62124 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Administration for Children and

Families

45 CFR Parts 270, 271, 272, 273, 274,

275

RIN 0970–AB64, 0970–AB76, and 0970–

AB77

Temporary Assistance for Needy

Families Program (TANF)

AGENCY: Administration for Children

and Families, HHS.

ACTION: Proposed rule.

SUMMARY: The Administration for

Children and Families (ACF) proposes

to issue regulations governing key

provisions of the new welfare block

grant program enacted in 1996—the

Temporary Assistance for Needy

Families, or TANF, program. It replaces

the national welfare program known as

Aid to Families with Dependent

Children (AFDC) and the related

programs known as the Job

Opportunities and Basic Skills Training

Program (JOBS) and the Emergency

Assistance (EA) program.

The proposed rules reflect new

Federal, State, and Tribal relationships

in the administration of welfare

programs; a new focus on moving

recipients into work; and a new

emphasis on program information,

measurement, and performance. The

proposed rules also reflect the

Administration’s commitment to

regulatory reform.

DATES: You must submit comments by

February 18, 1998.

ADDRESSES: You may mail or handdeliver comments to the Administration

for Children and Families, Office of

Family Assistance, 5th Floor East, 370

L’Enfant Promenade, SW, Washington,

DC 20447. You may also transmit

written comments electronically via the

Internet. To transmit comments

electronically, or download an

electronic version of the proposed rule,

you should access the ACF Welfare

Reform Home Page at http://

www.acf.dhhs.gov/news/welfare/ and

follow any instructions provided.

We will make all comments available

for public inspection on the 5th Floor

East, 901 D Street, SW, Washington, DC

20447, from Monday through Friday

between the hours of 9 a.m. and 4 p.m.

For additional information, see

Supplementary Information section of

the preamble.

FOR FURTHER INFORMATION CONTACT:

Mack Storrs, Director, Division of SelfSufficiency Programs, Office of Family

Assistance, ACF, at 202–401–9289, or

Robert Shelbourne, Chief, Program

Development Branch, at 202–401–5150.

Deaf and hearing-impaired

individuals may call the Federal Dual

Party Relay Service at 1–800–877–8339

between 8 a.m. and 7 p.m. Eastern time.

SUPPLEMENTARY INFORMATION:

Comment Procedures

We will not consider comments

received beyond the 90-day comment

period in developing the final rule.

Because of the large number of

comments we anticipate, we will only

accept written comments. In addition,

all your comments should:

• Be specific;

• Address only issues raised by the

proposed rule, not the law itself;

• Where appropriate, propose

alternatives;

• Explain reasons for any objections

or recommended changes; and

• Reference the specific section of the

proposed rule that you are addressing.

We will not acknowledge the

comments we receive. However, we will

review and consider all that are germane

and received during the comment

period.

Table of Contents

I. The Personal Responsibility and Work

Opportunity Reconciliation Act

II. Regulatory Framework

A. Consultations

B. Related Regulations under Development

C. Statutory Context

D. Regulatory Reform

E. Scope of This Rulemaking

F. Applicability of the Rules

III. Principles Governing Regulatory

Development

A. Regulatory Restraint

B. State Flexibility

C. Accountability for Meeting Program

Requirements and Goals

IV. Discussion of Individual Regulatory

Provisions

A. Part 270—General Temporary

Assistance for Needy Families (TANF)

Provisions

B. Part 271—Ensuring that Recipients

Work

C. Part 272—Accountability Provisions—

General

D. Part 273—State TANF Expenditures

E. Part 274—Other Accountability

Provisions

F. Part 275—Data Collection and Reporting

Requirements

V. Regulatory Impact Analyses

A. Executive Order 12866

B. Regulatory Flexibility Analysis

C. Paperwork Reduction Act

D. Unfunded Mandates Reform Act of 1995

I. The Personal Responsibility and

Work Opportunity Reconciliation Act

On August 22, 1996, President

Clinton signed ‘‘The Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996’’—or

PRWORA—into law. The first title of

this new law (Pub. L. 104–193)

establishes a comprehensive welfare

reform program designed to change the

nation’s welfare system dramatically.

The new program is called Temporary

Assistance for Needy Families, or

TANF, in recognition of its focus on

moving recipients into work and timelimiting assistance. Other key features of

TANF include its provisions to reward

States for high performance and to

encourage continued State expenditures

on assistance to needy families.

PRWORA repeals 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

repeals the related programs known as

the Job Opportunities and Basic Skills

Training program (JOBS) and

Emergency Assistance (EA).

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.

The new law reflects widespread,

bipartisan agreement on a number of

key principles:

• Welfare reform should help move

people from welfare to work.

• Welfare should be a short-term,

transitional experience, not a way of

life.

• Parents should receive the child

care and the health care they need to

protect their children as they move from

welfare to work.

• Child support programs should

become tougher and more effective in

securing support from absent parents.

• Because many factors contribute to

poverty and dependency, solutions to

these problems should not be ‘‘one size

fits all.’’ The system should allow

States, Indian tribes, and localities to

develop diverse and creative responses

to their own problems.

• The Federal government should

focus less attention on payment

accuracy and program procedures and

place more emphasis on program

results.

This landmark welfare reform

legislation dramatically affects not only

needy families, but also

intergovernmental relationships. It

challenges Federal, State, 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

transforms the way agencies do

business, requiring that they engage in

genuine partnerships with each other,
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62125

with businesses, community

organizations and needy families.

The new law provides an

unparalleled opportunity to achieve true

welfare reform. It also presents very

significant challenges for families and

State and Tribal entities in light of the

changing program structure, loss of

Federal entitlements, creation of timelimited assistance, and new penalty and

bonus provisions.

Most of the resources in the AFDC

program went to support mothers

raising their children alone. In the early

years, the expectation was that these

mothers would stay home and care for

their children; in fact, in a number of

ways, program rules discouraged work.

Over time, as social and economic

conditions changed, and more women

entered the work force, the expectations

changed. In 1988, Congress enacted the

new JOBS program to provide

education, training and employment

that would help needy families avoid

long-term welfare dependence. By 1994,

20 percent of the non-exempt adult

AFDC recipients nationwide were

participating in the JOBS program.

In spite of these changes, national

sentiment supported more drastic

change. Policy-makers, agency officials

and the public expressed frustration

about the slow progress being made in

moving welfare recipients into work and

the continuing decline in family

stability. States were clamoring for more

flexibility to reform their programs.

While the Clinton Administration had

supported individual reform efforts in

almost every State, approving 80

waivers in its first five years, the waiver

process was not an ideal way to achieve

systemic change. It required separate

Federal approval of each individual

reform plan, limited the types of reforms

that could be implemented, and enabled

reforms to take place only one State at

a time. Governors joined Congress and

the President in declaring that the

welfare system was ‘‘broken.’’

After more than two years of

discussion and negotiation, PRWORA

emerged as a bipartisan vehicle for

comprehensive welfare reform. On July

31, 1996, President Clinton issued a

statement indicating that the pending

bill had the potential ‘‘to transform a

broken system that traps too many

people in a cycle of dependence to one

that emphasizes work and

independence, to give people on welfare

a chance to draw a paycheck, not a

welfare check. It gives us a better chance

to give those on welfare what we want

for all families in America, the

opportunity to succeed at home and at

work.’’

The law that was enacted three weeks

later gives States, and federally

recognized Indian tribes, the authority

to use Federal welfare funds ‘‘in any

manner that is reasonably calculated to

accomplish the purpose’’ of the new

program.

It provides them broad flexibility to

set eligibility rules and decide what

benefits are most appropriate. It also

enables States to implement their new

programs without getting the

‘‘approval’’ of the Federal government.

In short, it offers States and Tribes an

opportunity to try new, far-reaching

changes that can respond more

effectively to the needs of families

within their own unique environments.

PRWORA redefines the Federal role

in administration of the nation’s welfare

system. It limits Federal regulatory and

approval authority, but gives the Federal

government new responsibilities for

tracking State performance. In a select

number of areas, it calls for penalties

when States fail to comply with

program requirements, and it provides

bonuses for States that perform well in

meeting new program goals.

Under the new statute, program

funding and assistance for families both

come with new expectations and

responsibilities. Adults receiving

assistance are expected to engage in

work activities and develop the

capability to support themselves before

their time-limited assistance runs out.

States and Tribes are expected to assist

recipients making the transition to

employment. They are also expected to

meet work participation rates and other

critical program requirements in order

to maintain their Federal funding and

avoid penalties.

Some important indicators of the

change in expectations are: time limits;

higher participation rates; the

elimination of numerous exemptions

from participation requirements that

existed under prior law; and the

addition of a statutory option for States

to require individual responsibility

plans. Taken together, these provisions

signal an expectation that we must

broaden participation beyond the ‘‘jobready.’’

In meeting these expectations, States

need to examine their caseloads,

identify the causes of long-term

underemployment and dependency, and

work with families, communities,

businesses, and other social service

agencies in resolving employment

barriers. In some cases, States may need

to provide intervention services for

families in crisis or may need to adapt

program models to accommodate

individuals with disabilities or other

special needs. TANF gives States the

flexibility they need to respond to such

individual family needs, but, in return,

it expects States to move towards a

strategy that provides appropriate

services for all needy families.

II. Regulatory Framework

A. Consultations

In the spirit of both regulatory reform

and PRWORA, we implemented a broad

and far-reaching consultation strategy

prior to the drafting of this Notice of

Proposed Rulemaking (NPRM). In

Washington, we set up numerous

meetings with outside parties to gain

information on the major issues

underlying the work, penalty, and data

collection provisions of the new law. In

our ten regional offices, we used a

variety of mechanisms—including

meetings, conference calls, and written

solicitations—to garner views from

‘‘beyond the Beltway.’’

The purpose of these discussions was

to gain a variety of informational

perspectives about the potential benefits

and pitfalls of alternative regulatory

approaches. We spoke with a number of

different audiences, including:

representatives of State, Tribal and local

governments; nonprofit and community

organizations; business and labor

groups; and experts from the academic,

foundation, and advocacy communities.

We solicited both written and oral

comments, and we worked to ensure

that information and concerns raised

during this process were shared with

both the staff working on individual

regulatory issues and key policy-makers.

These consultations were very useful

in helping us identify key issues and

evaluate policy options. However, we

would like to emphasize that we are

publishing these regulations as a

proposed rule. Thus, all interested

parties have the opportunity to voice

their concerns and react to specific

policy proposals. We will review

comments we receive during the

comment period and take them into

consideration before issuing a final rule.

B. Related Regulations Under

Development

This NPRM addresses the work,

accountability, and data collection and

reporting provisions of the new TANF

program. Over the next several months,

we expect to issue a number of other

related proposed rules, covering: child

poverty rates; high performance

bonuses; illegitimacy reduction

bonuses; and Tribal TANF and work

programs.

We will also be issuing a number of

NPRMs on the child support
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enforcement provisions found in title III

of PRWORA.

This NPRM does not include the

provisions for the new Welfare-to-Work

(WTW) provisions at section 403(a)(5) of

the Act, as created by section 5001(a)(1)

of Pub. L. 105–33. The Secretary of

Labor is responsible for issuing

regulations on these provisions and the

provisions at section 5001(c), regarding

WTW grants for Tribes. Information

about this program is available on the

Web at http://wtw.doleta.gov.

This NPRM does include the

conforming amendment to the

definition of ‘‘qualified State

expenditures’’ required by section

5001(a)(2) of Pub. L. 105–33, as well as

the amendments to the TANF

provisions at sections 5001(d),

5001(g)(1), and 5001(h). Section 5001(d)

addresses treatment of assistance under

WTW under the TANF time limits.

Section 5001(g)(1) provides a new

penalty that takes away WTW funds

when a State fails to meet the TANF

MOE requirements. Section 5001(h)

addresses the relationship between an

individual penalty and work

requirements.

This NPRM does not include the

provision at section 5001(g)(2), which

requires repayment of WTW funds to

the Secretary of Labor following a

finding by the Secretary of Labor of

misuse of funds. Since the Department

of Labor is responsible for administering

this penalty and receives any repaid

funds, it would not be appropriate for us

to issue rules on this provision.

Under section 5001(e) of Pub. L. 105–

33, we have responsibility for regulating

the WTW data reporting requirements,

under section 411(a) of the Act, as

amended.

We will issue a rulemaking that

addresses these requirements at a later

date, following consultation with the

Department of Labor, State agencies,

Private Industry Councils, and other

affected parties.

We encourage States and others who

are interested in these areas to review

and comment on these proposed rules

when they are published in the Federal

Register.

You should be aware of the important

relationships between this regulatory

package and the other packages that will

be following. In particular, we would

like to point out that section 412 of the

Social Security Act (as amended by

PRWORA) provides that federally

recognized Tribes may elect to operate

their own TANF programs, and Tribes

that operated their own JOBS programs

may continue to receive those funds to

operate Tribal work programs.

The choice Tribes make on TANF will

depend on a number of factors,

including the nature of services and

benefits available under the State

program. Thus, Tribes have a direct

interest in the regulations governing

State programs.

Tribes also have an interest in these

regulations because some of the rules

we develop for State programs could

eventually apply to the Tribal programs.

In particular, we urge Tribes to note the

data collection and reporting

requirements at part 275. While the

statute allows Tribes to negotiate certain

program requirements, it subjects Tribal

programs to the same data collection

and reporting requirements as States.

We would also like to direct the

Tribes to the maintenance-of-effort

(MOE) policies discussed at § 273.1. In

that section, we propose that State

contributions to a Tribal program could

count toward a State’s MOE. Tribes

should be aware that this proposal

could have important implications for

the funding of Tribal programs and

State-Tribal relations.

In order for welfare reform to succeed

in Indian country, it is important for

State and Tribal governments to work

together on a number of key issues,

including data exchange and

coordination of services. We remind

States that Tribes have a right under law

to operate their own programs. States

should cooperate in providing the

information necessary for Tribes to

implement their own programs.

Likewise, Tribes should cooperate

with States in identifying Tribal

members and tracking receipt of

assistance.

We are also issuing separate final

rules to make conforming changes to our

existing rules in chapter II of title 45.

In the first, we will be repealing the

obsolete regulations for the EA, JOBS,

and the IV–A child care programs, and

some rules covering administrative

requirements of the AFDC programs.

This rulemaking will be a final rule,

effective upon publication. We expect to

eliminate about 82 pages from the Code

of Federal Regulations.

Later on, we will be issuing a final

rule that deletes or replaces obsolete

AFDC and title IV–A references

throughout chapter II. This second

rulemaking will take additional time

because the AFDC provisions are

intertwined with provisions for other

programs that are not repealed. Also, it

is not clear that we should repeal all the

AFDC provisions because Medicaid,

foster care and other programs depend

on the AFDC rules in effect under prior

law. Because of these complexities and

the non-urgent nature of the conforming

changes, the second rule is on a slower

schedule.

PRWORA also makes changes to other

major programs administered by ACF,

the Department, and other Federal

agencies that may significantly affect a

State’s success in implementing welfare

reform. For example, title VI of

PRWORA repeals the child care

programs that were previously

authorized under title IV–A of the

Social Security Act (the Act). In their

place, it provides two new sources of

child care funding for the Lead Agency

that administers the Child Care and

Development Block Grant program. A

major purpose of the increases in child

care funding provided under PRWORA

is to assist low-income families in their

efforts to be self-sufficient. We issued

proposed rules covering this new

funding and amendments to the Child

Care and Development Block Grant

program on July 23, 1997. Comments

were due within 60 days of that date.

We encourage you to look in the

Federal Register for rulemaking actions

on related programs and to take the

opportunity to comment.

C. Statutory Context

These proposed rules reflect

PRWORA, as enacted, and amended by

Pub. L. 104–327 and Pub. L. 105–33.

The changes made by Pub. L. 104–237

are fairly limited in scope; we discuss

them in the preamble on contingency

fund MOE requirements at §§ 274.71,

274.72, and 274.77.

Pub. L. 105–33 created the new

Welfare-to-Work (WTW) program, made

a few substantive changes to the TANF

program, and made numerous technical

corrections to the TANF statute.

Throughout the preamble discussion

and the appendices, you will note

references to the amendments made by

this legislation. However, as we

previously mentioned, this NPRM

includes only a limited number of

changes related to the new WTW

provisions. The Department of Labor

has primary responsibility for

administering the program and issuing

the WTW regulations. We have

responsibility for issuing rules on the

WTW data collection requirements, but

will be doing that at a subsequent date.

D. Regulatory Reform

In its latest Document Drafting

Handbook, the Office of the Federal

Register supports the efforts of the

National Performance Review and

encourages Federal agencies to produce

more reader-friendly regulations. In

drafting this proposed rule, we have

paid close attention to this guidance.

Individuals who are familiar with our
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62127

existing welfare regulations should

notice that this package incorporates a

more readable style. This rulemaking

effort gave us a unique opportunity to

change our approach because we were

starting from scratch rather than

amending an existing rule.

In the spirit of facilitating

understanding, we have included some

preamble discussion and regulatory text

to give you a broader context for other

parts of the rulemaking document.

Examples include the provisions in

subparts A and G of part 271 (which

address work provisions other than

participation rates and penalties) and

§ 270.20 (which includes the statutory

goals of the program). These sections are

primarily explanatory or restatements of

the statutory requirements. The

language used and the surrounding

discussion should indicate the nature of

the provision.

In the same spirit, we have included

draft data collection and reporting forms

as appendices to the proposed rules

even though we do not intend to

publish the forms as part of the final

rule. We thought that the inclusion of

the draft forms would expand public

access to this information and make it

easier to comment on our data

collection and reporting plans.

E. Scope of This Rulemaking

Our initial regulatory plan for TANF

included three separate TANF

regulations—one each on work,

penalties, and data collection and

reporting. However, we decided it

would be better to incorporate these into

a single regulatory package. While this

decision resulted in a much larger

document, it should facilitate your

understanding of the entire regulatory

framework of the TANF program, as

well as your review and comment.

F. Applicability of the Rules

As we indicated in previous policy

guidance to the States, a State may

operate its program under a reasonable

interpretation of the statute prior to our

issuance of final rules. Thus, in

determining whether a State is subject

to a penalty, we will not apply

regulatory interpretations retroactively.

You can find a statement of this policy

at § 270.40(b) of the proposed rules.

III. Principles Governing Regulatory

Development

A. Regulatory Restraint

Under the new section 417 of the Act,

the Federal government may not

regulate State conduct or enforce any

TANF provision except to the extent

expressly provided by law. This

limitation on Federal authority is

consistent with the philosophy of State

flexibility and the general State and

Congressional interest in shifting more

responsibility for program policy and

procedures to the States.

We are interpreting this provision to

allow us to regulate in two different

kinds of situations: (1) where Congress

has explicitly directed the Secretary to

regulate (for example, under the

caseload reduction provisions,

described below); and (2) where

Congress has charged HHS with

enforcing penalties, even if there is no

explicit mention of regulation. In this

latter case, we believe we have an

obligation to States to set out, in

regulations, the criteria we will use in

carrying out our express authority to

enforce certain TANF provisions by

assessing penalties.

Throughout the proposed rule, we

have endeavored to regulate in a manner

that does not impinge on a State’s

ability to design an effective and

responsive program.

You will also note that this

rulemaking does not cover the nondiscrimination provisions at section

408(c). This subsection specifies that

any program or activity receiving TANF

funds is subject to the: (1) Age

Discrimination Act of 1975; (2) section

504 of the Rehabilitation Act of 1973; (3)

the Americans with Disabilities Act of

1990; and (4) title VI of the Civil Rights

Act of 1964. Since ACF is not

responsible for administering these

provisions of law, and they are not

TANF provisions, this rulemaking does

not include them.

Individuals with questions about the

requirements of the non-discrimination

laws, or concerns about compliance of

individual TANF programs with them,

should address their comments or

concerns to the Director, Office of Civil

Rights, Department of Health and

Human Services, 200 Independence

Ave, SW, Room 522A, Washington, DC

20201.

B. State Flexibility

In the Conference Report to PRWORA,

Congress stated that the best welfare

solutions come from those closest to the

problems, not from the Federal

government. Thus, the legislation

creates a broad block grant to each State

to reform welfare in ways that work

best. It gives States the flexibility to

design their own programs, define who

will be eligible, establish what benefits

and services will be available, and

develop their own strategies for

achieving program goals, including how

to help recipients move into the work

force.

Under the law and under these

proposed rules, States may implement

innovative and creative strategies for

supporting the critical goals of work and

responsibility. For example, they may

choose to expend funds on earned

income tax credits or transportation

assistance that would help low-wage

workers keep their jobs. They could also

extend employment services to noncustodial parents, by including them

within the definition of ‘‘eligible

families.’’

To ensure that our rules support the

legislative goals of PRWORA, we are

committed to gathering information on

how States are responding to the new

opportunities available to them. We

reserve the right to revisit some issues,

either through legislative or regulatory

proposals, if we identify situations

where State actions are not furthering

the objectives of the Act.

C. Accountability for Meeting Program

Requirements and Goals

The new law gives States enormous

flexibility to design their TANF

programs in ways that strengthen

families and promote work,

responsibility, and self-sufficiency. At

the same time, however, it reflects a

bipartisan commitment to ensuring that

State programs support the goals of

welfare reform. To this end, the

statutory provisions on data collection,

bonuses, and penalties are crucial

because they allow us to track what is

happening to needy families and

children under the new law, measure

program outcomes, and promote key

program objectives.

Work

We believe the central goal of the new

law is to move welfare recipients into

work. The law reflects this important

goal in a number of ways:

• Work receives prominent mention

in the statutory goals at section 401 and

the plan provisions in section 402;

• Section 407 establishes specific

work participation rates each State must

achieve;

• Section 409 provides significant

financial penalties against any State that

fails to achieve the required

participation rates;

• Section 411 provides specific

authority for the Secretary to establish

data reporting requirements to capture

necessary data on work participation

rates; and

• Section 413 calls for ranking of

States based on the effectiveness of their

work programs.

These proposed rules reflect a similar,

special focus on promoting the work

objectives of the Act. We are proposing
62128 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

specific rules under sections 407, 409,

and 411 designed to ensure that States

meet the statutory requirements. You

should look at the proposed rules in

part 271, and the related preamble

discussion, for specific details.

This Administration has already

shown its commitment to promoting the

work objectives of this new law in

several ways. Before the legislation was

passed, we worked very hard to ensure

that Congress passed strong work

provisions and provided adequate child

care funding and other program

supports.

Since enactment, the President has

announced a number of additional

welfare-to-work initiatives designed to

promote work. These include

implementation of a new ‘‘Work

Opportunity Tax Credit’’ that provides

incentives for employers to hire welfare

recipients and proposals to:

• Extend and expand this credit;

• Increase investments in distressed

communities; and

• Provide $3 billion in additional

funding to help communities move

hard-to-serve recipients into jobs.

As part of budget reconciliation,

Congress increased the Work

Opportunity Tax Credit, available to

employers who hire long-term welfare

recipients, and funded a new Welfareto-Work (WTW) program. States,

localities, and Indian Tribes will receive

the additional $3 billion in WTW funds

in FYs 1998 and 1999.

The President has also challenged

America’s businesses, its large nonprofit sector and the executive branch of

the Federal government to make job

opportunities available to welfare

recipients. On March 8, 1997, he

directed all Federal agencies to submit

plans describing the efforts they would

make to respond to this challenge. In

response to this directive, Federal

agencies identified more than 10,000

jobs that would be available for welfare

recipients over the next four years. (You

can find additional information on this

initiative on the Web at http://

w2w.fed.gov.)

Meeting the Needs of Low-Income

Families and Children

In a number of different ways, the

new law works to ensure that the needs

of low-income children and families are

met. First, it provides a guaranteed base

level of Federal funding for the TANF

programs. Then, in times of special

financial need, it makes additional

funding available through a $2 billion

Contingency Fund and through a

Federal loan fund. It also authorizes

several studies to monitor changes in

the situations of needy children and

families that occur after enactment. For

example, it requires us to report on how

certain children are affected by the

provisions of the new law, and to track

State child poverty rates, and initiate

corrective actions by States when such

rates rise.

Domestic Violence

We wish to bring one particular

provision—known as the Family

Violence Option (FVO)—to your

attention. This provision, at section

402(a)(7), gives States the option to

waive certain program requirements for

certain victims of domestic violence. It

thus provides a valuable framework for

identifying victims of domestic violence

and developing appropriate service

strategies for them.

This Administration is strongly

committed to reducing domestic

violence, and we encourage all States to

consider adopting the Family Violence

Option. In working with domestic

violence cases, we also encourage States

to pay special attention to the need for

maintaining the confidentiality of caserecord information and the victims’ own

assessments of their safety needs and

their abilities to meet program

requirements.

During our consultations, we heard

numerous questions about the

relationship between State policies on

domestic violence and the

determination of State work and timelimit penalties. Congress considered this

issue in its budget resolution, but

decided to study the issue further rather

than to amend the statute during budget

reconciliation. Our regulations seek to

implement the statute in a way that is

consistent with both the language of the

statute and our national interest in

fostering appropriate State responses to

domestic violence.

The FVO provides States with a

specific vehicle for addressing domestic

violence among recipients of TANF

assistance. The provision envisions that

States would screen and identify

victims of violence, conduct individual

assessments, and develop temporary

safety and service plans that would

protect victims from any immediate

dangers, stabilize their living situations,

and explore avenues for overcoming

dependency.

