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BACKGROUND:

Since we issued the interim final rule on June 29, 2006, implementing the Temporary Assistance for Needy Families (TANF) provisions of the Deficit Reduction Act of 2005, States have asked us how to address the job search and job readiness assistance needs of clients, given the time limitations on counting this activity in the statute.

First, we would like to emphasize that States may permit and should encourage clients to participate in job search and job readiness assistance activities any time these activities will lead to employment or help overcome barriers to employment. However, a State may not count those activities towards the participation rate if they exceed the statutory limitations. The law and regulations limit counting participation in job search and job readiness assistance activities to six weeks (or 12 weeks if a State qualifies due to high unemployment or as a “needy State”), with no more than four consecutive weeks, in a fiscal year. We believe Congress envisioned those weeks as concentrated participation in job search or job readiness activities, not an hour here or there, because the idea was to focus people on preparing for or getting a job. We encourage States to consider counting only those weeks in which clients primarily engage in job search or job readiness assistance activities with sufficient hours to meet their participation requirements. For example, a State could count a client that is in full time substance abuse treatment for the week. When participation is more part time or episodic, such as attending a counseling session for two hours, a State could count these hours as an “excused absence” from the countable work activity in which the individual is participating or simply require an individual to participate in these activities after satisfying the minimum hourly requirements in another countable activity. This would avoid using up the limited weeks that this activity can count and conserve it for times when the individual can participate intensively in these activities.

12-Week Qualification

Under Section 407(c)(2) of the Social Security Act and 45 CFR 261.34, an individual’s participation in job search and job readiness assistance can count for a maximum of six weeks in a fiscal year (no more than four consecutive weeks). This can be extended to 12 weeks in a fiscal year if a State has an unemployment rate at least 50 percent greater than the unemployment rate of the United States or if the State meets the definition of a “needy State” under the Contingency Fund provisions of the law. There are two ways for a State to qualify as a “needy State,” one based on its unemployment rate, the other based on increases in its Food Stamp caseload. (See section 403(b)(5) of the Act.) Here is a general description of the two triggers:

• Unemployment Trigger – the average unemployment rate for the most recent 3-month period is at least 6.5% and at least 110% of the State rate for the corresponding 3-month period in either of the two preceding calendar years.
• Food Stamp Trigger (as determined by the Secretary of Agriculture) – the monthly average number of participants for the most recent 3-month period is at least 110% of the State’s monthly average caseload for FY 1994 or FY 1995, whichever is less, had the immigrant and Food Stamp provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) been in effect in those years.

POLICY:

Some readers of the TANF interim final rule have speculated that, once a State meets the high unemployment rate criterion or meets a “needy State” trigger, it will be eligible to count up to 12 weeks of qualifying participation in job search and job readiness assistance for the rest of the fiscal year. We do not believe this is a proper interpretation of the law or our rule. Under the statute, a State may count up to 12 weeks of participation in job search and job readiness assistance for an individual participating in those activities only in a month in which the State qualifies as “needy” or the unemployment rate is at least 50 percent greater than the national unemployment rate in that month. (See sections 407(c)(2)(A)(i) and 407(c)(1)(A) of the Act.)

During FY 2006, many States qualified in one or more months to count up to an additional six weeks of participation for individuals engaged in job search and job readiness assistance activities, either due to high unemployment or by qualifying as a “needy State.” As of June 2006, 32 States (including the District of Columbia and Guam) met the definition of a “needy State” for at least one month in FY 2006 and 27 States met it in the month of June. Twenty-five States also met the definition each consecutive month, October through June. With the exception of Mississippi, which only qualified on the basis of the unemployment trigger, States qualified primarily because of growth in Food Stamp caseloads, although some States qualified under two criteria. Many States may remain “needy States” for the foreseeable future and others may qualify by the end of the fiscal year because the monthly Food Stamp thresholds that trigger the definition decline in most States over the last half of the fiscal year.

The USDA determines when a State’s Food Stamp caseload increases enough to qualify as a “needy State.” Because the USDA’s calculations are based on caseload data reported by States, the official determination that a State is a “needy State” in a particular month comes with a two- to three-month lag. Similarly, the Department of Health and Human Services determines when a State meets either unemployment criterion, based on unemployment data reported by the Bureau of Labor Statistics. At the very earliest, this occurs late in the month following the month of qualification. As a result, a State will not know officially that it qualified to count a client’s additional weeks of participation in job search and job readiness assistance activities until the month has passed.

However, using its own trends and projections of Food Stamp participants and unemployment rates, a State can predict with reasonably high accuracy whether it will qualify due to high unemployment or as a “needy State” for a month. Based on actual Food Stamp participation in fiscal years 1994 and 1995 (adjusted, as required by statute, as if the immigration and Food Stamp provisions of PWRORA had been in effect in those years), the USDA has established a table of the caseload thresholds for each State for each month in the year (See Attachment). A State whose monthly average number of participants for the most recent 3-month period exceeds the threshold for the comparable period qualifies as “needy” for purposes of the 12-week job search and job readiness assistance provision. Using USDA’s threshold table and the State’s actual count and/or estimate of the average number of Food Stamp participants in any three-month period, a State will be able to determine with high probability whether it will be a “needy State” for a month. Similarly, for unemployment rates, State economists can predict with a high degree of accuracy whether a State will qualify under either unemployment criterion in an upcoming month. A State making such a determination with respect to the Food Stamp trigger should be sure to use the average of the most recent month and the two preceding months in comparison to the threshold for the most recent month. For example, to determine whether it qualifies on this basis for July, a State would calculate the monthly average caseload for May, June, and July 2006 and compare it to the July threshold.

With this announcement, we are posting by month at: http://www.acf.hhs.gov/programs/ofa/pi-ofa/12weekqualifier.htm the official list of States that have qualified for counting up to six additional weeks of job search and job readiness assistance by month through June of 2006 for FY 2006. As soon as the USDA or ACF determines which States qualify as “needy States” for July and each subsequent month, we will post that information. If, at that time, a State has incorrectly counted additional weeks of job search and job readiness assistance to which the State is not “officially” entitled or conversely failed to count weeks of participation to which it is entitled, the State must adjust the participation rate data for that month.

ATTACHMENTS: USDA’s Monthly Food Stamp Caseload Thresholds Triggering “Needy State” Status

INQUIRIES: Inquiries should be made to the appropriate Administration for Children and Families (ACF) Regional Administrator.

/s/
Sidonie Squier
Director
Office of Family Assistance

Attachment

Monthly Food Stamp Caseload Thresholds Triggering “Needy State” Status