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TANF-ACF-PI-2005-07 (Public Law 109-68, the TANF Emergency Response and Recovery Act of 2005) (AMENDED)

Published: October 20, 2005
Audience:
Temporary Assistance for Needy Families (TANF)
Topics:
TANF Guidance
Types:
Program Instructions (PI)

To:

State Agencies and Tribes Administering the Temporary Assistance for Needy Families (TANF) Program and Other Interested Parties.

Subject:

Public Law 109-68, the TANF Emergency Response and Recovery Act of 2005

Purpose:

This Program Instruction outlines the key features of the TANF Emergency Response and Recovery Act of 2005, Public Law 109-68 (attached) that was signed by the President on September 21, 2005 and became effective upon enactment.  We also provide information and guidance on how States may access and use the TANF Contingency Funds and loans authorized in the legislation.  This Program Instruction addresses only the provisions of Public Law 109-68, as enacted.  Should there be any changes to Public Law 109-68, we will issue another Program Instruction clarifying any necessary changes.

This PI was originally issued on October 12, 2005.  We have re-issued this PI principally because we augmented the response to question 11.

Overview:

Congress passed the TANF Emergency Response and Recovery Act of 2005 (H.R. 3672) to provide assistance to families affected by Hurricane Katrina through the TANF block grant program.  Designed to help States provide immediate services and benefits to families affected by the hurricane, the new law includes several key provisions:

Section 2 extends the TANF program and related activities through December 31, 2005 and requires the Secretary to pay TANF grants to States for the first quarter of fiscal year 2006 as soon as practicable after the date of enactment;

Section 3 makes all States and the District of Columbia eligible for payments from the TANF Contingency Fund under Section 403(b) of the Social Security Act for the period from enactment (September 21, 2005) through August 31, 2006 if:

  • short-term, nonrecurrent cash benefits have been provided to families who have traveled to another State from the disaster designated States of Alabama, Florida, Louisiana, or Mississippi as a result of Hurricane Katrina; and the State has determined that the family is not receiving TANF cash benefits from another State.
  • A State is reimbursed for the total amount of cash benefits provided to families up to 1/12th of 20 percent of the State family assistance grant (SFAG).
  • Such grants paid to a State are not subject to the matching requirement or the annual reconciliation procedures of Section 403(b)(6), nor to the penalty for failure of a State receiving Contingency Funds to meet the 100 percent “maintenance of effort” (MOE) requirement under Section 409(a)(10) of the Social Security Act.

Section 4 makes additional funds available for the hurricane-damaged States of Louisiana, Mississippi and Alabama.  Beginning on September 21, 2005 and ending on September 30, 2006, these three States are eligible for loans under Section 406 of the Social Security Act.  The cumulative dollar amount of all loans that a State could receive under this section may not exceed 20 percent of the amount of the State’s family assistance grant for fiscal year 2006.  The law prohibits the imposition of a penalty against these loan-eligible States for failure to make interest payments or repay the loan before October 1, 2007.

Section 5 authorizes a State or tribe to use any TANF grant for any fiscal year to support needy families affected by Hurricane Katrina.  Thus, both prior-year, unspent funds and current year grants may be used for any TANF benefit or service (not just “assistance”) for these families.  Section 6 clarifies that TANF subsistence benefits provided to a family on a short-term, nonrecurring basis as a result of Hurricane Katrina shall not be considered “assistance” for purposes of the work participation requirements of Section 407 or the 5-year lifetime limit of Section 408(a)(7) of the Social Security Act.

[Note: Under current rules, all nonrecurrent, short-term benefits that meet the conditions of 45 CFR 260.31(b)(1) are already excluded from the definition of assistance and thus, all requirements and prohibitions related to the provision of assistance, including work requirements and time limits.]

Section 7 prohibits the Secretary from imposing any TANF penalty that would otherwise apply to Louisiana, Mississippi or Alabama for failure to comply with specific TANF provisions, except the penalty for misuse of Federal TANF funds or the penalty for failure to maintain the applicable 75 or 80 percent historic level of State expenditures, if the Secretary determines that the failure resulted from Hurricane Katrina or the State acted reasonably in addressing the needs of victims of Hurricane Katrina.  This waiver of penalties applies from September 21, 2005 through September 30, 2006.