The family’s individual circumstances

or service plans may require that certain

program requirements (e.g., regarding

time limits and child support

cooperation) be temporarily waived in

cases where compliance with such

requirements would make it difficult for

individuals to escape domestic violence,

unfairly penalize victims, or put

individuals at further risk of domestic

violence. In these cases, the FVO allows

States to grant such waivers.

Under TANF, States must meet

numerical standards for work

participation and the percentage of

families that may receive federallyfunded assistance for more than five

years. The statutory language on

calculating work participation rates

makes no reference to domestic violence

cases or to a State’s good cause waivers

of work requirements under the Family

Violence Option. Thus, we think that

the clearest reading of this statutory

provision includes victims of domestic

violence in the calculation of the work

participation rates.

The statutory language on time limits

refers to victims of domestic violence,

but not to the good cause waivers

provided under the Family Violence

Option. The statutory language suggests

that victims of domestic violence would

be included in the 20 percent limit on

exceptions to the time limit.

However, there is legitimate concern

among States and others that election of

the FVO might put States at special risk

of incurring financial penalties. In

granting good cause waivers of program

requirements under the FVO, they may

make it more difficult for themselves to

meet the numerical requirements on

time limits and the work participation

rates.

Our proposed rules attempt to remain

true to the statutory provisions on work

and time limits and to ensure that

election of the FVO is an authentic

choice for States. In deciding to address

these waiver cases under ‘‘reasonable

cause’’ rather than through direct

changes in the penalty calculations, we

are reflecting the statutory language and

maintaining the focus on moving

families to self-sufficiency. At the same

time, we are giving States some

protection from penalties when their

failures to meet the standard rates are

attributable to the granting of good

cause domestic violence waivers that

are based on individual assessments, are

temporary, and include individualized

service and safety plans. We hope our

proposal will alleviate concern among

States that attention to the needs of

victims of domestic violence might

place them at special risk of a financial

penalty.

Our proposed rules recognize that,

through the FVO, Congress gave unique

status to victims of domestic violence

under the TANF program. Likewise,

under our proposed rules, this group of

recipients receives special recognition

under the ‘‘reasonable cause’’ provisions

for the work and time-limit penalties.

At § 270.30, the proposed rules reflect

our expectation that good cause waivers
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will be bona fide waivers provided

within the framework of the FVO.

Under this framework: (1) State policies

would provide for individualized

responses and service strategies,

consistent with the needs of individual

victims; (2) waivers of program

requirements would be temporary in

nature (e.g., would not be granted for

longer than six months); and (3) in lieu

of program requirements, victims of

domestic violence would be served in

alternative ways, consistent with their

individualized safety and service plans.

In specifying that good cause waivers

should not exceed six months in length,

we have attempted to balance two

distinct objectives: (1) giving States the

flexibility they need to respond

appropriately to the individual

circumstances of domestic violence

victims; and (2) assuring that the work

objectives of the Act are not

undermined.

We do not intend that all good cause

waivers should last six months. The

length of the waiver should reflect the

State’s individualized determination of

what length of time a client needs. We

expect that the length of the waiver

could be substantially shorter in some

cases. Also, we expect that, in some

cases, States might have to renew a

waiver or issue a second waiver (i.e.,

because a victim of domestic violence

suffered from continued abuse that

required further protection and

response).

We welcome comments on whether

our proposed approach and language

achieve the balance we are seeking.

We want to ensure that our rules work

to foster, not undermine, the objectives

of the Act. Our goal is to promote the

provision of appropriate alternative

services for victims of domestic violence

that foster both safety and selfsufficiency.

To ensure that these policies have the

desired effect, we limit the availability

of ‘‘reasonable cause’’ to States that have

adopted the FVO. In addition, in the

definitions section of the proposed rule

(at § 270.30), we specify criteria that

will apply in deciding whether a good

cause domestic violence waiver exists.

Also, we reserve the right to audit States

claiming ‘‘reasonable cause’’ to ensure

that good cause domestic violence

waivers that States include in their

‘‘reasonable cause’’ documentation meet

the specified criteria.

In addition, we intend to monitor the

number of good cause waivers granted

by States and their effect on work and

time limits. We want to ensure that

States identify victims of domestic

violence so that they may be

appropriately served, rather than

exempted and denied services that lead

to independence. We also want to

ensure that the provision of good cause

waivers does not affect a State’s overall

effort in moving families towards selfsufficiency. Thus, we will be looking at

information on program expenditures

and participation levels to see if States

granting good cause domestic violence

waivers are making commitments to

assist all families in moving toward

work.

If we find that good cause waivers are

not having the desired effects, we may

propose regulatory or legislative

remedies to address the problems we

identify.

For additional discussion of our

proposals, see §§ 270.30, 271.52 and

274.3 of the preamble and proposed

rule.

Use of Funds

The new law imposes several

restrictions on the use of both Federal

and State funds to help ensure that

program expenditures serve program

goals. More specifically, the statute: (1)

places a cap on the percentage of funds

spent on administrative costs; (2)

authorizes audits and penalties to

protect against the misuse of funds; (3)

establishes a number of limitations on

the use of Federal funds; and (4) defines

the conditions under which

expenditures of State funds may count

for MOE purposes. In general, States

must expend both their Federal funds

and their own State monies on activities

that are consistent with the purposes of

the TANF program. (For additional

information on allowable uses of

Federal TANF and State MOE funds, see

ACF’s guidance, TANF–ACF–PA–97–1,

dated January 31, 1997, and the

preamble discussion for part 273.)

Maintenance-of-Effort (MOE)

One of the most important provisions

in the new law designed to protect

needy families and children is the

TANF maintenance-of-effort (MOE)

requirement. This provision requires

States to maintain a certain level of

spending on welfare, based on historic

(i.e., fiscal year (FY) 1994) expenditure

levels. Because this provision is critical

to the successful implementation of the

law, Congress gave us the authority to

enforce State compliance in meeting

this requirement, and it receives

significant attention in this proposed

rule.

Under the data collection, work, and

penalty provisions of the proposed rule,

at parts 271–275, we took care to

propose rules that: (1) ensure that States

continue to make the required

investments in meeting the needs of

low-income children and families; (2)

prevent States from either supplanting

State funds with Federal funds or using

their MOE funds to meet extraneous

program or fiscal needs; (3) give us

adequate information to meet our

statutory responsibility to determine

what is happening in State programs;

and (4) take a broad view of work effort,

caseload reduction, and program

performance.

We recognize that States have more

flexibility in spending State MOE funds

than Federal funds, especially when

they expend their MOE funds in

separate State programs. However, the

proposed rules also recognize and try to

protect against actions that might

undermine important goals of welfare

reform. This is the same concern that we

voiced in policy guidance we issued on

MOE in January (TANF–ACF–PA–97–

1). In particular, we noted that States

could design their programs so as to

avoid the work requirements of the new

law or to avoid returning a share of their

child support collections to the Federal

government.

To mitigate these potential negative

consequences, we indicated our intent

to both take administrative actions and

seek legislative remedies. As part of our

commitment to taking administrative

action, we are proposing to require

States, under certain circumstances, to

report information about the families

served by States under separate State

programs. Only through this additional

reporting will we be able to determine

the full nature and scope of State efforts

to move needy families into work and

the actual caseload reductions States are

achieving. (See the preamble discussion

and regulation under part 272, subpart

D, and part 275.)

In TANF–ACF–PA–97–1, we

indicated that States not making a goodfaith effort on work in their separate

State programs would not be eligible for

a reasonable cause exception from the

penalty for failing to achieve their work

rate. The proposed rule incorporates

and expands that proposal.

More specifically, it indicates that

States would not be eligible for a

reasonable cause exception from the

time-limit penalty or any of the three

work-related penalties if we detect a

significant pattern of diversion of

families to separate State programs that

has the effect of undermining the work

participation requirements of the Act. In

general, diverting States would not be

eligible for reductions in the work

penalty amounts. Finally, they would be

ineligible for a penalty reduction under

corrective compliance if they did not

correct the diversion and meet the other
62130 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

conditions for reduction specified in

these proposed rules.

In the January guidance we expressed

similar concerns about the effect of

separate State programs on the Federal

share of child support collections.

Therefore, our proposal in this area is

similar to our proposal to prevent

undermining of the work participation

provisions. More specifically, we would

deny States reasonable cause for the

time-limit, work participation, child

support cooperation, and work sanction

penalties if we detect a significant

pattern of diversion of families into

separate State programs that results in

the diversion of the Federal share of

child support collections to State

coffers. States undertaking such

diversions would also be ineligible for

reductions in the amounts of any of

these four penalties under corrective

compliance unless they also corrected

the diversion during the corrective

compliance process.

In making these proposals, we note

that the Secretary has considerable

discretion in determining whether to

reduce penalties or grant a good cause

exception.

Getting recipients to work is the most

critical component to achieving the

purposes of TANF—making welfare a

program of temporary assistance for

families moving to self-sufficiency. The

Secretary has determined that, to

prevent circumvention of this purpose,

it is appropriate to limit the availability

of the reasonable cause exception and

penalty reduction if a State attempts to

avoid the work participation

requirements. Congress has reinforced

the importance of appropriate work for

recipients in four of the established

penalties in section 409 of the Act—

work participation rates, continuing

assistance when child care is not

available, sanctioning families that fail

to participate in work, and continuation

of assistance beyond 60 months. To

carry out the intent of Congress that

work be a central part of the TANF

program, if we detect that a State is

avoiding the work requirements by

diverting a significant number of

families to separate State programs, we

will not grant this State a reasonable

cause exception from any of the four

penalties most closely tied to the work

requirements, either in the form of a

reduction in its work penalty based on

degree of non-compliance or as a

reduction in any of the four penalties as

the result of achieving substantial (but

not full) compliance.

The other key component to achieving

self-sufficiency is implementation of the

child support enforcement provisions.

The Federal government has a major

role to play in such enforcement

(particularly with regard to the

operation of the New Hire Directory and

the Federal Parent Locator Service). It

also has a continuing interest in the

effectiveness of these programs and,

under TANF, maintains its commitment

to the funding of needy families whose

children have been deprived of parental

support and care.

We are concerned that a State’s

diverting cases to separate State

programs would not only have

unintended, negative consequences for

the Federal budget and the Federal

government’s ability to ensure an

effective child support program; it

would also diminish the State’s

accountability for ensuring that needy

families take appropriate steps towards

achieving self-sufficiency. The Secretary

has determined that, in the interest of

protecting the key goals of TANF, it is

appropriate to exercise her discretion to

set penalty amounts and forgive

penalties in a manner that will ensure

that States do not divert cases

inappropriately. Thus, if we detect a

significant pattern of diversion of

families to separate State programs that

has the effect of diverting the Federal

share of child support collections, we

will not grant a reasonable cause

exception or reduced penalty through

corrective compliance for the following

four penalties: work participation, time

limits, failure to cooperate with

paternity establishment and child

support enforcement requirements, or

failure to impose work sanctions.

We plan to monitor States’ actions to

determine if they constitute a significant

pattern of diversion. For example, if,

based on an examination of statistical or

other evidence, we came to the

conclusion that a State was assigning

people to a separate State program in

order to divert the Federal share of child

support collections, or in order to evade

the work requirements, we would

conclude that this is a significant

pattern of diversion and would deny the

State certain types of penalty relief.

A State would be permitted the

opportunity to prove that this pattern

was actually the result of State policies

and objectives that were entirely

unrelated to the goal of diversion, but

we would make the final judgment as to

what constitutes a significant pattern of

diversion.

For the specific regulatory changes

associated with these policies, see

§§ 271.51, 272.5 (c) and (d), and

272.6(i)(2).

We will also propose to require States

seeking to receive high performance

bonuses to report on families served by

separate State programs. We will

address this issue more fully in the

coming NPRM on high performance

bonuses.

In the policy announcement, we

advised States to think carefully about

the risks to the long-term viability of

their TANF programs if they rely too

extensively on separate State MOE

programs. In general, States cannot

receive contingency funds unless their

expenditures within the TANF program

are at 100 percent of historic State

expenditures. Thus, excessive State

reliance on expenditures outside the

TANF program to meet MOE

requirements could make access to

contingency funds difficult during

economic downturns.

Child-Only Cases

Since the January guidance came out,

we have also become concerned that

States might be able to avoid the work

participation rates and time limits by

excluding adults (particularly parents)

from their eligible cases. Given the

flexibility available to States under the

statute and regulations, it appears

possible that States could protect

themselves from the requirement and

the associated penalty risk by

converting regular welfare cases into

child-only cases. Such conversions

would seriously undermine these

critical provisions of welfare reform.

To protect against these negative

consequences, in the work and timelimit sections of this proposed rule, we

would prohibit States from converting

cases to child-only cases for the purpose

of avoiding penalties and require annual

reporting of any such exclusions (with

explanations). We are also proposing to

recalculate a State’s work participation

rates and time limit exemptions if we

determine that a State has excluded

cases from its calculations for the

purpose of avoiding penalties in these

areas. See §§ 271.22, 271.24, and 274.1

for the specific proposals.

IV. Discussion of Individual Regulatory

Provisions

Following is a discussion of all the

regulatory provisions we have included

in this package. The discussion follows

the order of the regulatory text,

addressing each part and section in

turn.

A. Part 270—General Temporary

Assistance for Needy Families (TANF)

Provisions

This part of the proposed rules helps

set the framework for the rest of the

proposed rule. For the convenience of

the reader, it reiterates the goals stated

in the new section 401. It also includes
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62131

a set of definitions that are common to

the different parts of the proposed rule.

What does this part cover? (§ 270.10)

This section of the proposed rules

indicates that part 270 includes

provisions that are applicable across all

the TANF regulations in this

rulemaking.

What is the purpose of the TANF

program? (§ 270.20)

This section of the proposed rules

repeats the statutory goals of the TANF

program. In brief, they include reducing

dependency and out-of-wedlock

pregnancies; developing employment

opportunities and more effective work

programs; and promoting family

stability.

While we do not elaborate on the

statutory language, we would like to

point out that, in a number of ways, the

new law speaks to the need to protect

needy and vulnerable children. States

should keep this implicit goal in mind

as they implement their new programs.

What definitions apply under the TANF

regulations? (§ 270.30)

This section of the proposed rule

includes definitions of the terms used in

parts 270 through 275. It does not

include definitions that pertain only to

individual provisions. You should look

to the appropriate individual parts of

the proposed rules for definitions that

are provision-specific.

In drafting this section of the

proposed rule, we defined only a

limited number of terms used in the

statute and regulations. We understood

that excessive definition of terms could

unduly and unintentionally limit State

flexibility in designing programs that

best serve their needs. For example, we

did not define ‘‘family’’ or ‘‘head-ofhousehold.’’ States are thus free to

define what types of families would be

eligible for TANF assistance. (However,

we suggest that you look at the sections

of this rule covering work participation

rates (§§ 271.22 and 271.24), MOE

requirements (subpart A of part 273),

time limits (§ 274.1), and data collection

definitions (§ 275.2); none of these

sections creates a definition of family,

but all address the definition of the term

‘‘family’’ in describing key requirements

on States.)

We also decided not to define the

individual work activities that count for

the purpose of calculating a State’s

participation rates. You should look to

the preamble discussion for § 273.13

and subpart C of part 271, respectively,

for additional discussion of these

decisions.

You will note that we use the term

‘‘we’’ throughout the regulatory text and

preamble. The term ‘‘we’’ means the

Secretary of the Department of Health

and Human Services or any of the

following individuals or agencies acting

on her 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.

Likewise, you should note that we use

the term ‘‘Act’’ to refer to the Social

Security Act, as amended by the new

welfare law. We use the term

‘‘PRWORA’’ when we refer to the new

law itself. A section reference is a Social

Security Act reference if we use neither

term.

Some of the definitions in this section

incorporate the statutory definitions in

PRWORA. We included these

definitions largely for the reader’s

convenience. These statutory definitions

include: ‘‘adult,’’ ‘‘minor child,’’

‘‘eligible State,’’ ‘‘Indian, Indian Tribe

and Tribal organization,’’ ‘‘State,’’ and

‘‘Territories.’’

We also propose some clarifying

definitions. These include explanations

of commonly used acronyms (such as

ACF, AFDC, EA, IEVS, JOBS, MOE,

PRWORA and TANF, as well as the new

WTW) and commonly used terms and

phrases (such as the Act and the

Secretary). While the meaning of many

of these is generally understood, we

included them to ensure a common

understanding.

We are also proposing a number of

definitions that have substantial policy

significance, for clarification purposes.

For example, the definitions distinguish

among several types of expenditures.

These distinctions are critical because

the applicability of the TANF

requirements vary depending on the

source of funds for the expenditures. In

particular, it is important to distinguish

between expenditures from the Federal

TANF grant and from the State funds

expended to meet MOE requirements

(either within the TANF program or in

separate State programs).

Federal expenditures. This is shorthand for the State expenditure of

Federal TANF funds.

Qualified State Expenditures. This

term refers to expenditures that count

for TANF MOE purposes (at section

409(a)(7)). By regulation, we are

proposing that most of the requirements

that apply for countable TANF MOE

expenditures also apply for Contingency

Fund MOE purposes.

TANF MOE. This term refers to the

expenditure of State funds that a State

must make in order to meet the MOE

requirement at section 409(a)(7).

Contingency Fund MOE. This term

refers to expenditures of State funds that

a State must make in order to meet the

Contingency Fund MOE requirements

under sections 403(b) and 409(a)(10).

States must meet this MOE level in

order to retain contingency funds made

available to them for the fiscal year.

Note that this term is more limited in

scope than the term ‘‘TANF MOE.’’ See

discussion at subpart B of part 274 for

additional details.

State MOE expenditures. This term

refers to any expenditure of State funds

that may count for TANF MOE or

Contingency Fund purposes. It includes

both State TANF expenditures and

expenditures under separate State

programs.

State TANF expenditures. This term

encompasses the expenditure of State

funds within the State’s TANF program.

It identifies the only expenditures that

can be counted toward the Contingency

Fund MOE, except for expenditures

made under the Child Care and

Development Fund. It includes both

commingled and segregated State TANF

expenditures.

Commingled State TANF

expenditures. This term identifies the

expenditure of State funds, within the

TANF program, that are commingled

with Federal funds. Such expenditures

may count toward both the State’s

TANF MOE and Contingency Fund

MOE. To the extent that expended State

funds are commingled with Federal

funds, they are subject to the Federal

rules.

Segregated State TANF expenditures.

This term identifies State funds

expended within the TANF program

that are not commingled with Federal

funds. Such expenditures count for both

TANF MOE and Contingency Fund

MOE purposes. They are not subject to

many of the TANF requirements that

apply only to Federal funds (including

time limits).

Separate State program. This term

identifies programs operated outside of

TANF in which the expenditure of State

funds count toward TANF MOE, but

generally does not count for

Contingency Fund MOE. With one

exception (for CCDF expenditures),

expenditure of State funds must be

made within the TANF program in

order to count as MOE for Contingency

Fund purposes.

The definitions also distinguish

among different categories and amounts

of TANF grant funds. These distinctions

are important because they affect the

size of grant adjustments and total

funding available to the State. In some
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cases, different spending rules apply to

different categories of funds.

State Family Assistance Grant (or

SFAG). This term refers to the annual

allocation of Federal funds to a State

under the formula at section 403(a)(1).

Adjusted State Family Assistance

Grant, or ‘‘Adjusted SFAG.’’ This term

refers to the grant awarded to a State

through the formula and annual

allocation at section 403(a)(1), minus

any reductions due to the

implementation of a Tribal TANF

program to serve Indians residing in the

State. You should note the distinction

between this term and the ‘‘SFAG,’’

because of their significance in

determining spending limitations and

the amount of penalties that might be

assessed against a State under parts

271–275.

TANF funds. This term includes not

just amounts made available to a State

through the SFAG, but also other

amounts available under section 403,

including bonuses, supplemental grants,

and contingency funds.

Federal funds. This has the same

meaning as ‘‘TANF funds.’’ In

expending Federal funds, States are

subject to more restrictions than they

are in expending State MOE as

discussed in this NPRM under subpart

B of part 273.

You should also note the definition of

‘‘assistance’’ proposed in this section.

Assistance. The terms ‘‘assistance’’

and ‘‘families receiving assistance’’ are

used in the PRWORA in many critical

places, including: (1) in most of the

prohibitions and requirements at section

408, which limit the provision of

assistance; (2) in the numerator and

denominator of the work participation

rates in section 407(b); and (3) the data

collection requirements of section

411(a). Largely through reference, the

term also affects the scope of the penalty

provisions in section 409. Thus, it is

important that States have a definition

of ‘‘assistance.’’ At the same time,

because TANF replaces AFDC, EA and

JOBS, and provides much greater

flexibility than these programs, what

constitutes assistance is less clear than

it was in the past.

Because PRWORA is a block grant,

and it incorporates three different

programs, a State may provide some

forms of support under TANF that

would not commonly be considered

public assistance. Some of this support

might resemble the types of short-term,

crisis-oriented support that was

previously provided under the EA

program. Other forms might be more

directly related to the work objectives of

the Act and not have a direct monetary

value to the family. We are proposing to

exclude some of these forms of support

from the definition of assistance.

The general legislative history for this

title indicates that Congress meant that

this term encompass more than cash

assistance; beyond that, it is not very

informative (H.R. Rep. No. 725, 104

Cong., 2d Sess (1996)). Our

consultations did not produce clear

guidance in this area either. However,

they did identify some areas where

clarification would be helpful.

Therefore, this proposed rule contains

essentially the same definition as we

suggested in our January policy

announcement (TANF–ACF–PA–97–1),

with some additional clarifications.

In our January proposal, we took the

view that the definition of assistance

should encompass most forms of

support. However, we recognized two

basic forms of support that would not be

considered welfare and proposed to

exclude them from the definition. In

brief, the two exclusions were: (1)

services that had no direct monetary

value and did not involve direct or

indirect income support; and (2) onetime, short-term assistance.

In the proposed rule, we are clarifying

that child care, work subsidies, and

allowances that cover living expenses

for individuals in education or training

are included within the definition of

assistance. For this purpose, child care

includes payments or vouchers for

direct child care services, as well as the

value of direct child care services

provided under contract or a similar

arrangement. It does not include child

care services such as information and

referral or counseling, or child care

provided on a short-term, ad hoc basis.

Work subsidies includes payments to

employers to help cover the costs of

employment or on-the-job training.

We are also proposing to define onetime, short-term assistance as assistance

that is paid no more than once in any

twelve-month period, is paid within a

30-day period, and covers needs that do

not extend beyond a 90-day period. In

response to the policy announcement,

we received a number of questions

about what the term ‘‘one-time, shortterm’’ meant. Based on our experience

with the EA program, we realized that

a wide range of interpretations was

possible, and we were concerned that

States might try to define as ‘‘shortterm’’ or ‘‘one-time’’ many situations

where assistance was of a significant

and ongoing nature. We hope our

proposal will give States the flexibility

to meet short-term and emergency needs

(such as an automobile repair), without

invoking too many administrative

requirements and undermining the

objectives of the Act. We welcome

comments on whether the proposed

policy achieves this end.

Under the policy announcement and

proposed rule, we define the minimum

types of services and benefits that must

be included. Based on comments we

received, we considered allowing States

to include additional kinds of benefits

and services, at their option. However,

we were concerned that varying State

definitions would create additional

comparability problems with respect to

data collection and penalty

determinations. Also, we were

concerned that an expanded definition

might have undesirable program effects.

For example, it could extend child

support assignment to cases where it

would not be appropriate.

If States expanded their definitions of

assistance, they would have to apply

that same definition under all

provisions of the regulations. Thus, if

something fell within the definition of

assistance, the family receiving that type

of benefit would be subject to data

collection and reporting, child support

assignment and cooperation

requirements, work requirements, and

Federal time limits. In response to the

policy announcement, we have also

received a number of questions about

the treatment of TANF assistance under

the child support enforcement program.

The Office of Child Support

Enforcement will be issuing guidance

on the distribution of child collections

under PRWORA; this guidance will

explain the treatment of TANF

assistance under the new distribution

rules.

For those concerned about the

inclusion of child care in the definition

of assistance, we would point out the

child care expenditures made under the

CCDBG program are not subject to

TANF requirements, and States have the

authority to transfer up to 30 percent of

their TANF grant to the CCDBG

program.

We are proposing to collect data on

how much of the program expenditures

are being spent on different kinds of

‘‘assistance’’ and ‘‘non-assistance.’’ See

the discussion of the TANF Financial

Report at part 275 for additional details.

If the data show that large portions of

the program resources are being spent

on ‘‘non-assistance,’’ we would have

concerns that the flexibility in our

definition of ‘‘assistance’’ is

undermining the goals of the legislation.

We would then look more closely at the

‘‘non-assistance’’ being provided and try

to assess whether work requirements,

time limits, case-record data and child

support assignment would be

appropriate for those cases. If necessary,

we would consider a change to the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62133

definition of ‘‘assistance’’ or other

remedies.

You should also note the definitions

of ‘‘waiver’’ and ‘‘inconsistency’’ in this

part.

Waiver and Inconsistency. Under the

new section 415, States that received

approval for welfare reform waivers

under section 1115 before July 1, 1997,

have the option to operate their cash

assistance programs under some or all of

these waivers. For States electing this

option, provisions of the new law that

are inconsistent with the waivers do not

take effect until the expiration of the

applicable waivers. States have raised

numerous questions about how we will

interpret this provision, particularly

with regard to what is a waiver and an

inconsistency.

Since a waiver extension might affect

the application of certain of the penalty

provisions within a State, we are

defining both terms. Part of our

responsibility in administering the

penalty provisions is to provide notice

concerning the rules we will utilize in

applying the penalties.

