39234 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Administration for Children and

Families

45 CFR Part 284

RIN 0970–AB65

Methodology for Determining Whether

an Increase in a State or Territory’s

Child Poverty Rate Is the Result of the

TANF Program

AGENCY: Administration for Children

and Families, HHS.

ACTION: Final rule.

SUMMARY: This final rule establishes the

methodology the Administration for

Children and Families will use to

determine the child poverty rate in each

State and Territory. If any jurisdiction

experiences an increase in its child

poverty rate of five percent or more as

a result of the Temporary Assistance for

Needy Families (TANF) program, the

State or Territory must submit and

implement a corrective action plan. This

requirement is a part of the TANF

program, the welfare reform block grant

enacted in 1996.

EFFECTIVE DATE: This rule is effective

August 22, 2000.

FOR FURTHER INFORMATION CONTACT:

Sean Hurley at (202) 401–9297 or

Dennis Poe at (202) 401–4053.

Deaf and hearing-impaired

individuals may call the Federal Dual

Party Relay Service at 1–800–877–8339

between 8:00 a.m. and 7:00 p.m. Eastern

time.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Statutory Provisions and Regulatory

History

II. Provisions of the NPRM

III. Comment Overview

IV. Discussion of the Final Rule

A. Response to Comments on Cross-cutting

Issues and Issues Not Tied to the

Regulatory Text

1. Intent of the statute and the relationship

between the TANF program and child

poverty

2. Tribal TANF programs and section

413(i) of the Act

3. Recommendations to improve the

national poverty measure

B. Summary of the Final Rule

C. Section-by-Section Discussion of the

Regulatory Text

V. Regulatory Impact Analyses

A. Executive Order 12866

B. Regulatory Flexibility Analysis

C. Assessment of the Impact on Family

Well-Being

D. Paperwork Reduction Act

E. Unfunded Mandates Reform Act of 1995

F. Congressional Review

G. Executive Order 13132

I. Statutory Provisions and Regulatory

History

On September 23, 1998, the

Administration for Children and

Families (ACF) published a Notice of

Proposed Rulemaking to implement

section 413(i) of the Social Security Act

(63 FR 50837). This section of the Act

is a part of the welfare reform block

grant program known as Temporary

Assistance for Needy Families, or

TANF.

The TANF program was added to the

Social Security Act by the Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996 (PRWORA),

signed by President Clinton on August

22, 1996. The first title of this new law,

‘‘Block Grants for Temporary Assistance

for Needy Families’’ (sections 101–116,

Pub. L. 104–193) established a

comprehensive welfare reform program

designed to change dramatically the

nation’s welfare system into one that

promotes work and responsibility. The

new program is called Temporary

Assistance for Needy Families in

recognition of its focus on time-limiting

assistance and moving recipients into

work.

PRWORA repealed the existing

welfare program known as Aid to

Families with Dependent Children

(AFDC), which provided cash assistance

to needy families on an entitlement

basis. It also repealed the related

programs known as the Job

Opportunities and Basic Skills Training

program and Emergency Assistance.

The new TANF program went into

effect on July 1, 1997, except in States

that elected to submit a complete plan

and implement the program at an earlier

date.

This landmark welfare reform

legislation dramatically affects not only

needy families, but also

intergovernmental relationships. It

challenges Federal, State (including

Territories), Tribal, and local

governments to foster positive changes

in the culture of the welfare system and

to take more responsibility for program

results and outcomes. It also challenges

them to develop strong interagency

collaborations and improve their

partnerships with legislators, advocates,

businesses, labor, community, and faithbased groups, and other parties that

share their interest in helping needy

families transition into the mainstream

economy.

This legislation also gives States and

Tribes the authority to use Federal

welfare funds ‘‘in any manner that is

reasonably calculated to accomplish’’

one or more of the four purposes of the

new program. It provides them broad

flexibility to set eligibility rules and

decide what benefits are most

appropriate, and it offers States and

Tribes an opportunity to try innovative

ideas so they can respond more

effectively to the needs of families

within their own unique environments.

One of the concerns of Congress in

passing PRWORA, however, was the

potential harm to children that might

result from the loss of Federal

entitlement to benefits or the

unsuccessful efforts of their caretakers

to achieve self-sufficiency within the

five-year time limit for receipt of

federally-funded TANF assistance.

Congress was also concerned that States

might take an overly-cautious approach

to implementing the new law and, for

example, not take advantage of the

opportunities under the TANF program

to use new ways to assist families to

obtain and retain employment and

increase economic capability.

To address these concerns, Congress

added section 413(i) (42 USC 613(i)) to

the Social Security Act (the Act)).

Specifically:

• Section 413(i)(1) of the Act requires

the Chief Executive Officer of each State

(including the Territories) to submit

annually to the Secretary a statement of

the child poverty rate in the State. The

first statement, due May 31, 1998, was

required to report on the child poverty

rate at the time of enactment of

PRWORA, or August 22, 1996.

• Section 413(i)(2) specifies that, in

subsequent years, if the child poverty

rate in a State increases by five percent

or more from the previous year as a

result of the TANF program(s) in the

State, the State shall prepare and submit

a corrective action plan to the Secretary.

• Section 413(i)(3) provides that the

corrective action plan shall outline the

manner in which the State will reduce

the child poverty rate in the State and

include a description of the actions to

be taken by the State under the plan.

• Section 413(i)(4) specifies that the

State shall implement the corrective

action plan until the State determines

that the child poverty rate in the State

is less than the lowest child poverty rate

on the basis of which the State was

required to submit the corrective action

plan.

• Section 413(i)(5) requires the

Secretary to establish the methodology

by which a State will determine the

child poverty rate and specifies three

factors that the Department must take

into account in developing the

methodology: The number of children

who receive free or reduced-price

lunches; the number of food stamp

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39235

households; and, to the extent available,

the county-by-county estimates of

children in poverty as determined by

the Census Bureau.

On May 29, 1998, the Administration

for Children and Families (ACF) issued

a Program Instruction to States (and

Territories operating a TANF program)

clarifying that the State and the

Territory need not submit a statement of

its child poverty rate to us by May 31,

1998, as specified in the statute. We

explained that we planned to send to

each jurisdiction the Census Bureau

estimate of the number of children in

poverty and that we would be

publishing an NPRM in the near future.

See TANF–ACF–PI–98–4.

II. Provisions of the NPRM

Prior to development and publication

of the Notice of Proposed Rulemaking

(NPRM), we held two types of

consultations. First, we raised issues

related to this provision in the general

TANF consultation meetings with

representatives of State and local

government; nonprofit, advocacy, and

community organizations; foundations;

and others. Second, we held

consultations focused specifically on

this provision with national

organizations representing State and

local elected officials; technical,

statistical, and policy experts; and

representatives of research, advocacy,

and public interest organizations that

focus on poverty and child economic

well-being. These discussions were

helpful to us in identifying key issues

and evaluating policy options.

In the NPRM, we discussed issues

raised during our consultations,

including: Measurement of Child

Poverty and the Census Bureau Data,

Use of the County-By-County Estimates

of Children in Poverty in the

Methodology, Use of Food Stamp Data

in the Methodology, Use of Free and

Reduced-Price School Lunch Data in the

Methodology, Relative Importance of

Various Factors in the Proposed

Methodology, and Clarification of the

Term ‘‘Five Percent Increase.’’

In the NPRM, our approach to

establishing a methodology for

determining a State child poverty rate

was based on several principles: Using

the most reliable and objective data on

child poverty currently available (and

thus avoiding a requirement that each

State or Territory must develop its own

child poverty rate); assuring that the

child poverty rate was assessed in

relation to the TANF program in the

context of all appropriate circumstances

in the jurisdiction; and limiting

administrative burden by requiring that

States and Territories provide only

those data readily available and

necessary to implement the statute.

We proposed a sequential

methodology consisting of five major

steps. Not all States or Territories would

be required to participate in all steps.

The proposed methodology for the

Territories was similar to that for the

States but included some necessary

modifications.

We based our methodology on the

estimates of child poverty (the child

poverty rate) developed by the Census

Bureau. The Census Bureau’s child

poverty rate is the official United States

child poverty rate.

Proposed Step 1

• Annually, we would provide each

State with an estimate of the number

and percentage of children living at or

below 100 percent of the Federal

poverty threshold within the State,

based on Census Bureau data. This

estimate would be for the calendar year

two years prior to the current calendar

year, e.g., in 1998, we would provide an

estimate for calendar year 1996. The

Census Bureau estimates would

incorporate county-level estimates of

poverty.

• In 1999, and annually thereafter, we

would determine for each State, at the

80-percent confidence level, the change

in the percent of children in poverty for

the most recent two-year period for

which the data are available and

provide this information to the State. In

1999, we would provide data comparing

calendar years 1996 and 1997.

Proposed Step 2

• If the child poverty rate in a State

did not increase by five percent or more,

we would conclude that the State has

met the requirements of section 413(i) of

the Act, and the State would not be

required to submit further information

for that two-year period. (A five percent

increase would mean that the most

recent child poverty rate is at least five

percent higher (i.e., 1.05 times higher)

than the previous year’s rate. A five

percent increase did not mean a five

percentage point increase.)

• If the child poverty rate in a State

increased by five percent or more, we

proposed to require that the State

provide supplemental information to

adjust, explain, or account for this

increase. We proposed that the State,

within 60 days—

a. Must provide data on the average

monthly number of households with

children that received food stamp

benefits for each of the two most recent

calendar years for which data are

available;

b. Must provide data on any changes

in legislation, policy, or program

procedures that have had a substantial

impact on the number of households

with children receiving food stamp

benefits during the same two-year

period, including data on subpopulations affected; and

c. May provide, at State option, other

information covering any pertinent time

period, such as the proportion of

students certified for free or reducedprice school lunches or estimates of

child poverty derived from an

independent source.

Alternatively, if a State chose to

accept the increase in child poverty as

indicated by the Census Bureau data, it

could skip steps two and three and

move directly to step four—the

assessment of the impact of the TANF

program on the increase in child

poverty.

Proposed Step 3

• We would review the food stamp

and other data provided by the State. If

we determined that these data indicated

a subsequent improvement,

commensurate with the poverty increase

in the Census data, it would not be

necessary for the State to proceed to

Step 4 because the more recent data

would indicate that the child poverty

rate in the State was improving.

Proposed Step 4

• If we determined that the food

stamp and other data provided by the

State did not indicate a subsequent

commensurate decrease in child

poverty, we proposed to notify the State

that it must, within 60 days, provide an

assessment (and the information and

evidence on which the assessment was

based) of the impact of the TANF

program in the State on the child

poverty rate. We proposed to give the

States and Territories broad latitude in

the information they could provide.

Proposed Step 5

• We would review the information

provided by the State, along with other

information available such as the State’s

TANF plan and eligibility criteria, data

on other supportive services and

assistance programs, and information on

the State’s economic circumstances. If

we determined that the increase in the

child poverty rate was the result of the

State’s TANF program, we would notify

the State that it would be required to

submit a corrective action plan within

90 days.

39236 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

Proposed Methodology for the

Territories

• To the extent that data are available

and the procedures applicable, we

proposed that the Territories would be

subject to the same general methodology

as described for the States. Because the

Census Bureau does not estimate a child

poverty rate for the Territories, we

proposed that ACF would compute an

estimated child poverty rate for each

Territory, based on information

submitted by the Territory.

• Subsequent procedural steps would

be the same as for States, i.e., as

applicable, we would review

supplemental data to determine whether

the child poverty rate increased by five

percent or more; review the Territory’s

assessment of whether the increase in

the child poverty rate was a result of the

TANF program; and require the

development of a corrective action plan,

as necessary.