Guidance:

Since the House of Representatives passed H.R. 3672 on September 8, 2005, States have raised a variety of implementation and interpretation questions in anticipation of Senate passage and the President signing the bill.  On September 21, 2005, the date of enactment of Public Law 109-68, the Office of Family Assistance offered States the opportunity to participate in a conference call to provide initial implementation guidance and address any questions.  As a follow-up to that discussion, we have decided to issue written guidance on implementing the TANF Emergency Response and Recovery Act of 2005 through the following series of questions and responses.  We hope this information will enable States to immediately access the additional Federal resources that are made available to address the needs of families affected by Hurricane Katrina.

Questions and Answers:

Q.  1: How may a State access the Contingency Fund to cover the short-term, nonrecurrent cash benefits provided to Hurricane Katrina evacuees?

A.  1: Both the statute at Section 403(b) of the Social Security Act and the implementing regulations at 45 CFR 264.70 require a State to submit a written request for Contingency Funds.  The request should include a specific dollar amount based on an estimate of the number of evacuee families that have traveled to your State (not necessarily directly) as a result of Hurricane Katrina.  Only families dislocated from one of the disaster declared States of Alabama, Florida, Louisiana, and Mississippi may be served under this special Contingency Fund provision.  Your estimate for the first quarter of fiscal year (FY) 2006 should include the number of families you anticipate serving from September 21, 2005 through December 31, 2005 multiplied by the average costs of providing short-term, nonrecurring cash benefits to these families.

To make this process as simple as possible, the request may be made by letter, by facsimile or by E-mail. The request should be directed to:

Joseph Lonergan, Director
Division of Mandatory Grants
Office of Administration
Administration for Children and Families
370 L’Enfant Promenade, S.W., 4th Floor East
Washington, DC 20447
FAX: (202) 401-5644
E-mail: JLonergan@acf.hhs.gov

We would note that under the legislation, the “annual reconciliation” process, which is normally required for States that receive Contingency Funds (including the State match requirement), is not applicable.  Under current law, the amount of Contingency Funds paid to a State is considered to be provisional because the actual amount that the State is eligible to receive is not determined until after the fiscal year ends.  The purpose of the annual reconciliation is to determine the amount of Contingency Funds that a State may retain for a fiscal year.  But, because the annual reconciliation process does not apply to Contingency Payments made pursuant to Public Law 109-68, this makes the grant awards “nonprovisional”.  As a result, it is important that you monitor your actual expenditures against your estimates and make necessary adjustments during this limited period of authorization.  After August 31, 2006, it is critical that you compare your awards with actual expenditures for evacuee families and request any adjustment.  Any excess Contingency Funds that were drawn down for the purpose of assisting hurricane evacuees and not returned to the Federal government after the period of eligibility ends would be subject to the single State audit and a potential “misuse of funds” penalty.

Q.  2: Can an eligible “needy” State receive Contingency Funds for the entire period (date of enactment through August 31, 2006) at one time?

A.  2: No, we cannot issue grant awards for the entire period for two reasons:

1.  Section 405 of the Social Security Act requires the Secretary to pay all Section 403 grants, including the Contingency Fund under 403(b) in quarterly installments.
2.  Section 3(b) of Public Law 109-68 (HR 3672) explicitly limits monthly payments to the lesser of the total amount of short-term, nonrecurrent cash benefits, or the existing statutory limitation of 1/12th of 20% of SFAG.

Q.  3: Is the monthly statutory limitation of 1/12th of 20 percent under Section 403(b)(3)(C(i) of the Social Security Act only a limit on the Secretary’s reimbursement authority for a month, or a limit on the amount of a State’s claimable expenditures in any month, or both?

A.  3: We interpret this provision as capping the total amount of reimbursement that may be provided in a month, but not the amount of claimable expenditures for that month.  In other words, the funding limitation does not mean that expenditures incurred in a month can only be reimbursed with funds available for that month.  As an illustration, a State provides short term, nonrecurring cash benefits to 1,000 evacuee families in September, and the capped funding only covers the costs for 800 families.  In May 2006, if the costs of providing short term cash benefits to 400 evacuee families are only half of the 1/12th of 20 percent limitation, the State could then claim Federal reimbursement for the excess, unpaid expenditures made for evacuee families in September 2005.

