Q & A: State Maintenance-of-Effort and Tribal Programs

State Maintenance-of-Effort and Tribal Programs

Q1: What are the basic program and financial requirements that State TANF agencies must follow when contributing State maintenance-of-effort (MOE) funds to Tribal TANF programs within the State?

A1: TANF-ACF-PA-00-4, dated November 27, 2000 advises that State funds paid to an Indian tribe with an approved Tribal Family Assistance plan may count toward the State's basic MOE requirement for the fiscal year. This assumes that the State funds given to the Tribe are actually used for, or on behalf of, eligible families, as defined in 45 CFR 263.2(b), during that fiscal year. Basically, an eligible family is a financially needy family that consists of, at a minimum, a child living with a relative, or consists of a pregnant woman. States establish the financial eligibility criteria (income and resources (when applicable)) for receiving the benefit(s) or service(s). The State may adopt the financial eligibility criteria the Tribe has set to receive Tribal benefits or services as the State's standard for "needy" for Tribal benefits from MOE funds." The State's TANF plan must contain the financial eligibility criteria for all MOE-funded benefits and services.

The State is responsible for ensuring that the funds paid to the Tribe are used in accordance with all MOE requirements. In TANF-ACF-PA-00-4, we wrote that "States and Tribes need to establish a mechanism that will enable the State to know how the Tribe has used the State's MOE funds and the number of eligible families served with the funds. This is because States must continue to report on the TANF Financial Report form (ACF-196) all MOE funds contributed to a Tribe or consortium of Tribes operating an approved Tribal TANF plan." Hence, the State and the Tribe must work together so that the State can have the accounting information it needs for audit and reporting purposes. In this regard, we highly recommend that the State prepare a written document for the State and Tribe to sign, which clearly sets forth the use of the MOE funds paid to the Tribe."

TANF-ACF-PA-00-4 also discusses Tribal TANF programmatic requirements that apply when the Tribe provides "assistance" using State MOE funds that have been commingled with its Tribal TANF grant funds, as well as those that apply when the Tribe provides "assistance" using State MOE funds that have been segregated from its Tribal TANF grant funds. It is also important for Tribes to know that a commingled funding structure is the least flexible funding arrangement. This is because all the expenditures are subject to Federal funding restrictions, Tribal TANF programmatic requirements and MOE limitations. Therefore, we recommend that Tribes do not commingle State MOE funds with Federal Tribal TANF funds.

Q2: If the Tribal TANF program provides services to families in more than one State (e.g., the Navajo Tribal TANF program), are there any restrictions on how the Tribal TANF agency can use the MOE funds contributed from individual States whose boundaries cover the Tribal service area?

A2: The Tribal TANF agency must use the State's MOE funds for or on behalf of eligible families residing in that State. With respect to eligible families, title IV-A, section 409(a)(7)(B)(i)(I) of the Social Security Act and implementing regulations at 45 CFR 263.2(a) provide that qualified expenditures for or on behalf of such families may come from all State programs -- i.e., the State's TANF program or separate (nonTANF) State programs. Families residing in another State would not be covered under the State's TANF program or a separate State program, even if such families met the definition of "eligible family," including the financial eligibility criteria.

Hence, the Tribe is limited to using the MOE funds provided by the particular State to help eligible Tribal families residing in that State in ways that "qualify" -- i.e., as set forth in 45 CFR 263.2(a). These include expenditures to provide cash assistance, child care assistance, certain educational activities, or any other use that is reasonably calculated to accomplish the purpose of the TANF program. The Tribe may also use some or all of the MOE funds provided by the State on administrative costs to carry out its Tribal TANF program. HOWEVER, the State must agree to using the funds to pay for administrative costs because such uses fall within the State's 15% administrative cap.

Q3: What financial principles apply when a Tribal TANF agency receives MOE funds from more than one State?

A3: In general, Tribes administering a Tribal TANF program are subject to 45 CFR PART 75—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR HHS AWARDS (Part 75), the applicable provisions of the Statute and regulations, and grant terms and conditions. Part 75,  Departmental guidance, and Grant Policy Directives require grantees to cost allocate according to benefits received when the grantee receives multiple funding sources.

A Tribe receiving MOE funds from a State is responsible for assuring the State that the funds are expended on allowable activities for eligible families. See responses 1a and b above regarding the State's need to meet all MOE requirements in order to receive credit for these expenditures. The State must report the expenditures on the ACF-196. The State also needs to include this activity on its Annual Report on State Maintenance-of-Effort Programs (Form ACF-204).

If a Tribe is receiving MOE funding from more than one State, it must allocate funds in such a manner as to assure each State affected that the funds contributed by the State are only being expended to the benefit of eligible TANF participants residing in that State. This is true whether the funds are used to provide benefits and services to eligible family members or used to help offset the Tribe's TANF administrative expenditures on behalf of eligible families. Hence, if the Tribal service area includes more than one State, and the Tribe has centralized administrative (e.g., services related to accounting, litigation, audits, management of property, payroll, and personnel) and/or programmatic services for or on behalf of eligible families residing in the Tribal TANF service area, then the Tribe must take care to use only a fair share of each State's MOE contribution to help pay such administrative and/or programmatic costs. The amount of the State's MOE funds to use must be based on a reasonable and sound estimate of the eligible families residing in that State's Tribal service area benefiting from the activity.

While 45 CFR 286.75(h), and Part 75 require Tribes administering TANF to apply the fiscal accounting principles of section 5(f)(1) of the Indian Self-Determination and Education Assistance Act (25 U.S.C.450c(f)(1) reclassified as 25 U.S.C. 5305 ), relating to submission of a single audit report required by chapter 75 of title 31, United States Code, the audit process for the funds is slightly different. While the accounting principles apply generally to all the funds in the program, the Tribal audit under this section would include only Federal funds the Tribe receives directly from ACF and funds contributed by the Tribe. Any State MOE contributions fall under 45 CFR Part 75 because they are meeting State MOE requirements under title IV-A, section 409(a)(7) of the Social Security Act.