Based on this proposed methodology,

we anticipated that a small number of

States and Territories would need to

respond to the requirements of each step

and an even smaller number would be

required to submit a corrective action

plan.

III. Comment Overview

We received 14 comment letters on

the NPRM from seven State TANF

agencies, four national organizations,

two State and local policy and advocacy

organizations, and one United States

Senator. We reviewed and seriously

considered all comments. We

particularly appreciated the fact that

several commenters went beyond

reacting to the proposed regulatory text

to include a helpful discussion of the

issues raised in the preamble and

additional supportive and analytic

information.

In general, most commenters had

mixed views on our proposed approach.

They commended our external

consultation process prior to the

development of the rule and our

‘‘reader-friendly’’ regulations, given the

highly complex and technical nature of

the subject. Several commenters agreed

with specific policy provisions, e.g., our

use of the Census Bureau data, our

recognition of the limited usefulness of

the school nutrition program data, and

the flexibility we proposed to allow

States regarding what information the

State could include in its assessment of

the impact of the TANF program on

child poverty or in the corrective action

plan.

At the same time, we also received

some objections to our proposed

approach and recommendations for

changes. The strongest objections were

directed at our proposal to allow a State

whose child poverty rate had increased

by five percent or more to provide food

stamp participation data in order to

adjust for deficiencies in the Census

Bureau data. Our rationale in the NPRM

was that food stamp participation data

(which historically had tracked the

poverty rate) could be used to show

evidence of more recent trends that

would explain or ‘‘rebut’’ the increase in

child poverty. Commenters pointed out

that the food stamp participation rate,

indeed, had tracked poverty in the past

but that recent evidence indicated that

it no longer did so. They urged the

deletion of this provision. Others

objected to this provision on the

grounds of administrative and reporting

burden.

Two commenters objected to what

they believed were implicit assumptions

in the statute, i.e., that child poverty is

the result of the TANF program or that

the TANF program could affect child

poverty in any meaningful way. Others

objected to the additional administrative

burden of specific provisions and

questioned several technical provisions,

e.g., our use of the 80-percent

confidence interval in determining the

child poverty rate.

Some commenters called to our

attention that we had not addressed the

role of the Tribal TANF programs in

implementing this section of the Act.

Some recommended that we clarify that

States may exclude the Tribal TANF

population in the calculation of the

State’s child poverty rate.

In addition, one advocacy

organization urged us to focus not only

on a five percent increase in the child

poverty rate but also to address the

‘‘poverty gap,’’ i.e., the depth of poverty

for those children below the poverty

level. Finally, two national

organizations recommended a number

of steps the Department might take to

help improve the national child poverty

measure and, thus, better implement the

overall intent of the statute.

We have organized our response to

the comments, first, to address the

issues that are cross-cutting and are not

tied to regulatory text and, second, to

address other issues in the section-bysection discussion of the regulatory text.

IV. Discussion of the Final Rule

A. Response to Comments on Crosscutting Issues and Issues Not Tied to the

Regulatory Text

1. The Intent of the Statute and the

Relationship Between the TANF

Program and Child Poverty

Comments: A number of commenters

expressed differing views on the

purpose of section 413(i) of the Act and

the NPRM. One commenter assumed

that the purpose of the statute and the

regulation was to decrease child poverty

nationally. Other commenters believed

that the intent of the law was to monitor

child well-being and track changes in

the child poverty rate related to

PRWORA. Some commenters objected

to what they believed were implicit

assumptions in section 413(i), i.e., that

the child poverty rate was the result of

the TANF program (a ‘‘cause and effect

relationship’’ was assumed to exist), or

that the TANF program could affect

child poverty in any meaningful way.

One commenter found the statute and

the NPRM ‘‘grossly flawed’’ based on

this implicit assumption.

One commenter stated that, as was

true in the Aid to Families With

Dependent Children (AFDC) program,

the TANF program is not explicitly

designed to elevate families above the

poverty level. Rather, its purpose, they

believed, is to provide a set of financial

and service supports, coupled with an

assumption of personal responsibility,

that will provide the opportunity for a

family to become self-sufficient. Except

in circumstances where the State’s

TANF payments exceed the poverty

rate, this commenter alleged that all

children receiving TANF will already

have incomes beneath the poverty level.

Therefore, because all the affected

persons are already counted as living

beneath the poverty level, no change to

the operation of the TANF program,

whether it be reducing TANF payments,

failing to move families to employment,

or terminating families’ eligibility for

TANF, would increase the poverty rate.

They concluded that only positive

changes made by the TANF program,

such as successful employment

programs which move recipients to

relatively high paying jobs, could affect

the child poverty rate. Significant

changes in the poverty rate, they

believed, are necessarily the result of

factors extrinsic to TANF, such as

economic and demographic shifts. Thus,

it appeared to this commenter that

neither the statute nor the regulations

could be implemented in any

meaningful way.

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39237

Response: We disagree with the

observation that ‘‘all children receiving

TANF will already have incomes below

the poverty line.’’ Based on AFDC data,

we know that, typically, a family may

have income below the poverty line in

a specific month (or months), but family

income would not necessarily fall below

the poverty line on an annual basis.

However, we agree that the intent of

the statute reflects Congressional

concern about PRWORA’s effects on the

well-being of children, including

children who no longer receive TANF

benefits. Section 413(i), as well as other

provisions of the law, were added to

provide a careful look at what is

happening to children following

enactment of this legislation. Clearly,

certain TANF program and policy

decisions could contribute to an

increase in poverty. Finally, and more

importantly, we note that there are

positive actions that State and Tribal

TANF agencies can take to help improve

the poverty status and well-being of

families.

The child poverty rate in the United

States, developed by the Census Bureau,

is a frequently used indicator of child

well-being. (The ‘‘child poverty rate’’

means the percentage of all children in

a State that live in families with annual

incomes below 100 percent of the

Census Bureau’s poverty threshold.)

The national child poverty rate has

declined since 1992 from 22.3 percent

to 18.9 percent, the largest five-year

drop in nearly 30 years. Still, currently,

13.5 million children live below the

poverty line. At the same time, a recent

Census Bureau report found that, among

Americans living below the poverty

line, a greater share held jobs than at

any point in the last 20 years. The

Census Bureau found that, in 1998, 12.5

percent of poor adults worked full-time

(a 22 percent increase over 1997), and

another 41 percent worked part-time.

In the context of the TANF program,

employment is central to assisting

families to escape poverty. States have

made huge progress in moving families

to work; large increases in employment

are evident from every information

source. However, for many families,

work by itself will not guarantee an

escape from poverty unless other critical

supports are in place. Thus, the

challenges are to continue the

movement of families into work, build

supports that can sustain parents in

work, and help them move to more

enduring and higher paying jobs, so that

families who work will not be poor.

The TANF program, as opposed to the

AFDC program, allows States to provide

a broad array of supports for working

families and to provide them

independently of the basic cash welfare

system. Unlike AFDC, TANF can be an

effective vehicle for reducing poverty,

supporting families, and making work

pay.

A number of innovative States are

using child poverty as a measure of their

efforts to assist families, and some

States are already using the resources

and flexibility under TANF to address

this issue. Some activities that

specifically address poverty include:

• Under TANF, utilizing well-known

strategies to supplement work, such as

more generous earning disregards,

earnings supplements, and wage

subsidies;

• Improving child support, such as

increasing the amount of support

collected from non-custodial parents

that is passed through to children; and

• Enacting State refundable tax

credits.

Recent research findings from studies

in Minnesota and Oregon support the

use of these specific strategies in

reducing poverty.

In addition to these activities directly

related to reducing poverty, States are

undertaking a number of supportive

activities which indirectly help make

work pay, including:

• Taking critical steps to ensure that

eligible families, including those that do

not receive TANF, do receive food

stamps and Earned Income Tax Credit

payments for which they are eligible;

• Increasing the stability of work

through investments in the wages

parents earn or the hours they work,

such as employer partnerships that

focus on the first job, on job

advancement after the first job, or on

combinations of work and training;

mentoring and case management

strategies; strategies that combine work,

education, and training; and supported

work for families with barriers to private

sector employment;

• Helping families during periods

between jobs, such as quick reemployment services; and

• Providing employment assistance

for other families, such as a child-only

family where a caretaker relative is not

receiving assistance.

We are continuing to monitor what is

happening to children and families as a

result of the enactment of the TANF

program. In addition to section 413(i),

we are looking at State performance and

accomplishments through the High

Performance Bonus and the Out-ofWedlock Childbearing Bonus. We are

also sponsoring a variety of research

studies and evaluations to assess the

impact of welfare reform, e.g., we are

measuring the effects of different

approaches to welfare reform on child

well-being, and numerous studies are

tracking families leaving TANF.

2. Tribal TANF Programs and Section

413(i) of the Act

Comments: As several commenters

pointed out, we did not address the

issue of child poverty in areas covered

by Tribal TANF programs in the NPRM.

They asked for clarification in the final

rule on how Tribes operating TANF

programs will be considered in the

poverty rate calculation and

recommended that we allow States to

exclude the Tribal TANF population in

the calculation of a State’s child poverty

rate. These commenters also indicated

that it was unfair to hold the State

TANF program accountable for the

Statewide child poverty rate when the

State has no authority over or

responsibility for the conduct of the

TANF program in areas of the State

covered by a Tribal TANF program(s).

Response: Section 413(i) of the Act

specifies the responsibilities of the Chief

Executive Officer of the State in relation

to increases in the child poverty rate

and the TANF program(s) in the State.

Section 413(i)(2) also provides that an

assessment of the increase in the State’s

child poverty rate shall be made in

relation to ‘‘the amendments made by

section 103 of PRWORA.’’ Because

section 103 of PRWORA authorizes both

State and Tribal TANF programs, the

Chief Executive Officer must address

increases in the State’s child poverty

rate in relation to both State and Tribal

TANF programs in the State.

We do not accept the

recommendation that the States may

exclude the Tribal TANF population in

a calculation of a ‘‘State’’ child poverty

rate. We could not implement this

recommendation because the statute

clearly specifies that both State and

Tribal TANF programs must be

considered. In addition, the Census

Bureau does not determine a separate

child poverty rate for Tribal lands or

reservation areas.

In response to comments, however,

we have amended three sections of the

final rule. Specifically, we have:

• Amended § 284.15(b) to provide

that the State should obtain information

from and work with any Tribe(s) (and

Tribal consortia) operating a Tribal

TANF program in the State in preparing

and submitting the assessment of the

impact of TANF programs on the

increase in child poverty and the

corrective action plan;

• Added, in § 284.30(b), examples of

Tribal TANF information that might

appropriately be included in the

assessment;

39238 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

• Extended, in § 284.21, the period of

time the State has submit the

assessment, from 60 days to 90 days, in

part to allow further opportunity for

State and Tribal coordination; and

• Specified in § 284.45 that any

actions to reduce child poverty to be

taken by the Tribe(s) must be included

in the corrective action plan.

In the context of State and Tribal

cooperation, we note that there are 330

American Indian entities in the

contiguous 48 States and 13 Alaska

entities eligible to administer a Tribal

TANF program. Currently, there are 21

approved Tribal TANF plans in

operation. (One additional Tribal TANF

plan is approved but not yet in

operation.) Nineteen of these programs

involve individual Tribes and three are

operated by inter-tribal consortia. (One

consortium in California is composed of

19 Tribes; another consortium is

composed of 37 Alaska Native villages

(Tribes); and the third consortium is

made up of 20 Alaska Native villages

(Tribes).) Additional Tribes are

exploring the option of operating a

TANF program.

Both State and Tribal TANF programs

serve Indian families. Based on the most

recent data available from 1999, Indian

tribes expect to serve approximately

3,800 families in FY 2000. In FY 1998,

approximately 46,702 American Indian

families were served by State programs.