The issue in defining waiver concerns

the scope of the provision, specifically

how much of the current or underlying

law (i.e., the provisions of title IV–A as

in effect on August 21, 1996) are

properly considered to be part of the

waiver. Three possible interpretations

were suggested. The first is a very

limited definition in which a waiver is

only the specific change to the AFDC

statute as articulated in the waiver list

that was included in the terms and

conditions for each demonstration

project. The second possible

interpretation is that a waiver includes

all the underlying law; that, in effect,

the AFDC statute, as modified by the

waiver terms and conditions, would

continue to apply in a State continuing

a demonstration project. The third

interpretation is that the waiver

includes only some parts of the

unwaived underlying law.

We believe the third option is the

best. It seems most consistent with the

Congressional intent to allow States to

finish testing the welfare reform policies

they had initiated through waivers by

allowing sufficient flexibility to

continue relevant aspects of those

policies. It recognizes that, although

some requirements may not have

specifically been part of the waiver (as

there was no need for a waiver under

AFDC), the requirements are an integral

part of the demonstration embodied in

the waiver.

The first interpretation option is too

narrow to allow continuation of many

demonstration objectives; thus, it seems

inconsistent with the Congressional

intent. Similarly, to allow a State to

continue the AFDC program in its

entirety, even when a particular AFDC

provision was not necessary to the

demonstration, would seem to frustrate

the intent of Congress in enacting

TANF. Rather, we believe section 415

was intended to allow States to continue

their reform policies, but not the AFDC

program in its entirety.

The definition of ‘‘waiver’’ we are

proposing allows a State the flexibility

to include applicable provisions of prior

law, but only if their inclusion were

necessary to achieve the objective of the

approved waiver.

At § 271.60, we provide an example of

the application of the definitions of

waiver and inconsistent to the work

requirements and explain their

implications. We also discuss the

application of the definitions to control

and experimental groups.

After extensive deliberations, we have

also defined what makes the new law

‘‘inconsistent’’ with a waiver. We

propose that a provision of TANF is

inconsistent with a waiver only if the

State must change its waiver policy in

order to comply with the TANF

requirement. A TANF provision is not

inconsistent if it is possible for the

TANF requirement and the waiver

policy to operate concurrently.

For example, if the State has a time

limit that runs for two years and then

has extensions if the recipient is

‘‘playing by the rules,’’ that time limit

can run in tandem with the Federal time

limit until the five-year limit on Federal

assistance is reached. At that point, the

TANF restriction would be inconsistent

with providing further assistance under

the demonstration’s extension.

However, since there is an

inconsistency at that point, section 415

would allow a State to continue such

assistance until the demonstration

ended.

We considered two alternative

definitions of inconsistency. The first

was that just having a waiver that differs

in any respect from the TANF

requirement creates an immediate

inconsistency. For example, under this

definition, the State time limit and the

Federal time limit would run

sequentially. However, this definition

seems to create an artificial

inconsistency where one does not exist

in fact; thus, it seems contrary to the

statute.

The second alternative was to find

that a waiver was not inconsistent with

the TANF provisions of the law if TANF

restrictions related only to the

expenditure of Federal funds and did

not prohibit States from continuing their

waiver policies with their own funds.

However, application of this theory

could lead to a finding of no

inconsistency for all waiver provisions,

including those in the major areas of

work and time limits. It would thus

render section 415 meaningless.

At § 274.1, we provide additional

discussion regarding the implications of

our definition of inconsistency.

You should also note the definitions

of ‘‘Family Violence Option,’’ ‘‘good

cause domestic violence waiver,’’ and

‘‘victim of domestic violence.’’

Family Violence Option, Good Cause

Domestic Violence Waivers, and Victims

of Domestic Violence. These definitions

are relevant to State claims of

‘‘reasonable cause’’ for failing to meet

the work participation rate and timelimit requirements of the Act. Under

parts 271 and 274, a State’s decision to

implement the Family Violence Option

and its provision of good cause waivers

to victims of domestic violence under

that provision create a special-case

situation that may affect a State’s

eligibility for a reasonable cause

exception from these two penalties.

Finally, we would like you to note

that § 273.0(b) contains a definition of

‘‘administrative costs.’’ This definition

is important because States are subject

to 15 percent caps on the amount of

Federal TANF and State MOE funds

they may spend on administrative

activities.

When are these provisions in effect?

(§ 270.40)

This section of the proposed rules

provides only the general time frames

for the effective dates of the TANF

provisions. Many of the penalty and

funding provisions have delayed

effective dates. For example, most

penalties would not be assessed against

States in the first year of the program,

and reductions in grants due to

penalties would not occur before FY

1998 because reductions take place in

the year following the failure. You

should look to the discussion on the

individual regulatory sections for

specific information on effective dates.

This section also makes the important

point that we will not retroactively

apply rules against States. With respect

to any actions or behavior that occurs

before we issue final rules, we will

judge State actions and behavior only

against a reasonable interpretation of the

statute.

B. Part 271—Ensuring That Recipients

Work

What does this part cover? (§ 271.1)

This section identifies the scope of

part 271: the mandatory work

requirements of TANF.
62134 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

What definitions apply to this part?

(§ 271.2)

This section cross-references the

general definitions for the TANF

regulations established under part 270.

Supart A—Individual Responsibility

During our extensive consultations, a

number of groups and individuals asked

how the requirements on individuals

relate to the State participation

requirements and penalties. To help

clarify what the law expects of

individuals as opposed to the

requirements it places on States, we

have decided to outline a recipient’s

statutory responsibilities as part of the

proposed rules. In so doing, we only

paraphrase the statute, without

interpreting these provisions. Inclusion

of these provisions in the regulation

does not indicate our intent to enforce

these statutory provisions, but our

expectation is that States will meet

these requirements. We have included

the requirements in the regulation for

informational and contextual reasons.

What work requirements must an

individual meet? (§ 271.10)

PRWORA promotes self-sufficiency

and independence by expanding work

opportunities for welfare recipients

while holding individuals to a higher

standard of personal responsibility for

the support of their children. The

legislation expands the concept of

mutual responsibility, introduced under

the Family Support Act of 1988. It

espouses the view that income

assistance to families with able-bodied

adults should be transitional and

conditioned upon their efforts to

become self-sufficient. As States and

communities assume new

responsibilities for helping adults get

work and earn paychecks quickly,

parents face new, tougher work

requirements.

Readers should understand that the

law imposes a requirement on each

parent or caretaker to work (see section

402(a)(1)(A)(ii)). That requirement

applies when the State determines the

individual is ready to work, or after

(s)he has received assistance for 24

months, whichever happens first. For

this requirement, the State defines what

work activities meet the requirement.

In addition, there is a requirement

that each parent or caretaker participate

in community service employment if

s(he) has received assistance for two

months and is not either engaged in

work in accordance with section 407(c)

or exempt from work requirements. The

State must establish minimum hours of

work and the tasks involved. A State

may opt out of this provision if it

chooses. A State may impose other work

requirements on individuals, but there

is no further Federal requirement to

work.

These individual requirements are

different from the work requirements

described at section 407. Section 407

applies a requirement on each State to

engage a certain percentage of its total

caseload and a certain percentage of its

two-parent caseload in specified work

activities. For the State requirement, the

law lists what activities meet the

requirement. A State could chose to use

this statutory list for the first

requirement on individuals, but is not

required to do so. Subpart B below

explains more fully what the required

work participation rates are for States

and how they are calculated. Subpart C

explains the work activities and when

an individual is considered ‘‘engaged in

work’’ for those rates.

Which recipients must have an

assessment under TANF? (§ 271.11)

Each State must make an initial

assessment of the skills, prior work

experience and employability of each

recipient who is at least 18 years old, or

has not completed high school (or

equivalent) and is not attending

secondary school.

With respect to the timing of

assessments, within 90 days of the

effective date of the State’s TANF

program (or up to 180 days, at State

option), the State may assess an

individual who is already receiving

benefits as of that date. For any other

recipient, the State may make the

assessment within 30 days of the date

on which the individual is determined

to be eligible for assistance, but may

increase this period to as much as 90

days. For example, if a State begins

operating its TANF program on July 1,

1997, it may assess all individuals in its

existing caseload by September 30, 1997

(or, at State option, December 31, 1997).

For any individual applying after July 1,

1997, the State may do an assessment

within 30 days (or 90 days, at State

option).

What is an individual responsibility

plan? (§ 271.12)

A State may require individuals to

adhere to the requirements of an

individual responsibility plan.

Developed in consultation with the

individual on the basis of the initial

assessment described above, the plan

should set forth the obligations of both

the individual and the State. It should

include an employment goal for the

individual and a plan to move him/her

into private-sector employment as

quickly as possible. The proposed

regulation includes more detailed

suggestions for the content of an

individual responsibility plan.

May an individual be penalized for not

following an individual responsibility

plan? (§ 271.13)

If the individual does not have good

cause, (s)he may be penalized for not

following the individual responsibility

plan that (s)he signed. The State has the

flexibility to establish good cause

criteria, as well as to determine what is

an appropriate penalty to impose on the

family. This penalty is in addition to

any other penalties the individual may

have incurred.

What is the penalty if an individual

refuses to engage in work? (§ 271.14)

If an individual refuses to engage in

work in accordance with section 407,

the State must reduce the amount of

assistance otherwise payable to the

family pro rata (or more, at State option)

for the period during the month in

which the individual refused, subject to

good cause and other exceptions

determined by the State. The State also

has the option to terminate the case.

Each State may establish its own

criteria for determining when not to

impose a penalty on an individual.

States may also establish other rules

governing penalties as needed.

Under the Family Violence Option, a

State may waive work requirements in

cases where compliance would make it

difficult for an individual to escape

domestic violence or would unfairly

penalize individuals who are or have

been victimized by such violence or

individuals who are at risk of further

domestic violence. The State must

determine that the individual receiving

the program waiver has good cause for

failing to comply with the standard

work requirements.

Can a family be penalized if a parent

refuses to work because (s)he cannot

find child care? (§ 271.15)

A State may not reduce or terminate

assistance to a single custodial parent

caring for a child under age six for

refusing to engage in required work, if

the parent demonstrates an inability (as

determined by the State) to obtain

needed child care. This exception

applies to penalties the State imposes

for refusal to engage in work in

accordance with either section 407 or

section 402(a)(1)(A)(ii) of the Act. The

parent’s demonstrated inability must be

for one of the following reasons:

• Appropriate child care within a

reasonable distance from the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62135

individual’s home or work site is

unavailable;

• Informal child care by a relative or

under other arrangements is unavailable

or unsuitable; or

• Appropriate and affordable formal

child care arrangements are unavailable.

This penalty exception underscores

the pivotal role of child care in

supporting work and also recognizes

that the lack of appropriate, affordable

child care can create unacceptable

hardships on children and families. To

keep families moving toward selfsufficiency, and to assess the State’s

compliance with this penalty exception,

we have described in the preamble to

§ 274.20 our expectation that States will

have a process or procedure that: (1)

Enables a family to demonstrate its

inability to obtain needed child care; (2)

informs parents that the family’s

benefits cannot be reduced or

terminated when they demonstrate that

they are unable to work due to the lack

of child care for a child under the age

of six; and (3) advises parents that the

time during which they are excepted

from the penalty will still count toward

the time limit on benefits at section

408(a)(7).

Because the State has the authority to

determine whether the individual has

demonstrated adequately an inability to

obtain needed child care, as the

regulations indicate, we expect the State

to define the terms ‘‘appropriate child

care,’’ ‘‘reasonable distance,’’

‘‘unsuitability of informal care,’’ and

‘‘affordable child care arrangements.’’

The State should also provide families

with the criteria, including the

definitions, that it will use to implement

the exception and the means by which

a parent can demonstrate an inability to

obtain needed child care.

The proposed regulations for the

Child Care and Development Fund

(CCDF) reinforce the importance of

providing this vital information to

parents by requiring the child care Lead

Agency, as part of its consumer

education efforts, to inform parents

about: (1) The penalty exception to the

TANF work requirement; (2) the State’s

process or procedure for determining a

family’s inability to obtain needed child

care; and (3) the fact that the exception

does not extend the time limit for

receiving assistance. The information

must also include the definitions or

criteria that the State employs to

implement the State’s determination

process.

Under the proposed CCDF rule, we

would require the Lead Agency for child

care to coordinate with the TANF

agency in order to understand how the

TANF agency defines and applies the

terms of the statute regarding the

penalty exception and to include the

definitions (listed above) and criteria in

the CCDF plan.

Thus, the proposed CCDF rule

requires that the Lead Agency would

submit the definitions and criteria used

by the State in determining whether

child care is available. We took this

child care proposal into consideration

in drafting our proposed rule. Under

§ 271.15, we would require that the

definitions and criteria be submitted,

but would not require that the TANF

agency submit them directly. Our goal is

to ensure that these items are made

available for audit and penalty purposes

and that they be part of the public

record.

If, based on the child care final rule,

we would not expect to receive the

criteria and definitions from the Lead

Agency, we would add a data element

to one of the proposed TANF reporting

forms (such as the annual addendum) to

incorporate them.

Does the imposition of a penalty affect

an individual’s work requirement?

(§ 271.16)

Section 408(c) of the Act, as amended

by section 5001(h) of Pub. L. 105–33,

clarifies that sanctions against recipients

under TANF ‘‘shall not be construed to

be a reduction in any wage paid to the

individual.’’ This means that imposition

of such penalties would not result in a

reduction in the number of hours of

work required.

Subpart B—State Accountability

How will we hold a State accountable

for achieving the work objectives of

TANF? (§ 271.20)

Work is the cornerstone of welfare

reform. Research has demonstrated that

early connection to the labor force helps

welfare recipients make important steps

toward self-sufficiency. The rigorous

work participation requirements

embodied in the legislation provide

strong incentives to States to

concentrate their resources in this

crucial area. This summary section

makes the legislation’s focus on work

and the requirements for work clear,

while other sections address each of

these areas in more detail.

This section of the proposed

regulations describes what a State must

do to meet the overall and two-parent

work participation rates. It explains that

a State must submit data to allow us to

measure each State’s success with the

work participation rates. It notes that a

State meeting the minimum rates will

have a reduced MOE requirement but

that a State failing to meet them risks a

financial penalty.

What overall work rate must a State

meet? (§ 271.21)

Section 407(a) establishes two

minimum participation rates that a State

must meet for FYs 1997 through 2002

and thereafter. The first, the overall

work rate, is the percentage of all

families receiving assistance who must

participate in work activities by fiscal

year. This section lists the statutory

overall participation rate by fiscal year.

The second is the work rate for twoparent families, addressed below at

§§ 271.23 and 271.24.

How will we determine a State’s overall

work rate? (§ 271.22)

This section of the proposed

regulation restates in clear terms the

participation rate calculation specified

in the statute. In particular, without

changing its meaning, we have phrased

the denominator in a way that we think

is easier to understand than the

statutory language.

We received many requests for

guidance concerning how, for purposes

of the participation rates, a State should

treat a family that it exempts from work

requirements. A State has the flexibility

to establish any exemptions it chooses;

however, with two exceptions

(discussed below), the legislation offers

no room to remove categories of

recipients from the denominator.

PRWORA embodies the views that: (1)

Work is the best way to achieve

independence; and (2) each individual

should participate to his or her greatest

ability. As waiver projects have

demonstrated, innovative State

programs can often find meaningful

ways for nearly every recipient to

participate in work-related activities.

Therefore, the statute and the proposed

regulation require nearly all families to

be included in the calculation of the

participation rates.

The proposed regulation makes clear

that a State may count as a month of

participation any partial months of

assistance, if an adult in the family is

engaged in work for the minimum

average number of hours in each full

week that the family receives assistance

in that month. These families are

already included in the denominator

since they are recipients of assistance in

that month.

This provision ensures that a State

receives credit for its efforts in the first

and last months that a family receives

assistance. Without it, a State would

have an inadvertent incentive to start

and end assistance as close as possible

to the beginning of the month, rather

than as families need it. We think that

measuring work in full weeks of
62136 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

assistance during a partial month is

consistent with the spirit of PRWORA.

We have proposed the same policy for

partial months of assistance under the

two-parent rate at § 271.24.

During the development of the

proposed regulation and in consultation

with stakeholders, one important topic

of discussion was how to treat victims

of domestic violence whom the State is

helping under the Family Violence

Option (FVO), under section 402(a)(7).

We recognize that there are

circumstances in which a State should

and will temporarily waive work

requirements for some domestic

violence victims. One question we

considered was how such waivers

would affect the calculation of the

participation rates.

Many commenters urged us to remove

all victims of domestic violence from

the denominator of a State’s

participation rate so that the State

would not be penalized for choosing to

develop appropriate responses to their

problems. Instead of changing the basic

calculation of the work participation

rates, we chose to address this situation

under the definition of ‘‘reasonable

cause’’ for States failing to meet their

rates. Our approach is targeted, so as not

to provide blanket exemptions for those

who have ever suffered domestic

violence, but instead to provide

appropriate protections and supports for

TANF recipients who need them.

We believe that keeping recipients

who are being assisted under the FVO

in the calculation is the better reading

of the statute. In the calculation of work

participation rates, the statute provides

only two exemptions from the

denominator: one for a single custodial

parent of a child under 12 months old;

the other for a recipient who is being

sanctioned but has not been so for more

than three of the last 12 months. The

law is very specific concerning these

exemptions and does not provide for

others.

We believe victims of domestic

violence and the objectives of the Act

will be best served if we maintain the

integrity of the work requirements and

promote appropriate services to the

victims of domestic violence. Service

providers who work closely with

victims of domestic violence attest that

work is often a key part of the solution

to domestic violence problems; it may

provide both emotional support and a

path to financial independence. Thus,

we do not want to create an incentive

for States to waive work requirements

routinely for a recipient who does not

need such a waiver.

However, we also hear that, in some

cases, going to work may aggravate

tensions with a batterer and place the

victim at risk of further danger. Under

our proposed rules, States should feel

free to provide temporary waivers of

work requirements in such cases.

Given the pressure States are under to

meet the work participation rates, and

the individualized circumstances that

domestic violence victims face, we have

concerns that automatically removing

victims of domestic violence from the

calculations could result in

inappropriate exemptions or deferrals of

work requirements for victims of

domestic violence. We also have

concerns that it could result in

diversion of resources away from these

families to other categories of recipients.

We believe our ‘‘reasonable cause’’

proposal and our strategy for monitoring

the effect of these provisions will

protect against these possible negative

effects.

You will also note that this section of

the regulation addresses our concern

that States could use the flexibility

inherent in the statute and these

regulations to avoid the work

participation rates for certain families in

the TANF program. Because the

participation rates include only those

families receiving assistance that

include an adult, the possibility exists

that States could try to keep cases out

of the calculation by converting them to

child-only cases. Under our proposal,

States would continue to have

discretion in defining ‘‘families

receiving assistance’’ and deciding the

circumstances under which adults and

children receive assistance in the State.

However, we would reserve the right to

add cases back into the calculation if we

determine that a State was defining

families solely for the purpose of

avoiding a work penalty. Also, we are

proposing to require that States submit

annual reports to us specifying how

many families were excluded from the

overall work participation rate, together

with the basis for any exclusions.

Please see § 271.52 of the proposed

regulations for further discussion of the

reasonable cause criteria.

What two-parent work rate must a State

meet? (§ 271.23)

As with § 271.21, this section restates

the minimum work participation rates

for two-parent families established in

the statute.

States should note the sharp increases

in the two-parent participation rate.

Congress has high expectations that

States will help the vast majority of

adults in two-parent families find jobs

or participate in other work activities.

We note that most States had difficulty

meeting the less ambitious JOBS

participation rates for unemployed

parent families (UPs), the primary twoparent cases under AFDC. For several

reasons, the new rates under TANF are

much more demanding than they were

under JOBS. First, the TANF rate is a

‘‘two-parent’’ rate, not a rate just for

UPs. Secondly, the denominator

includes much more of the caseload; it

recognizes many fewer exemptions.

Finally, PRWORA lifted the restrictions

on providing assistance to two-parent

families. Thus, in some States, many

more two-parent families could be

eligible for assistance and subject to the

work requirements than under prior

law.

We strongly encourage each State to

consider carefully what it must do to get

two-parent families working. In some

cases, States may need to make

substantial changes to their program

designs over time. In the first few years

of operating TANF, the participation

rates are at their lowest and pro rata

reductions may significantly reduce the

minimum required rates. We think it is

important for States to capitalize on this

initial period to invest in program

designs that will allow them to achieve

the higher participation rates in effect in

later years. We intend to assist States in

this endeavor through technical

assistance and by sharing promising

models as they emerge.

Finally, we would like to make it

clear that providing a non-custodial

parent with TANF services need not

cause a State to consider the family a

two-parent family for the purposes of

the participation rate. States could

define two-parent families as those with

two parents living in the same

household.

How will we determine a State’s twoparent work rate? (§ 271.24)

The proposed regulations express the

two-parent work participation rate in

terms very similar to those we used for

the overall rate. States should note that

any family that includes a disabled

parent is not considered a two-parent

family for purposes of the participation

rate and, thus, is not included in the

numerator or denominator of the twoparent rate. They should also note the

prohibition against defining families

receiving assistance for the purpose of

excluding cases from two-parent

participation rate. (See § 271.22 for

additional discussion.)

It is important to note that, in

accordance with the statute, we

calculate both participation rates in

terms of families, not individuals.

Whether we include the family in the

numerator depends on the actions of

individuals, but an entire family either
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62137

counts toward the rate or does not. In

the case of a two-parent family, whether

a family counts may depend on the

actions of both parents.

Section 408(a)(7) limits the receipt of

Federal TANF assistance to 60 months

for any family, unless the family

qualifies for a hardship exception or

disregard of a month of assistance. (In

our discussion of § 274.1, we explain

that months of receipt are disregarded

when the assistance was received either:

(1) by a minor child who was not the

head of a household or married to the

head of a household; or (2) while an

adult lived in Indian country or in an

Alaska Native Village with 50 percent or

greater unemployment.) We have

received inquiries concerning the effect

of a time-limit exception or disregard on

the participation rates. In fact, the time

limit does not have a bearing on the

calculation of the participation rate. All

families must be included in the

participation rate, unless they have been

removed from the rate for one of the two

work-related exemptions (i.e., the family

is subject to a penalty but has not been

sanctioned for more than three of the

last 12 months, or the parent is a single

custodial parent of a child under one

year of age and the State has opted to

remove the family from the rate).

Does a State include Tribal families in

calculating these rates? (§ 271.25)

States have the option of including in

the participation rates families in the

State that are receiving assistance under

an approved Tribal family assistance

plan or under a tribal work program. If

the State opts to include such families,

they must be included in the

denominator, as well as the numerator

where appropriate. We are particularly

interested in receiving comments

relating to the implementation of this

option, such as Tribal reporting of

participation information to the State.

Subpart C—Work Activities and How

To Count Them

What are ‘‘work activities?’’ (§ 271.30)

Section 407(d) specifies the twelve

work, training, and education activities

in which individuals may participate in

order to be ‘‘engaged in work’’ for the

purpose of counting toward the work

participation rate requirements.

Congress did not define these activities

further. Some have commonly

understood meanings from their use

over time or from operational

definitions adopted by prior

employment and training programs. But

several of the permissible activities,

such as ‘‘vocational educational

training’’ and ‘‘job readiness

assistance,’’ do not have commonly

understood meanings and are subject to

interpretation. Because these terms lack

a common definition or understanding,

we began receiving questions soon after

the enactment of PRWORA about

whether we would define them in the

rules.

To address this problem, we first

examined legislative intent. In enacting

TANF, Congress wanted to give States

significant flexibility in administering

TANF and limit Federal authority to

regulate. At the same time, Congress

wanted to create a work-focused

program of time-limited assistance. In

addition, it established significant data

reporting requirements for States,

including information about the

activities in which individuals

participate. As discussed below, these

three purposes do not clearly point in

the direction of more or less definition.

Thus, the statute itself did not clearly

resolve the matter.

Secondly, we engaged in wide and

extensive consultation with a variety of

groups to determine what others

thought about the definition issue. Most

groups, particularly States and their

organizational representatives,

overwhelmingly urged us not to define

the work activities further and

recommended that definitions be left to

States. They suggested that we could

use this preamble to underscore the

flexibility and latitude intended by the

statute, especially in vocational

education. A few individuals asked

whether a State would be subject to a

penalty if it did not define activities in

a way we thought appropriate. They

suggested providing illustrative

examples or including guidance in the

preamble on activities that could not

count as work. Several participants

thought that we should offer general

guidance on the definition of activities

to ensure uniform data reporting across

States.

Representatives of the education

community and some from the labor

community expressed concerns about

how work-focused activities will affect

programs that have been operating

under the Job Opportunities and Basic

Skills Training (JOBS) program. They

emphasized the positive correlation

between educational attainment and job

acquisition and advancement, as well as

the importance of parental education

levels and involvement in the education

of their children. They also expressed

concern that, without additional

education and training, many families

will find it difficult to hold meaningful

employment, much less to advance.

They wanted us to take this opportunity

to define work activities in ways that

fostered education while promoting

work.

In this regulation, we are proposing

not to define the individual work

activities. In making our decision, we

considered the following.

Congress did not define the terms and

clearly gave States overall flexibility to

design their programs. Certainly, one

element of that flexibility could be to

allow each State to define the work

activities in order to address its unique

needs and circumstances.

