TANF-ACF-PI-2001-02 (Drawdown of Federal TANF funds for States, Tribes and sub-grantees.)
State agencies administering a Temporary Assistance for Needy Families (TANF) program under Title IV-A of the Social Security Act, Tribes administering a TANF program under Title IV-A of the Social Security Act, State TANF sub-grantees, Tribal TANF sub-grantees and other interested organizations, agencies and individuals.
Drawdown of Federal TANF funds for States, Tribes and sub-grantees.
Legal and Related References:
Title IV-A of the Social Security Act, 45 CFR Part 92 and 31 CFR Part 205.
The purpose of this instruction is to reiterate Federal policies with regard to the treatment of the drawdown of Federal TANF funds for State and Tribal TANF grantees and sub-grantees.
This Program Instruction concerns the drawdown of Federal TANF funds in advance of States' or Tribes' immediate cash needs to expend these funds. Several States, Regional Offices and other organizations have contacted ACF for guidance on this subject. Most inquiries have asked whether States or Tribes may draw down Federal TANF funds in advance of TANF expenditures and whether States, Tribes or subgrantees may place the funds in a bank account and earn interest on those funds. We are issuing this Program Instruction in response to these inquiries.
Part I: States Administering TANF Programs
The procedures below outline how States (and State sub-grantees) should draw down Federal TANF funds to cover TANF expenditures. By the term "TANF funds" we mean those sums awarded to States under Section 403 of Title IV-A of the Social Security Act (45 CFR Part 260.30). TANF funds include the State Family Assistance Grant (SFAG), the Bonus to Reward Illegitimacy, Supplemental Grants for Population Increases in Certain States, the Bonus to Reward High Performance States and the Contingency Funds.
U.S. Department of Health and Human Services regulations at 45 CFR Part 92.20(b)(7) govern the procedures for cash management in the TANF program. These regulations state that grantees (States) and sub-grantees must follow procedures for minimizing the time elapsing between the transfer of Federal funds from the U.S. Treasury and disbursements whenever they use advance procedures for drawdown. Also, States must monitor cash drawdowns by their sub-grantees to assure that they conform substantially to the same standards of timing and amount as apply to States.
Federal TANF funds are available only for drawdowns to cover allowable TANF expenditures. 45 CFR Part 260.30 of the final TANF regulations defines Federal TANF expenditures. Federal TANF expenditures are defined as any amount of Federal TANF funds that a State expends, spends, pays out, or disburses consistent with the requirements of 45 CFR Parts 260 through 265 of the final TANF regulations. Disbursements to subgrantees, including counties administering TANF, must be to cover allowable TANF expenditures consistent with the final TANF regulations prior to the disbursement of the Federal TANF funds. Disbursement of Federal TANF prior to their immediate cash need to cover allowable TANF expenditures is unallowable (with emphasis).
45 CFR Part 92.21 states that methods and procedures for payment shall minimize the time elapsing between the transfer of funds and disbursements by grantees and sub-grantees, in accordance with Department of Treasury regulations at 31 CFR Part 205. 31 CFR Part 205 implements the Cash Management Improvement Act (CMIA) and prescribes the rules and procedures for the transfer of funds between the Federal Government and States for Federal grant programs. The TANF program is one of the Federal grant programs subject to the CMIA and the regulations at 31 CFR Part 205. 31 CFR Part 205.20 (Cash Advances) provides that cash advances shall be limited to the minimum amounts needed and shall be timed to be in accord only with the actual, immediate cash requirements of the State in carrying out a program or project. 31 CFR Part 205.12 (State Interest Liabilities) states that a State will incur an interest liability to the Federal government if Federal funds are in a State account prior to the day the State pays out funds for program purposes.
The drawdown and transfer of Federal TANF funds in advance of immediate cash needs violate both U.S. Department of Health and Human Services administrative regulations and the Department of Treasury regulations implementing Treasury State Agreements under CMIA.
States or sub-grantees that violate the drawdown rules, must return the overdrawn TANF funds and any interest earned on the funds to the DHHS Payment Management System (PMS). PMS has procedures in place to allow the States to return overdrawn Federal TANF funds and any interest earned in advance of TANF expenditures. States should consult with their PMS contact for additional information regarding the return of Federal TANF funds and any interest.
Part II: Tribes Administering TANF Programs
Tribes administering Tribal TANF programs are not covered by the Department of Treasury rules implementing the Cash Management Improvement Act. However, they are covered by 45 CFR Part 92. For Tribes operating TANF, 45 CFR Part 92.20(b)(7) states that procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursements by the Tribe for TANF expenditures must be followed whenever advance payment procedures are used. The Tribe must establish reasonable procedures to ensure the receipt of reports on sub-grantees cash balances and cash disbursements in sufficient time to enable the Tribe to prepare complete and accurate cash transactions reports. Tribes must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the Tribe. These rules apply to all Tribes operating a Tribal TANF program under Section 412 of Title IV-A of the Social Security Act, including those administered through the Department of Interior, Bureau of Indian Affairs (BIA) 102-477 consolidated grant program.
General inquiries should be directed to the appropriate ACF Hub/Regional office (with emphasis).
Elizabeth M. James Duke
Deputy Assistant Secretary for Administration
Alvin C. Collins, Director
Office of Family Assistance
Donald Sykes, Director
Office of Community Services