TANF-ACF-PA-1998-01 (Guidance concerning proper use of Tribal TANF grant funds, negotiated indirect cost rates and other provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996)
Indian tribes administering approved Temporary Assistance for Needy Families (TANF) plans and other interested parties
Guidance concerning proper use of Tribal TANF grant funds, negotiated indirect cost rates and other provisions in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
Title I of Public Law 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). Sections 401(a), 409(a)(1), and 412(g)(1) of Title IV-A of the Social Security Act (the Act), as amended by PRWORA.
We have received inquiries from a number of Tribes operating TANF programs about the proper use of Tribal TANF grant funds and the application of negotiated indirect cost rates to Tribal TANF grant funds. The purpose of this policy announcement is to provide guidance as to what are considered proper uses of Tribal TANF grant funds, how these indirect cost rates may be applied to the Tribal TANF grant, and how the penalty provisions of the Act will be applied for improper application of indirect cost rates to the Tribal TANF grant.
TANF funds may only be used for welfare-related services or activities reasonably calculated to accomplish the purposes of Title IV-A of the Act. We consider it a reasonable interpretation of the purposes of the TANF program, as stated at section 401 of the Act, that a substantial majority of Tribal TANF grant funds be available for program assistance and/or services. Furthermore, amounts paid to recipients in the form of cash assistance with TANF block grant funds must be considered as passthrough funds and therefore may not be included in the base amount when a negotiated indirect cost rate is applied to a TANF grant.
In addition, TANF funds are not authorized to be used to contribute to or otherwise support non-TANF programs.Use of TANF funds by Tribes to support non-TANF programs shall be considered an improper use of TANF funds. All improper uses of Tribal TANF grant funds shall subject Tribes to penalties under section 409(a)(1) of the Act.
Administrative expenditures consist of both direct administrative costs and indirect costs. Negotiated indirect cost rates which apply to TANF grant funds are considered to be administrative expenditures and, thus, are not available for program assistance and/or services.
While PRWORA provides Tribes as well as States with flexibility to decide how to spend TANF funds, all uses of a Tribal TANF grant must be consistent with section 401(a) of the Act. We believe that section 401(a) restricts the use of TANF funds to the operation and administration of TANF programs. We interpret this section of the Act to require that a substantial majority of Tribal TANF grant funds must be made available for program assistance and services and that a small percentage be used for administrative expenditures (including indirect costs).
We intend to address in regulations the proper use of TANF block grant funds, including use of funds for administrative expenditures. Until such regulations are final, Tribes must operate their TANF programs so that a "substantial majority" of Tribal TANF expenditures are used for TANF assistance and services and not for administrative expenditures.
July 1, 1997
ACF Regional Administrators
Office of Community Services