We recognize that definitions of terms

could help clarify the parameters of a

work-focused program design. For

example, without Federal definitions,

States could conceivably include a

range of activities that may not enhance

work skills or might not be considered

‘‘work experience’’ by potential

employers. However, in light of the fiveyear time limit, we expect that States

will be very careful to establish

programs that do not work to prolong a

family’s use of assistance.

After considering the extensive input

we received, we think that the goals and

objectives of the legislation will be

better served by having each State

define the work activities. We believe

States will use the flexibility of the

statute to formulate a variety of

reasonable interpretations leading to

greater innovation, experimentation,

and success in helping families become

self-sufficient quickly.

Because the flexibility could also be

used in ways that do not further

Congressional intent, we are requiring

each State to provide us with its

definitions of work activities for both

TANF and separate State programs

under the data collection requirements

at §§ 275.9 and 273.7. We are concerned

that different TANF definitions could

affect the vulnerability of States to

penalties for failure to meet the

participation rate. This data collection

will help us determine whether this is

in fact a serious problem; to the extent

possible, we want to ensure an equitable

and level playing field for the States.

Over the next several years, we will

carefully assess the types of programs

and activities States develop and will

actively publicize and share the results

of our findings. If necessary at some

time in the future, we will initiate

further regulatory action.

Before leaving the subject of work

activities and program design, we would

like to remind States about some key

research findings from prior welfare-towork programs. According to the

Manpower Demonstration Research

Corporation’s publication, Work First:

The most successful work first programs

have shared some characteristics: a mixed
62138 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

strategy including job search, education and

training, and other activities and services; an

emphasis on employment in all activities; a

strong, consistent message; a commitment of

adequate resources to serve the full

mandatory population; enforcement of

participation requirements; and a costconscious management style.

While the most successful programs

consistently and strongly emphasize

work, the actual program designs

recognize and address the critical role

education plays in preparing adults for

work. As more and more recipients

engage in work, State caseloads may

reflect higher proportions of the

educationally disadvantaged. In

combination with other work activities,

education may become more important

in improving basic communication,

analytical and work-readiness skills of

recipients. Thus, States may need to

integrate adult basic skills, secondary

education, and language training within

high-quality vocational education

programs. Such program designs

encourage recipients to continue

acquiring necessary educational skills

and foster programs that prepare

recipients for higher-skill, higher-wage

jobs.

In his most recent ‘‘State of the

Union’’ address, President Clinton

identified education as his number one

priority. He Issued a call to action for

American education based on principles

necessary to prepare people for the 21st

century. One principle was to make sure

that learning is available for a lifetime.

We encourage States to adopt program

designs that take advantage of existing

educational opportunities. States may

use the statutory flexibility to design

programs that promote educational

principles by:

• Actively encouraging adults and

children to finish high school or its

equivalent;

• Expecting family members to attain

basic levels of literacy and to

supplement their education in order to

enhance employment opportunities;

• Encouraging family literacy; and

• Promoting community-based workrelated vocational education classes,

created in collaboration with employers.

States could also make it easier for

individuals to combine school and

work. For example, they could develop

on-campus community work experience

program positions, where child care is

also available. They could also

encourage schools to use work-study

funds for students on welfare and then

count the hours worked in those

programs toward work requirements.

While we have not regulated the

definition of work activities, we want to

ensure that recipients and children both

experience positive outcomes. This is a

particularly significant issue when child

care is the work activity. For this to

happen, child care arrangements should

be well developed, implemented and

supported.

Research has found that quality child

care is critical to the healthy

development of children and that

providers who choose to care for

children create more nurturing

environments than those who feel they

have no choice and are providing care

only out of necessity. Thus, States

should assess whether recipients have

an interest in providing child care

before assigning them to this activity.

In addition, States should provide

training, supervision and other supports

to enhance caregiving skills if they wish

recipients to attain self-sufficiency.

Such supports would assist the

development of both the caregivers and

the children in care.

A State that assesses the individual’s

commitment to child care and provides

opportunities for training in health and

safety (e.g., first aid and CPR), nutrition,

and child development, should see

successful outcomes for both the adults

and children in care.

Finally, the stability of child care

arrangements affects outcomes for both

parents and the children in care. When

parents feel comfortable with their child

care arrangements, their own

participation in the work force becomes

more stable. Stability fosters emotional

security for children. Thus, stability

should be one of the factors States take

into account when assigning

participants to child care as a work

activity.

How many hours must an individual

participate to count in the numerator of

the overall rate? (§ 271.31)

Section 407(c) specifies the minimum

hours an individual must participate to

count in the State’s participation rate

calculation. There are two related

requirements. First, there is a minimum

average number of hours per week for

which a recipient must be engaged in

work activities. The average weekly

hours are reflected in the following

table:

If the fiscal year is:

All families

Then the

participation rate

is:

(percent)

and the

average

weekly

hours of

work are:

1997 .......................... 25 20

1998 .......................... 30 20

1999 .......................... 35 25

2000 .......................... 40 30

2001 .......................... 45 30

If the fiscal year is:

All families

Then the

participation rate

is:

(percent)

and the

average

weekly

hours of

work are:

2002 .......................... 50 30

Second, the law requires that at least

an average of 20 hours per week of the

minimum average must be attributable

to certain specific activities. These

activities are:

• Unsubsidized employment;

• Subsidized private sector

employment;

• Subsidized public sector

employment;

• Work experience;

• On-the-job training;

• Job search and job readiness

assistance for no more than four

consecutive weeks and up to six weeks

total in a year;

• Community service programs;

• Vocational educational training not

to exceed 12 months;

• Provision of child care services to

an individual who is participating in a

community service program.

Note: The limitation that at least 20 hours

come from certain activities does not apply

to teen heads of households; however, there

are other limitations related to teen heads of

households. Please refer to § 271.33 below.

After an individual meets the basic

level of participation, the following

activities may count toward the total

work requirement hours of work:

• Job skills training directly related to

employment;

• Education directly related to

employment for those without a high

school diploma or equivalent;

• Satisfactory attendance at a

secondary school or GED course for

those without a high school diploma or

equivalent.

In our consultations, several people

asked whether a State may average the

hours of participation of different

recipients to reach the minimum

average hours required by the work

participation rate, as they could in the

JOBS program. PRWORA does not

permit combining and averaging the

hours of work of different individuals.

However, we have clarified in the rules

that a State may average an individual’s

weekly work hours over the month to

reach the minimum average number of

hours per week that the individual must

engage in work.

Our consultations uniformly

suggested that we did not need to

provide any further regulatory guidance

or clarification in this area. Thus, in the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62139

regulatory text, we have paraphrased the

statute in simple, understandable terms.

How many hours must an individual

participate to count in the numerator of

the two-parent rate? (§ 271.32)

For two-parent families, section

407(c) specifies that the parents must be

participating in work activities for a

total of at least 35 hours per week and

that a specified number of hours be

attributable to specific work activities. A

State may have one parent participate

for all 35 hours, or both parents may

share in the work activities. If the family

receives federally-funded child care

assistance and an adult in the family is

not disabled or caring for a severely

disabled child, then the parents must be

participating for a total of at least 55

hours per week. As before, a specified

number of hours must be attributable to

certain activities (listed below). We

summarize the requirements for twoparent families in the table below:

If the fiscal year

is:

Two-parent families

then the

participation

rate is:

(percent)

and the

weekly

hours of

work (without/with federal child

care) are:

1997 .................. 75 35/55

1998 .................. 75 35/55

1999 .................. 90 35/55

2000 .................. 90 35/55

2001 .................. 90 35/55

2002 .................. 90 35/55

In the first situation (where the

weekly total must be at least 35 hours),

at least 30 hours must be attributable to

the same specific activities as in the

overall rate. In the second situation

(where the weekly total must be at least

55 hours), 50 hours must be attributable

to these activities. Again, these are:

• Unsubsidized employment;

• Subsidized private sector

employment;

• Subsidized public sector

employment;

• Work experience;

• On-the-job training;

• Job search and job readiness

assistance for no more than four

consecutive weeks and up to six weeks

total in a year;

• Community service programs;

• Vocational educational training (for

not more than 12 months);

• The provision of child care services

to an individual who is participating in

a community service program.

Therefore, no more than five of the

appropriate minimum hours may be

attributable to education related to

employment, high school (or

equivalent), or job skills training

activities.

During our consultations, many

thought it was unclear whether the 35-

hour requirement is a minimum for each

week or whether it is a minimum

weekly average, as is the case in the

overall rate. For example, if a parent

participated 40 hours one week and 30

hours the next, the question arises

whether (s)he would meet the minimum

requirement for both weeks. To provide

maximum flexibility for States to meet

the program goals, we have clarified in

the proposed rule that, as long as the

parents’ average total hours equal at

least 35 hours per week, the individual

meets the participation requirement.

Other than this clarification, we have

mirrored the statute in simple,

understandable terms.

What are the special requirements

concerning educational activities in

determining monthly participation

rates? (§ 271.33)

Section 407(c)(2)(C) provides that a

teen who is married or the single headof-household is deemed to be engaged

in work for a month if (s)he maintains

satisfactory attendance at a secondary

school or the equivalent or participates

in education directly related to

employment for an average of at least 20

hours per week. Since we have heard

few comments about this provision, our

proposed rule paraphrases the statutory

language.

To reinforce the emphasis on work,

section 407 limits educational activities

in two ways:

(1) An individual’s participation in

vocational educational training may

count for participation rate purposes for

a maximum of 12 months; and

(2) For each participation rate, not

more than 30 percent of individuals

determined to be engaged in work for a

month may count by reason of

participation in vocational educational

training or, for teens who are married or

single heads of households, either by

reason of maintaining satisfactory

attendance at secondary school (or the

equivalent) or participating in education

directly related to employment. Teen

parents are only included in the 30

percent limitation in fiscal year 2000

and thereafter.

When PRWORA was enacted, there

was substantial controversy about

precisely how the second limitation

would apply. However, Pub. L. 105–33

modified this provision, making the

limitation much clearer. The description

above and the regulation at § 271.33

reflect the new provision, as amended

by Pub. L. 105–33.

Are there any limitations in counting

job search and job readiness assistance

toward the participation rates?

(§ 271.34)

Section 407(c)(2)(A)(i) limits job

search and job readiness assistance in

several ways.

First, an individual generally may not

be counted as engaged in work by virtue

of participation in job search and job

readiness assistance for more than six

weeks. No more than four of these

weeks may be consecutive. During our

consultations, we were asked whether

these limitations apply for the lifetime

of the individual, per spell of assistance,

or per fiscal year.

Many people recommended treating it

as a fiscal-year limit for two policy

reasons. First, since the participation

rate itself is tied to the fiscal year, it

makes sense to have the limitation

apply to the same time frame. Second,

a different policy could force States to

place individuals in other, less

appropriate activities just to meet the

participation rate. Moreover, research

indicates that job search activities are an

instrumental component in effective

work program designs.

The statutory language supports the

fiscal-year interpretation. The job search

language at 407(c)(2)(A)(i) limiting the

weeks of participation states that the

limit is ‘‘notwithstanding paragraph

(1).’’ Paragraph (1) refers to the

determination of whether a recipient is

engaged in work for a month ‘‘in a fiscal

year.’’ Thus the reference to paragraph

(1) puts the job search limitation in the

context of a calculating whether an

individual is engaged in work in the

fiscal year. Based on these

considerations, we have clarified in the

proposed rules that the six-week

limitation applies to each fiscal year.

The legislation and our proposed

rules allow the six-week limit on job

search and job readiness assistance to

extend to 12 weeks if the

unemployment rate of a State exceeds

the national unemployment rate by at

least 50 percent, or if the State could

qualify as a needy State for the

Contingency Fund.

Finally, our rules paraphrase the

statute (at section 407(c)(2)(A)(ii)) in

allowing a State to count three or four

days of job search and job readiness

assistance during a week as a full week

of participation on one occasion for the

individual.

Are there any special work provisions

for single custodial parents? (§ 271.35)

Section 407(c)(2)(B) provides a special

participation rule for single parents or

caretakers with young children. A single
62140 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

parent or caretaker with a child under

the age of six will be deemed to be

engaged in work for a month if s(he)

participates in work activities for an

average of at least 20 hours per week.

This provision has little relevance in

FYs 1997 and 1998, when, for the

overall rate, the required number of

hours for all individuals is 20 hours per

week. But, when the required number of

hours rises to 25 hours per week in FY

1999 and to 30 hours per week

thereafter, this provision allows single

parents or caretakers to spend time with

younger children. It also may enable

those with young children to fulfill their

work obligations while their children

are in preschool activities.

Because our consultations yielded few

comments regarding this provision, the

proposed regulations paraphrase the

statute.

Do welfare reform waivers affect what

activities count as engaged in work?

(§ 271.36)

This section is simply a crossreference to § 271.60, which addresses

welfare reform demonstration waivers.

We thought it would be helpful to

include it so that readers would know

to refer to this important exception to

the work activities and hours specified

in subpart C.

Subpart D—Caseload Reduction Factor

for Minimum Participation Rates

Is there a way for a State to reduce the

work participation rates? (§ 271.40)

Section 407(b)(3) requires us to issue

regulations to reduce a State’s minimum

participation rate based on reductions in

its welfare caseload. Under this

provision, a State’s participation rate for

any fiscal year will be reduced by the

same number of percentage points as the

reduction in the State’s average monthly

caseload since 1995. The reduction

reflects the difference between the

State’s caseload under the IV–A State

plan in effect in FY 1995 and the

average number of cases receiving

assistance, including assistance under a

separate State program, in the prior

year.

The statute specifies that the

reduction must not reflect any caseload

changes that resulted from either

Federal requirements or State changes

in eligibility between the previous and

current IV–A programs.

States have an inherent interest in

achieving caseload reductions; this

provision increases that interest. If a

State were to reduce its caseload, under

the caseload reduction provision it

could qualify for lower participation

rate requirements, reduce the risk of a

penalty for failing to meet the work

participation rates, and increase its

chance of qualifying for a lower TANF

MOE requirement. It could also free up

resources to serve recipients in

alternative ways.

How will we determine the caseload

reduction factor? (§ 271.41)

We found it difficult to develop an

appropriate methodology that could

quantify different types of caseload

reductions. In our extensive

consultations, we found no

straightforward methodology for

estimating the reduction factor.

We considered and rejected two

alternative approaches for calculating

the caseload reduction factor.

The first alternative was to use

Medicaid records to estimate the effect

of eligibility changes. Initially, we

thought this might be a viable solution

because, under section 114 of PRWORA,

States continue to determine Medicaid

eligibility on the basis of the AFDC

eligibility rules in effect as of July, 1996.

Thus, in theory, this provision might

give us a count of how many

individuals would have been eligible for

benefits in the absence of Title IV–A

eligibility changes. However, this option

proved not to be feasible because

Medicaid data are not collected in a

manner that is useful for this purpose.

In addition, the statute allows States to

modify AFDC rules for Medicaid

eligibility purposes; adjusting for such

changes would greatly complicate any

estimations.

Our second alternative was to

estimate the caseload reduction factor

for each State based on a computer

model. The hope was that we might

estimate the caseload effects of State

and Federal policy changes using Statereported information on policy changes

and Current Population Survey

household data. However, this option

also was not feasible due to the

difficulty of developing computer

models that could accurately estimate

the effects on State caseloads. In

particular, using Census data would

make it difficult to estimate the effects

of certain policy changes in small

States. Finally, we were concerned that

this approach would run counter to our

intention of creating a simple,

understandable methodology.

Because of the difficulty we had in

establishing a uniform methodology, we

are proposing to determine the

appropriate caseload reductions that

apply to each State based on

information and estimates reported to us

by the State. The statute specifies that

the responsibility for establishing the

caseload reduction factors lies with us.

We will analyze the information and

estimates provided, determine whether

we think they are reasonable (based in

part on State-by-State comparisons), and

conduct periodic, on-site reviews to

validate the accuracy of the information.

This approach involves States in the

process of assessing the causes of

caseload changes. It also tries to ensure

program accountability and preserve the

focus on work.

As the first step in the process, we

will be using the caseload data reported

to us by the State. To establish the

caseload base for fiscal year 1995, we

will use the number of AFDC cases

reported on ACF–3697, Statistical

Report on Recipients Under Public

Assistance. For fiscal years 1996–1998,

we will be using data from this same

report, supplemented by caseload

information from the TANF Data Report

and the TANF MOE Data Report,

beginning with the fourth quarter of

fiscal year 1997, where appropriate. For

fiscal years 1999 and beyond, we will

only be using caseload information from

the TANF Data Report and the TANF

MOE Data Report to compare against the

fiscal year 1995 base year information.

Therefore, in order to qualify for a

caseload reduction, a State must have

reported information on monthly

caseloads for the previous year

(including cases in separate State

programs), based on the definition of a

case receiving assistance, as defined at

§ 271.43.

Next, to receive a reduction in the

participation rates, a State must provide

us with sufficient data and information

to calculate the reduction. To facilitate

such reporting, a State must submit the

Caseload Reduction Report to us

containing the following information:

(1) A complete listing of and

implementation dates for all eligibility

changes, including those mandated by

Federal law, made by the State since the

beginning of FY 1995, and a listing of

the reasons (such as found employment)

for case closures;

(2) A numerical estimate of the impact

on the caseload of each eligibility

change or case closure reason;

(3) Descriptions of its estimating

methodologies, with supporting

documentation; and

(4) A certification from the Governor

that it has taken into account all

reductions resulting from changes in

Federal and State eligibility.

States should note that the

information required here to make a

determination about the reduction

factors is distinct from the case-record

information proposed as an optional

reporting requirement at § 275.3(d).
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62141

We will determine whether the

methodology and resulting estimates are

reasonable. We will compare each

State’s methodology, estimates and

impact against that of other States. We

will also review the quality and

completeness of data and the adequacy

of the documentation. We may discuss

the estimates and methodologies with

State staff and may request additional

information or documentation to make

adjustments in the estimates. We will

also conduct periodic, on-site visits and

examine case-record information in

order to validate the information, data

and estimates provided.

The proposed regulation requires

States to provide us with any additional

information within two weeks of our

requesting it. We realize that this is a

short time period, but we have proposed

this deadline because a State’s MOE

requirement for the fiscal year may

hinge upon the caseload reduction

calculations. A State that achieves the

participation rates must only reach 75

percent of its historic expenditures for

the MOE requirement, rather than 80

percent. The reduction factor may play

a significant part in whether States meet

the participation rates. We have given

ourselves a limited timeframe of 90 days

in which to evaluate, make any

necessary modifications, and establish

caseload reduction factors. We must

acquire and evaluate any additional

information we need within that period.

In light of these constraints, we think

that the two-week timeframe is

reasonable.

Many of the eligibility changes States

have made have a differential effect on

two-parent cases (compared to the

impact on cases overall). We did a Stateby-State comparison of the overall

caseload reductions and the two-parent

caseload reduction between fiscal years

1995 and 1996 and noted dramatic

differences for almost all States.

Therefore, we are requiring States to

calculate two separate sets of caseload

reduction estimates, one for the overall

caseload and another for two-parent

cases. States must base their overall

caseload reduction estimates on

decreases in cases receiving assistance

in the prior year compared to the AFDC

caseload in FY 1995. States must base

their caseload reduction estimates for

two-parent families on decreases in

their two-parent caseload compared to

the AFDC Unemployed Parent caseload

in FY 1995.

Which reductions count in determining

the caseload reduction factor? (§ 271.42)

In drafting this provision, Congress

recognized that some, but not all,

caseload reductions in a State should be

allowed to reduce work participation

rates. Allowing States too much credit

could mean that they could avoid

accountability for meeting the law’s

tough new work requirements; they

could simply deny families assistance

and face much lower requirements.

Allowing States too little credit would

mean that the States that are most

successful in moving families into

employment and off their caseloads

would not get the intended reward for

their efforts.

In implementing this provision,

therefore, our primary goals were to: (1)

reinforce strongly the work participation

requirements of the Act; (2) give States

full credit for caseload reductions that

result from moving people into work;

and (3) avoid categorizations of

eligibility changes that would create

inadvertent incentives for changes in

State policy that were unrelated to work

and harmful to vulnerable families.

Thus, we propose to give States credit

for caseload reductions except when

those caseload reductions arise from

changes in eligibility rules that directly

affect a family’s eligibility for benefits

(e.g., more stringent income and

resource limitations, time limits, grant

reductions, changes in requirements

based on residency, age or other

demographic or categorical factors). A

State need not factor out calculable

effects of enforcement mechanisms or

procedural requirements that are used to

enforce existing eligibility criteria (such

as fingerprinting or other verification

techniques) to the extent that such

mechanisms or requirements identify or

deter families ineligible under existing

rules.

In short, we are seeking to achieve the

balance identified by Congress: that a

State should receive credit for moving

families off welfare, but should not be

able to avoid its accountability for work

as a result of any changes that restrict

program eligibility.

Likewise, a State can argue that some

or all of the families in separate State

programs should not be included in this

calculation, based on the type of family

served or the nature of benefits

provided, but it must substantiate such

a claim with specific data on the family.

Case-record information on the

characteristics of families served in

separate State programs and data on the

services provided in those programs

will contribute to this discussion. Under

part 275 and § 271.41(e), we propose

that States wishing to claim a caseload

reduction factor must report these data.

What is the definition of a ‘‘case

receiving assistance’’ in calculating the

caseload reduction factor? (§ 271.43)

To determine the caseload reduction

factor, we will look at caseloads in both

TANF and separate State programs.

Using the definition of assistance

proposed under part 270, we propose to

base the calculation on all cases in the

State receiving IV–A assistance, except

those receiving one-time, short-term

assistance or services with no monetary

value.

When must a State report the required

data on the caseload reduction factor?

(§ 271.44)

The caseload reduction factors reflect

the caseloads in the previous year

compared to FY 1995. For each fiscal

year, a State must report its data by

November 15th. We will approve or

reject a State’s proposed reduction

within 90 days of that date, or by

February 15th.

Subpart E—State Work Penalties

While PRWORA embodies State

flexibility in program design and

decision-making, it also embodies the

principle of accountability. Where a

State does not live up to the minimum

standards of performance, it faces

serious financial penalties. One of the

principal areas of accountability is in

the State’s provision of work and workrelated activities that recipients need to

leave the system and become selfsufficient. The work participation rates

are demanding, but designed to ensure

that recipients move as quickly as

possible into work and towards

independence. This is especially

important given the time-limited nature

of Federal TANF benefits.

Almost all of the groups with which

we consulted were interested in the

penalty related to the work participation

rates. Most had strong views about what

should be a reasonable cause exception

to the penalty. They stressed that the

criteria should be flexible, leaving room

to respond to circumstances in different

States. They also urged us to examine a

State’s good-faith efforts in determining

the severity of a penalty.

In structuring this part of the

proposed regulations, we have

attempted to balance the imperative of

State accountability in the work

participation rates with the knowledge

that each State enters TANF from a

different standpoint and with different

plans for helping its recipients.

What happens if a State fails to meet the

participation rates? (§ 271.50)

In accordance with section 409(a)(3),

as amended by Pub. L. 105–33, if we
62142 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

determine that a State has not achieved

either or both of the minimum

participation rates in a fiscal year, we

must reduce the SFAG payable for the

following fiscal year. The initial penalty

is five percent of the adjusted SFAG and

increases by two percentage points for

each successive year that the State does

not achieve the participation rates. We

may reduce the penalty amount based

on the degree of noncompliance, as

discussed at § 271.51. The total work

participation penalty can never exceed

21 percent of the adjusted SFAG. (Please

refer to § 272.1(d) for a discussion of the

total penalty limit under TANF.)

If a State fails to provide complete

and accurate data on work participation,

as required under section 411(a) of the

Act and part 275 of the proposed rules,

we will determine that a State has not

achieved its participation rates, and the

State will be subject to a penalty under

this part. We have the authority to

penalize a State that does not report its

work participation data for failure to

report (under section 409(a)(2)).

However, in this case, we thought it

would be more appropriate to penalize

the State for failure to meet its work

rate. First, this policy is consistent with

the approach we are taking when States

fail to report information related to

other penalty determinations. Also, we

did not want to create a situation where

non-reporting States would face lesser

penalties than reporting States, and we

did not believe duplicate penalties were

warranted.

Under what circumstances will we

reduce the amount of the penalty below

the maximum? (§ 271.51)

The statute requires us to reduce the

amount of the penalty based on the

degree to which the State is not in

compliance with the required

participation rate. However, it specifies

neither the measures of noncompliance

nor the extent of reduction. The

proposed rule uses three criteria to

measure the degree of noncompliance.

The statute also gives us the discretion

to reduce the penalty if the State’s

noncompliance resulted from certain

specific causes; we address this latter

issue separately, in the section entitled

‘‘Discretionary Reductions.’’

We are proposing that, a State will not

receive a penalty reduction based on the

severity of the failure or our

discretionary authority, if a State has

diverted cases to a separate State

program for the purpose of avoiding the

work participation rates. We want to

ensure that each State makes a serious

effort to provide work and work-related

activities in any State-only funded

programs. As we indicated in program

announcement TANF–ACF–PA–97–1,

we do not believe Congress intended a

State to use separate State welfare

programs to avoid TANF’s focus on

work.

Required Reduction

In part, we will measure

noncompliance on the basis of whether

the State failed one or both rates for the

fiscal year and which participation rate

it failed, if only one. First, we believe

that a State that fails the two-parent rate

should be subject to a smaller penalty

than a State that fails the overall rate or

both. Second, we believe it is

appropriate to consider the size of the

two-parent caseload in deciding how

much weight to give a failure of the twoparent rate only.