A State can get reimbursed for actual expenditures up to the capped limitation in September, and then claim any un-reimbursed expenditures in future months over the course of the year, as long as the reimbursements are for allowable short term, nonrecurring cash assistance expenditures, the State does not exceed its monthly cap, and Contingency Funds are available.

Q.  4: May a State treat the first four months of regular TANF “assistance” to a family as a short-term, nonrecurrent cash benefit?

A.  4: While we are sympathetic to the emergency situation States faced in addressing the needs of hurricane evacuees, we do not believe such a conversion is permissible.  Congress, in passing this legislation, explicitly limited reimbursement to short-term, nonrecurrent cash benefits. Under 45 CFR 260.31(b)((1), we clarified that one form of non-assistance is:  nonrecurrent, short-term benefits that are designed to deal with a specific crisis situation or episode of need; are not intended to meet recurrent or ongoing needs; and will not extend beyond four months. Regular TANF “assistance” does not conform to this definition in two ways:  1) it covers recurrent, ongoing basic needs; and 2) it will extend beyond four months, if eligibility and need continues. Therefore, the first four months of a recurring basic needs payment does not meet the definition of a nonrecurring, short-term benefit.

Our intention in developing the rule was to support State efforts to address the emergency needs of families and State efforts to divert families from the welfare rolls through short-term relief that could resolve discrete family problems.  We said in the preamble that “A family may receive such benefits more than once.  However, the expectation at the time they are granted is that the situation will not occur again and such benefits are not to be provided on a regular basis”.  We also clarified that the four month limit does not impose a specific monetary limit on the benefits.  A key feature of this exclusion from the definition of assistance is that none of the TANF programmatic requirements apply to these families, including work requirements, time limits and data reporting.

Q.  5:  May a State claim the costs of short-term, nonrecurrent cash benefits provided to evacuee famil ies before enactment of Public Law 109-68?

A.  5: No. The law makes States eligible for the Contingency Fund “beginning with the date of enactment of this Act (September 21, 2005) and ending with August 31, 2006”.  Under the principles of appropriations law, expenditures incurred prior to the effective date of a law may not be claimed, unless explicitly authorized in the statute.  This legislation does not contain such an authorizing provision.  Accordingly, expenses incurred before September 21, 2005 are not covered.

Q.  6:  A condition of reimbursement under Section 3(c) of Public Law 109-68 is that “the State has determined that the family is not receiving cash benefits” from any TANF program of another State.   What must States do to meet this requirement of the law?

A.  6:  Because the legislation does not specify any method for how States are to make this determination, we believe the method is a matter of State choice and discretion.  For example, a State may choose to accept the statement or declaration of an evacuee family, or the State may choose to request confirming information from any of the disaster-affected States or another State.

Q.  7: Can child care be provided and claimed as Contingency Funds?

A.  7: Yes, as long as a State provides short-term, nonrecurrent TANF cash benefits that includes child care costs to evacuee families.  The cash benefit must be provided to the family either for anticipated short-term child care needs, or as reimbursement for these incurred child care costs.  Because the statute reimburses States for short-term, nonrecurrent, TANF cash benefits that have been provided to a family, payments to providers may not be included.  We also remind States that Contingency Funds provided under Section 403(b) of the Social Security Act may not be transferred to either the Title XX State agency or the agency administering the Child Care and Development Block Grant; the TANF fund transfers authorized by Section 404(d) of the Social Security Act are limited to grants under Section 403(a).

Q.  8: Must the evacuee families have “traveled from” specified disaster related counties?

A.  8: Section 3 of Public Law 109-68 covers any family that resided in “another State that includes an area for which a major disaster has been declared…”.  This includes any family from the States of Alabama, Florida, Louisiana and Mississippi that has traveled (not necessarily directly) to another State as a result of the hurricane.  States have discretion in determining whether the travel was a result of the hurricane.

Q.  9: Are additional Contingency Funds available under Public Law 109-68 for States who anticipate drawing down the full 20 percent of funds available as “needy” States under the increase in the Food Stamp caseload or unemployment triggers?