In several States, American Indians

constitute a large percentage of the State

TANF caseload, i.e., 73 percent of South

Dakota’s TANF caseload, 54 percent in

North Dakota, about 41 percent in

Alaska, and over 46 percent in Montana.

Tribes that operate a TANF program

have the flexibility to design programs

and services; define eligibility criteria;

establish benefits; and design strategies

for achieving program goals, including

helping recipients become selfsufficient.

Welfare reform also provided Tribes

and States with new opportunities for

communication, coordination, and

collaboration to help achieve program

goals. One of the most important ways

States have been working with Tribes to

address the issue of poverty is by

making State supplemental

contributions to Tribal TANF programs

(as a maintenance-of-effort (MOE)

expenditure) to expand job-related

activities and strengthen Tribal

programs for families and children. In

addition, a number of States and Tribes

are also entering into a range of

cooperative efforts, including:

• Sharing equipment and resources,

such as computers;

• Co-locating service centers and

sharing office space;

• Conducting joint staff training;

• Coordinating information, reporting

requirements, and reporting systems;

• Establishing consolidated intake

and eligibility determinations,

particularly for the food stamp,

Medicaid, and State Children’s Health

Insurance Programs; and

• Cooperating in the provision of

direct services (e.g., job skills training)

and supportive services, e.g.,

transportation.

The preparation and submittal of an

assessment and a corrective action plan

are additional opportunities for State

and Tribal coordination, both in

meeting the requirements of section 413

of the Act and meeting the needs of

Indian families. We believe the

additional time provided to submit the

assessment will help support such

coordination.

3. Recommendations To Improve the

National Poverty Measures

Comment: Two national advocacy

organizations recommended that the

U.S. Department of Health and Human

Services (DHHS) should take full

advantage of the opportunities afforded

by PRWORA and section 413(i) of the

Act to actively explore activities that

would expand and improve the Census

Bureau’s existing measure of child

poverty. They believed that the most

important purpose of section 413(i) of

the Act is to require a careful look at

what is happening to the well-being of

children following enactment and

implementation of TANF. The

measurement of child poverty,

therefore, provides a useful means of

evaluating changes in child well-being

at the State level. Improved measures

will support this effort.

Generally, these organizations

recommended that the Census Bureau’s

child poverty estimates include data

from both current and new sources and

that currently available data from other

sources should be used (in conjunction

with the official poverty measure) to

focus increased public attention on

child poverty. Specifically, they

recommended that DHHS:

• Support research now underway to

implement the recommendations of the

National Academy of Sciences panel on

poverty measurement;

• Support funding needed to field the

Census Bureau’s American Community

Survey which is designed to provide

more timely State-level data than the

decennial census and more accurate

State-level data than the Current

Population Survey;

• Explore ways to use currently

available data to improve the existing

poverty measure and to add new data to

the measure as they become available,

e.g., modify the Census Bureau’s Small

Area Income and Poverty Estimates by

adding data on food stamps, housing

benefits, earned income tax credits, and

work expenses;

• Encourage States to better assess the

well-being of their children and make

the data more generally useful by

participating in the increased costs of

expanding the Current Population

Survey (CPS) sample size at the State

level;

• Encourage and fund efforts by

States to develop administrative

databases for measuring child wellbeing within their own jurisdictions;

• Use data already collected by the

Census Bureau to show the impact of

specific programs such as TANF by

comparing child poverty before and

after receipt of means-tested government

transfers; and

• Publish measures of the poverty gap

among children to provide an indication

of the depth of poverty, at least at the

national level.

Response: While we generally agree

that these recommendations would help

to improve the Census Bureau’s

measurement of child poverty and

understand the circumstances of

children in poverty, the Department

already participates in a number of

inter-agency and Departmental efforts

that address these recommendations:

• In May 1995, the Panel of Poverty

and Family Assistance appointed by the

National Research Council published a

report in which it proposed a new

approach for developing an official

measure of poverty in the U.S. Since

that time, personnel from the Census

Bureau, the Bureau of Labor Statistics,

and other Federal agencies (including

DHHS) have been engaged in research to

explore possible implementation of the

Poverty Panel’s recommendations.

• In 1997, the Office of Management

and Budget convened a Federal

Interagency Technical Working Group

to Improve the Measurement of Income

and Poverty that includes

representatives from DHHS. In July

1999, the Census Bureau issued a report

on experimental poverty measures,

reflecting the results of ongoing

research. However, none of these

experimental measures has been

selected to replace the current official

definition because a number of issues

remain unresolved. The review of

alternative poverty measures is expected

to carry on for several years. We will

continue to work with this group and

other interested public and private

organizations to develop improved

measures of child poverty.

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39239

• Also at an inter-agency level, the

National Science and Technology

Council’s ‘‘Children’s Initiative

Subcommittee’’ continues to explore the

most effective use of Federal resources

for research focused on child poverty as

well as other issues related to the wellbeing of America’s children.

In addition, the Department is:

• Transferring funds to the Census

Bureau to allow for the expansion of

State and local estimates of poverty to

include children ages 0 to 4;

• Financing a research effort to

advance State Child Indicators

Initiatives. The aims of this program are

to: (1) Promote State efforts to develop

and monitor indicators of the health and

well-being of children as welfare reform

and other policy changes occur; and (2)

help to institutionalize the use of

indicator data in State and local policy

formulation; and

• Funding two national poverty

research centers: The Institute for

Research on Poverty located at the

University of Wisconsin at Madison and

The Joint Center for Poverty Research,

co-located at the Northwestern

University and the University of

Chicago. These national nonprofit, nonpartisan centers focus their research on

the causes and consequences of poverty

and inequality and on interventions to

reduce poverty and dependence and

help focus on and contribute to the

knowledge about this important issue.

In response to the recommendation

for publication of information on

poverty, particularly the poverty gap,

these data are available from the Census

Bureau’s Internet site (www.census.gov)

along with information on how to obtain

more detailed data files. ACF also

publishes poverty gap information in its

annual TANF Report to Congress.

B. Summary of the Final Rule

Our principles, first established in the

development of the NPRM, remain the

same for the final rule: Use the most

recent, reliable, and objective data

available; assess the impact of the TANF

program(s) in the State on any increase

in the child poverty rate of five percent

or more in the context of all appropriate

information; and require minimal

administrative burden on States and

Territories in carrying out these

requirements.

In the final rule, we retained some

policies as proposed in the NPRM and

made several changes and

modifications, based on our

consideration of public comments. We

address these policies and changes in

the section-by-section discussion.

Briefly, however, we:

• Continue to base the State child

poverty rate on the current Census

Bureau estimates, but, if better Census

Bureau data become available, we will

use these data;

• Will provide to States, in 2000, the

Census Bureau’s estimate of the number

and percent of children in poverty in

each State for calendar year 1997 and

the change in the percentage of children

in poverty between 1996 and 1997, at

the 90-percent confidence level rather

than the 80-percent confidence level

proposed in the NPRM. (We provided

the calendar-year 1996 Census Bureau

estimates of children in poverty in each

State to the Chief Executive Officer of

the 50 States and the District of

Columbia on December 21, 1999. We

also sent a copy of this information to

the director of each State’s human

services agency.);

• Allow a State to submit an estimate

of the State’s child poverty rate, derived

from an independent source; we will

accept the State’s estimate if it is more

reliable than the Census Bureau data;

• Eliminated the step in the NPRM

that used food stamp participation rate

data to ‘‘rebut’’ an increase in the child

poverty rate;

• Continue to allow a State wide

latitude in how it conducts its

assessment of the impact of the TANF

program(s) in the State on an increase in

the State’s child poverty rate;

• Allow a State 90 days to submit the

assessment, an additional 30 days

beyond the 60-day period proposed in

the NPRM;

• Continue to allow States to develop

the content and determine the duration

of the corrective action plan in

accordance with the law;

• Clarify that a State should obtain

information from and work with the

Indian tribes (or Tribal consortia)

operating a TANF program in the State

in preparing and submitting the

assessment and the corrective action

plan; and

• Postpone the development of a

child poverty rate for the Territories

(i.e., Guam, Puerto Rico, and the Virgin

Islands) until reliable data are available.

(At the present time, American Samoa

has not applied to implement the TANF

program.)

C. Section-by-Section Discussion of the

Regulatory Text

Section 284.10—What Does This Part

Cover?

In the NPRM, this section provided a

summary of the scope and content of

part 284. We received no comments on

this section.

We made two editorial changes in the

final rule for clarity. First, we added the

word ‘‘Territories’’ to make explicit that

this part applies to States and

Territories. Second, we substituted the

phrase, ‘‘as a result of the TANF

program(s) in the State or Territory’’ for

the phrase ‘‘as a result of TANF.’’ This

latter change emphasizes that an

increase in the State’s child poverty rate

will be assessed in relation to all TANF

programs(s) in the State, i.e., both State

and Tribal TANF programs.

Section 284.11—What Definitions Apply

to this Part?

This section of the NPRM proposed

the definition of terms we used in part

284. We received one comment on this

section indirectly related to our

definition of ‘‘children in poverty.’’ We

had defined this term to mean

‘‘estimates resulting from the Census

Bureau methodology of the percent of

children in a State that live in families

with incomes below 100 percent of the

federal poverty level.’’ These estimates,

developed by the Census Bureau,

constitute the official U.S. child poverty

rate.

In our external consultations prior to

the development of the NPRM, we noted

that several agencies and organizations

recommended that, in addition to

statutory requirements, we also focus on

the percent of children in families with

income levels at or below 50 percent of

poverty. We considered regulating

beyond the provisions of the statute, but

found that the current Census Bureau

methodology would require significant

revision and would be much less

effective in estimating poverty at levels

lower than 100 percent. However, we

invited public comment about the

advisability and desirability of pursuing

such an approach.

Comment: The advocacy organization

which responded to this issue pointed

out that measuring a five percent

increase in the child poverty rate, as

required by law and as proposed in the

definition of children in poverty in the

NPRM, will not present a complete or

accurate picture of the effects of TANF

on poor children. They were concerned

that changes brought about by State

TANF policies could negatively impact

the lives of children whose families

were already below 100 percent of the

poverty level before the TANF program

began. They provided two examples to

illustrate this point:

• In States whose pre-TANF cash

assistance standards were below the

federal poverty level, children in TANF

families were already included in the

State’s poverty rate. Reductions in the

amount of assistance caused by TANFrelated changes, or even failure of the

assistance standard to keep pace with

39240 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

inflation, would worsen the family’s

poverty but would not be reflected as a

change in the poverty rate and, thus, not

measure the impact of the TANF

program on children and families.

• The flexibility offered to States

under the TANF program means that a

State could make major policy changes

that might negatively affect families. For

example, a State might count the

benefits from other programs (such as

Supplemental Security Income (SSI)) as

available income. Such a policy could

make a family ineligible for TANF. In

this case, a family could go from

receiving low assistance to no assistance

and still not be identified as having

been affected by TANF-related changes.

This organization was also concerned

about the inequities of the proposed five

percent increase and our definition. For

example, in States where the poverty

rate is high, a five percent increase

means more children have fallen into

poverty before corrective action is taken

than in States whose initial poverty

rates are low.

They strongly recommended that we

develop measures that would not only

identify the number of children in

families below the poverty level, but

would also reveal the depth of their

poverty, i.e., the size of the ‘‘gap’’

between family income and 100 percent

of the official poverty level. They also

recommended that the final rule focus

on any State where the child poverty

rate is high, regardless of whether that

rate increased by five percent or more.

