TANF-ACF-PA-2004-01 (Clarification that third party cash or in-kind may count toward a State’s or Territory’s TANF maintenance-of-effort (MOE) requirement)
State and Territorial agencies administering the Temporary Assistance for Needy Families (TANF) program and other interested parties
Clarification that third party cash or in-kind may count toward a State’s or Territory’s TANF maintenance-of-effort (MOE) requirement
Section 409(a)(7) of the Social Security Act (Act), 45 CFR 92.3 and 45 CFR 92.24
States have inquired whether in-kind or cash expenditures by sources in the State other than the State or local government may count toward the State’s TANF MOE requirement. Neither the TANF MOE requirement found at section 409(a)(7) of the Act nor the implementing program regulations at 45 CFR 263, subpart A explicitly addressed this question. However, the regulations at 45 CFR Part 92 (Uniform administrative requirements for grants and cooperative agreements to State, local, and Tribal governments) apply to the TANF program and cover a matching or cost-sharing requirement.
The TANF MOE requirement is a cost-sharing requirement. The term "cost-sharing” as defined in 45 CFR 92.3 means the value of the third party in-kind contributions and the portion of the costs of a federally assisted project or program not borne by the Federal Government. The regulation at 45 CFR 92.24 elaborates on the ways in which a State may satisfy a cost-sharing requirement. The cost-sharing requirement may be met through allowable State or local cash expenditures for goods and services, expenditures for allowable costs by other non-Federal third parties (e.g., a non-profit organization, corporation, or other private party), cash donations by non-Federal third parties, as well as the value of third party in-kind contributions. States may also count their own non-cash contributions to or on behalf of eligible families toward the MOE requirement.
A cash donation does not in-and-of-itself constitute an expenditure. The money must actually be used for an allowable purpose for it to count toward the State’s MOE requirement. Donations from non-Federal third parties need not be transferred to the State or local agency and under its administrative control, or donated without any restriction. Nevertheless, the third party must be aware of and agree with the State’s intentions. Accordingly, the State records must include an agreement between the State and the third party permitting the State to count the expenditure toward its MOE requirement.
For example, if a State has an agreement with a food bank/soup kitchen the State could count the value of foodstuffs and/or meals from the food bank on behalf of eligible families. The State could also count toward its MOE requirement the allocable portion of administrative costs of providing the food, meals, and related services for or on behalf of the eligible families. Similarly, a foundation’s donation to a non-profit, community agency to enhance and expand its after-school academic enrichment and non-marital pregnancy prevention program could also be claimed toward the State’s MOE requirement in the fiscal year the State actually uses the donated funds for these activities. The State may claim the allocable portion of the donation spent on eligible family members, consistent with the general rule that TANF MOE funds must be spent on eligible families.
States may not count toward their MOE requirement, two different iterations of the same expenditure. Using the food bank example above, a State may count toward its MOE requirement either cash given to the food bank for or on behalf of eligible families or the value of the in-kind service that the food bank provided to eligible families using that cash, but not both.
Regardless of the source of the expenditures, the State’s records must show that all the costs are verifiable and meet all applicable requirements in 45 CFR 263.2 through 263.6 and 45 CFR 92.24 in order to count toward the State’s MOE requirement. For example, Federal funds received and expended by the third party may not be used to meet the State’s MOE requirement. Likewise, expenditures of non-Federal funds by the third party may not count toward the State’s MOE requirement, if the funds have been used or will be used to satisfy the cost-sharing or matching requirement of another Federal program.
Please direct any inquiries to the appropriate Administration for Children and Families (ACF) Regional Administrator.
Andrew S. Bush, Director
Office of Family Assistance