A.  9: Public Law 109-68 does not establish additional or separate funding for “evacuee families” under the Contingency Fund.  States that are eligible for Contingency Funds as “needy” States in a month under more than one qualifying condition are still subject to the monthly 1/12th of 20 percent of the SFAG limitation.  States in this situation may choose to draw down funds under the restrictions associated with either or both triggers.  However, a State that uses Contingency Funds based on the Food Stamp or unemployment triggers are still subject to the 100 percent MOE requirement, and the annual reconciliation and matching fund requirements of Section 403(b)(6) of the Social Security Act.

Q.  10: What are “cash benefits”?

A.  10: Neither the statute, nor our current rules define the term “cash benefits;” therefore, States may define and use the term under a “reasonable interpretation” of the law.  As States make this determination, they should note several considerations:

  • Public Law 109-38 reimburses States only for short-term, nonrecurring cash benefits provided to evacuee families.  Therefore, it would not be reasonable to conclude that vouchers, certificates or the like provided to vendors or a State’s direct payments to vendors constitutes “cash benefits provided to a family.”
  • The closest definition to “cash benefits” in current regulations is the definition of (Welfare-to-Work) “WtW cash assistance” under 45 CFR 260.32. It includes benefits provided in the form of “cash payments, checks, reimbursements, electronic funds transfers, or any other form that can legally be converted to currency”.  The preamble used an example to distinguish between a WtW cash benefit and a WtW “noncash” benefit.  “Examples of “noncash” assistance would include housing vouchers or a State version of food stamps.”  (64 FR, p. 17761) Noncash benefits do not meet the intent of Public Law 109-68, Section (3)(a).
  • Under the former AFDC program, the term “cash benefits” was often used interchangeably with the term “money payments” to eligible families and individuals. Money payments were “payments in cash, checks, or warrants immediately redeemable at par, made to the grantee (for Federal matching purposes, known as Federal financial participation under the former AFDC program) or his legal representative with no restrictions imposed by the agency on the use of funds by the individual”.  It would be reasonable to conclude that a cash payment to a person that the agency, court, or other administrative setting, officially designated as the family’s legal representative or representative payee constitutes a cash benefit to the family.

Q.  11: What restrictions, if any, apply to the use of the “loan” funds for Louisiana, Mississippi, and Alabama?

A.  11: Unlike Sections 3, 5, 6, and 7 of Public Law 109-68, Section 4 (Loan-Eligible States) does not expressly mention Hurricane Katrina.  Therefore, we have concluded that the loan-eligible States of Louisiana, Mississippi, and Alabama may use the Federal Loan funds received under Section 4 of Public Law 109-68 for or on behalf of victims of Hurricane Katrina and Hurricane Rita, in any manner that is reasonably calculated to accomplish a TANF purpose and in any way Federal State Family Assistance Grants may be used. Section 406 of the Social Security Act permits States to use Federal loan funds “for any purpose for which grant amounts received by the State under section 403(a) may be used ….”

Under Section 4(b) of Public Law 109-68, there is some ambiguity in the express legislative language with respect to whether Congress intended to permanently forgive a penalty for failure to make interest payments or repay a loan, or whether such forgiveness only applied though October 1, 2007.   But, the announcements by the bill’s sponsor, Congressman McCrery, and nearly all summaries of the legislation indicate an intention to permanently prohibit the Secretary from imposing a failure to repay penalty on these three States.  To ensure that legislative intent is carried out within the constraints of the legislative language, ACF will make the loans to these States with a period of maturity only through September 30, 2007.  Then, we believe it is clearly implied that no penalty may be imposed for failure to make interest payments or repay the loan, because the entire repayment period is forgiven.

Q.  12: Do the assignment of support rights, and cooperation with child support requirements apply to these short-term, nonrecurrent cash benefits?

A.  12: Under Section 408(a)(2) of the Social Security Act, a State must reduce or eliminate assistance to a family if a parent does not cooperate with the Child Support Enforcement agency in establishing paternity or in establishing, modifying, or enforcing a support order for her child. Under Section 408(a)(3), the family must assign its rights to child support to the agency as a condition of receiving assistance. These prohibitions apply only to the receipt of “assistance.” Since short-term, nonrecurrent cash benefits are not “assistance”, these requirements do not apply.