Response: We carefully considered

these comments in developing the final

rule. We agree with this commenter that

child poverty is a serious issue and that

poverty at the deepest levels is an even

more serious issue. We are committed

to, and concerned with, the well-being

of children and families, and undertake

a wide range of activities to improve the

lives of children and families, as do a

number of other public and private

agencies and organizations. However,

given the specific requirements of the

statute and our lack of regulatory

authority to impose requirements not

specified in the law, we did not accept

this recommendation. For the purpose

of public information, as noted earlier,

we publish the poverty gap information

in our Annual TANF Report to

Congress. We also post the Census

Bureau’s State child poverty rate data on

our Internet site (www.acf.dhhs.gov).

Other Changes Made in § 284.11 of the

Final Rule

We made several changes in this

section to provide further clarity and

explanation of terms. We:

• Revised the definition of ‘‘Census

Bureau methodology’’ by: (1) Adding an

explanation to clarify that the term may

include a range of mechanisms to

estimate poverty, including estimates

based on the Current Population Survey;

the Small Area Income and Poverty

Estimates; annual demographic

programs, including the American

Community Survey; or any other

methods used by the Census Bureau; (2)

adding a definition of the term

‘‘children in poverty’’ as used in the

definition of ‘‘Census Bureau

methodology’’ and deleting the

definition of ‘‘children in poverty’’ as a

separate definition; and (3) deleting the

sentence explaining how we proposed

to compute the child poverty rate for the

Territories;

• Revised the definition of ‘‘Child

poverty rate’’ to incorporate language

from the NPRM’s definition of ‘‘children

in poverty’’ and to comport with the

current Census Bureau description;

• Added a definition of Tribal TANF

program; and

• Added definitions for, or

explanations of, acronyms used in the

final rule, i.e., the Small Area Income

and Poverty Estimates (SAIPE), Separate

State Program-Maintenance of Effort

(SSP–MOE), and Maintenance of Effort

(MOE).

Section 284.15—Who Must Submit

Information to ACF To Carry Out the

Requirements of this Part?

As specified in section 413(i) of the

Act, we proposed in the NPRM that the

Chief Executive Officer of the State or

Territory, or his or her designee, is

responsible for carrying out the

requirements of this part.

We received no comments on this

section of the NPRM but have made one

addition in this section of the final rule.

In new paragraph (b), we specify that

the State should obtain information

from and work with any Indian tribe

(and Tribal consortia) operating a TANF

program in the State in preparing and

submitting the assessment (as specified

in § 284.30) and the corrective action

plan (as specified in § 284.45). As

discussed above under the topic ‘‘Tribal

TANF programs and Section 413(i) of

the Act,’’ this change clarifies that the

statute requires the State to consider

both State and Tribal TANF programs in

carrying out the requirements of this

part. If the requested Tribal TANF

information is not made available to the

State, any submission to us should

clearly indicate that fact.

Section 284.20—What Information Will

We Use To Determine the Child Poverty

Rate in the State?

(§ 284.20 of the NPRM—What

information will we provide to each

State to estimate the number of children

in poverty?)

In the NPRM, we proposed, in

paragraph (a), that we would send to the

States each year the Census Bureau’s

estimate of the number of children in

poverty. The first estimate in 1998

would be for calendar year 1996. In

paragraph (b) of the NPRM, we

proposed that, beginning in 1999, we

would compute the change in the

percentage of children in poverty, at the

80-percent confidence level, and

provide this information to the State.

We proposed that the first percentage

change would be sent to States in 1999

and would cover the change between

calendar years 1996 and 1997. We also

proposed that the annual Census Bureau

estimates would be based on the Current

Population Survey (CPS) data and

would incorporate data from the Small

Area Income and Poverty Estimates

(SAIPE), e.g., State and county level

data.

We have continued this general

approach in § 284.20 of the final rule,

with two modifications. The first

modification, in response to comments,

is a change in the level of statistical

confidence we will use to determine the

percentage change in a State’s child

poverty rate, i.e., from 80 percent to 90

percent. We have also clarified the use

of a statistical test to ascertain a change

in a State’s child poverty rate. The

second modification expands on a

provision in the NPRM to allow a State

to submit child poverty data derived

from an independent source.

Briefly, we will continue to send

annual estimates of the number and

percentage of children in poverty to

each State, based on data from the

Census Bureau. Paragraph (b) of the

final rule specifies that, in 2000, we will

determine the first percentage change in

the State’s child poverty rate, between

calendar years 1996 and 1997, at the 90-

percent confidence level. Paragraph (c)

allows a State to submit child poverty

data derived from an independent

source as an alternative to the Census

Bureau data and specifies the conditions

for submitting these data. Paragraph (d)

specifies that if we determine that the

State’s independent child poverty data

are more reliable than the Census

Bureau data, we will accept them. These

changes are discussed more fully below.

We also received a number of

technical comments which we have

organized into and will respond to

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39241

under four subject areas: Use of the

Census Bureau Estimates of Poverty;

Use of the 80-percent Confidence Level;

Interpretation of the Term ‘‘five percent

increase;’’ and Dissemination of the

Census Bureau Data.

Comment: One national organization

recommended that, because the Census

Bureau data is considered moderately

reliable and we proposed an 80-percent

confidence level, the final rule should

allow States to challenge the Census

Bureau estimates by providing

alternative statistical evidence.

Response: In the NPRM, we proposed

in § 284.25(c) to allow a State to submit

an independent estimate of child

poverty as part of the ‘‘rebuttal’’ process,

along with food stamp and school

nutrition data. However, we agree with

the thrust of this commenter’s

recommendation and have added new

paragraphs (c) and (d) to § 284.20 of the

final rule to allow States to provide

child poverty data derived from an

independent source.

New paragraph (c) specifies that if the

State submits an independent estimate

of child poverty, it must do so within

45 days of the date the State receives the

Census Bureau estimates from us;

include the child poverty rate for each

of the two years covered by the Census

Bureau estimates; include a

computation of the change in the child

poverty rate over the two-year period at

the 90-percent confidence level; and

provide a description of the

methodology used by the independent

source to develop its child poverty

estimate.

New paragraph (d) provides that we

will accept the State’s independent

estimate of the child poverty rate if the

data are more reliable than the Census

Bureau data. Otherwise, we will

determine the State’s child poverty rate

based on the Census Bureau estimates.

In the NPRM, we recognized that a

growing number of States and other

organizations are conducting studies of

child poverty. One of our aims in

implementing section 413(i) of the Act

is to use the best child poverty data

available. We believe that those States

currently conducting or funding such

studies of child poverty will be in the

best position to provide an independent

estimate, if they so choose.

We have specified that the State may

provide an alternative estimate of the

State’s child poverty rate, but only if the

estimate is derived from an independent

source. (An ‘‘independent source’’ is a

source of data or information not under

the direct supervision or control of the

State TANF agency such as a university,

research or advocacy organization, or an

independent evaluation or analysis

office associated with a State executive

branch agency or State legislature.)

We have specified that the

independent estimate must be provided

within 45 days of the State’s receipt of

the Census Bureau estimates because we

want to utilize independent estimates

that have already been conducted for

the applicable years. Our intent is to not

delay the process of review and

assessment of poverty estimates in

relation to the TANF program(s) in the

State.

We will need certain information

from the State in order to evaluate the

reliability of the State’s independent

estimate. Accordingly, in paragraph

(c)(2)(iv), we specify that the State must

describe the methodology used to

develop the independent estimate, the

source of the data, the data collection

methodology, any known problems

associated with making estimates of this

type, the estimate of the standard error,

and the power of the sample to detect

a five percent change in the child

poverty rate. The State must also use the

official definition of poverty used by the

Census Bureau.

We believe that the State’s data must

be ‘‘more reliable’’ than the Census

Bureau data. Otherwise, we will use the

Census Bureau data in implementing

this part. For the purposes of paragraph

(d), the term ‘‘more reliable’’ means data

that are based on and meet accepted

statistical methods and standards, e.g.,

the data are derived from a

representative sample of households,

determined at precision levels higher

than the Census Bureau data, and based

on income and other variables

comparable to the Census Bureau

methodology.

A. Use of the Census Bureau Estimates

of Poverty

Comments: A national organization

supported our use of the Census Bureau

estimates on the grounds that ‘‘the

Census Bureau estimates, including the

SAIPE data, are the best current

available measures of the percentage of

children living at or below the Federal

poverty threshold.’’ A State TANF

agency expressed appreciation for our

proposal to send the child poverty data

to the States, thus reducing State

reporting burden.

However, another State TANF agency

recommended that we use only the

Current Population Survey (CPS) data

because the CPS sample sizes are large

enough to reduce the risk of error,

higher confidence levels are possible,

and the lag time would be reduced from

two years to one.

Response: We reviewed our decision

to use the Census Bureau estimates of

poverty, and we believe, at the present

time, they are the best national data

available. This decision is reflected in

paragraph (b) of this section of the final

rule. If more reliable Census Bureau

data sources become available in the

future, we plan to use them.

In response to the recommendation

that we use CPS data as the basis of our

national estimates of poverty, we agree

with the commenter that the lag time

would be reduced. However, we believe

that the SAIPE data are not only

required by section 413(i)(5) (i.e., use of

‘‘county-by-county estimates of children

in poverty as determined by the Census

Bureau’’), but that the SAIPE data, when

used with the Census Bureau State

estimates, provide greater accuracy and

less variation than are present in the

CPS data.

In addition, we are not relying on

point estimates, but are using statistical

tests that address variation. Finally, we

believe, and the Census Bureau

confirms, that the CPS estimates are

large enough to provide reliable direct

estimates for only 10 States and a few

large counties. The CPS data might

serve the large population States but

would not serve as a reliable national

data source for all States.

Comment: One commenter noted the

increasing disconnect between the use

of food stamps and the poverty rate and

was concerned about how this would

affect the SAIPE data.

Response: The Census Bureau is

satisfied that current estimates are

reasonable and appropriate. They will

be closely monitoring the relationship

between food stamp program

participation and poverty and will

consider changes in their modeling

process, as needed. In addition to the

Census Bureau’s expert review, a

national panel of independent experts,

established by Congress under the

auspices of the National Academy of

Sciences’ Committee on National

Statistics, has been formed to also

review and determine the reliability of

these estimates. The results of this

independent review are available from

the Academy on its website.

Comment: A State TANF agency

requested information concerning how

the Census Bureau determines the child

poverty rate, the formula, weighting of

variables, and the definition of child

poverty used. They believed this

information would be useful in order to

monitor and modify their TANF

program to avoid negative impacts.

Response: We refer this commenter to

the Census Bureau website. On its

Internet site, the Census Bureau

provides a wide range of information on

families and children in poverty. It also

39242 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

provides an explanation of its methods,

discusses the limitations of and

problems encountered in its use of

current methods, and describes steps

being taken to improve future data

collection.

B. Use of the 80-Percent Confidence

Level

Background

The measurement of child poverty

involves a process which employs

samples taken from the general

population to generate estimates. In this

case, we use sample estimates produced

by the Census Bureau to determine if an

increase in the child poverty rate has

occurred over a two-year period. This

process of using samples results in some

statistical uncertainty in each year’s

estimate of the child poverty rate. It is

because of this statistical uncertainty

that we cannot simply look at the

difference in the observed poverty rate

from one year to the next and determine

that an increase of at least five percent

occurred or did not occur. To overcome

this statistical uncertainty, statisticians

employ tests that incorporate a measure

of error to better estimate a

characteristic of a population.

In the NPRM, we proposed to use a

statistical test at the 80-percent

confidence level. We proposed the 80-

percent confidence level for several

reasons. First, we were attempting to

strike a balance between falsely

identifying a State as having a five

percent increase in its child poverty rate

when it did not and missing a five

percent increase that truly did occur.

