit for Minimum
Participation Rates?
261.40 Is there a way for a State to reduce the work participation
rates?
261.41 How will we determine the caseload reduction credit?
261.42 Which reductions count in determining the caseload reduction
credit?
261.43 What is the definition of a ``case receiving assistance'' in
calculating the caseload reduction credit?
261.44 When must a State report the required data on the caseload
reduction credit?
Subpart E--What Penalties Apply to States Related to Work Requirements?
261.50 What happens if a State fails to meet the participation
rates?
261.51 Under what circumstances will we reduce the amount of the
penalty below the maximum?
261.52 Is there a way to waive the State's penalty for failing to
achieve either of the participation rates?
261.53 May a State correct the problem before incurring a penalty?
261.54 Is a State subject to any other penalty relating to its work
program?
261.55 Under what circumstances will we reduce the amount of the
penalty for not properly imposing penalties on individuals?
261.56 What happens if a parent cannot obtain needed child care?
261.57 What happens if the State sanctions a single parent of a
child under six who cannot get needed child care?
Subpart F--How Do Welfare Reform Waivers Affect State Penalties?
261.60 How do existing welfare reform waivers affect a State's
penalty liability under this part?
Subpart G--What Nondisplacement Rules Apply in TANF?
261.70 What safeguards are there to ensure that participants in
work activities do not displace other workers?
Authority: 42 U.S.C. 601, 602, 607, and 609.
Sec. 261.1 What does this part cover?
This part includes the regulatory provisions relating to the
mandatory work requirements of TANF.
Sec. 261.2 What definitions apply to this part?
The general TANF definitions at Secs. 260.30 through 260.33 of this
chapter apply to this part.
Subpart A--What Are the Provisions Addressing Individual
Responsibility?
Sec. 261.10 What work requirements must an individual meet?
(a)(1) A parent or caretaker receiving assistance must engage in
work activities when the State has determined that the individual is
ready to engage in work or when he or she has received assistance for a
total of 24 months, whichever is earlier, consistent with section
407(e)(2) of the Act.
(2) The State must define what it means to engage in work for this
requirement; its definition may include participation in work
activities in accordance with section 407 of the Act.
(b) If a parent or caretaker has received assistance for two
months, he or she must participate in community service employment,
consistent with section 407(e)(2) of the Act, unless the State has
exempted the individual from work requirements or he or she is already
engaged in work activities as described at Sec. 261.30. The State will
determine the minimum hours per week and the tasks the individual must
perform as part of the community service employment.
Sec. 261.11 Which recipients must have an assessment under TANF?
(a) The State must make an initial assessment of the skills, prior
work experience, and employability of each recipient who is at least
age 18 or who has not completed high school (or equivalent) and is not
attending secondary school.
(b) The State may make any required assessments within 30 days (90
days, at State option) of the date an individual becomes eligible for
assistance.
Sec. 261.12 What is an individual responsibility plan?
An individual responsibility plan is a plan developed at State
option, in consultation with the individual, on the basis of the
assessment made under Sec. 261.11. The plan:
(a) Should set an employment goal and a plan for moving immediately
into private-sector employment;
(b) Should describe the obligations of the individual. These could
include going to school, maintaining certain grades, keeping school-
aged children in school, immunizing children, going to classes, or
doing other things that will help the individual become or remain
employed in the private sector;
(c) Should be designed to move the individual into whatever
private-sector employment he or she is capable of handling as quickly
as possible and to increase over time the responsibility and the amount
of work the individual handles;
(d) Should describe the services the State will provide the
individual to enable the individual to obtain and keep private sector
employment, including job counseling services; and
(e) May require the individual to undergo appropriate substance
abuse treatment.
[[Page 17885]]
Sec. 261.13 May an individual be penalized for not following an
individual responsibility plan?
Yes. If an individual fails without good cause to comply with an
individual responsibility plan that he or she has signed, the State may
reduce the amount of assistance otherwise payable to the family, by
whatever amount it considers appropriate. This penalty is in addition
to any other penalties under the State's TANF program.
Sec. 261.14 What is the penalty if an individual refuses to engage in
work?
(a) If an individual refuses to engage in work required under
section 407 of the Act, the State must reduce or terminate the amount
of assistance payable to the family, subject to any good cause or other
exceptions the State may establish. Such a reduction is governed by the
provisions of Sec. 261.16.
(b)(1) The State must, at a minimum, reduce the amount of
assistance otherwise payable to the family pro rata with respect to any
period during the month in which the individual refuses to work.
(2) The State may impose a greater reduction, including terminating
assistance.
(c) A State that fails to impose penalties on individuals in
accordance with the provisions of section 407(e) of the Act may be
subject to the State penalty specified at Sec. 261.54.
Sec. 261.15 Can a family be penalized if a parent refuses to work
because he or she cannot find child care?
(a) No, the State may not reduce or terminate assistance based on
an individual's refusal to engage in required work if the individual is
a single custodial parent caring for a child under age six who has a
demonstrated inability to obtain needed child care, as specified at
Sec. 261.56.
(b) A State that fails to comply with the penalty exception at
section 407(e)(2) of the Act and the requirements at Sec. 261.56 may be
subject to the State penalty specified at Sec. 261.57.
Sec. 261.16 Does the imposition of a penalty affect an individual's
work requirement 
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