However, for custodial families who are receiving short-term benefits and would like to apply for and receive child support enforcement services, we believe it is essential that States provide them with these services during this critical time of family economic distress.

Q.  13: How do the restrictions on aliens apply to short-term, nonrecurring cash benefits?

A.  13: If the State uses Federal TANF funds to provide these cash benefits to the financially needy, then they appear to meet the criteria of a Federal public benefit.  Only citizens, U.S. nationals, and qualified aliens may receive a Federal public benefit.  For a Federal public benefit, States must verify that the non-citizen is in satisfactory immigration status - i.e., a qualified alien. (42 USC 1642 and section 1137(d) of the Social Security Act) However, States have some flexibility in verifying satisfactory immigration status.  Section 1137(d)(2)(B of the Social Security Act allows States to accept “such other documents as the State determines constitutes reasonable evidence indicating a satisfactory immigration status”.  A State could, for example, determine that the declaration by an individual that she is a citizen or national of the U.S. or that she is in satisfactory immigration status is reasonable evidence under the current emergency circumstances created by Katrina.

Q.  14: What reporting requirements apply to these Contingency Funds?

A.  14: Since short-term, nonrecurrent cash benefits are not assistance under the definition of “assistance” at 45 CFR 260.31, they are subject to the same reporting requirements as any other expenditure for nonassistance.  Such expenditures of TANF funds are to be reported on the appropriate lines of the ACF-196.  Also, under the “annual report” requirements of 45 CFR 265.9(a)(6) a State must include “A description of any nonrecurrent, short-term benefits provided, including:  eligibility criteria, policies that limit such payments to families, and procedures to ensure that individuals diverted from assistance receive information/access to Medicaid and Food Stamps.

Inquiries:

Please direct any inquiries to the appropriate Administration for Children and Families Regional Administrator.

/s/

Sidonie Squier
Director
Office of Family Assistance


H.R.3672 (Became Public Law No: 109-68)

One Hundred Ninth Congress of the United States of America at the First Session Begun and held at the City of Washington on Tuesday, the fourth day of January, two thousand and five an Act to provide assistance to families affected by Hurricane Katrina, through the program of block grants to States for temporary assistance for needy families.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

Section 1.  Short Title.

This Act may be cited as the `TANF Emergency Response and Recovery Act of 2005.

Section 2.  Advance Payment of TANF Block Grants for the First Quarter of Fiscal Year 2006.

(a) In General- Notwithstanding section 405 of the Social Security Act, the Secretary of Health and Human Services shall pay each grant payable under section 403 of such Act for the first quarter of fiscal year 2006, as soon as practicable after the date of the enactment of this Act.

(b) Extension of the Temporary Assistance for Needy Families Block Grant Program Through December 31, 2005-

(1) In General - Activities authorized by part A of title IV of the Social Security Act, and by section 1108(b) of such Act, shall continue through December 31, 2005, in the manner authorized for fiscal year 2005, and out of any money in the Treasury of the United States not otherwise appropriated, there are hereby appropriated such sums as may be necessary for such purpose.  Grants and payments may be made pursuant to this authority through the first quarter of fiscal year 2006 at the level provided for such activities through the first quarter of fiscal year 2005.

(2) Conforming Amendments-

(A) Supplemental Grants for Population Increases in Certain States - Section 403(a)(3)(H)(ii) of the Social Security Act (42 U.S.C. 603(a)(3)(H)(ii)) is amended by striking `September 30' and inserting `December 31'.

(B) Contingency Fund - Section 403(b)(3)(C)(ii) of such Act (42 U.S.C. 603(b)(3)(C)(ii)) is amended by striking `2005' and inserting `2006'.

(C) Maintenance of Effort - Section 409(a)(7) of such Act (42 U.S.C. 609(a)(7)) is amended-
(i) in subparagraph (A), by striking `or 2006' and inserting `2006, or 2007'; and
(ii) in subparagraph (B)(ii), by striking `2005' and inserting `2006'.

(c) Extension of the National Random Sample Study of Child Welfare and Child Welfare Waiver Authority Through December 31, 2005- Activities authorized by sections 429A and 1130(a) of the Social Security Act shall continue through December 31, 2005, in the manner authorized for fiscal year 2005, and out of any money in the Treasury of the United States not otherwise appropriated, there are hereby appropriated such sums as may be necessary for such purpose. Grants and payments may be made pursuant to this authority through the first quarter of fiscal year 2006 at the level provided for such activities through the first quarter of fiscal year 2005.