In looking at the data for FY 1996, we

noted that the two-parent participation

rate on average affects a very small

percentage of a State’s entire caseload;

the mean State percentage was about 6.6

percent, but the median was only about

2.4 percent.

Under our proposal, the maximum

penalty a State would face for failure to

meet the two-parent rate would depend

directly on how much of the total

caseload in the State was comprised of

two-parent families.

The State would not get a similar

reduction if it failed the overall rate

because all cases, including two-parent

cases, are reflected in the overall rate.

We believe a State that failed with

respect to only a small percentage of its

cases should not face a huge penalty. At

the same time, we want to ensure that

States make adequate commitments to

achieving the two-parent participation

rates and that our policies support State

efforts to extend benefits to two-parent

families. We would like comments as to

whether our proposal properly balances

these objectives.

Finally, we will measure

noncompliance on the basis of the

severity of a State’s failure to achieve

the required rate. We are proposing to

reduce the penalty in direct proportion

to the State’s level of achievement above

a threshold of 90 percent. We would

compute a ratio whose numerator is the

difference between the participation rate

a State actually achieved and the

applicable threshold rate and whose

denominator is the difference between

the applicable required participation

rate and the applicable threshold rate.

For example, assume a State achieved

95 percent of the required rate, or 5

percentage points above the threshold.

These 5 percentage points represent 50

percent of the difference between the

required rate and the threshold.

Therefore, we would reduce by 50

percent that portion of the penalty

(either 90 percent or 10 percent)

allocated to the rate the State failed.

In drafting the regulation, we wanted

to strike the right balance between the

importance of work and the requirement

to reduce the penalty based on the

degree of noncompliance. Although our

first inclination was to make reductions

in proportion to the State’s achievement

toward the required rate, our experience

in the JOBS program led us to consider

creating a threshold below which we

would grant no reduced penalty. We

were concerned that, as in the JOBS

Unemployed Parent participation rates,

there would be States whose level of

achievement was negligible, particularly

with the two-parent caseload, and thus

did not merit a reduced penalty. Given

that experience, we thought it was

essential to have a threshold.

We considered basing the threshold

on the past performance of the States,

for example at the 50th or 75th

percentile of participation the previous

year. However, the data we had from the

JOBS program did not prove sufficient

to determine where we should set such

a State performance threshold. Instead,

we chose to establish a threshold as a

percentage of the required participation

rate. We set the participation threshold

at 90 percent because of the emphasis in

the statute on making the work penalty

meaningful. In particular, Pub. L. 105–

33 amended the work penalty provision

so that the amount was fixed, removing

the discretion we had under PRWORA

to set a lesser penalty amount. We think

this shows Congressional intent that the

work penalty should be meaningful. To

avoid undercutting this intent, we

believe that a State should make

substantial progress in meeting the

target rates before we should consider a

reduction.

Moreover, the threshold works in

conjunction with the penalty allocation

we are proposing for failing to meet just

one rate. Given their combined effects,

we think it is appropriate to set the

threshold at 90 percent.

We are particularly interested in any

comments readers have concerning the

measures of noncompliance we have

proposed.

Discretionary Reductions

The proposed regulation also reflects

the discretion that we have to reduce

the amount of the penalty if the State

could qualify as a needy State for the

Contingency Fund. The definition of

‘‘needy State’’ is based on especially

high unemployment or large numbers of

Food Stamp recipients in the State.

Please see § 270.2 for more discussion of
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62143

how a State qualifies for the

Contingency Fund.

Pub. L. 105–33 gave us the added

discretion to reduce the penalty if the

State failed to meet the participation

rate due to extraordinary circumstances

such as a natural disaster or regional

recession. To ensure that we take any

such circumstances into consideration,

States should submit information

describing the circumstances and their

effects on the ability of the State to meet

the participation rates. We must provide

a written report to Congress to justify

any penalty reductions we provide

States on this basis.

Readers will note the similarity

between this criterion for reducing the

amount of the penalty and the criterion

at § 272.5(a)(1) for granting a reasonable

cause exception to a penalty due to a

natural disaster. We will evaluate any

information a State submits concerning

the effects of a natural disaster on its

ability to achieve the participation rates.

If the material does not support granting

a reasonable cause exception, we will

consider whether it is appropriate to

reduce the penalty. For example, if the

disaster caused a failure in only one

area of the State, we might reduce the

penalty in proportion to the TANF

caseload in that area. We intend to use

a similar approach to evaluating the

effects of a regional recession.

Finally, this section of the proposed

regulation indicates that States may

dispute our findings that they are

subject to a penalty.

Is there a way to waive the State’s

penalty for failing to achieve either of

the participation rates? (§ 271.52)

Section 409(b) creates a reasonable

cause exception to the requirement for

certain penalties, including failure to

meet the minimum participation rates. If

we determine that a State has reasonable

cause for failing to meet one of the rates,

we cannot impose a penalty.

We have included general reasonable

cause criteria at § 272.5, which may

apply to any of the penalties for which

there are reasonable cause exceptions.

The preamble to § 272.5 discusses how

we arrived at these criteria as well as

our general thinking about the

reasonable cause exception. For the

work participation rate penalty, two

additional, specific reasonable cause

exceptions apply. Under the proposed

rule at § 271.52, a State may

demonstrate that its failure can be

attributed to its granting of good cause

domestic violence waivers under the

Family Violence Option. In this case,

the State must show that it would have

achieved the required work rates if cases

with good cause waivers were removed

from both parts of the calculation (i.e.,

from the numerators described in

§§ 271.22(b)(1) and 271.24(b)(1) and the

denominators described in

§§ 271.22(b)(2) and 271.24(b)(2)). A

State must grant the good cause

domestic violence waivers in

accordance with criteria in the

regulation to be eligible to receive a

reasonable cause exemption on these

grounds.

The regulation also provides that a

State may receive a good cause

exemption if it demonstrates that its

failure to achieve the work participation

rates can be attributed to the provision

of assistance to refugees in federallyapproved alternative project.

In either of these two situations, as

well as in the general reasonable cause

criteria, a State must demonstrate that it

did not divert cases to a separate State

program for the purpose of avoiding the

work participation rates before we will

grant a reasonable cause exemption.

Can a State correct the problem before

incurring a penalty? (§ 271.53)

The process for developing a

corrective compliance plan does not

differ from one penalty to the next,

although the content of the plan

naturally would. Thus, the proposed

regulation refers to § 272.6, the general

section on submittal of a corrective

compliance plan for any penalty.

However, in this section, we establish

a specific threshold that States must

achieve in order to be considered for a

reduced work penalty under

§ 272.6(i)(1). More specifically, we

indicate that the State must increase its

participation rate during the compliance

period enough to reduce the difference

between the participation rate it

achieved in the year for which it is

subject to a penalty and the minimum

participation rate it must achieve in the

year of the corrective compliance plan

by 50 percent. (In other words, if you

divided the difference between the rate

achieved during the compliance period

and the rate achieved during the penalty

year by the difference between the target

rate during the compliance period and

the rate achieved during the penalty

year, the result must be 0.50 or greater.)

We believe that showing more

progress than not indicates significant

compliance. Thus, if the State achieves

this amount of progress towards coming

into compliance, we may reduce its

work penalty under the corrective

compliance provision.

This proposal is similar in approach

to the approach taken in § 271.51, with

respect to potential reductions in work

penalties based on degree of

noncompliance. In both cases, we are

expecting a State to come into

significant compliance in order to get a

reduced penalty.

Is a State subject to any other penalty

relating to its work program? (§ 271.54)

In accordance with section 409(a)(14),

as amended by Pub. L. 105–33, if we

determine that a State has violated

407(e) of the Act in a fiscal year, which

relates to when a State must impose

penalties on individuals who refuse to

engage in required work, we must

reduce the SFAG payable for the

following fiscal year by between one

and five percent of the adjusted SFAG.

We propose to require each State to

provide us with a description of how it

will carry out a pro reduction for

individuals under both TANF and

separate State programs. This

requirement appears in the data

collection requirements at § 275.9. This

data collection will help us determine

whether this is in fact a serious

problem; to the extent possible, we want

to ensure an equitable and level playing

field for the States.

Under what circumstances will we

reduce the amount of the penalty for not

properly imposing penalties on

individuals? (§ 271.55)

The statute requires us to reduce the

amount of the penalty based on the

degree to which the State is not in

compliance with the section 407(e) of

the Act.

In determining the size of any

reduction, we propose to consider two

factors. First, we will examine whether

the State has established a control

mechanism to ensure that the grants of

individuals are reduced for refusing to

engage in required work. Second, we

will consider the percentage of grants

that the State has failed to reduce in

accordance with the statute. We are

particularly interested in any comments

readers have concerning what criteria to

use in this area. We would like readers’

views on the proposal to link the

penalty amount to the percentage of

cases for which grants have not been

appropriately reduced.

Subpart F—Waivers

How do existing welfare waivers affect

the participation rate? (§ 271.60)

Section 415 permits a State to

continue operating any welfare reform

demonstration waiver (i.e., section 1115

waiver) affecting work activities granted

prior to the date of enactment of

PRWORA, to the extent that PRWORA

is inconsistent with the waiver.

In considering how this provision

affects the work rules applicable in a

State, we wanted to draft a regulation
62144 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

that would balance the legislative

emphasis on helping recipients find

work quickly with the intent to allow

States to continue reform activities they

had already undertaken. Under prior

law, this Administration encouraged

States to use the waiver mechanism to

its fullest capacity and to act as the

‘‘laboratories of change’’ for the nation.

Our intent is to help States capitalize on

the promising initiatives they began

under those waivers, but in a way that

is consistent with the overall purpose of

PRWORA. We are also cognizant of the

importance Congress placed on ensuring

that States are accountable for

promoting work.

The proposed regulation requires a

waiver to meet the definition included

in § 270.30. This definition allows a

State the flexibility to include

applicable provisions of prior law, but

only if their inclusion were necessary to

achieve the objective of the approved

waiver. For example, a State might have

had a waiver requiring single parents

with children under one year of age and

pregnant recipients to participate in

JOBS, while maintaining the JOBS

exemptions for the disabled and the

elderly. In this example, the objective of

the waiver, as reflected in the

application and terms and conditions,

was to expand the group of recipients

who were required to participate in

work activities. Maintaining the other

statutory exemptions would not be

necessary to achieve this objective and,

in fact, would be inconsistent with the

fundamental purpose of the waiver.

Therefore, the prior law exemptions

would not be included as part of the

waiver; the waiver would include only

the expanded participation

requirements for single parents of young

children and pregnant recipients.

Moreover, because those two groups can

also be required to participate under

TANF, there is no inconsistency. Thus,

in this example, the prior law

exemptions would not be included in

the waiver, and the waiver itself would

not be inconsistent with TANF.

The proposed definition recognizes

two kinds of waiver inconsistencies

with respect to the work requirements.

The first is in the area of what activities

a State may count toward the

participation rate. As part of the waiver

demonstrations, a number of States

expanded the JOBS work activities.

Those States believed that a broader

range of activities would be most

effective in helping the recipients in

their States find and retain work and

achieve self-sufficiency. In creating this

package of activities, States generally

kept some of the prior law activities,

changed others, and added new ones.

While only the changed and new

activities required waivers, we would

include the prior law activities under

the waiver because they are necessary

for the State to carry out the objectives

of the approved waiver. Some of these

activities are inconsistent with the

definition of work activities in section

407(d), so States could use the activities

defined under the waivers instead of the

TANF list of work activities. Thus,

States could count participation in a

broader range of activities as

participation in work.

The other area in which the proposed

definition recognizes waiver

inconsistencies relates to hours of

participation. In approving waivers of

required hours of participation, we

allowed States to implement two kinds

of policies.

First, States expanded the number of

required hours of participation for a

class or classes of recipients. Because

those classes of recipients are already

required to participate for a greater

number of hours under TANF than

under prior law, there is no

inconsistency. Those waivers would not

continue under this proposed

regulation.

Second, we approved waivers that

allowed a State to set the number of

hours an individual must participate in

accordance with an individualized plan

for achieving self-sufficiency. This gave

States additional freedom to tailor work

requirements to the circumstances of the

individual. For example, some States

removed the JOBS exemption for the

disabled. The intent of such a waiver

was to find an appropriate level of

participation based on the particular

circumstances and abilities of the

individual. Because continuing these

policies could be inconsistent with

TANF, due to requiring a lesser number

of hours of participation than TANF, we

will recognize such waivers as

allowable inconsistencies.

The definition does not recognize

prior law exemptions from the

denominators of the participation rates

as part of the waiver, except for research

group cases. We believe this is

appropriate for two reasons. First,

although we have allowed new or

modified activities to count for

participation, we have never granted a

waiver of a participation rate itself.

Second, we have never granted a waiver

that added new exemptions from the

work requirements, which would have

reduced the number of recipients

counted in the denominator. We think

that States need to try to provide workrelated services for the entire caseload,

because almost all families will be

facing the time limit on benefits. By not

adjusting the number of families who

would otherwise be counted in the

denominators, States have a greater

incentive to provide work-related

services for everyone.

Finally, we would like to explain the

policy in the proposed regulations with

respect to control and experimental

treatment groups. As part of the

demonstrations, States divided the

AFDC population in the demonstration

into three groups. The first, the control

group, received benefits under the

regular, statutory AFDC program. The

second, the experimental treatment

group, received benefits under AFDC

with the demonstration changes and is

used to evaluate the impacts of the new

program. The third, the nonexperimental treatment group, also

received benefits under AFDC with the

demonstration changes, but is not used

to evaluate the impacts of the new

program. The control and experimental

treatment groups together comprise the

research group and contain a fairly

small number of the AFDC recipients.

Except in States with small caseloads,

the research group represents a very

small proportion of the welfare

caseload. The non-experimental

treatment group includes the vast

majority of the welfare population.

Information on the research group is

the sole basis for impact and costbenefit analyses of the effects of the

demonstration provisions and is

essential to all the major components of

the evaluation. Because evaluation is

one of the goals of the demonstration,

and the maintenance of different

requirements for the three groups of

recipients is necessary to avoid

compromising the evaluation, we

believe all of the underlying law for the

research group continues to apply in

those States continuing demonstration

evaluations and is uniquely necessary to

achieve that evaluation goal. Thus, the

research group—both the control and

experimental treatment groups—should

not be included in either the numerator

or the denominator of the participation

rates.

Subpart G—Non-displacement

What safeguards are there to ensure that

participants in work activities do not

displace other workers? (§ 271.70)

The proposed regulations incorporate

the statutory prohibition against

allowing an individual participating in

TANF work activities from displacing

another employee. A participant in a

work activity may not fill a vacancy that

exists because another individual is on

layoff from the same or equivalent job.

Also, a participant may not fill a
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62145

vacancy created by an involuntary

reduction in work force or by the

termination of another employee for the

purpose of filling a vacancy with a

participant.

We encourage States to take

aggressive steps to ensure that the

current work force is not harmed or

their employment jeopardized in any

way by a State’s efforts to place welfare

recipients in employment or workrelated positions. Our ultimate goal, and

that of States, is to increase the ranks of

the employed, not to substitute one

group of job-seekers for another.

Displacing current workers is counterproductive and damages the overall

stability of the labor force. We are

confident that States will develop

procedures for working with employers

to protect against displacing other

employees.

C. Part 272—Accountability

Provisions—General

It is clear that, in enacting the

penalties at section 409(a), Congress

intended for State flexibility to be

balanced with State accountability. To

assure that States fulfilled their new

responsibilities under the TANF

program, Congress established a number

of penalties and requirements under

section 409(a). The penalty areas

indicate the areas of State performance

that Congress found most significant

and for which it gave us clear

enforcement authority.

What definitions apply to this part?

(§ 272.0)

This section cross-references the

general TANF regulatory definitions

established under part 270.

What penalties will apply to States?

(§ 272.1)

Section 409 includes 15 penalties that

may be imposed on States. This

proposed rule covers 14 of the 15. We

have not included the specific penalty

dealing with substantial noncompliance

with requirements under title IV–D

(section 409(a)(8)) in this proposed rule.

Our Office of Child Support

Enforcement will address this penalty in

a separate proposed rule to be published

at a future time.

The penalties for which we are

proposing regulations are:

(1) a penalty for using the grant in

violation of title IV–A of the Act, as

determined by findings from a single

State audit and equal to the amount of

the misused funds;

(2) a penalty of five percent of the

adjusted SFAG, based on audit findings

that show that a State intentionally

violated a provision of the Act;

(3) a penalty of four percent of the

adjusted SFAG for the failure to submit

an accurate, complete and timely

required report;

(4) a penalty of up to 21 percent of the

adjusted SFAG for the failure to satisfy

the minimum participation rates;

(5) a penalty of no more than two

percent of the adjusted SFAG for the

failure to participate in the Income and

Eligibility Verification System (IEVS);

(6) a penalty of no more than five

percent of the adjusted SFAG for the

failure to enforce penalties on recipients

who are not cooperating with the State

Child Support Enforcement Agency;

(7) a penalty equal to the outstanding

loan amount plus interest for the failure

to repay a Federal loan provided for

under section 406;

(8) a penalty equal to the amount by

which qualified State expenditures fail

to meet the appropriate level of historic

effort in the operation of the TANF

program;

(9) a penalty of five percent of the

adjusted SFAG for the failure to comply

with the five-year limit on Federal

funding of assistance;

(10) a penalty equal to the amount of

contingency funds unremitted by a State

for a fiscal year;

(11) a penalty of no more than five

percent of the adjusted SFAG for the

failure to maintain assistance to an adult

single custodial parent who cannot

obtain child care for a child under age

six;

(12) a penalty of no more than two

percent of the adjusted SFAG plus the

amount a State has failed to expend of

its own funds to replace the reduction

to its SFAG due to the assessment of

penalties in § 272.1 in the year of the

reduction;

(13) a penalty equal to the amount of

the State’s Welfare-to-Work formula

grant for failure to maintain the historic

effort during a year in which this

formula grant is received; and

(14) a penalty of not less than one

percent and not more than five percent

of the adjusted SFAG for failure to

reduce assistance for recipients refusing

without good cause to work.

In calculating the amount of the

penalty, we will take into consideration

the extent to which a State’s SFAG has

been reduced to fund Tribal TANF

grants. This is particularly applicable

for penalties based on percentage

reductions. These regulations use the

term ‘‘adjusted SFAG’’ to refer to States

whose SFAG allocations are reduced for

this purpose. For States without Tribal

grantees, ‘‘adjusted SFAG’’ will be the

same as SFAG.

Except for the penalty at

§ 272.1(a)(12), all penalties are either a

percentage of the adjusted SFAG or a

fixed amount. In calculating the amount

of these penalties, we will add all

applicable penalty percentages together,

and we will apply the total percentage

reduction to the amount of the adjusted

SFAG that would have been payable if

no penalties were assessed against the

State. As a final step, we will subtract

other (fixed) penalty amounts.

The penalty at § 272.1(a)(12) requires

that we reduce a State’s adjusted SFAG

if, after one of the penalties under this

section has been taken, a State does not

expend its own funds on the State’s

TANF program in the amount of the

penalty, i.e., the amount by which the

adjusted SFAG is reduced. Unlike the

other penalties, this penalty represents

a percentage of the adjusted SFAG (up

to two percent) and a fixed amount, i.e.,

the amount of the reduction a State has

failed to expend under the TANF

program with its own funds. We believe

it is appropriate to calculate the amount

of this penalty by including the amount

of the penalty based on a percentage

with other applicable penalty

percentages. The fixed amount of this

penalty will be subtracted with other

fixed-amount penalties. Then we will

add the amount based on the percentage

for this penalty and the fixed amount for

this penalty to determine the

cumulative amount of this penalty.

The total reduction in a State’s grant

must not exceed 25 percent. If the 25

percent limit prevents the recovery of

the full penalty imposed on a State

during a fiscal year, we will apply the

remaining amount of the penalty to the

SFAG payable for the immediately

succeeding fiscal year. If it is not

possible to take the full penalty in the

next succeeding year, we will defer

taking the penalty to subsequent years

until it is finally taken in full.

When do the TANF penalty provisions

apply? (§ 272.2)

States may implement the TANF

program at different times, but no later

than July 1, 1997. The Territories, i.e.,

Guam, the Virgin Islands, Puerto Rico,

and American Samoa, may not

implement until July 1, 1997.

Congress recognized that, in certain

circumstances, States should face the

consequences for failing to meet the

requirements of the penalty provisions

from the first day the State operates the

TANF program. It also recognized,

however, that States needed some lead

time in implementing other TANF

requirements.

Section 116(a)(2) of PRWORA delays

the effective date of some of the penalty

provisions in title IV–A. For those

provisions where the effective date is
62146 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

not delayed, we believe that Congress

intended that a State would be subject

to these penalties from the first day it

began to operate TANF.

Before we issue final rules, States

must implement the TANF provisions

in accordance with their own reasonable

interpretation of the statute. If we find

that a State’s actions are inconsistent

with the final regulations, but consistent

with a reasonable interpretation of the

statute, we will not impose a penalty.

However, if we find that a State has

operated its TANF program in a manner

that is not based on a reasonable

interpretation of the statute, we may

penalize the State.

How will we determine if a State is

subject to a penalty? (§ 272.3)

We have concluded that no one

method can be used for monitoring State

performance. The following discussion

explains the different methods we will

use to determine State compliance with

the requirements with which

noncompliance may lead to penalties.

Using the Single Audit to Determine

Misuse of Funds and the Applicability

of Certain Other Penalties

We will determine whether a State

has used funds under section 403 in

violation of title IV–A through an audit

conducted under the Single Audit Act.

(See § 273.10 on Misuse of Funds.) This

is the only penalty for which Congress

identified a method for determining a

penalty.

Under the requirements of the Single

Audit Act, States operating Federal

grant programs meeting a monetary

threshold (currently $100,000, but soon

to be $300,000) must conduct an audit

under the Act. Most States must audit

annually; a few may audit biennially.

Because of the substantial funding

under TANF, all TANF States meet the

audit threshold.

The single audit is an organizationwide audit that reviews State

performance in many program areas. We

will implement the Single Audit Act

through use of Office of Management

and Budget (OMB) Circular A–133,

‘‘Audits of States, Local Governments,

and Non-Profit Organizations.’’ OMB

recently revised the Circular, merging

former Circulars A–128 and A–133,

because of amendments to the Act in

1996. The new Circular was published

in the Federal Register on June 30,

1997, at 62 FR 35277.

In conducting their audits, auditors

use a variety of tools, including the

statute and regulations for each program

and a compliance supplement issued by

OMB that focuses on certain areas of

primary concern to that program. Upon

issuance of final regulations, we will

prepare a TANF program compliance

supplement, for OMB to issue, which

will focus on those penalties for which

the single audit will be our primary

compliance instrument.

The Single Audit Act does not

preclude us or other Federal offices or

agencies, such as the Office of the

Inspector General (OIG), from

conducting additional audits or reviews.

In fact, there is specific authority to

conduct such additional audits or

reviews. In particular, 31 U.S.C. 7503(b)

states:

(b) Notwithstanding subsection (a), a

Federal agency may conduct, or arrange for

additional audits that are necessary to carry

out its responsibilities under Federal law or

regulation. The provisions of this chapter do

not authorize any non-Federal entity (or subrecipient thereof) to constrain, in any

manner, such agency from carrying out or

arranging for such additional audits, except

that the Federal agency shall plan such

audits to not be duplicative of audits of

Federal awards.

States should note, therefore, that the

State-conducted single audit will be our

primary means for determining if a State

has misused funds. We may, however,

through our own audits and reviews, or

through OIG and its contractors,

conduct audits or reviews of the TANF

program that will not be duplicative of

single organization-wide audit

activities. We may identify a need to

conduct such audits as the result of

complaints from individuals and

organizations, requests by the Congress

to review particular areas of interest, or

other indications of problems in State

compliance with TANF program

requirements.

We are proposing that the single audit

be the primary means for determining

certain other penalties as well.

Where we determine that a State is

subject to a penalty for the misuse of

funds, we may apply a second penalty

if we determine that the State

intentionally misused Federal TANF

funds. The criteria for determining

‘‘intentional misuse’’ are found at

§ 273.12. The single audit will be the

primary vehicle for this penalty because

of its link to the determination of

misuse of funds.

The single audit will also be the

primary means that we use to determine

State compliance with the following

three penalties: (1) failure to participate

in the Income and Eligibility

Verification System (see § 274.11); (2)

failure to comply with paternity

establishment and child support

enforcement requirements under title

IV–D of the Act (see § 274.31); and (3)

failure to maintain assistance to an adult

single custodial parent who cannot

obtain child care for a child under age

six (see § 274.20). For these processfocused penalties, we determined that

we could make appropriate use of the

single audit to monitor State

compliance.

The audit compliance supplement

will include guidance to auditors on

how to monitor these areas. As in the

case of the misuse-of-funds penalty, we

may conduct other reviews and audits,

if necessary. For example, the penalty

for a State’s failure to maintain

assistance to an adult single custodial

parent who cannot obtain child care is

an area where we anticipate that we

could receive complaints from

individuals and organizations. A

number of substantiated complaints

may indicate that an additional review

may be warranted.

Use of Data Collection and Reporting for

Determining Applicability of Certain

Penalties

We will monitor State compliance

with the penalties for failure to satisfy

minimum participation rates (see

§ 271.21) and failure to comply with the

five-year limit on Federal assistance

primarily through the information

required to be reported by section 411(a)

(i.e., State reporting of disaggregate case

record information). (See part 275 of the

proposed rule for the proposed data

collection and reporting requirements.)