Second, we proposed that if a five

percent or greater increase in the

poverty rate had occurred, based on the

Census Bureau’s data and the statistical

test, we asked that the State submit

more recent Food Stamp administrative

data to determine if there was a

commensurate increase in the number

of households with children

participating in the Food Stamp

Program. Finally, we reasoned that the

direct consequence to a State of the

identification of a five percent increase

when in fact such an increase did not

occur would be the preparation of an

assessment of the impact of the TANF

program on the increase and, possibly,

a corrective action plan.

In the NPRM, we proposed a onetailed statistical test because we were

interested in determining if an increase

in the child poverty rate occurred from

one year to the next. There are three

possible outcomes from comparing the

child poverty rate from one year to the

next: (a) There was an increase; (b) there

was no change; and (c) there was a

decrease. However, only an increase is

relevant for purposes of this section of

the Act. We, therefore, proposed using

a one-tailed statistical test which only

examines increases or decreases, but not

both.

Comments: One national advocacy

organization supported our use of the

80-percent confidence level, concurring

with our statement in the NPRM that it

would help protect children by

decreasing the possibility that we would

miss a significant change in a State’s

child poverty rate. They also supported

the 80-percent confidence level as a

useful tool in carrying out what they

believed was the primary intent of

section 413(i), i.e., the protection of

children.

Four State TANF agencies, however,

disagreed with our proposed use of the

80-percent confidence level. Their

general concern was that the lower

confidence level would lead to a large

number of States incorrectly identified

as having experienced a five percent

increase in child poverty. One State

agency noted that, using an 80 percent

confidence level, we could expect that,

purely by chance, 10 (or 20 percent) of

the States would show an increase in

poverty when in fact they do not. At the

90-percent level, five States could be

mistakenly identified as having an

increase in poverty.

Another State agency observed that

any State whose child poverty rate

increased by five percent or more could

maintain that the larger confidence level

obscured any real fluctuation. In other

words, an alleged increase could be the

result of random fluctuation.

Still another State agency commented

that the use of a one-tailed confidence

interval test does not appear to take into

account the error in both the previous

year and the current year estimate.

Recommendations by these State

agencies included:

• Increase the confidence level to 90

or 95 percent because these levels are

used in much policy research, including

the national welfare reform

demonstrations sponsored by DHHS.

• Use, and clearly explain in the final

rule, a statistical test that appropriately

provides for the error in the previous

and the current year estimates, e.g., a

difference of means or proportions test

or a confidence interval around the

difference in proportions.

• Make explicit in the final rule the

possibility, magnitude, and the benefits

of an incorrect identification of an

increase in the child poverty rate.

• Explicitly state in the final rule the

tradeoffs in choosing a particular

confidence level, including the use of a

‘‘payoff matrix, computable by a

statistician, using the standard errors

from the model that will be used.’’

Response: After consideration of all

comments on both the policy and

technical issues, we have concluded

that the intent of the statute and this

section of the law will be served if we

increased the level of statistical

confidence from 80 to 90 percent while

maintaining the use of a one-tailed Ztest for the difference of proportions. We

believe that this choice will serve the

needs of children while balancing the

burden on the States.

First, we concur with the national

advocacy organization that the use of

the 80-percent confidence level is a

useful way to assess the change in the

child poverty rate for the purpose of the

Act. At the same time, the State TANF

agencies are correct in noting that, at the

lower confidence level (80 percent as

opposed to 90 or 95 percent), we can

expect a larger number of findings of

change that may be due to statistical

variability and not true increases.

Increasing the confidence level to 90

percent would reduce the likelihood

that a State would be identified as

having an increase in its child poverty

rate when in fact the rate had not

increased. We are aware, however, that

this change leads to the possibility that

we may miss a State where an increase

actually did occur. However, on

balance, we believe this change will

provide more reliable data while

protecting the well-being of the nation’s

children.

Second, we want to make explicit the

statistical test we will employ to

determine if a five percent or greater

increase in a State’s child poverty rates

occurred. We use a Z-test for difference

between proportions. This test uses the

information for each year under

consideration, including the point

estimate of the child poverty rate for

each year as well as the variance of the

point estimate for each year. In addition,

since the samples for the two years are

not completely independent, the

statistical test utilizes the variance of

the difference between the point

estimates for the two years.

Given that we have eliminated the

step that proposed to rely on Food

Stamp participation rate data to ‘‘rebut’’

an increase in the child poverty rate, a

State found to have an increase of five

percent in its child poverty rate would

either accept the finding and provide an

explanation of the role of TANF in the

increase, or provide child poverty data

from an independent source as an

alternate to the Census Bureau’s

estimates.

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39243

C. Interpretation of the Term ‘‘Five

Percent Increase’’

In the NPRM, we proposed that the

term ‘‘five percent increase,’’ as

specified in the statute, did not mean a

five percentage point increase in child

poverty. Rather, it meant that the most

recent child poverty rate is at least five

percent higher than the previous year’s

rate.

Comment: One State TANF agency, in

commenting on the statistical concerns

they had with our approach and the

consequent burden on States of this

approach, noted that there were ‘‘high

risks’’ involved in trying to detect a

small percentage change in the face of

large errors in the estimation

procedures. They asserted that Congress

would not have wanted to impose a

significant corrective action burden on

States based on erroneous data. They

believed Congress must have meant an

increase of five percentage points.

Response: Based on our analysis, we

believe that there is enough reliability in

the poverty estimates that, using

statistical techniques, we can make

reasonable estimates of changes. We

also believe that this is the clearest

reading of the statute and is the

interpretation intended by Congress,

given the sources of data specified in

the statute.

D. Dissemination of the Census Bureau

Data

Comment: A commenter

recommended that the final rule

indicate when the child poverty rate

will be sent to each State, on the

assumption that the Census Bureau

could reasonably specify a date by

which the child poverty estimates

would be available.

Response: The Census Bureau does

not have a firm date for issuance of the

child poverty estimates. Our plan is to

make these data available to the States

as soon as they are available from the

Census Bureau.

Comment: One commenter made a

recommendation for improved

communication of the State child

poverty rate data. In the NPRM, we

proposed to distribute the child poverty

rate to the Chief Executive Officer of

each State. The commenter

recommended that this information also

be posted on the DHHS and Census

Bureau websites, sent to ‘‘Kids Count’’

organizations in each State, and shared

with research and advocacy

organizations.

Response: We accept this

recommendation in part. The Census

Bureau’s child poverty data are posted

on the Census Bureau’s website, and we

will post this information on the ACF

website. Because this information will

thus be readily available, we do not plan

to send it to other agencies and

organizations.

Section 284.21—What Will We Do if the

State’s Child Poverty Rate Increased

Five Percent or More Over the Two-Year

Period?

This new section of the final rule is

added for clarity. The content of this

new section is derived from § 284.25(d)

and (e) and § 284.30(a) of the NPRM and

specifies the next steps in the process

we will follow if the State’s child

poverty rate increased five percent or

more over the applicable two-year

period.

In this section, we provide that, if we

determine that the State’s child poverty

rate increased by five percent or more

over the two-year period (based either

on the Census Bureau estimates or, if we

accept them, the State’s independent

estimates), we will notify the State that

it has 90 days from its receipt of our

notification to submit an assessment of

the impact of the TANF program(s) in

the State on that increase. To provide

flexibility, we have added an additional

30 days beyond the 60-day period

proposed in the NPRM for States to

submit the assessment.

We will also notify those States in

which the child poverty rate did not

increase five percent or more over the

two-year period that no further

information or action is required for the

applicable two-year period.

Proposed § 284.25—What Information

Must the State Provide if the Estimate of

the State’s Child Poverty Rate Has

Increased Five Percent or More Over the

Two Year Period? (DELETED IN THE

FINAL RULE)

We deleted this section in the final

rule.

In the NPRM, we proposed that, if a

State’s child poverty rate increased by

five percent or more, the State could

provide information to explain, indicate

a subsequent improvement in, or

‘‘rebut’’ this increase. We proposed that

the State must submit information on

the number of households with children

receiving food stamps. The State could

also submit school nutrition information

and/or an estimate of the State’s child

poverty rate derived from an

independent source. Alternatively, the

State could accept the Census Bureau

estimate and move to the next step in

the process, i.e., to prepare an

assessment of the relationship of the

TANF program to the increase in child

poverty.

We based this proposed step in

§ 284.25 on our assumption that, despite

recent changes, the relationship

between the child poverty rate and the

food stamp participation rate continued

to be a reasonably reliable one. We also

proposed this step because we

recognized the time lag in receipt of the

child poverty estimates. We believed

that a State whose child poverty rate

increased during the period 1996–1997

should not necessarily be required to

assess the relationship to the TANF

program and develop a corrective action

plan if, in 1998 or 1999, verifiable

circumstances indicated that the rate or

level of child poverty in the State had

improved.

Comments: A majority of commenters

strongly objected to this proposal in

§ 284.25, and almost all urged its

deletion. They stated that there is no

longer a direct relationship between the

numbers of children in poverty and the

numbers of children receiving food

stamps. Some commenters also pointed

out that recent declines in food stamp

participation appear to reflect a decline

in participation among those eligible for

the program as well as a reduction in

poverty. Other commenters found that

the changes in the food stamp

participation rate were related to the

implementation of the TANF program,

e.g., that State practices, whether

intended or unintended, had, indeed,

affected the food stamp participation

rate.

In addition, commenters expressed

concern that using food stamp data to

‘‘rebut’’ increases in the child poverty

rate could give States more incentive to

ignore administrative problems that

could lead to reduced food stamp

participation among eligible families

with children. Our proposed approach,

they believed, could enable, if not

encourage, States to avoid taking

corrective action to address such

administrative problems.

Several commenters also referred to

recent national studies that found food

stamp declines unexplained by

unemployment or other factors and

provided specific State data illustrating

the lack of relationship in these two

data sets over recent years.

A national organization also objected

to this provision on the grounds that it

presented difficult administrative and

reporting burdens for States. This

organization and a State TANF agency

also objected to the proposed

requirement to report on any changes in

food stamp policy and procedures,

including changes made at the national

level, that have affected the food stamp

participation rate. (§ 284.25(c)(3) of the

NPRM.) They believed that this

39244 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

provision was extremely broad and

amorphous and would be both

burdensome and costly to States.

Response: After further research and

analysis, we agree with these general

comments on § 284.25 and have deleted

this section from the final rule.

Comment: One national organization

recommended that, instead of using

food stamp data to explain or ‘‘rebut’’ an

increase in child poverty, the final rule

should require that States provide data

on: (1) The number of families receiving

TANF cash payments; (2) the total

amount of State spending on TANF cash

payments; and (3) the numbers of

families and families with children

participating in the food stamp program.

Response: We agree that the

recommended information may

potentially be valuable in assessing the

relationship of the TANF program(s) in

the State to any increase in child

poverty. Rather than using these

recommended data as part of a

‘‘rebuttal’’ process, however, we have

added the three recommended items to

§ 284.30(b) as information a State may

wish to submit as part of its assessment

of the impact of the TANF program on

the increase in child poverty.

Comment: Another national

organization recommended that the

final rule require States to submit data

on the employer-reported earnings

levels of TANF leavers, e.g.,

Unemployment Insurance wage record

data. (These data are similar to the data

provided by States competing for the

high performance bonus.) This

commenter believed these data would

be highly relevant to evaluating the

poverty rate in the State. They also

recommended that the final rule inform

States that submitting multi-year

Unemployment Insurance wage record

data would be an appropriate and

meaningful way to show that an

increase in child poverty is not the

result of the TANF program.

Response: We agree that the

Unemployment Insurance wage record

data may be valuable in assessing the

possible impact of TANF on State child

poverty, and we have added this

information in § 284.30(b).