Section 3.  Reimbursement of States for TANF Benefits Provided to Assist Families from Other States Affected by Hurricane Katrina.

(a) Eligibility for Payments from the Contingency Fund - Beginning with the date of the enactment of this Act and ending with August 31, 2006, a State shall be considered a needy State for purposes of section 403(b) of the Social Security Act if--

(1) cash benefits under the State program funded under part A of title IV of the Social Security Act have been provided on a short-term, nonrecurring basis, to a family which--

(A) has resided in another State that includes an area for which a major disaster has been declared under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) as a result of Hurricane Katrina; and
(B) has travelled (not necessarily directly) to the State from such other State as a result of the hurricane; and

(2) the State has determined that the family is not receiving cash benefits from any program funded under such part of any other State.

(b) Limitation on Funding- Subject to section 403(b)(3)(C)(i) of the Social Security Act, the total amount paid under section 403(b)(3)(A) of such Act to a State which is a needy State for purposes of section 403(b) of such Act by reason of subsection (a) of this section shall not exceed the total amount of cash benefits provided as described in subsection (a)(1) of this section, to the extent that the condition of subsection (a)(2) of this section has been met with respect to the families involved.

(c) No State Match Required- Sections 403(b)(6) and 409(a)(10) of the Social Security Act shall not apply with respect to a payment made to a State by reason of this section.

Section 4.  Availability of Additional TANF Funds for Hurricane-Damaged State.

(a) Certain States Made Eligible for Loans - Beginning with the date of the enactment of this Act and ending with the end of fiscal year 2006:

(1) The States of Louisiana, Mississippi, and Alabama shall be considered loan-eligible States for purposes of section 406 of the Social Security Act.
(2) Notwithstanding section 406(d) of the Social Security Act, the cumulative dollar amount of all loans made to such a State under such section by reason of this section shall not exceed 20 percent of the State family assistance grant payable to the State under section 403 of such Act for fiscal year 2006.

(b) Forgiveness of Loans - Notwithstanding section 406 of the Social Security Act, a penalty may not be imposed against any of the States of Louisiana, Mississippi, or Alabama for failure to--

(1) Repay a loan made to the State under such section on or after the date of the enactment of this Act and before October 1, 2007; or
(2) make any interest payment on such a loan.

Section  5.  Availability of Unspent TANF Funds to Provide Benefits and Services to Support Needy Families Affected by Hurricane Katrina.

A State or tribe may use a grant made to the State or tribe under part A of title IV of the Social Security Act for any fiscal year to provide, without fiscal year limitation, any benefit or service that may be provided under the State or tribal program funded under such part to support needy families affected by Hurricane Katrina.

Section 6.  Work Requirements and Time Limits Under TANF Program Not Triggered by Receipt of Temporary TANF Benefits by Families Affected by Hurricane Katrina.

Benefits provided on a short-term, nonrecurring basis under a State program funded under part A of title IV of the Social Security Act, during the period that begins with the date of the enactment of this Act and ends with the end of fiscal year 2006, to meet a subsistence need of a family resulting from Hurricane Katrina shall not be considered assistance for purposes of sections 407 and 408(a)(7) of the Social Security Act.

Section 7.  Waiver of TANF Penalties in Hurricane-Damaged States.

The Secretary of Health and Human Services shall not impose a penalty on any of the States of Louisiana, Mississippi, or Alabama under any of paragraphs (2) through (6), or (8) through (14) of section 409(a) of the Social Security Act with respect to a failure to comply with a provision of part A of title IV of such Act during the period that begins with the date of the enactment of this Act and ends with the end of fiscal year 2006, if the Secretary determines that the failure resulted from Hurricane Katrina or reasonable conduct of the State in addressing needs of victims of Hurricane Katrina.

Section 8.  Emergency Designation.

Each amount provided in this Act (other than in section 2) is designated as an emergency requirement pursuant to section 402 of H. Con. Res. 95 (109th Congress).

Speaker of the House of Representatives.

Vice President of the United States and President of the Senate.