We believe that Congress intended

that the data elements in section 411(a)

be used to gather information for these

two penalty areas. Thus, we concluded

that the section 411(a) data collection

tools would be our primary means for

determining these penalties. We may

also need to conduct reviews in the

future to verify the data submitted by

States, particularly in these two areas

where a fiscal penalty is applicable.

States should maintain records to

adequately support any report in

accordance with 45 CFR 92.42. States

may not revise the sampling frames or

program designations for cases in the

quarterly TANF and TANF MOE Data

Reports retroactively (i.e., after

submission).

Accurate data are essential if we are

to apply penalties fairly. If the State

submits insufficient data to verify its

compliance with the requirements, or if

we determine that a State can not

adequately document data it has

submitted showing that it has met its

participation rates or the five-year time

limit, we will enforce the participation

rate penalty or five-year time limit

penalty.

In our consultations, some

participants recommended that the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62147

single audit be the means for

determining all the penalties. However,

since States must otherwise report the

data that directly speak to their

compliance in these two areas, and

timely determination of State

compliance is necessary, we did not

accept that recommendation and have

proposed to rely on the quarterly reports

required under part 275 of the proposed

rule.

TANF MOE and Contingency Fund

MOE Penalties, and Failure to Replace

Grant Reductions Penalty

All States are subject to the TANF

MOE penalty for failure to maintain a

certain level (i.e., 75 or 80 percent) of

historic effort. Those States that choose

to receive contingency funds under

section 403(b) are subject to a separate

maintenance-of-effort penalty for failure

to maintain 100 percent of historic

effort.

We have developed a proposed TANF

Financial Report (see Appendix D of

part 275). We designed this report to

gather information required under

sections 403(b)(4), 405(c)(1), 409(a)(1),

409(a)(7), 411(a)(2), 411(a)(3), 411(a)(5),

including data on administrative costs,

types of State expenditures, and

transitional services for families no

longer receiving assistance. It will also

gather financial information to enable us

to award grant funds, close out

accounts, and manage other financial

aspects of the TANF program. In

addition, we will be using this report to

monitor State compliance with the

TANF and Contingency Fund MOE

requirements and to aid us in

determining if Federal TANF funds

have been used properly.

Consistent with section 5506(a) of

Pub. L. 105–33, the TANF Financial

Report is due 45 days after the end of

each quarter. Upon receipt of the report

for the fourth quarter, i.e., by November

14, we will have State-reported

information indicating whether or not

the State met its MOE requirements.

On the TANF Financial Report, States

will inform us of the amount of

expenditures they have made for TANF

and Contingency Fund MOE purposes.

For the TANF MOE, States must inform

us of the amount of expenditures made

in the State TANF program and in

separate State programs. (See part 274,

subpart B, for more information on the

Contingency Fund MOE requirement.)

For the TANF MOE, we are proposing

to require a supplemental report that

must accompany the fourth quarter

TANF Financial Report. The

supplemental report (or addendum) will

include a description of the TANF MOE

expenditures that States have made

under separate programs, i.e., not as part

of their State TANF programs. (See

§§ 273.7 and 275.9(a) for more

information on the contents of this

supplemental report.)

If we reduce a State’s SFAG as the

result of a penalty, the State is required

to expend an equal amount of its own

funds for the fiscal year in which the

reduction is made. If the State fails to

replace the funds through these Stateonly expenditures, as required, the State

is subject to the penalty at

§ 272.(1)(a)(12), i.e., an amount of up to

two percent of the adjusted SFAG and

the amount not expended to replace the

reduction to the SFAG due to the

penalty.

We will use the TANF Financial

Report (or Territorial Financial Report)

to determine if a State has complied

with these provisions. Instructions to

the TANF Financial Report in Appendix

D require States to include amounts that

they are required to contribute as a

result of a penalties taken against the

State. (A similar requirement will be

included in the Territorial Financial

Report.)

As in the case of the penalties for

failure to meet the participation rates or

comply with the five-year limit on

assistance, our program management

responsibilities may require us to verify

the data submitted by States on the

TANF Financial Report, particularly

data on MOE expenditures and

‘‘replacement funds.’’ States should

maintain records in accordance with 45

CFR 92.42. As we have stated, accurate

data are essential if we are to determine

State compliance. If the State submits

insufficient MOE data to verify its

compliance or if we determine that the

State can not adequately document data

it has submitted showing that it has met

its MOE requirements, we will apply the

penalties for failure to meet the TANF

and Contingency Fund MOE

requirements. For the TANF MOE, we

may have to estimate the actual level of

qualifying MOE expenditures. We

would then base the amount of the

penalty on the degree to which we

believe the data are inaccurate.

Federal Loan Repayment

We will penalize States for failing to

repay a loan provided under section 406

(see § 274.40). A specific vehicle for

determining a State’s compliance with

this requirements is unnecessary. In our

loan agreements with States, we will

specify due dates for the repayment of

the loans and will know if payments are

not made.

Penalty for Reporting Late

We will penalize States for failing to

submit a report required under section

411(a) by the established due dates (see

§§ 275.4 and 275.7). As noted before, we

are requiring that the reports must not

only be timely, but they must also be

complete and accurate. Thus, we may

take actions to review the accuracy of

data reporting if appropriate. If we

determine that the data required under

section 411(a) are incomplete or

inaccurate, we may apply the penalty

for failing to submit a report. As

discussed above, if the data that are

inaccurate or incomplete pertain to

other penalties (i.e., the participation

rate, the five-year time limit on

assistance, or the TANF MOE and

Contingency Fund MOE requirements),

we will apply the penalties associated

with these requirements.

Additional Single Audit Discussion

Although we are proposing that the

single audit be the primary means to

determine certain specific penalties, if a

single audit detects the lack of State

compliance in other penalty areas, e.g.,

the five-year limit on Federal assistance,

we cannot ignore those findings.

Therefore, we will also impose a penalty

based on the single audit findings in

such other penalty areas.

For most programs, other than TANF,

the Single Audit Act procedures provide

for disallowance in cases of

substantiated monetary findings.

However, in accordance with section

409(a), we will be taking penalties,

rather than disallowances, under TANF.

When the single audit determines a

specific penalty, the penalty amount

that we will apply is the penalty amount

associated with the specific penalty

provision or provisions, for example,

misuse of funds and failure to end

federal assistance after 60 months of

receipt. Likewise, where we, or OIG,

conduct an audit or review, the penalty

amount that will apply is the penalty

amount associated with the specific

penalty or penalties under section 409.

Regardless of how we determine that

a State is subject to a penalty, the

determination of whether a State may

invoke the reasonable cause exception

or enter into a corrective compliance

plan depends on the specific penalty

provision. States cannot avoid all

penalties through the reasonable cause

exception or a corrective compliance

plan (see § 272.4).
62148 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

What happens if we determine that a

State is subject to a penalty? (§ 272.4)

Notification to the State

If we determine that a State is subject

to a penalty, we will send the State a

notice that it has failed to meet a

requirement under section 409(a). This

notice will: (1) specify the penalty

provision at issue, including the

applicable penalty amount; (2) specify

the source and reasons for our decision;

(3) explain how and when the State may

submit a reasonable cause justification

under 409(b) and/or corrective

compliance plan under 409(c); and (4)

invite the State to present its arguments

if it believes that the data or method we

used were in error or were insufficient,

or that its actions, in the absence of

Federal regulations, were based on a

reasonable interpretation of the statute.

Process When Both Reasonable Cause

and Corrective Compliance Plan

Provisions Apply

For penalties where the reasonable

cause and the corrective compliance

plan provisions both apply, we are

proposing that a State submit to us both

its justification for reasonable cause and

corrective compliance plan within 60

days of receipt of our notice of failure

to comply with a requirement. The

objective of this proposal is to expedite

the resolution of State failure to meet a

requirement.

A State may choose to submit a

reasonable cause justification without a

corrective compliance plan. In this case,

we will notify the State if we do not

accept the State’s justification of

reasonable cause. Our notification will

also inform the State that it has an

opportunity to submit a corrective

compliance plan. The State will then

have 60 days from the date it receives

the notification to submit a corrective

compliance plan. (Under this scenario,

we will send the State two notices—the

first will inform the State that it may be

subject to a penalty, and the second will

inform the State that we determined that

it did not have reasonable cause.)

A State may also choose to submit

only a corrective compliance plan if it

believes that the reasonable cause

factors do not apply in a particular case.

Process When the Reasonable Cause

and/or Corrective Compliance Plan

Provisions Do Not Apply

The reasonable cause and corrective

compliance plan provisions in the

statute do not apply to five penalties:

(1) failure to repay a Federal loan on

a timely basis; (2) failure to maintain the

applicable percentage of historic State

expenditures for the TANF MOE

requirement; (3) failure to maintain 100

percent of historic State expenditures

for States receiving Contingency Funds;

(4) failure to expend additional state

funds to replace grant reductions due to

the imposition of one or more penalties

listed in § 272.1; and (5) failure to

maintain 80, or 75 percent, as

appropriate, of historic State

expenditures during a year in which a

Welfare-to-Work grant is received.

Due Dates

States must postmark their responses

to our notification within 60 days of

their receipt of our notification.

If, upon review of the State’s

submittal(s), we find that we need

additional information, the State must

provide the information within two

weeks of the date of our request. This is

to make sure we are able to respond

timely.

Under what general circumstances will

we determine that a State has reasonable

cause? (§ 272.5)

Two provisions in section 409, the

reasonable cause and corrective

compliance provisions, could result in

our decision to excuse or reduce a

penalty. After reviewing these

provisions, we decided that we should

not consider the reasonable cause

exception in isolation. Rather, we view

it in conjunction with the provision for

developing corrective compliance plans.

In drafting this proposed regulation, we

have acknowledged the new Federal

and State roles under TANF and worked

to minimize adversarial Federal-State

issues. Our primary task is to help each

State operate the most effective program

it can to meet the needs of its caseload

and the goals of the law. Through these

rules, we hope to focus States on

positive steps that they should take to

correct situations that resulted in a

determination that they are subject to a

penalty rather than let them simply

avoid the penalty. As such, we consider

it more appropriate to emphasize the

use of the corrective compliance plan

process over the reasonable cause

exception. Consequently, we have

drafted a more limited list of reasonable

cause criteria than some suggested

during our consultations.

PRWORA did not specify any

definition of reasonable cause or

indicate what factors we should use in

deciding whether to grant a reasonable

cause exception for a penalty. During

our deliberations on reasonable cause

factors, we considered the diverse

opinions expressed during our

consultation process, as well as the need

to support the commitment of Congress,

the Administration, and States to the

work and other objectives of the TANF

program. In keeping with these

objectives, we are proposing a limited

number of reasonable cause factors for

circumstances that are beyond a State’s

control, and placing a greater emphasis

on corrective solutions for those

circumstances a State can control. We

strongly believe that States must correct

problems that detract from moving

families from welfare to self-sufficiency.

In the discussion that follows, we will

describe: (1) the factors that we will

consider in deciding whether or not to

excuse a penalty based on a State’s

claim of reasonable cause; (2) the

contents of an acceptable corrective

compliance plan; and (3) the process for

applying these provisions. Our proposal

attempts to treat these two provisions as

part of an integrated process.

We are proposing factors that would

be applicable to all penalties for which

the reasonable cause provision applies.

We generally limit reasonable cause to

the following: (1) natural disasters and

other calamities (e.g., hurricanes,

tornadoes, earthquakes, fires, floods,

etc.) whose disruptive impact was so

significant as to cause the State’s failure

to meet a requirement; (2) formally

issued Federal guidance that provided

incorrect information resulting in the

State’s failure; and (3) isolated, nonrecurring problems of minimal impact

that are not indicative of a systemic

problem (e.g., although a State’s policies

and procedures, including a

computerized kick-out system, require

that Federal TANF assistance be timelimited to five years, ten families

somehow slip through and receive

assistance for longer than five years).

We are also proposing a separate

factor that would apply in cases when

the State fails to satisfy the minimum

participation rates, and another specific

factor that would apply to cases when

the State fails to meet the five-year limit.

We discuss specific factors in our

preamble discussion of §§ 271.52 and

274.3.

We will not grant a State reasonable

cause to avoid the time-limit penalty or

any of the three penalties related to

work if we detect a significant pattern

of diversion of families to separate State

programs that achieves the effect of

avoiding the work participation rates.

As we indicated in program

announcement TANF–ACF–PA–97–1,

we do not believe Congress intended a

State to use separate State welfare

programs to avoid TANF’s focus on

work.

Likewise, as discussed previously, we

will not grant a State reasonable cause

to avoid the penalty on work

participation, failure to enforce child
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62149

support cooperation, time limits or

failure to impose work sanctions if we

detect a significant pattern of diversion

of families to separate State programs

that has the effect of diverting the

Federal share of child support

collections.

In determining reasonable cause, we

will consider the efforts the State made

to meet the requirement. We will also

take into consideration the duration and

severity of the circumstances that led to

the State’s failure to achieve the

requirement.

The burden of proof rests with the

State to explain fully what

circumstances, events, or other

occurrences constitute reasonable cause

with reference to its failure to meet a

particular requirement. The State must

provide us with sufficient relevant

information and documentation to

substantiate its claim of reasonable

cause. If we find that the State has

reasonable cause, we will not impose

the penalty.

What if a State does not demonstrate

reasonable cause? (§ 272.6)

As noted, section 409(c), as amended

by section 5506 of Pub. L. 105–33,

provides that, prior to imposing a

penalty against a State, we will notify

the State of the violation and allow the

State the opportunity to enter into a

corrective compliance plan. The State

will have 60 days from the date it

receives our notice of a violation to

submit a corrective compliance plan if

it does not claim reasonable cause or if

it claims reasonable cause

simultaneously with its corrective

compliance plan. If, in response to our

notice of a violation, the State initially

submits only a claim of reasonable

cause, and if we deny this claim, the

State has 60 days from the date it

receives our (second) notice denying the

claim to submit a corrective compliance

plan. If an acceptable corrective

compliance plan is not submitted on

time, we will assess the penalty

immediately. Outside of the notice(s) we

will not remind the State that the

corrective compliance plan is due.

The corrective compliance plan must

identify the milestones, including

interim process and outcome goals, the

State will achieve to assure that it will

fully correct or discontinue the violation

within the time period specified in the

plan. In order to highlight the

importance of the plan, it must also

include a certification by the Governor

that the State is committed to correcting

or discontinuing the violation in

accordance with the plan.

We recognize that each plan will be

specific to the violation (or penalty) and

that each State operates its TANF

program in a unique manner. Thus, we

will review each plan on a case-by-case

basis. Our determination to accept a

plan will be guided by the extent to

which the State’s plan indicates that it

will completely correct or discontinue,

as appropriate, the situation leading to

the penalty.

The steps a State takes to correct or

discontinue a violation may vary. For

example, where a State is penalized for

misusing Federal TANF funds, we will

expect it to remove this expenditure

from its TANF accounting records

(charging it to State funds, as allowable)

and provide steps to assure that such a

problem does not recur. Where a State

has reduced or denied assistance

improperly to a single custodial parent

who could not find child care for a child

under six, correcting the violation may

require that the State reimburse a parent

retroactively for the assistance that was

improperly denied. The State’s

corrective compliance plan would also

have to describe the steps to be taken to

prevent such problems in the future.

Section 409(c)(3) requires that a

violation be corrected or discontinued,

as appropriate, ‘‘in a timely manner.’’ A

State’s timely correction of the problem

or discontinuance of an improper action

is critical to assure that the State is not

subject to a subsequent penalty. At the

same time, we recognize that the causes

of violations will vary and we cannot

expect all violations to be rectified in

the same time frame. Thus, we do not

want to unduly restrict the duration of

corrective compliance plans. At the

same time, we do not want to allow

States to prolong the corrective

compliance process indefinitely and

leave problems unresolved into another

fiscal year. Therefore, we are proposing

that the period covered by a corrective

compliance plan end no later than six

months after the date we accept a State’s

corrective compliance plan.

We believe that, for most violations,

States will have some prior indication

that a problem exists and will be able

to begin addressing its problems during

the period before the deadline for

submitting its corrective compliance

plan. Therefore, we think it fair that the

corrective compliance plan period

extend no more than six months from

the date when we accept the State’s

plan; this period should provide the

State sufficient time in which to correct

or discontinue violations.

We would like to hear comments from

States and other interested parties on

this proposal to restrict the time period

for a corrective compliance plan. We

will consider all comments and

suggestions we receive on this matter.

Corrective Compliance Plan Review

We propose to consult with States on

any modifications to the corrective

compliance plan and seek mutual

agreement on a final plan. Such

consultation will occur only during the

60-day period specified in the law. Any

modifications to the State’s corrective

compliance plan resulting from such

consultation will constitute the State’s

final corrective compliance plan and

will obligate the State to take such

corrective actions as specified in the

plan.

We may either accept or reject the

State’s corrective compliance plan

within the 60-day period that begins on

the date that we receive the plan. If a

State does not agree to modify its plan

as we recommend, we may reject the

plan. If we reject the plan, we will

immediately notify the State that the

penalty is imposed. The State may

appeal our decision to impose the

penalty in accordance with the

provisions of section 410 of the Act and

the proposed regulations at § 272.7. If

we have not taken an action to reject a

plan by the end of the 60-day period,

the plan is accepted, as required by

section 409(c)(1)(D).

If a State corrects or discontinues, as

appropriate, the violations in

accordance with its corrective

compliance plan, we will not impose

the penalty. The statute permits us to

collect some or all of the penalty if the

State has failed to correct or discontinue

the violation. Therefore, under limited

circumstances, we may reduce the

amount of the penalty if the violation

has not been fully rectified, based on

one or more of the following situations:

(1) the State made substantial progress

in correcting or discontinuing the

violation; or (2) a natural disaster or

regional recession prevented the State

from coming into full compliance.

As discussed previously, we are

proposing that, for certain penalties, we

would not grant a State a reduced

penalty through corrective compliance

if we detect a significant pattern of

diversion of cases to separate State

programs that result in avoidance of the

work requirements or diversion of the

Federal share of child support

collections unless the State discontinues

the diversion during the corrective

compliance period. A State wishing to

receive one of these reductions should

address its plans to discontinue the

diversion during the corrective

compliance period and provide

evidence of the discontinuation.
62150 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

How can a State appeal our decision to

take a penalty? (§ 272.7)

Once we make a final decision to

impose a full or partial penalty, we will

notify the State that we will reduce the

State’s SFAG payable for the quarter or

the fiscal year and inform the State of

its right to appeal to the Departmental

Appeals Board (the Board).

Section 410 provides that the

Secretary will notify the chief executive

officer of the State of the adverse action

within five days. This provision covers

any adverse actions with respect to the

State TANF plan or the imposition of a

penalty under section 409.

Within 60 days after the date a State

receives this notice, the State may file

an appeal of the action, in whole or in

part, to the Board. As Congress only

allowed 60 days for the Board to reach

a decision following the appeal, it is

evident they intended a very

streamlined procedure. Therefore, the

State’s appeal must include all briefs

and supporting documentation for its

case when it files its appeal. A copy of

the appeal should be sent to the Office

of the General Counsel, Children,

Families and Aging Division, Room

411–D, 200 Independence Avenue,

S.W., Washington, D.C. 20201. ACF

must file its reply brief and supporting

documentation within 30 days after a

State files its appeal. Further briefing

and argument will be at the discretion

of the Board. A State’s appeal to the

Board will also be subject to the

following regulations at part 16 of title

45: §§ 16.2, 16.9, 16.10, and 16.13–

16.22.

Section 410(b)(2) provides that the

Board will consider an appeal on the

basis of documentation the State

submits, along with any additional

information required by the Board to

support a final decision. In deciding

whether to uphold an adverse action or

any portion of such action, the Board

will conduct a thorough review of the

issues and make a final determination

within 60 days after the appeal is filed.

The filing date will be the date that

materials are received by the Board in

a form acceptable to it. The 60 days may

be tolled by the Board, for a reasonable

period, if it determines it needs

additional documentation to reach a

decision.

Finally, a State may obtain judicial

review of a final decision by the Board

by filing an action within 90 days after

the date of the final decision. States may

file either with the district court of the

United States in the judicial district

where the State Agency is located or in

the United States District Court for the

District of Columbia. The district courts

will review the final decision of the

Board on the record established in the

administrative proceeding, to determine

if it is arbitrary, capricious, an abuse of

discretion or otherwise not in

accordance with law, or unsupported by

substantial evidence. The court’s review

will be on the basis of the documents

and supporting data submitted to the

Board.

What is the relationship of continuing

waivers on the penalty process for work

participation and time limits? (§ 272.8)

States that, in accordance with section

415 of the Act, continue waivers may

operate under a different set of

requirements in determining the

calculation of work participation rates

and/or applicability of time limits.

Providing this flexibility is an important

aspect of encouraging States who have

been innovative in implementing

welfare reform to continue those

endeavors and test their results.

However, this flexibility must also be

balanced with accountability to the

purposes of TANF, particularly those of

encouraging work and focusing TANF

on the provision of temporary support

to families as they move to selfsufficiency. To address this balance, we

will: (1) require Governors to certify

waiver inconsistencies a State believes

apply; (2) treat a State’s failure to meet

work participation rates or time limit

requirements in a modified manner for

States continuing waivers that are

inconsistent with TANF; and (3) publish

information related to a State’s success

in meeting work participation rates and

time-limit restrictions, as measured

against both TANF and waiver

requirements. Further, if this

information indicates that States

continuing waivers inconsistent with

TANF perform significantly below

States operating fully under TANF we

will consider seeking legislative changes

regarding State authority to continue

waivers policies inconsistent with

TANF.

Governor’s Certification

Because the inconsistent waiver will

constitute an alternative requirement, it

is important to establish the specific

extent of applicability of waiver

inconsistencies and their related

purpose. Consequently, § 272.8 requires

Governors to certify to the Secretary, upfront and in writing, the specific

inconsistencies that the State chooses to

continue and the reasons for continuing

the alternative waiver requirements,

including how their continuation is

consistent with the purposes of the

waiver. As indicated in our definitions

of waiver and inconsistency at § 270.30,

we will not recognize inconsistencies

related to continuation of alternative

waiver requirements for the explicit

purpose of avoiding penalties for failing

to meet the work participation rate or

implement the time limit as these were

not part of the original purpose of the

waiver. The Governor’s certification of

waiver inconsistencies must, consistent

with the approved waivers, describe the

standards the State will use in: (1)

assigning individuals to alternative

waiver work activities or to an

alternative number of hours of work;

and (2) determining exemptions from or

extensions to the time limit.

For additional discussion of what are

waiver inconsistencies in work

participation and time limits, see

§§ 270.30, 271.60 and 274.1(e).

Penalty Process for States Continuing

Waivers

States operating under alternative

waiver requirements are at an advantage

compared to other States in being able

to meet participation rates and comply

with time limit requirements. For

example, a State with a waiver allowing

unlimited job search has more options

in how it can assign work and training

activities to meet work participation

requirements. Similarly, a State

continuing waiver policies that exempt

a portion of its cases which include an

adult recipient from the time limit will

have a lower percentage of families

reaching the 60-month time limit and

therefore less difficult decisions in

granting applicable hardship extensions.

We have taken this advantage into

consideration and determined that

States continuing waivers in either of

these areas will not be eligible for a

reasonable cause exception from a

related work participation or time-limit

penalty. Nor will they be eligible for a

work participation rate penalty

reduction based on severity of the

failure or under our discretionary

authority, as otherwise allowed in

accordance with § 271.51(b)(3) or (c).

Given the State’s advantage compared to

States operating fully under TANF

rules, neither a reasonable cause

exception nor a reduction in the penalty

is warranted.

Further, in developing a corrective

compliance plan to address failure to

meet work participation requirements or

adhere to the restriction on the

percentage of families receiving TANF

benefits in excess of 60 months, we will

require that States consider

modification of its alternative waiver

requirements as part of the plan. In

making this consideration, we will

expect States to assess whether

continuing any of their waiver policies
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62151

hinders their ability to achieve

compliance. If the State continues

waivers related to the failure to achieve

compliance with the work requirements

described in subparts B and C of part

271 or the time limits described in

§§ 274.1 and 274.2 and still fails to

correct the violation, it will not be

eligible for a reduced penalty for such

related noncompliance regardless of

whether the State made substantial

progress towards achieving compliance

or if the State’s failure to comply was

attributable to natural disaster or

regional recession.

Calculating/Publishing Results

In publishing information concerning

State performance related to work

participation rates, it is necessary to

measure compliance based on waiver

rules. Similarly, reports on the

percentage of cases with an adult

recipient receiving Federal TANF

benefits in excess of 60 months should

reflect the percentage of cases receiving

benefits in excess of 60 months under

alternative waiver rules, an amount

which may exceed the TANF 20 percent

limit. However, these differential rules

do not provide a comparable basis for

reporting on State performance related

to work, nor an accurate picture of the

extent to which Federal TANF benefits

are provided for more than 60 months.

Therefore, we will publish reports

which provide information, where

applicable, concerning the percentage of

cases meeting work participation

requirements under both TANF and

waiver rules. Similarly, we will provide

information indicating the percentages

of cases with an adult recipient that

receive more than 60 months of Federal

TANF benefits in accordance with

TANF hardship exemptions and in

accordance with alternative rules under

waivers. The requirements specified

under the TANF data collection

regulations will facilitate reporting

results under both sets of rules.