Comment: Two commenters agreed

with our recognition of the limited

usefulness of the school nutrition

information (in assessing the

relationship between child poverty and

the TANF program(s)) and supported

our proposal in the NPRM to make this

information optional.

Response: We have continued to make

the school nutrition information

optional as a part of the State’s

assessment in § 284.30.

Section 284.30—What Information Must

the State Include in Its Assessment of

the Impact of the TANF Program(s) in

the State on the Increase in Child

Poverty?

If a State’s child poverty rate

increased by five percent or more, we

proposed in the NPRM that the State

must make an assessment of the impact

of the TANF program on the increase in

the child poverty rate, covering the

same two-year period for which an

increase in child poverty was identified.

We proposed that the State must submit

the assessment, and the information on

which the assessment was based, within

60 days. We also listed examples of

suggested information and evidence the

State might want to include in its

assessment.

Comments: Most commenters agreed

with our proposal to allow States the

flexibility to base their assessment on a

wide range of information, including

data from other assistance programs,

State economic conditions, etc.

Response: We have continued the

same general approach in this section as

we proposed in the NPRM, but we have

made the following changes for

additional clarity, specificity, flexibility

and in response to comments:

• Retained the requirements that the

assessment must cover the same twocalendar-year period as the Census

Bureau estimates provided to the State

and include the information on which

the assessment was based;

• Added, in paragraph (a), that the

assessment must directly address the

issue of whether the State’s child

poverty rate increased as a result of the

TANF program(s) in the State and

include the State’s analysis,

explanation, and conclusions in relation

to this issue to help assure a high

quality, focused assessment;

• Provided an expanded list of

examples of data and information the

State may include in its assessment,

including examples of information from

Tribal TANF programs; and

• Allowed States 90 days (an

additional 30 days beyond the 60 days

proposed in the NPRM) to submit the

assessment.

Comment: One commenter read the

statute as requiring only actions

initiated by the State, i.e., the State must

specify whether the State’s child

poverty rate increased by five percent or

more and, if so, it must develop a

corrective action plan. This commenter

objected to the proposed assessment

process as beyond the scope of the law.

Response: We believe that section

413(i)(2) of the Act requires the

assessment of, and some conclusion

regarding, the impact of the TANF

program(s) in the State on the child

poverty rate before a State moves to

develop a corrective action plan. We do

not read the statute to require that all

States that experience a five percent

increase or more in child poverty must

develop such a plan—only those where

the increase was a result of the TANF

program(s) in the State.

However, if a State objects to the

assessment process and wishes to

conclude that the increase in the child

poverty rate is due to, or is the result of,

the TANF program(s) in the State,

without any analysis or assessment, the

State may skip the assessment process

and prepare a corrective action plan.

Comment: One commenter objected to

our flexible approach to the assessment

process on the assumption that asking a

State to report on whether its TANF

policies contributed to an increase in

child poverty put the State in an

untenable, conflict-of-interest position.

They doubted that any State would selfreport any actions that would jeopardize

its current practices or policies,

particularly those policies related to

caseload reduction. They also believed

that it would be easy for a State to point

to other factors (e.g., economic

circumstances) as the primary reason for

increases in child poverty.

Response: We recognize the

commenter’s concern, but we decline to

be more prescriptive in our

requirements. As we said in the

preamble to the NPRM, it is the

Department’s responsibility to

determine whether a State’s child

poverty rate increased as a result of the

TANF program(s) in the State. This is a

responsibility we take seriously. Thus,

we proposed, in the NPRM, that we

would consider not only the

information the State submitted in its

assessment, but also other information

that is readily available, such as State

TANF plan provisions, eligibility

requirements, benefit levels, TANF

expenditures, and other factors.

We also expect that States will take

this responsibility seriously. We know

States are concerned with the well-being

of their citizens, and some are actively

addressing issues of poverty, frequently

in cooperation with other public and

private agencies. We also know that

there is much public concern and

attention focused on the issue of child

poverty by the media, researchers,

advocacy organizations, and Congress.

We expect that the States will respond

to this provision by providing a

thorough and reasoned analysis and

assessment.

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39245

Section 284.35—What Action Will We

Take in Response to a State’s

Assessment and Other Information?

In the NPRM, § 284.35 was titled,

‘‘How will the methodology for the

Territories differ?’’. The section in the

final rule regarding the Territories is

now numbered § 284.50. We have

created a new § 284.35 in the final rule.

The content of this new section is taken

from paragraphs (b) and (c) of § 284.30

of the NPRM. In the NPRM, these

paragraphs proposed that we would

review the State’s assessment, along

with other available information; make

a determination whether the child

poverty rate increased at least five

percent as a result of the TANF

program(s) in the State; and notify the

State whether a corrective action plan

was required.

Comment: One commenter asked that

we specify in the final rule how a State

(or DHHS) should (or will) attribute any

increase in child poverty to the TANF

program. They asked that we specify

what formula for computation we would

use, what criteria we would use, and

how States should weight the numerous

variables (both TANF and non-TANF

related) in the formula that might

contribute to such an increase.

Response: We have not specified a

computation formula, established

criteria, or identified variables for the

State assessment process because we do

not believe we could, in advance,

specify exactly how DHHS will review

and evaluate a State’s assessment. We

believe that a process that relies on

analysis, evaluation, and judgment will

be more likely to reflect reality rather

than a computation formula or

weighting of variables. This analysis

and judgment will be particularly

important when a variety of factors,

including the TANF program, may have

resulted in the increase in child poverty.

Our plan is to work cooperatively with

States in reviewing the assessment

information and making a final

determination on whether a corrective

action plan is required. It is not our

intention to require a corrective action

plan when the TANF program is only a

minimal cause of the increase in the

State’s child poverty rate.

We have made no substantive

changes, but we have modified the

language in this section for clarity.

Section 284.40—When Is a Corrective

Action Plan Due?

In the NPRM, we proposed that a

corrective action plan is required only

for those States and Territories whose

child poverty rate increased by five

percent or more as a result of TANF. We

also proposed that the State and

Territory must submit the plan within

90 days of the date we notify it of our

determination that such a relationship

exists between the TANF program and

the child poverty rate.

Comment: One commenter supported

a 90-day timeframe for submitting the

corrective action plan.

Response: We have made no changes

to this section of the final rule.

Section 284.45—What Are the Contents

and Duration of a Corrective Action

Plan?

In the NPRM, we proposed in

paragraph (a) that the corrective action

plan must outline the manner in which

the State or the Territory will reduce

child poverty in the State and included

a description of the actions to be taken

by the State or Territory under such a

plan.

We proposed in paragraph (b) that the

State or Territory must implement the

corrective action plan until it

determines that the child poverty rate in

the State is less than the lowest child

poverty rate on the basis of which the

State was required to submit the

corrective action plan.

Comment: One commenter supported

our proposal to allow States the

flexibility to design the content of their

corrective action plans as States are best

able to determine which methods will

work best for reducing child poverty

within their boundaries. Another

commenter recommended that this

section be revised to require corrective

action plan content specific to affected

States, based on Federal site visits and

monitoring of States. They believed that,

as proposed, this section was weak and

ineffective. Also, if a State were allowed

to develop its own corrective action

plan, it would merely be a ‘‘paper

exercise.’’

Response: The Act does not provide

express authority for us to prescribe

regulations regarding the content of the

corrective action plan. We believe,

however, that States will take the

requirement to develop a corrective

action plan seriously, not only because

of concern for the issues affecting the

well-being of families and children but

also, in part, because of the attention

being given to this issue by the media

and a wide range of external

organizations. We have made no change

in this section of the final rule in

response to this comment.

Comment: One commenter was

concerned that there was no penalty

currently assigned to this section of the

regulations. The commenter believed

that it would be extremely awkward for

a State to agree to a corrective action

plan only to have a penalty assigned at

a later date.

Response: There was no penalty

proposed in the NPRM because there

was no penalty included in section

413(i) of the Act. Given the limited

Federal regulatory and enforcement

authority under the TANF program, we

have not included a penalty provision.

However, we will monitor the State’s

actions and timelines under the plan.

We also expect that interested national,

State, and local organizations will

monitor State progress in this matter as

well.

We want to clarify that the corrective

action plan is not intended to be based

on or cover the two-year period in

which an increase in the child poverty

rate was identified. Rather, we

anticipate that the State’s corrective

action plan would include both past

efforts and current activities aimed at

reducing child poverty.

We have made several changes in this

section of the final rule. In § 284.45(a),

we added language regarding the

inclusion in the corrective action plan

of any action steps that will be taken by

the Tribes (or consortia of Tribes) under

the plan. We also added a requirement

in paragraph (b) that the State notify us

when it determines that it is no longer

required to implement the corrective

action plan. Finally, for clarification, we

added a definition of the term ‘‘lowest

child poverty rate’’ in paragraph (b) and

specified that the State must use the

methodology in § 284.20 in determining

when a corrective action plan is no

longer required to be implemented.

We took the definition of the term

‘‘lowest child poverty rate’’ and the

following explanatory language from the

preamble to the NPRM regarding the

duration of the corrective action plan

(see 63 FR 50844).

Section 413(i)(4) of the Act requires that

the State implement the corrective action

plan ‘‘until the State determines that the

child poverty rate in the State is less than the

lowest child poverty rate on the basis of

which the State was required to submit the

corrective action plan.’’

The ‘‘lowest child poverty rate’’ means the

five percent threshold above the first year in

the two-year comparison period. For

example, a State with a 20 percent child

poverty rate in the first year of the two-year

comparison period would have a five percent

threshold of 21 percent and would be

required to implement its corrective action

plan until its child poverty rate dropped

below 21 percent.

By specifying that the State must use

the methodology in § 284.20 in

determining the duration of the

corrective action plan, we intend to

clarify that the State may use either the

39246 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

Census Bureau data or an independent

estimate of the child poverty rate.

Section 284.50—What Information Will

We Use To Determine the Child Poverty

Rate in Each Territory? (§ 284.35 of the

NPRM)

The Census Bureau produces annual

estimates of the child poverty rate in

each of the 50 States and the District of

Columbia. However, the Census Bureau

does not develop poverty estimates for

the Territories. Therefore, in § 284.35 of

the NPRM, we proposed that each

Territory must, annually, beginning in

1998 (for calendar year 1996), submit to

ACF certain food stamp or other data on

which we would calculate a child

poverty rate. We also proposed a

process similar to the proposed State

process for determining whether the

child poverty rate increased by five

percent or more between the applicable

years. Finally, we specified the actions

and information we would require if the

child poverty rate increased by five

percent or more as a result of the TANF

program.

‘‘Territories’’ are defined, for the

purposes of this part, as American

Samoa, Guam, Puerto Rico, and the

United States Virgin Islands. At the

present time, this part applies to all of

these jurisdictions except American

Samoa, which has not applied to

operate a TANF program. When it does

so, the provisions of this part will apply

to it as well.

We received no comments on § 284.35

of the NPRM or how we proposed to

determine a child poverty rate for the

Territories. We did, however, receive

comments critical of our proposed use

of State food stamp data in rebutting the

increase in child poverty (in § 284.25).

These comments caused us to reevaluate our use of food stamp data as

the basis for calculating a child poverty

rate for the Territories.

During the development of the final

rule, we had numerous discussions with

the Census Bureau and others in an

attempt to identify reliable child

poverty data for the Territories, but we

were unsuccessful. Therefore, we have

revised § 284.50 to postpone,

temporarily, the determination of a

child poverty rate for these

jurisdictions. However, we are

committed to applying the provisions of

section 413(i) to both States and

Territories. We specify, in paragraph (a)

that our intent is to apply the same

requirements and procedures to the

Territories as to the States. We specify

in § 284.50(b) that we will estimate the

number of children in poverty in these

jurisdictions when reliable data are

available.

