TANF-ACF-PI-2011-02 (Temporary Modification of the TANF Caseload Reduction Credit)
State agencies administering the Temporary Assistance for Needy Families (TANF) Program and other interested parties.
Temporary Modification of the TANF Caseload Reduction Credit.
Section 2101 of Public Law 111-5, Section 407(b)(3) of the Social Security Act, TANF-ACF-PI-2009-02.
To provide guidance about the calculation of the temporarily modified caseload reduction credit when a State uses maintenance-of-effort (MOE) expenditures in excess of its basic MOE amount to increase its credit.
We issued TANF-ACF-PI-2009-02 on April 3, 2009, to inform States about the process we would use to implement the temporary modification of the TANF caseload reduction credit calculation in the American Recovery and Reinvestment Act of 2009 (Recovery Act). The caseload reduction credit reduces a State’s required work participation rate for a fiscal year (FY) by the number of percentage points its caseload declined between FY 2005 and the year prior to the current fiscal year, called the comparison year. We noted in that program instruction that, under the Recovery Act provision, for FYs 2009, 2010, and 2011, a State either may use the prior fiscal year as its comparison year or may use the caseload reduction credit it qualified to receive when the comparison year was FY 2007 or FY 2008, whichever had the lower caseload.
Since issuing that program instruction, we have received questions concerning how we would factor maintenance-of-effort (MOE) expenditures in excess of a State’s basic MOE amount into the modified caseload reduction credit calculation. Under TANF rules, a State that spends MOE funds in excess of its basic MOE amount (i.e., 80 or 75 percent of its historic spending) need only include the pro rata share of caseloads receiving assistance that is needed to meet basic MOE requirements. In other words, it may exclude from its comparison year caseload the share of cases funded with “excess MOE.” The current TANF rules, specifically 45 CFR 261.43, prescribe a method for calculating the number of cases funded with excess MOE, but those rules did not apply for determining the number of cases in the FY 2007 caseload. They only took effect beginning with the FY 2009 caseload reduction credit, i.e., for determining the number of cases in FY 2008 caseload and thereafter.
Before the current rules took effect (i.e., for the FY 2007 and FY 2008 caseload reduction credits), we used an approach to excess MOE that many States had proposed in their FY 2007 and FY 2008 Caseload Reduction Reports. In essence, because there was no specific method in place we used a method based on reasonable state interpretation of the statute.
Under the Recovery Act provision, a State may use the prior fiscal year as its comparison year or may use the caseload reduction credit it qualified to receive when the comparison year was FY 2007 or FY 2008. If a State chooses FY 2008 as its comparison year, then 45 CFR 261.43 applies and we will calculate the number of cases funded with excess MOE using the method specified in that regulatory provision. If a State chooses FY 2007 as its comparison year, then 45 CFR 261.43 does not apply, and the calculation of the credit will be based on the methodology previously used in determining the State’s caseload for FY 2007 when we calculated the FY 2008 caseload reduction credit. In essence, we would be using the FY 2008 caseload reduction credit, which compared FY 2007 to the FY 2005 base year. That caseload reduction credit calculation already exists for FY 2008.
As we noted above, this provision only applies to the caseload reduction credits for FYs 2009, 2010, and 2011. Therefore this method of calculating the number of cases funded with excess MOE will only apply for these years, and only in the event that the State exercises the option for the temporary modification using FY 2007 as the comparison year and reported MOE expenditures for that fiscal year by the due date previously required for caseload reduction credit. In FYs 2010 and 2011, if a State opts for the temporary modification but opts to use FY 2008 as the comparison year, we will use the excess MOE methodology in the TANF regulations.
If this guidance should cause a State to reconsider its decision regarding using the substitute comparison-year caseload in any of the applicable years, it should contact the TANF Program Manager in the ACF Regional Office. If a State wishes to make such a change, it should advise the Regional Office within two weeks of the issuance of this program instruction, otherwise we will calculate the caseload reduction credit based on the information previously provided.
Please direct inquiries to the TANF Program Manager in your Region.
Earl S. Johnson
Office of Family Assistance
Last Reviewed: October 29, 2015