D. Part 273—State TANF Expenditures

Subpart A—What Rules Apply to a

State’s Maintenance of Effort?

What definitions apply to this part?

(§ 273.0)

This section cross-references the

general TANF regulatory definitions

established under part 270. It also adds

a definition of ‘‘administrative costs’’

that is applicable in determining

whether States have exceeded the caps

on ‘‘administrative costs’’ that apply

separately to their Federal TANF funds

and State MOE funds.

We consulted with State and local

representatives and other parties and

organizations on whether and how we

should define the types of costs that

should be considered administrative

costs.

We considered not proposing a

Federal definition (but requiring States

to develop their own definitions and

provide them to us as part of the annual

addendum). That option had appeal

because: (1) it is consistent with the

philosophy of a block grant; (2) we took

a similar approach in some other areas

(i.e., in not defining individual work

activities); (3) we support the idea that

we should focus on outcomes, rather

than process; and (4) the same

definition might not work for each State.

Also, we were concerned we could

exacerbate consistency problems if we

created a Federal definition. Because of

the wide variety of definitions in other

related Federal programs, adoption of a

single national definition could create

new inconsistencies in operational

procedures within State agencies and

add to the complexities administrators

would face in operating these programs.

At the same time, we were hesitant to

defer totally to State definitions. The

philosophy underlying this provision is

very important; in the interest of

protecting needy families and children,

it is critical that the substantial majority

of Federal TANF funds and State MOE

funds go towards helping needy

families. If we did not provide some

definition, it would be impossible to

assure that the cap had meaning. Also,

we felt that it would be better to give

general guidance to States than to get

into disputes with individual States

about whether their definitions

represented a ‘‘reasonable interpretation

of the statute.’’

We thought that it was very important

that any definition be flexible enough

not to unnecessarily constrain State

choices on how they deliver services. As

numerous commenters have pointed

out, a traditional definition of

administrative costs would be

inappropriate because the TANF

program is unique, and we expect TANF

to evolve into something significantly

different from its predecessors and from

other welfare-related programs.

Specifically, we expect TANF to be a

more service-oriented program, with

substantially more resources devoted to

case management and fewer distinctions

between administrative activities and

services provided to recipients.

You will note that the definition we

have proposed does not directly address

case management or eligibility

determination. We understand that, in

many instances, the same individuals

may be performing both activities. In

such cases, to the extent that a worker’s

activities are essentially administrative

in nature (e.g., traditional eligibility

determinations or verifications), the

portion of the worker’s time spent on

such activities will be treated as

administrative costs, along with any

associated indirect (or overhead) costs.

However, to the extent that a worker’s

time is essentially spent on casemanagement functions or delivering

services to clients, that portion of the

worker’s time can be charged as

program costs, along with associated

indirect (or overhead) costs.

We believe that the definition we

have proposed will not create a

significant new administrative burden

on States. We hope that it is flexible

enough to facilitate effective case

management, accommodate evolving

TANF program designs, and support

innovation and diversity among State

TANF programs. It also has the

significant advantage of being closely

related to the definition in effect under

the Job Training Partnership Act (JTPA).

Thus, it should facilitate the

coordination of Welfare-to-Work and

TANF activities and support the

transition of hard-to-employ TANF

recipients into the work force.

We have not included specific

language in the proposed rule about

treatment of costs incurred by

subgrantees, contractors, community

service providers, and other third

parties. Neither the statute nor the

proposed regulations make any

provision for special treatment of such

costs. Thus, the expectation is that

administrative costs incurred by these

entities would be part of the total

administrative cost cap. In other words,

it is irrelevant whether costs are

incurred by the TANF agency directly or

by other parties.

We realize this policy may create

additional administrative burdens for

the TANF agency and do not want to

unnecessarily divert resources to

administrative activities. At the same

time, we do not want to distort agency

incentives to contract for administrative

or program services. In seeking possible

solutions for this problem, we looked at

the JTPA approach (which allows

expenditures on services that are

available ‘‘off-the-shelf’’ to be treated

entirely as program costs), but did not

think that it provided an adequate

solution. We thought that too few of the

service contracts under TANF would

qualify for simplified treatment on that

basis.

We welcome comments on how to

deal with this latter dilemma, as well as

comments on our overall approach to

the definition of administrative costs.

We discussed this issue thoroughly
62152 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

during our consultations, but this is a

policy area where no single, clear

solution emerged.

How much State money must a State

expend annually to meet the TANF

MOE requirement? (§ 273.1)

To ensure that States would continue

to contribute their own money towards

meeting the needs of low-income

families, the new section 409(a)(7)

requires States to maintain a certain

level of spending on programs on behalf

of eligible families. If a State does not

meet the ‘‘TANF MOE’’ requirements in

any fiscal year, then it faces a penalty

for a following fiscal year. The penalty

consists of a dollar-for-dollar reduction

in a State’s adjusted SFAG.

In order for States to know their

specific TANF MOE requirements, they

must understand the terms used in

amended section 409(a)(7). Therefore,

we address each of these terms in this

proposed rule.

Historic State Expenditures

Each State’s TANF MOE requirement

reflects its historic spending on welfare

programs. Section 409(a)(7)(B)(iii)

provides two ways to calculate a State’s

FY 1994 expenditures. It then

establishes that the lesser amount be

used for determining a State’s MOE

requirement.

The first calculation, at section

409(a)(7)(B)(iii)(I), defines historic State

expenditures as the State’s FY 1994

share of expenditures for the AFDC, EA,

AFDC-related child care, transitional

child care, at-risk child care and JOBS

programs (including expenditures for

administration and systems operations).

An alternative calculation appears in

section 409(a)(7)(B)(iii)(II).

After examining the formula for the

alternative method, we determined that

the amounts resulting from this

calculation would always equal or

exceed the amount calculated under the

first, simpler method. Therefore, we

calculated the historic State

expenditures based on the first method.

Adjusting A State’s TANF MOE Level

The statute authorizes an adjustment

to a State’s TANF MOE level. If a Tribe

or a consortium of Tribes residing in the

State submits a plan to operate its own

TANF program, and we approve this

plan, then that State’s MOE requirement

will be reduced beginning with the

effective date of the approved Tribal

plan. Section 409(a)(7)(B)(iii) excludes

from the TANF MOE calculation any

IV–A expenditures made by the State for

FY 1994 on behalf of individuals

covered by an approved Tribal TANF

plan. Because TANF funding for Tribes

may also reflect a State’s IV–F (JOBS)

expenditures, we believe that it is

appropriate that State TANF MOE levels

be reduced for IV–A and IV–F

expenditures.

Under our proposed rules, we will

determine the percentage reduction in

the SFAG due to Tribal programs and

apply the same percentage reduction to

the State’s TANF MOE requirement. The

State’s revised TANF MOE level applies

for each fiscal year covered by the

approved Tribal TANF plan(s).

For example, if the amount of the

Tribal Family Assistance Grant

represents ten percent of the State’s

SFAG, then the State’s MOE

requirement will be reduced by ten

percent. This approach provides a

consistent method for determining both

the reduction in the State’s SFAG and

required MOE level.

Applicable Percentage

The TANF MOE rules do not require

that a State spend the same annual

amount as it did in FY 1994. (States

must spend 100 percent of the amount

spent in FY 1994 to access the

Contingency Fund under section 403(b).

See part 274, subpart B, for a discussion

of the Contingency Fund requirements.)

Rather, States must maintain the

‘‘applicable percentage’’ of their FY

1994 expenditures.

Under section 409(a)(7)(B)(ii), if any

State fails to meet the minimum work

program participation rate requirements

in the fiscal year, then it must spend at

least 80 percent of its FY 1994 spending

level. If a State meets the minimum

work participation rate requirements,

then the ‘‘applicable percentage’’ is 75

percent of its FY 1994 spending level for

the year. The dollar amount

representing 75 and 80 percent of the

FY 1994 State expenditures is known as

the TANF MOE level.

States must know the amount of their

FY 1994 total expenditures and

calculate the figures that represent 75

and 80 percent of those expenditures.

Data

Section 5506(f) of Pub. L. 105–33

clarifies the source and date of data to

use to calculate FY 1994 State

expenditures. We used the same data

sources. We calculated each State’s total

FY 1994 expenditures and TANF MOE

levels by using data on the State share

of expenditures for AFDC benefits and

administration, EA, FAMIS, AFDC/JOBS

Child Care, and Transitional and AtRisk Child Care programs reported by

States on form ACF–231 as of April 28,

1995, as well as the State share of JOBS

expenditures reported by each State on

form ACF–331 as of April 28, 1995.

These are the same State expenditure

data sources that we used to calculate

the SFAGs under TANF.

We transmitted tables showing FY

1994 spending amounts and MOE levels

to the States via Program Instruction

Number TANF–ACF–PI–96–2, dated

December 6, 1996. This Program

Instruction, as well as a separate MOE

table listing FY 1994 State expenditures

and MOE levels for each of the 50 States

and the District of Columbia, are

available on the world wide web at

http://www.acf.dhhs.gov/.

We also determined FY 1994

spending and MOE levels for each of the

Territories. We transmitted this

information to the Territories via our

Regional Administrators in San

Francisco and New York.

For IV–A expenditures for Puerto

Rico, we used the Financial Report

Form ACF–231 as of April 28, 995.

However, for Guam and the Virgin

Islands, we did not use the Territories’

share of expenditures as submitted on

the ACF–231 because their share of

expenditures exceeded the amounts for

which Federal reimbursement was

available (due to the statutory ceiling on

funding for each, under section 1108). If

we used the expenditures reported on

form ACF–231, then the MOE levels for

both Guam and the Virgin Islands

would be inordinately high. We believe

that Congress’ intent in establishing the

historic spending level was to assure

that States and Territories contribute to

the specified programs at least 80

percent (or 75 percent) of the amounts

they were required to expend to match

Federal funds in FY 1994. Thus, for

Guam and the Virgin Islands, we used

the share of expenditures that

corresponded to the amount on the

Federal grant awards for FY 1994, i.e.,

the Territories’ share of AFDC benefit

payments (25 percent), EA (50 percent),

administration (50 percent), and Child

Care (25 percent).

The Territories’ funds for the JOBS

program were not subject to the ceiling

amounts given in section 1108. They are

subject to an appropriation limit, but the

Territorial expenditures did not exceed

this amount. Therefore, for JOBS, the

Territories’ MOE levels reflect

expenditures reported on the ACF–331

as of April 28, 1995.

In addition, for both IV–A (AFDC, EA,

and child care) and JOBS, Guam and the

Virgin Islands (but not Puerto Rico)

benefit from Pub. L. 96–205, as

amended (48 U.S.C. 1469a). This law

permits waiver of the first $200,000 of

the Territories’ share of expenditures.

Therefore, for Guam and the Virgin

Islands, we reduced the share they were
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62153

required to contribute, and thus their

MOE amount, by $200,000.

FY 1997 MOE Level

Finally, we considered whether to

require all States to meet the full MOE

level in FY 1997, the first year for the

requirement. Because States have until

July 1, 1997, to implement the TANF

program, many States are not operating

a TANF program for all of FY 1997.

We examined two alternative

adjustments to FY 1997 TANF

requirements. First, we could require

that all States meet 80 percent (or 75

percent) of their full FY 1994 spending

level, but count the State portion of

expenditures from AFDC, EA, and JOBS

made in FY 1997 toward the State’s

MOE expenditures. Alternatively, we

could prorate a State’s FY 1997 MOE

level based on the date of TANF

implementation. Under this latter

option, none of the expenditures from

AFDC, EA, and JOBS made in FY 1997

prior to implementation of the State’s

TANF program count toward meeting

the State’s prorated MOE level. We

determined that the former option is

less acceptable because it fails to

recognize the distinction between TANF

and the AFDC and JOBS programs.

Therefore, we decided that proration of

the FY 1997 MOE level presented the

most consistent and equitable approach.

Under the proposed rules, the State

may prorate its TANF MOE level for FY

1997 by taking the total FY 1994 State

expenditures provided to the State in

Program Instruction Number TANF–

ACF–PI–96–2, multiplying that number

by the number of days during FY 1997

that the State operated a TANF program

and dividing by 365. The State’s TANF

implementation date is the date given in

the Department’s completion letter to

the State. The State must meet 80

percent (or 75 percent) of the resulting

amount.

What kinds of State expenditures count

toward meeting a State’s annual MOE

expenditure requirement? (§ 273.2)

Qualified State Expenditures

Section 409(a)(7)(B)(i) establishes the

criteria for the expenditure of State

funds to count toward a State’s TANF

MOE level. This critical provision has

already engendered a number of

inquiries as States and organizations

strive to meet the challenge of welfare

reform. While we are unable to discuss

every potential use of State funds, we do

discuss the specific requirements that

must be met and address some of the

examples that have come to our

attention.

Congress wanted States to be active

partners in the welfare reform process.

Thus, States must spend a substantial

amount of their own money on aid to

needy families. While Congress gave

States significant flexibility in this area,

it did establish a number of important

statutory restrictions on which State

expenditures qualify as MOE.

Section 409(a)(7)(B)(i) defines

‘‘qualified State expenditures’’ to

include certain expenditures by the

State under all State programs. We

interpret ‘‘all State programs’’ to mean

the State’s family assistance (TANF)

program plus any other separate State

program that assists ‘‘eligible families’’

and provides appropriate services or

benefits.

Thus, States could structure the use of

State expenditures for MOE purposes in

three ways. The first would be a TANF

program funded by expenditures of

commingled State funds and Federal

grant funds. The second would be a

TANF program in which a State

segregates its Federal grant from its

State funds.

A State might choose to operate a

‘‘segregated’’ TANF program because

certain limitations apply to the program

funded with Federal funds that would

not apply to a TANF program funded

wholly with State funds, e.g., time

limitations and certain alien

restrictions.

Third, States could use State funds in

a State program, separate from TANF,

but for the types of activities listed in

the statute, e.g., cash assistance, child

care assistance and education activities.

In order for the expenditure of State

funds under State programs to count

toward meeting the State’s TANF MOE,

the expenditures must: (1) be made to or

on behalf of an eligible family; (2)

provide assistance to eligible families in

one or more of the forms listed in the

statute under section 409(a)(7)(B)(i)(I);

and (3) comply with all other

requirements and limitations set forth in

this part of the proposed regulations,

including those set forth in §§ 273.5 and

273.6.

Eligible Families

Section 409(a)(7)(B)(i)(I) provides that

State funds under all State programs

must be spent on behalf of eligible

families to count toward the State’s

MOE. Section 409(a)(7)(B)(i)(IV) further

clarifies that an eligible family means a

family eligible for assistance ‘‘under the

State program funded under this part.’’

We have interpreted ‘‘under the State

program funded under this part’’ to

mean the State’s TANF program.

Thus, we propose that, in order to be

considered an ‘‘eligible family’’ for MOE

purposes, a family must have a child

living with a custodial parent or other

adult caretaker relative (or consist of a

pregnant individual) and be financially

needy under the TANF income and

resource standards established by the

State under its TANF plan. This

definition would include all families

funded under TANF, including certain

alien families or time-limited families

who cannot be served with Federal

funds, but who are being served in a

segregated State TANF program. (We

discuss this alien limitation in detail

further on in this section.)

If a family meets these criteria, then

the family may be considered an

‘‘eligible family’’ for purpose of

counting State-funded assistance for any

of the forms listed in section

409(a)(7)(B)(i)(I) as MOE. The family

does not have to be receiving TANF, but

instead could be receiving assistance

from a non-TANF State program. The

expenditures to provide these services

under all State programs may count

toward the MOE requirement, provided

the expenditures also meet all other

requirements and limitations set forth in

part 273.

A State is free to define who is a

member of the family for TANF

purposes and may use this same

definition for MOE purposes. For

example, it could choose to assist other

family members, such as non-custodial

parents, who might significantly

enhance the family’s ability to achieve

economic self-support and selfsufficiency. By including such

individuals within its definitions of

‘‘eligible family,’’ a State could provide

them with services through TANF or a

separate State program. Non-custodial

parents could then engage in activities

such as work or educational activities,

counseling, or parenting and money

management classes.

We expect States to define ‘‘child’’

consistent either with the ‘‘minor child’’

definition given in section 419 or some

other definition applicable under State

law.

The definition of ‘‘eligible family’’

expressly includes families that ‘‘would

be eligible for such assistance but for the

application of section 408(a)(7) of this

Act and families of aliens lawfully

present in the U.S. that would be

eligible for such assistance but for the

application of title IV of the Personal

Responsibility and Work Opportunity

Reconciliation Act of 1996.’’

Under section 408(a)(7), States may

not use Federal funds to provide TANF

assistance to a family that includes an

adult who has received federally-funded

assistance for a total of 60 months.

Therefore, if a family becomes ineligible

for Federal assistance under the TANF

program due to this time limit, but still
62154 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

meets the definition of eligible family,

then this family may be considered an

eligible family for MOE purposes.

Title IV of PRWORA prohibits certain

aliens from receiving certain Federal

assistance. Section 401 of PRWORA

prohibits all aliens who are not

qualified aliens from receiving Federal

public benefits, with exceptions. The

definition of ‘‘qualified aliens,’’ at

§ 270.30, refers to section 431 of

PRWORA, as amended by the Illegal

Immigration Reform and Immigrant

Responsibility Act of 1996 (Pub. L. 104–

208). It includes, among other alien

categories, permanent residents,

refugees and asylees. Section 403 of

PRWORA prohibits qualified aliens

(with exceptions) who arrive on or after

August 22, 1996, i.e., ‘‘newly-arrived

aliens,’’ from receiving, for five years

after entry, Federal means-tested public

benefits, which would include the

federally-funded TANF program

benefits, during their first five years in

the country. Section 402(b) of PRWORA

allows States to determine whether to

provide TANF assistance at all to

certain qualified aliens, while other

categories of qualified aliens cannot be

denied benefits on the basis of their

immigration status. Given these

limitations, a State could choose to

provide Federal TANF assistance to

qualified aliens who enter before August

22, 1996, and, for those who enter on or

after enactment, after the expiration of

the five-year time-bar. The State,

however, would still be precluded from

providing Federal TANF assistance to

non-qualified aliens and to newlyarrived qualified aliens who have been

in the country less than five years,

except for those who are exempted from

the limitations.

Under certain circumstances,

however, State expenditures for aliens

who are precluded from receiving

Federal TANF assistance may count

towards the State’s TANF MOE. The

family must have a child living with a

parent or other adult relative (or must be

a pregnant individual), and the family

must be financially needy under the

State’s TANF income and resource

standards. The expenditures must be

made on one of the statutorily permitted

activities enumerated in section

409(a)(7)(B)(i)(I) and meet all other

requirements and limitations set forth in

subpart A of this part.

Section 5506(d) of Pub. L. 105–33

clarifies that an eligible family, for

TANF MOE purposes, includes legal

aliens who are no longer eligible for

Federal assistance due to title IV of

PRWORA. The alien restrictions that

apply to State-funded programs are

found at title IV, section 411 of

PRWORA.

Section 411(d) addresses the

treatment of illegal aliens. It permits a

State to provide State or local benefits

to illegal aliens if the State enacted a

law after August 22, 1996, which

affirmatively provides for such

eligibility. Thus, we conclude that if a

State decides to provide assistance to

illegal aliens ‘‘in a State program funded

under this Part,’’ per title IV, section

411(d), such assistance may count

toward the State’s TANF MOE.

There is another complication in this

policy area. Section 411(a) of PRWORA

prohibits States from providing State or

local public benefits, with exceptions, to

aliens who are not qualified aliens, nonimmigrants, or aliens who are paroled

into the U.S. for less than one year.

There are a handful of categories of legal

aliens, e.g., temporary residents under

the Immigration Reform and Control Act

(IRCA), aliens with temporary protected

status, and aliens in deferred action

status, who are prohibited from

receiving State or local public benefits

under this provision. Thus,

expenditures on assistance for legal

aliens who are not qualified aliens, nonimmigrants, or aliens paroled in for less

than one year may not count towards a

State’s TANF MOE.

In addition, States may transfer funds

to Tribal grantees to assist families

eligible under an approved Tribal TANF

plan. However, if the eligibility criteria

under the Tribal TANF program are

broader than under the State’s TANF

plan, then all expenditures of State

funds within the Tribal TANF program

might not be countable as MOE. Only

expenditures used to assist an ‘‘eligible

family’’ under the State program count.

States must ensure that State funds are

expended on behalf of families eligible

under the State’s income and resource

standards.

Types of Activities

Section 409(a)(7)(B)(i)(I)(aa)–(ee)

specifies that State expenditures on

eligible families for the following types

of assistance are ‘‘qualified

expenditures’’ for MOE purposes:

• Cash assistance (see subsequent

discussion on this);

• Child care assistance (see the

discussion at § 273.3);

• Education activities designed to

increase self-sufficiency, job training,

and work (note the specific exception at

§ 273.4);

• Any other use of funds allowable

under section 404(a)(1) (see subsequent

discussion on this); and

• Associated administrative costs

(subject to a 15 percent cap, as

discussed subsequently).

For MOE purposes, ‘‘assistance’’ may

take the form of cash, certificates,

vouchers or other forms of

disbursement, as determined by the

State. Assistance may also be ongoing,

short-term, or one-time only. The

definition of assistance at § 270.30 does

not limit the nature of State-funded aid

provided to eligible families under

TANF or separate State programs. We

proposed that definition of ‘‘assistance’’

for the sole purpose of establishing

when critical provisions in the statute

using this term apply to States

providing support to families under

TANF.

Thus, State expenditures for activities

such as pre-pregnancy family planning

services, teen parenting programs, youth

and family counseling or support

services, job training or employment

services, or forms of crisis assistance

that meet the purposes of the program

may also count toward meeting a State’s

MOE requirement. However, we remind

States that such expenditures are subject

to other limitations and restrictions

under §§ 273.5 and 273.6.

We address the additional limitations

and restrictions in the discussion that

follows. We also discuss some specific

case situations that have come to our

attention. We invite comment on these

and other examples of aid for eligible

families that States believe could

qualify.

Cash Assistance

This category includes cash

payments, including electronic benefit

transfers, to meet basic needs; assistance

with work-related transportation costs;

clothing allowances; and any child

support collected on behalf of an

eligible child that the State passes

through to the eligible family. Section

5506(b) of Pub. L. 105–33 amended

section 409(a)(7)(B)(i)(I)(aa) to expressly

allow assigned child support collected

by the State and distributed to the

family to count toward a State’s TANF

MOE so long as the amount sent to the

family is disregarded in determining the

family’s eligibility and amount of

assistance.

Cash assistance also includes State

expenditures on behalf of eligible

families as part of a State’s Earned

Income Tax Credit (EITC) program.

Under a State EITC program, we have

determined that only the EITC cash

payments actually sent to eligible

families are countable as MOE. Also, in

a fiscal year, States that had EITC

programs in FY 1995 may count total

cash payments sent to eligible families
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only to the extent that these payments

exceed the cash payments sent in FY

1995 (see § 273.5).

Any Other Use Of Funds Allowable

Under Section 404(a)(1)

Section 404(a)(1) provides that TANF

funds may be used ‘‘in any manner that

is reasonably calculated to accomplish

the purpose of the TANF program,

including to provide low income

households with assistance in meeting

home heating and cooling costs.’’

Section 270.20 of these proposed rules

lists the purposes of the TANF program.

Medical and Substance Abuse Services

The statute does not prohibit the

expenditure of State MOE funds on

medical expenditures. Therefore, States

may use their own funds to provide

treatment services to individuals

seeking to overcome drug and/or

alcohol abuse when these services assist

in accomplishing the purposes of the

program. This policy would also

comport with both the Administration’s

support for drug rehabilitation services

and the Congressional call for State

flexibility in the operation of welfare

programs.

We remind States that such

expenditures must be consistent with

the purposes of the program and made

to or on behalf of eligible families. We

also remind States that section 408(a)(6)

bars the use of Federal TANF funds for

medical services. Therefore, States using

MOE funds to provide medical

treatment services may not commingle

State and Federal funds. In addition,

any State expenditures on medical

services that are used to obtain Federal

matching funds under the Medicaid

program would not count as MOE.

(Refer to the discussion under § 273.6.)

Finally, State expenditures on medical

and substance abuse services may only

count as MOE subject to the limitations

set forth in § 273.5.

Juvenile Justice

State funds used to pay the costs of

benefits or services provided to children

in the juvenile justice system and

previously matched under the EA

program do not count toward MOE.

More specifically, as juvenile justice

services do not meet any of the purposes

of the TANF program, they are not an

allowable use of funds under section

404(a)(1).

While some States may expend their

Federal TANF funds for this purpose,

under section 404(a)(2), the definition of

‘‘qualified State expenditures,’’ for MOE

purposes, does not include the reference

to section 404(a)(2). Therefore, we

conclude that Congress did not intend

to automatically qualify all previously

authorized IV–A expenditures to count

as MOE. States that expend Federal

funds for this purpose, under section

404(a)(2), must not commingle State

funds with Federal funds if they wish

the State funds to count as MOE.

State ‘‘Rainy Day’’ Funds

Finally, some States have inquired

whether State funds allocated or set

aside during a fiscal year as a ‘‘rainy

day’’ fund, to act as a hedge against any

economic downturn, could count as

MOE. While we understand State intent,

these allocations or set-asides do not

qualify as expenditures. States must

actually expend funds on behalf of

eligible families during the fiscal year

for expenditures to count toward the

State’s MOE for that fiscal year.

(However, under section 404(e), States

may reserve Federal TANF funds from

any fiscal year for use in any other fiscal

year.)