V. Regulatory Impact Analyses

A. Executive Order 12866

Executive Order 12866 requires that

regulations be drafted to ensure that

they are consistent with the priorities

and principles set forth in the Executive

Order.

The Department has determined that

this rule is consistent with these

priorities and principles. This

rulemaking implements statutory

authority based on broad consultation

and coordination. It also reflects our

response to comments received on the

NPRM issued on September 23, 1998.

The Executive Order encourages

agencies, as appropriate, to provide the

public with meaningful participation in

the regulatory process. As described

elsewhere in the preamble, ACF

consulted with State and local officials,

their representative organizations,

researchers, a broad range of technical

and interest group representatives, and

others to obtain their views prior to the

publication of the NPRM.

To a considerable degree, the NPRM

reflected the information provided by,

and the recommendations of, the groups

with whom we consulted. We also

carefully considered and have accepted

and/or responded to the comments

received in response to the NPRM.

This final rule also reflects the intent

of the Personal Responsibility and Work

Opportunity Reconciliation Act of 1996

to achieve a balance between granting

States the flexibility they need to

develop and operate effective and

responsive programs and ensuring that

they meet the objectives of the statute.

The limited scope of this regulation is

also consistent with the provisions of

the statute and Administration policy as

articulated in Executive Order 12866

and its Regulatory Reinvention

Initiatives.

The Department has determined that

this rule is significant under the

Executive Order. The Office of

Management and Budget has reviewed

this rule. This rule is not a major rule

under the Small Business Regulatory

Enforcement Fairness Act of 1996.

We have estimated the maximum

annualized Paperwork Reduction Act

costs to be approximately $454,118.

This is clearly an upper limit on what

the costs would be if all States were

required to respond to all requirements.

Thus, as discussed in section D below,

this figure is an over-estimate of the

expected costs.

In assessing the potential costs and

benefits—both quantitative and

qualitative—of these final regulations,

the Secretary has determined that the

benefits of these regulations justify the

costs. The Secretary has also determined

that this regulatory action does not

unduly interfere with State, local, and

Tribal governments in the exercise of

their governmental functions.

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. 603, 605) requires the Federal

government to anticipate and reduce the

impact of rules and paperwork

requirements on small businesses and

other small entities. Small entities are

defined in the Regulatory Flexibility Act

to include small businesses, small nonprofit organizations, and small

governmental agencies. This rule will

immediately affect the 50 States and the

District of Columbia. It will affect the

Territories in the future, when reliable

Census Bureau data on child poverty in

the Territories are available. Therefore,

the Secretary certifies that this rule will

not have a significant impact on small

entities.

C. Assessment of the Impact on Family

Well-Being

We certify that we have made an

assessment of this rule’s impact on the

well-being of families, as required under

section 654 of The Treasury and General

Government Appropriations Act of

1999. The overall aim of the TANF

program is to strengthen the economic

and social stability of families. The

purpose of this rule is to monitor annual

estimates of child poverty in the States

(and, in the future, the Territories);

assess the impact of the TANF

program(s) on an increase in child

poverty of five percent or more; and

require the development of a corrective

action plan, if indicated. We believe that

the well-being of families will be

enhanced by this rule.

D. Paperwork Reduction Act

This rule contains three information

collection requirements. These

requirements were reviewed and

approved by the Office of Management

and Budget (OMB) at the NPRM stage on

December 2, 1998, under the Paperwork

Reduction Act of 1995 (OMB control

number 0970–0186). This data

collection approval expires on

November 30, 2001. An agency may not

conduct or sponsor, and a person is not

required to respond to, a collection of

information unless it displays a

currently valid OMB control number.

To the extent possible, this rule relies

on existing data sources. We will obtain

data on child poverty from the Census

Bureau for the 50 States and the District

of Columbia. We have postponed

implementing the provisions of this

final rule for the Territories until

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39247

reliable Census Bureau data on child

poverty in the Territories are available.

The three information collection

activities in the final rule are: (1) As an

optional provision, a State or Territory

may provide an alternative estimate of

the child poverty rate (§ 284.20(c)); (2) a

State or Territory may be required to

conduct and submit an assessment of

the impact of the TANF program(s) in

the State or Territory on the increase in

the child poverty rate (§ 284.30 and

§ 284.50); and (3) a State or Territory

may be required to submit a corrective

action plan (§ 284.40, § 284.45 and

§ 284.50). These information collection

requirements were approved at the

NPRM level. We received no comments

on the burden as proposed in the

NPRM.

The annual burden estimates include

any time involved compiling and

abstracting information, analyzing and

evaluating information, assembling

materials necessary to provide the

requested information, obtaining

clearance, and transmitting the

information.

Prior to the development of this

estimate, we researched the burden

estimates for similar OMB-approved

data collections in our inventory and

those pending OMB approval and

consulted with knowledgeable Federal

officials.

The 50 States and the District of

Columbia are the immediate potential

respondents to the information

collection requirements in this rule.

These jurisdictions may, at their option,

submit an estimate of child poverty

from an independent source. They may

also be required to submit an

assessment and a corrective action plan.

We will not implement these

information collection activities for the

Territories until we have reliable child

poverty data for these jurisdictions, but

we have included Puerto Rico, Guam,

and the Virgin Islands in the burden

calculation as they will be respondents

in the future.

We have increased the estimated total

annual burden from 15,240 hours in the

NPRM to 15,552 hours in the final rule.

This change reflects the elimination of

the requirement that the Territories

provide data for us to compute an

estimate of their child poverty rate

(§ 284.35 of the NPRM); the elimination

of the requirement that States provide

food stamp data and other data to

explain or rebut an increase in the

State’s child poverty rate (§ 284.25 of

the NPRM); the addition of 8 hours per

respondent for the optional submission

of data on a State’s child poverty rate

from an independent source (§ 284.20(c)

of the final rule); and an increase in the

estimated burden hours for a State to

develop and submit an assessment of

the impact of TANF on the child

poverty rate from 80 hours per

respondent in the NPRM to 120 hours

in the final rule (§ 284.30 of the final

rule).

The annual burden estimates for each

of the three data collections are:

Instrument or requirement Number of

respondents

Number of responses per

respondent

Average

burden hours

per response

Total burden

hours

Optional Submission of Data on Child Poverty from an Independent Source

(§ 284.20(c)) ................................................................................................. 54 1 8 432

Assessment of the Impact of TANF on the Increase in Child Poverty

(§ 284.30 and § 284.50) ............................................................................... 54 1 120 6,480

Corrective Action Plan (§ 284.40, § 284.45, and 284.50) ................................ 54 1 160 8,640

Estimated Total Annual Burden Hours ..................................................... ........................ ........................ ........................ 15,552

We have estimated the burden hours

for each information collection activity

in part 284 as though they applied to all

jurisdictions for ease of discussion and

public review. This is clearly an overestimate. We do not expect that all

States (or Territories) will opt to provide

an alternate estimate of child poverty

derived from an independent source.

We expect that no more than a few

States (or Territories) will experience an

increase of five percent or more in their

child poverty rates and will need to

submit an assessment in relation to the

TANF program; and only a few States

(or Territories) will be required to

submit a corrective action plan.

We estimate the annualized cost of

the hour burden to be $454,118. Again,

this is an over-estimate. It is based on

an estimated average hourly wage of

$29.20 (including fringe benefits,

overhead, and general and

administrative costs) for the State staff

performing the work multiplied by the

estimated 15,552 burden hours.

We expect that no capital/start-up

costs and operation/maintenance costs

will be required as a result of a State or

Territory’s implementation of this part.

No systems modifications should be

required and much of the information

that States may submit as a part of their

assessment is pre-existing information

or available from other State executive

branch agencies or research sources.

Therefore, we do not anticipate any

significant costs beyond the annualized

cost of the hour burden noted above.

We considered all comments by the

public in:

• Evaluating whether the collections

are necessary for the proper

performance of our functions, including

whether the information will have

practical utility;

• Evaluating the accuracy of our

estimate of the burden of the collections

of information, including the validity of

the methodology and assumptions used,

and the frequency of collection;

• Enhancing the quality, usefulness,

and clarity of the information to be

collected; and

• Minimizing the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technology, e.g., the electronic

submission of responses.

E. Unfunded Mandates Reform Act of

1995

Section 202 of the Unfunded

Mandates Reform Act of 1995 requires

that a covered agency prepare a

budgetary impact statement before

promulgating a rule that includes any

Federal mandate that may result in the

expenditure by State, local, and Tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year.

If a covered agency must prepare a

budgetary impact statement, section 205

further requires that it select the most

cost-effective and least burdensome

alternative that achieves the objectives

of the rule and is consistent with the

statutory requirements. In addition,

section 203 requires a plan for

informing and advising any small

government that may be significantly or

uniquely impacted by the rule.

We have determined that this rule

will not result in the expenditure, in the

39248 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

aggregate, by State, Territorial, local,

and Tribal governments, or by the

private sector, of more than $100

million in any one year. Accordingly,

we have not prepared a budgetary

impact statement, specifically addressed

the regulatory alternatives considered,

or prepared a plan for informing and

advising any significantly or uniquely

impacted small government.

F. Congressional Review

This rule is not a ‘‘major’’ rule as

defined in 5 U.S.C., Chapter 8.

G. Executive Order 13132

On August 4, 1999, the President

issued Executive Order 13132,

‘‘Federalism.’’ The purposes of the

Order are: ‘‘to guarantee the division of

governmental responsibilities between

the national government and the States

that was intended by the Framers of the

Constitution, to ensure that the

principles of federalism established by

the Framers guide the executive

departments and agencies in the

formulation and implementation of

policies, and to further the policies of

the Unfunded Mandates Reform Act

* * *.’’

We certify that this final rule does not

have a substantial direct effect on States,

on the relationship between the Federal

government and the States, or on the

distribution of power and

responsibilities among the various

levels of government. The final rule

does not pre-empt State law and does

not impose unfunded mandates.

This rule does not contain regulatory

policies with federalism implications

which would require specific

consultations with State and local

elected officials. However, during the

development of the NPRM, we held two

types of consultations. First, we raised

issues related to this provision in the

general TANF consultation meetings

with representatives of State and local

governments; nonprofit, advocacy, and

community organizations; foundations;

and others. Second, we held

consultations focussed specifically on

this provision on May 30, 1997, and

September 4, 1997, with national

organizations representing State and

local elected officials; technical,

statistical, and policy experts; and

research, advocacy, and public interest

organizations that focus on poverty and

child well-being.

We sent invitations to the May 30

meeting (along with a list of policy

issues proposed for discussion) to,

among others: The National Governors’

Association (NGA), the National

Conference of State Legislatures (NCSL),

the National Association of Counties,

the National League of Cities, and the

United States Conference of Mayors. In

addition to these groups, invitations to

the September 4 meeting were also sent

to the National Black Caucus of State

Legislators and the National

Organization of Black County Officials.

Based on our records, representatives of

NGA and NCSL attended both meetings.

List of Subjects in 45 CFR Part 284

Grant programs—Social programs,

Public Assistance programs; Poverty;

Reporting and recordkeeping

requirements.

(Catalogue of Federal Domestic Assistance

Programs: 93.558 Temporary Assistance for

Needy Families; 93.559 Federal Loans for

State Welfare Programs; 93.594 Tribal Work

Grants; and 93.595 Welfare Reform Research,

Evaluations and National Studies.)

Dated: February 11, 2000.

Olivia A. Golden,

Assistant Secretary for Children and Families.

Approved: March 27, 2000.

Donna E. Shalala,

Secretary, Department of Health and Human

Services.

For the reasons set forth in the

preamble, we are amending 45 CFR

Chapter II by adding part 284 to read as

follows:

PART 284—METHODOLOGY FOR

DETERMINING WHETHER AN

INCREASE IN A STATE OR

TERRITORY’S CHILD POVERTY RATE

IS THE RESULT OF THE TANF

PROGRAM

Sec.

284.10 What does this part cover?

284.11 What definitions apply to this part?

284.15 Who must submit information to

ACF to carry out the requirements of this

part?

284.20 What information will we use to

determine the child poverty rate in each

State?

284.21 What will we do if the State’s child

poverty rate increased five percent or

more over the two-year period?

284.30 What information must the State

include in its assessment of the impact

of the TANF program(s) in the State on

the increase in child poverty?

284.35 What action will we take in

response to the State’s assessment and

other information?

284.40 When is a corrective action plan

due?

284.45 What are the contents and duration

of a corrective action plan?

284.50 What information will we use to

determine the child poverty rate in each

Territory?

Authority: 42 U.S.C. 613(i)

§ 284.10 What does this part cover?

(a) This part describes the

methodology for determining the child

poverty rates in the States and the

Territories, as required by section 413(i)

of the Social Security Act, including

determining whether the child poverty

rate increased by five percent or more as

a result of the TANF program(s) in the

State or Territory. It also describes the

content and duration of the corrective

action plan.

(b) The requirements of this part do

not apply to any Territory that has never

operated a TANF program.

§ 284.11 What definitions apply to this

part?

The following definitions apply to

this part:

ACF means the Administration for

Children and Families.

Act means the Social Security Act,

unless otherwise specified.

Census Bureau methodology means

the various methods developed by the

Census Bureau for estimating the

number and percentage of children in

poverty in each State. These methods

may include national estimates based on

the Current Population Survey; the

Small Area Income and Poverty

Estimates; the annual demographic

programs, including the American

Community Survey; or any other

programs or methods used by the

Census Bureau to estimate poverty.

‘‘Children in poverty’’ means children

that live in families with incomes below

100 percent of the Census Bureau’s

poverty threshold.

Child poverty rate means the

percentage of all children in a State or

Territory which live in families with

incomes below 100 percent of the

Census Bureau’s poverty threshold.

Date of enactment means calendar

year 1996.

MOE means maintenance-of-effort.

This is a provision in section 409(a)(7)

of the Social Security Act that requires

States to maintain a certain level of

spending based on historical (i.e., FY

1994) expenditure levels.

SAIPE means the Small Area Income

and Poverty Estimates, a methodology

developed by the Census Bureau to

obtain more accurate estimates of

poverty and income (including the

number and percentage of children in

poverty) at the State and county level

between decennial censuses.

SSP–MOE means a separate State

program operated outside of the TANF

program for which the expenditure of

State funds may count for MOE

purposes.

State means each of the 50 States of

the United States and the District of

Columbia.

TANF means the Temporary

Assistance for Needy Families program

Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations 39249

under sections 401 through 419 of the

Social Security Act, as enacted by the

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996,

sections 101–116 of Pub. L. 104–193 (42

U.S.C. 601–619).

Territories means American Samoa,

the Commonwealth of Puerto Rico,

Guam, and the United States Virgin

Islands.

Tribal TANF program means a TANF

program developed by an eligible Tribe,

Tribal organization, or consortium of

Tribes, and approved by us under

section 412 of the Act.

We (and any other first person plural

pronouns) means the Secretary of

Health and Human Services or any of

the following individuals and

organizations acting in an official

capacity on the Secretary’s behalf: The

Assistant Secretary for Children and

Families, the Regional Administrators

for Children and Families, the

Department of Health and Human

Services, and the Administration for

Children and Families.

§ 284.15 Who must submit information to

ACF to carry out the requirements of this

part?

(a) The Chief Executive Officer of the

State, or his or her designee, is

responsible for submitting to ACF the

information required by this part.

(b) The State should obtain

information from and work with the

Indian tribe(s) (and Tribal consortia)

operating a Tribal TANF program in the

State in preparing and submitting the

assessment, as specified in § 284.30, and

the corrective action plan, as specified

in § 284.45.

§ 284.20 What information will we use to

determine the child poverty rate in each

State?

(a) General

We will determine the child poverty

rate in each State based on estimates

from either the Census Bureau or the

State, as described in this section. Each

year we will use these data to determine

the change in the State’s child poverty

rate over a two-year period, beginning

with calendar years 1996 and 1997.

(b) Estimates from the Census Bureau

(1) Annually, we will obtain from the

Census Bureau and provide to each

State the estimate of the number and

percentage of children in poverty in

each State. The estimate will be based

on the Census Bureau methodology.

(2) In 2000, and annually thereafter,

we will determine for each State, at the

90-percent confidence level, the

percentage change in the child poverty

rate and provide this information to the

State. The determination of percentage

change in 2000 will cover the change

between calendar years 1996 and 1997.

(c) Estimates from the State

(1) As an alternative to the Census

Bureau estimates provided to the State

under paragraph (b) of this section, the

State may provide to us data on child

poverty in the State derived from an

independent source.

(2) If the State provides data on child

poverty as described in paragraph (c)(1)

of this section, it must:

(i) Provide an estimate of the child

poverty rate for the same two calendar

years as the Census Bureau estimates

provided to the State under paragraph

(b)(2) of this section;

(ii) Provide the change in the child

poverty rate for the applicable twocalendar-year period at the 90-percent

confidence level;

(iii) Use the official definition of

poverty as used by the Census Bureau;

and

(iv) Describe the methodology used to

develop its independent estimates, the

sources of data and methodology for

collecting the data, any known problems

associated with making estimates of this

type, the estimate of the standard error,

and the power of the sample to detect

a five percent change in the child

poverty rate.

(3) The State must submit its

independent estimates and supporting

information within 45 days of the date

the State receives the Census Bureau

estimates as described in paragraph (b)

of this section.

(d) Determination of the State’s child

poverty rate

(1) If we determine that the State’s

independent estimates of the child

poverty rate are more reliable than the

Census Bureau estimates, we will accept

these estimates.

(2) For all other States, we will

determine the State’s child poverty rate

based on the Census Bureau’s estimates.

§ 284.21 What will we do if the State’s

child poverty rate increased five percent or

more over the two-year period?

(a) If we determine, based on § 284.20,

that the State’s child poverty rate did

not increase by five percent or more

over the applicable two-year period at

the 90-percent confidence interval, we

will:

(1) Conclude that the State has

satisfied the statutory requirements of

section 413(i) of the Act; and

(2) Notify the State that no further

information from or action by the State

is required for the applicable twocalendar-year period.

(b) If we determine, based on § 284.20,

that the State’s child poverty rate

increased by five percent or more over

the applicable two-year period at the 90-

percent confidence level, we will notify

the State that it has 90 days from the

date of its receipt of our notification to

submit an assessment of the impact of

the TANF program(s) in the State, as

specified in § 284.30.

§ 284.30 What information must the State

include in its assessment of the impact of

the TANF program(s) in the State on the

increase in child poverty?

(a) The State’s assessment must:

(1) Cover the same two-calendar-year

period as the Census Bureau estimates

provided to the State in § 284.20(b)(2);

(2) Directly address the issue of

whether the State’s child poverty rate

increased as a result of the TANF

program(s) in the State and include the

State’s analysis, explanation, and

conclusions in relation to this issue; and

(3) Include the information on which

the assessment was based.

(b) The State’s assessment may be

supported by any materials the State

believes to be pertinent to its analysis,

explanation, and conclusions. The

following are examples of such

materials:

(1) The number of families receiving

TANF cash assistance payments under

the State TANF program and, if

applicable, the Tribal TANF program(s);

(2) The total amount of State and

Tribal spending on TANF cash

assistance payments;

(3) The number and/or percentage of

eligible families with children in the

State who are participating in the Food

Stamp Program or other State

supportive and assistance programs;

(4) The proportion of students

certified for free or reduced-price school

lunches;

(5) TANF income eligibility rules that

show that client participation was not

limited or cash benefits did not

decrease;

(6) Examples of efforts that the State

and the Indian tribe(s), as appropriate,

have taken using TANF and other funds

to support families entering the work

force;

(7) The percentage of eligible

individuals in the State receiving TANF

assistance;

(8) Information on TANF program

participation such as the number of

applications disapproved or denied, or

cases sanctioned;

(9) The number of TANF cases closed

as a result of time-limit restrictions or

non-compliance with work

requirements;

(10) The amount of total cash

assistance expenditures that can be

claimed for SSP–MOE purposes;

(11) Information based on

Unemployment Insurance wage record

39250 Federal Register / Vol. 65, No. 122 / Friday, June 23, 2000 / Rules and Regulations

data showing, for example, increases in

the number of TANF participants

entering jobs, retaining jobs, and

increasing their earnings;

(12) The number of families receiving

work subsidies, i.e., payments to

employers or third parties to help cover

the costs of employee wages, benefits,

supervision, and training;

(13) Information that a State met the

definition of ‘‘needy State’’ under

section 403(b)(6) of the Act for an

extended period of time within the

applicable two-calendar-year period;

(14) Examples of past efforts that the

State and the Indian tribe(s), as

appropriate, have taken to mitigate or

address child poverty;

(15) Any other data on the TANF

program(s) in the State that would

support the State’s conclusions; and

(16) Information on other

circumstances in the State that may

have contributed to the increase in child

poverty such as changes in economic or

social conditions, e.g., an increase in the

State’s unemployment rate.

§ 284.35 What action will we take in

response to the State’s assessment and

other information?

(a) We will review the State’s

assessment along with other available

information. If we determine that the

increase in the child poverty rate of five

percent or more is not the result of the

TANF program(s) in the State, we will

notify the State that no further

information from, or action by, the State

is required for the applicable twocalendar-year period.

(b) Based on our review of the State’s

assessment and other information, if we

determine that the increase in the

State’s child poverty rate of five percent

or more is the result of the TANF

program(s) in the State, we will notify

the State that it must submit a corrective

action plan as specified in §§ 284.40 and

284.45.

§ 284.40 When is a corrective action plan

due?

Each State must submit a corrective

action plan to ACF within 90 days of the

date the State receives notice of our

determination that, as a result of the

TANF program(s) in the State, its child

poverty rate increased by five percent or

more for the applicable two-calendaryear period.

§ 284.45 What are the contents and

duration of the corrective action plan?

(a) The State must include in the

corrective action plan:

(1) An outline of the manner in which

the State or Territory will reduce its

child poverty rate;

(2) A description of the actions it will

take under the plan; and

(3) Any actions to be taken under the

plan by the Indian tribe(s) (or Tribal

consortia) operating a TANF program in

the State.

(b) The State must implement the

corrective action plan until it

determines and notifies us that its child

poverty rate, as determined in § 284.20,

is less than the lowest child poverty rate

on the basis of which the State was

required to submit the corrective action

plan. The ‘‘lowest child poverty rate’’

means the five percent threshold above

the first year in the two-year comparison

period.

284.50 What information will we use to

determine the child poverty rate in each

Territory?

(a) Our intent is that, to the extent that

reliable data are available and the

procedures are appropriate, the

Territories must meet the requirements

in §§ 284.11 through 284.45 as specified

for the 50 States and the District of

Columbia.

(b) When reliable Census Bureau data

are available for the Territories, we will:

(1) Notify the Territories through

guidance of our intent to use these data

in the implementation of this part; and

(2) Begin the process by providing to

each Territory the number and percent

of children in poverty in each

jurisdiction, as specified in § 284.20(b).

[FR Doc. 00–15714 Filed 6–22–00; 8:45 am]

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