Administrative Costs

Administrative expenditures may

count toward a State’s MOE, but only to

the extent that they do not exceed 15

percent of the total amount of qualified

State expenditures for the fiscal year.

This limitation is the same as the limit

for TANF administrative expenditures.

Therefore, we propose that the State

apply the same definition of

administrative costs for MOE purposes

as for TANF. Section 404(b)(2) states

that expenditures of Federal funds with

respect to information technology and

computerization needed for tracking or

monitoring activities are not subject to

the 15 percent TANF limit. We are

providing the same flexibility with

respect to the administrative cost cap on

MOE expenditures. Thus, the proposed

rules do not count information

technology and computerization

expenditures under the administrative

cost cap and allows such expenditures

to count toward meeting a State’s MOE

requirement without being limited by

the 15 percent cap on administrative

expenditures.

When do child care expenditures count?

(§ 273.3)

There are certain restrictions on the

child care expenditures that may count

for TANF MOE purposes. First, only

child care expenditures used to assist

eligible families under the State’s TANF

criteria count toward the State’s TANF

MOE. As explained earlier, eligible

families means families that have a

child living with a parent or other adult

caretaker relative (or consisting of a

pregnant woman) and that are

financially needy per the TANF income

and resource standards established by

the state under its TANF plan. Thus, not

all State expenditures to provide child

care services would necessarily qualify

for TANF MOE purposes, particularly if

the eligibility criteria for the child care

services are broader than the State’s

TANF criteria, e.g., under the Child Care

Development Fund (CCDF).

Second, section 409(a)(7)(B)(iv)

establishes four general restrictions on

State expenditures. (These restrictions

are listed in § 273.6.) Two of the

restrictions apply to child care

expenditures: subsections

409(a)(7)(B)(iv)(IV) and

409(a)(7)(B)(iv)(I).

Subsection 409(a)(7)(B)(iv)(IV)

excludes any State funds expended as a

condition of receiving Federal funds

under other Federal programs from

counting toward a State’s TANF MOE.

However, this subsection also provides

an exception to this restriction. The

exception applies to the CCDF Matching

Fund (i.e., the State’s CCDF MOE and

the State’s share of matching funds).

State child care expenditures used to

meet the child care MOE requirement or

to receive Federal matching funds may

also count toward meeting the State’s

TANF MOE requirement if the

expenditures were made on behalf of

members of an eligible family.

But, subsection IV limits the amount

of the above-mentioned State child care

expenditures that may count for TANF

MOE purposes to the State’s share of

expenditures in FY 1994 or FY 1995,

whichever is greater, for the programs

described in section 418(a)(1)(A). These

are the former title IV-A child care

programs, i.e., the AFDC/JOBS child

care, transitional child care, and at-risk

child care programs. A State’s child care

MOE amount (for purposes of qualifying

for child care matching funds) is also

based on its expenditures for title IV-A

child care in FY 1994 or FY 1995,

whichever is greater. Hence, the amount

of State child care expenditures used to

meet the child care MOE requirement

and to receive Federal Matching Funds

that may count for TANF MOE purposes

is limited to the amount of the child

care MOE requirement for the State

under section 418(a)(2)(C).

If a State has additional State child

care expenditures, i.e., expenditures

which have not been used toward

meeting the child care MOE

requirement or to receive Federal

matching funds, these expenditures may

count toward the State’s TANF MOE

provided the expenditures meet all

other requirements and limitations set

forth in subpart A of this part. We

concluded that subsection IV does not

limit the amount of such additional
62156 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

child care expenditures which may

count for TANF MOE purposes.

Subsection 409(a)(7)(B)(iv)(I) excludes

any expenditures that come from

amounts made available by the Federal

government. Therefore, Federal funds

transferred from the TANF program to

the Child Care and Development Block

Grant (also known as the Discretionary

Fund) would not count toward MOE,

nor would Federal funds received under

CCDF.

When do educational expenditures

count? (§ 273.4)

Only expenditures on educational

services or activities that are targeted to

eligible families to increase selfsufficiency, job training, and work may

count toward a State’s MOE. The statute

excludes educational services or

activities that are generally available,

including through the public education

system. The conference report confirms

this exclusion. In H. Rept. 104–725,

page 277, the conferees agreed to

exclude ‘‘any expenditure for public

education in the State other than

expenditures for services or assistance

to a member of an eligible family that

is not generally available to other

persons.’’

Expenditures on special services that

are targeted to an ‘‘eligible family’’ and

are not generally available to other

residents of the State may count. These

could include contracted educational

services or activities, such as special

classes for teen parents in high schools

or other settings; special classes in

English as a second language for legal

immigrants; special classes in remedial

education to achieve basic literacy;

special classes that lead to a certificate

of high school equivalency (GED); or

pre-employment or job-readiness

activities.

We also note that expenditures on

supportive services, such as

transportation, to assist a member of an

eligible family in accessing educational

activities may also count toward a

State’s MOE, either as cash assistance or

another type of aid consistent with the

purposes of the Act. (See §§ 273.5 and

273.6 for other general restrictions on

these expenditures.)

When do expenditures in separate State

programs count? (§ 273.5)

Section 409(a)(7)(B)(i)(II) establishes

limits on the amount of expenditures

that may count when the MOE

expenditures are for activities under

separate State or local programs. The

heading for the provisions under this

section indicates that ‘‘transfers from

other State and local programs’’ must be

excluded from consideration toward a

State’s MOE. We received numerous

questions about this language. We do

not believe that the language intended

to convey merely a literal or physical

transfer of funds. Instead, we believe

that Congress wanted to prevent States

from substituting existing expenditures

in these outside programs for cash

welfare and related assistance to needy

families and claiming them as

expenditures for MOE purposes.

Therefore, section 409(a)(7)(B)(i)(II)(aa)

provides that the money spent under

State or local programs may count as

MOE only to the extent that the

expenditures exceed the amount

expended under such programs in the

fiscal year most recently ending before

the date of enactment (August 22, 1996).

Thus, States may count only additional

or new expenditures, i.e., expenditures

above FY 1995 levels.

Section 409(a)(7)(B)(i)(II)(bb) provides

what may appear to be an alternative

limitation. We believe that this

provision was intended as an exception

to the limitation under (aa). Under

provision (bb), State expenditures under

any State or local program during a

fiscal year may count toward a State’s

MOE to the extent that the State is

entitled to a payment under former

section 403 as in effect before the date

of enactment with respect to the

expenditures. We interpret this to mean

that State funds expended under

separate State/local programs that had

been previously authorized and

allowable under the former AFDC/EA/

JOBS programs in effect as of August 21,

1996, may have all such expenditures

count toward the State’s MOE. In other

words, the limit under (aa) does not

apply; there is no requirement that these

expenditures be additional or new

expenditures, above FY 1995 levels.

What kinds of expenditures do not

count? (§ 273.6)

As previously discussed,

expenditures under State programs

(TANF and separate State programs) do

not count if they are not made on behalf

of eligible families.

There are also specific statutory

requirements that affect the use of State

funds under a State’s TANF program.

The specific requirements that apply

depend on whether the expenditures

meet the definition of assistance under

§ 270.30; the language used in each

TANF provision or in a related

provision elsewhere in the statute; and

the manner in which a State structures

its TANF program and accounts. (None

of the TANF program requirements

directly apply to eligible families served

in separate State programs.)

Provisions in the statute that use the

terms ‘‘under the program,’’ ‘‘under the

program funded under this part,’’ and

‘‘under the State program funded under

this part’’ apply to the State’s TANF

program, regardless of the funding

source. That is, they apply to segregated

Federal programs, commingled State/

Federal programs, and segregated State

programs. Thus, all families receiving

TANF assistance (whether funded with

State or Federal funds) must meet work

participation and child support

requirements.

Provisions pertaining solely to the use

of Federal funds would not apply to

families assisted under TANF with

State-only funds. Consequently, if State

funds are segregated from Federal funds,

State expenditures on ‘‘assistance’’ must

comply with all the rules pertaining

generally to the State’s TANF program,

e.g., work and child support

requirements. However, they are not

subject to requirements that pertain only

to the use of Federal funds.

These requirements are found in the

provisions in the statute using the term

‘‘grant,’’ or ‘‘amounts attributable to

funds provided by the Federal

government.’’ This language refers to the

Federal funds provided to the State

under section 403. Therefore, those

provisions affect only the use of Federal

TANF funds, unless the State

commingles its money with Federal

TANF funds. If commingled, Federal

and State funds become subject to the

same rules. Thus, commingling of State

and Federal funds can reduce the total

amount of flexibility available to the

State in its use of both Federal and State

funds.

The provisions governing the use of

Federal TANF funds are generally found

in sections 404 and 408 of the Act and

section 115 of PRWORA. The proposed

regulations at § 273.11 provide

additional requirements regarding

allowable uses of Federal TANF funds.

The statute also provides several

general restrictions on MOE

expenditures. Pursuant to section

409(a)(7)(B)(iv), the following types of

expenditures do not count: (1)

expenditures of funds that originated

with the Federal government; (2) State

funds expended for the Medicaid

program under title XIX of the Act; (3)

any State funds used to match Federal

Welfare-to-Work funds provided under

section 403(a)(5) of the Act, as amended

by sections 5001(a) (1) and (2) of Pub.

L. 105–33; or (4) expenditures that

States make as a condition of receiving

Federal funds under other programs.

See discussion of § 273.3 for additional

information.
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Section 5506(c) of Pub. L. 105–33

amends section 409(a)(7)(B)(i) by adding

another restriction under section

409(a)(7)(B)(i)(III). Pursuant to section

409(a)(12), States must expend State

funds equal to the total reduction in the

State’s SFAG due to any penalties

incurred. Section 409(a)(7)(B)(i)(III)

provides that such expenditures may

not count toward a State’s TANF MOE.

(See § 274.50.)

TANF funds transferred to the Social

Service Block Grant Program under title

XX of the Act or transferred to the Child

Care and Development Block Grant

program (also known as the

Discretionary Fund within the Child

Care and Development Fund) do not

count toward meeting a State’s MOE

requirement because of the first

restriction under 409(a)(7)(b)(iv) that

prohibits funds that originated from the

Federal government from being used for

MOE purposes.

Finally, it is important to note that

only State expenditures made in the

fiscal year for which TANF funds are

awarded count toward meeting the MOE

requirement for that year. Therefore,

expenditures made in prior fiscal years

or, in the case of FY 1997, expenditures

made prior to the date the State starts its

TANF program do not count as TANF

MOE.

How will we determine the level of

State expenditures? (§ 273.7)

Congress recognized that State

contributions would play an important

role in making welfare reform a success.

We are interested in learning about the

ways in which States help families

move toward economic self-support and

self-sufficiency. We are particularly

interested in the types of services

eligible families are receiving through

separate State programs or activities. We

propose to use the administrative

avenues available to us to learn about

expenditures under separate State

programs.

To help determine if States are

meeting MOE requirements, we have

created a TANF Financial Report. The

report will require the State to specify

expenditures under its TANF program

and other separate State programs that

serve eligible families. Please refer to

the description of the TANF Financial

Report under part 275 for additional

information.

We are also proposing an annual

addendum to the report for the fourth

quarter. The addendum will supplement

information on separate State programs

that is captured only in a general

fashion in the quarterly report.

Thus, we propose that the annual

addendum contain: (1) a description of

the specific State-funded program

activities provided to eligible families;

(2) the program’s statement of purpose

(how the program serves eligible

families); (3) the definitions of each

work activity in which families in the

program are participating; (4) a

statement whether the program/activity

had been previously authorized and

allowable as of August 21, 1996 under

former section 403; (5) the FY 1995

State expenditures for each program/

activity not so authorized; (6) the total

number of eligible families served by

each program/activity as of the end of

the fiscal year; (7) the eligibility criteria

for families served under each program

or activity; and (8) a certification that

each of the families served met the

State’s criteria for ‘‘eligible family.’’

This information will enable us to

understand how separate State programs

are serving needy families outside of the

TANF program and to report on those

services to Congress.

What happens if a State fails to meet the

TANF MOE requirement? (§ 273.8)

Under section 409(a)(7)(A), if a State

does not meet the TANF MOE

requirement, we will reduce the amount

of the SFAG payable for the following

fiscal year on a dollar-for-dollar basis.

Section 5001(g) of Pub. L. 105–33

adds another penalty to section 409(a)

for a State that receives a Welfare-toWork formula grant pursuant to section

403(a)(5)(A), as amended by section

5001(a)(1), but fails to meet the TANF

MOE requirement for the fiscal year.

Under section 409(a)(13), the amount of

the State’s SFAG will be reduced for the

following fiscal year by the amount of

the Welfare-to-Work formula grant paid

to the State.

May a State avoid a TANF MOE penalty

because of reasonable cause or through

corrective compliance? (§ 273.9)

Under section 409(b)(2), a State may

not avoid a penalty for failure to meet

its TANF MOE requirement based on

reasonable cause. In addition, section

5506(m) of Pub. L. 105–33 amended

section 409(c)(4) to provide that a State

may not avoid the penalty through a

corrective compliance plan.

Congress’ decision not to provide for

a reasonable cause exception or

corrective compliance in TANF MOE

penalty cases indicates that Congress

viewed this requirement as critical. In

short, the MOE requirement is crucial to

meeting the work and other objectives of

the Act.

Subpart B—What rules apply to the use

of Federal funds?

What actions are to be taken against a

State if it uses Federal TANF funds in

violation of the Act? (§ 273.10)

Section 409(a)(1) contains two

penalties related to use of Federal TANF

funds (i.e., all Federal funds under

section 403) in violation of TANF

program requirements. The first is a

penalty in the amount of funds that are

used improperly, as found under the

Single Audit Act. We would reduce the

SFAG payable to the State for the

immediately succeeding fiscal year

quarter by the amount misused.

In addition, we would take a second

penalty, equal to five percent of the

adjusted SFAG, if we find that a State

has intentionally misused funds. The

criteria for ‘‘intentional misuse’’ is

found at § 273.12.

For both of these penalties, States may

request that we consider reasonable

causes for not taking the penalty and

may submit a corrective compliance

plan for correcting the violation.

What uses of Federal TANF funds are

improper? (§ 273.11)

The statute contains many

prohibitions and restrictions on the use

of Federal TANF funds. In determining

if funds have been used ‘‘in violation of

this part,’’ States should particularly

note the prohibitions in section 408 of

the Act and section 115 of PRWORA.

These sections provide that States must

not use Federal TANF funds to provide

assistance to:

• A family with an adult who has

received assistance funded with Federal

TANF funds for 60 months (except for

a family included in the 20 percent

hardship exemption);

• A family without a minor child (or

pregnant individual);

• A family not assigning support

rights;

• An unmarried parent under 18,

without a high school diploma, who

does not attend high school or

equivalent training;

• An unmarried parent under 18 not

living in an adult-supervised setting;

• A fugitive felon and probation and

parole violator;

• A minor child absent from the

home 45 days (or at State option, 30–

180 days);

• For ten years, a person found to

have fraudulently misrepresented

residence to obtain assistance; and

• An individual convicted of certain

drug-related offenses unless the State

has enacted a law to exempt such

individuals from the prohibition (refer

to section 115 of PRWORA).
62158 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Also, States must not use Federal

TANF funds for medical services,

except for pre-pregnancy family

planning services. This prohibition

raised a number of concerns among

States and advocates that are discussed

below as one of the clarifications on the

use of Federal TANF funds.

Section 404 also limits the use of

Federal TANF funds. More specifically,

section 404(a)(1) provides that TANF

funds may be used ‘‘. . . in any manner

that is reasonably calculated to

accomplish the purpose of this part,

including to provide low income

households with assistance in meeting

home heating and cooling costs. . . .’’

Conversely, TANF funds cannot be used

in a manner not reasonably calculated to

serve the purposes of the program.

In determining if an activity may be

funded with TANF funds under this

provision, you should refer to the

purposes described in section 401 and

reiterated at § 270.20. Also, you should

be aware that the specific prohibitions

or restrictions in the statute (e.g., the

prohibitions in section 408) apply even

if an activity seems otherwise consistent

with the purposes in section 404(a)(1).

In addition, section 404(a)(2), as

amended by section 5503 of Pub. L.

105–33, permits Federal TANF funds to

be used ‘‘in any manner that the State

was authorized to use amounts received

under part A or F, as such parts were

in effect on September 30, 1995 or (at

the option of the State) August 21,

1996.’’ We interpret this provision to

cover activities that are not permissible

under section 404(a)(1), but were

included in a State’s approved State

AFDC plan, JOBS plan, or Supportive

Services Plan as of September 30, 1995,

or, at State option, August 21, 1996. An

example of such an activity is

Emergency Assistance juvenile justice

activities that were included in many

State plans. Under this provision, only

those States whose approved AFDC

State plans included juvenile justice

activities as of September 30, 1995, or,

at State option, August 21, 1996, may

use Federal TANF funds for those

activities. Further, as with section

404(a)(1), this provision does not permit

Federal TANF funds to be used for any

activity that is otherwise prohibited or

restricted under the statute.

States should also note that if they

exceed the 15 percent limit on

administrative costs under section

404(b), we will consider any amount of

funds exceeding the limit to be misused

funds. Likewise, we would consider

unauthorized or inappropriate transfers

of TANF funds to be a misuse of funds.

We would consider any of the following

transfers to be inappropriate or

unauthorized: transfers to any program

except the Child Care and Development

Block Grant (also known as the

Discretionary Fund within the Child

Care and Development Fund) or the

Social Services and Block Grant

Program under title XX of the Social

Security Act; transfers to those two

programs in excess of the 30 percent

cap; and transfers to SSBG in excess of

the 10 percent cap.

OMB Circulars A–102 and A–87 also

include restrictions and prohibitions

that limit the use of Federal TANF

funds. The Department previously

promulgated A–102 (the common rule)

in its regulations at part 92 of title 45,

‘‘Uniform Administrative Requirements

for Grants and Cooperative Agreements

to State and Local Governments.’’

All provisions in part 92 are

applicable to the TANF program. TANF

is not one of the Block Grant programs

exempt from the requirements of part

92, as OMB has not taken action to

exempt it. Rather, OMB has determined

that TANF should be subject to part 92.

Section 417 does not prevent us from

applying the part 92 regulations to

TANF because the referenced

requirements are not developed to

enforce substantive provisions under

this part. We believe that Congress

understood that TANF, like other

Federal grant programs, was subject to

existing appropriations, statutory and

regulatory requirements regarding the

general administration of grants,

notwithstanding section 417. Section

417 was not meant to invalidate other

requirements that Congress and Federal

agencies, primarily OMB, have put in

place to assure that Federal grant funds

are properly administered or to inhibit

Federal agencies from fulfilling their

financial management responsibilities

in managing their programs.

By reference, part 92 also includes A–

87, the ‘‘Cost Principles for State, Local

and Indian Tribal Governments,’’ the

basic guidelines for Federal awards.

These guidelines provide, in part, that

an allowable cost must be necessary and

reasonable for the proper and efficient

administration of a Federal grant

program, and authorized or not

prohibited under State or local laws or

regulations.

A–87 also includes some specific

prohibitions on the use of Federal funds

generally that apply to Federal TANF

funds. For example, A–87 prohibits the

use of Federal funds for alcoholic

beverages, bad debts, and the salaries

and expenses of the Office of the

Governor.

Clarifications of Use of Federal TANF

Funds—Substance Abuse Services

In our consultations, we received

several inquiries regarding the use of

Federal TANF funds for substance abuse

treatment, i.e., treatment for alcohol and

drug abuse. In light of the prohibition

on the use of Federal TANF funds for

‘‘medical services, except for prepregnancy family planning activities,’’

we held discussions with other Federal

agencies and learned that in many, but

not all instances, the treatment of

alcohol and drug abuse involves not just

‘‘medical services,’’ but other kinds of

social and support services as well.

Allowing States to use Federal TANF

funds for substance abuse treatment is

programmatically sound since it may

help clients make successful transitions

to work and provide for a stable home

environment for TANF children.

Accordingly, we are proposing a policy

that permits States to use Federal TANF

funds for drug and alcohol abuse

treatment services to the extent that

such services are not medical. States

will have to look at the range of services

offered and differentiate between those

that are medical and those that are not.

In short, States cannot use Federal

TANF funds for services that the State

identifies as medical; they may only use

Federal funds used for services that are

non-medical.

Clarification of the Use of Federal TANF

Funds for Construction and Purchase of

Facilities

The Comptroller General of the

United States has prohibited the use of

Federal funds for the construction or

purchase of facilities or buildings unless

there is explicit statutory authority

permitting Federal grant funds to be

used for this purpose. Since the statute

is silent on this, States must not use

Federal TANF funds for construction or

the purchase of facilities or buildings.

Clarification of the Use of Federal TANF

Funds as State Match for Other Federal

Grant Programs

Federal TANF funds under section

403(a) may be used to match other

Federal grant programs if authorized

under the statute of the grant program.

However, these funds are still subject to

the TANF program requirements and

must be used in accordance with the

purposes of the TANF program and with

these proposed regulations.

Clarification of the Use of Federal TANF

Funds to Add to Program Income

We have received a number of

inquiries about whether or not TANF

funds may be used to generate program

income. An example of program income
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62159

is the income a State earns if it sells

another State a training curricula that it

has developed, in whole or mostly, with

Federal TANF funds.

States may generate program income

to defray costs of the program. Under 45

CFR 92.25, there are several options for

how this program income may be

treated. For the TANF program, in order

to give States flexibility in their use of

TANF funds, we are proposing to permit

States to add to their TANF grant

program income that has been earned by

the State. States must use such program

income for the purposes of the TANF

program and for allowable TANF

activities. We will not require States to

report on the amount of program income

earned, but they must keep on file

financial records on program income

earned and the purposes for which it is

used in the event of an audit or review.

How will we determine if a State

intentionally misused Federal TANF

funds? (§ 273.12)

To determine if funds have been

intentionally misused, we will require

the State to demonstrate to our

satisfaction that TANF funds were spent

for purposes that a reasonable person

would consider to be within the

purposes of the TANF program. Funds

will also be considered intentionally

misused if there is documentation, such

as Federal guidance or policy

instructions, that provides that funds

must not be used for such purposes, or

if the State misuses the funds after

receiving notification from us that such

use is not allowable.

What types of activities are subject to

the administrative cost limit on Federal

TANF grants? (§ 273.13)

Section 404 of the Act sets forth the

various ways in which a State may

expend its Federal TANF grant under

section 403. As a general rule, under

section 404(b)(1), only 15 percent of a

State’s Federal fiscal year grant may

consist of administrative expenditures.

This limit is reached in the quarter in

which a State’s administrative

expenditures, which may be made over

one or more fiscal years for each fiscal

year grant, equal 15 percent of the fiscal

year grant.

For the purpose of the 15 percent

limit, State expenditures on information

technology and computerization

necessary for tracking or monitoring

cases covered by the TANF program do

not count. But remaining of particular

interest to our State partners and other

interested parties is the definition of the

costs that are included as administrative

costs. This information is critical to

State planning for welfare reform.

In this proposed rule, the term

‘‘administrative costs’’ will include only

those expenditures that are subject to

the 15 percent limit in section 404(b).

Expenditures for information

technology and computerization

necessary for tracking and monitoring

and other expenditures, that have

traditionally been considered

‘‘administrative costs’’ but that are

outside of the 15 percent limit, are

referred to as ‘‘administrative costs

outside of the 15 percent limit.’’

We include our proposed definition of

‘‘administrative costs’’ at § 273.0(b). In

the preamble for § 273.0, we include a

detailed explanation of the proposal.

Pursuant to section 404(d), States may

transfer up to 30 percent of each fiscal

year’s SFAG to the Child Care and

Development Block Grant Program (also

known as the Discretionary Fund of the

Child Care and Development Fund) and

the Social Services Block Grant Program

under title XX of the Act. All 30 percent

may be transferred to CCDBG, but no

more than ten percent can be transferred

to SSBG. As transferred funds must then

be treated as if they were funds

appropriated to CCDBG and title XX,

and not as TANF funds, we will reduce

the total amount of TANF funds

available for administrative costs by the

total amount of any such transfers. The

15 percent ceiling applies to each fiscal

year’s adjusted SFAG.

If a State’s administrative costs exceed

the 15 percent limit, the penalty for

misuse of funds will apply. The penalty

will be in the amount spent on

administrative costs in excess of 15

percent. We will take an additional

penalty in the amount of five percent of

the adjusted SFAG if we find that a

State has intentionally exceeded the 15

percent limit.

States must allocate costs to proper

programs. Under the Federal

Appropriations Law, grantees must use

funds in accordance with the purpose

for which they were appropriated. In

addition, as stated previously, the grants

administration regulations at part 92,

and OMB Circular A–87, ‘‘Cost

Principles for State, Local, and Indian

Tribal Governments’’ apply to the TANF

program. A–87, in particular, establishes

the procedures and rules applicable to

the allocation of costs among programs

and the allowability of costs under

Federal grant programs such as TANF.

Subpart C—What Rules Apply to

Individual Development Accounts?

What definitions apply to Individual

Development Accounts (IDAs)?

(§ 273.20)

An IDA is defined as an account

established by or for an individual who

is eligible for TANF assistance to allow

the individual to accumulate funds for

specific purposes. A number of other

terms used in discussing IDAs are also

defined.

May a State use the TANF grant to fund

IDAs? (§ 273.21)

Section 404(h) of PRWORA gives

States the option to fund IDAs with

TANF funds for individuals who are

eligible for TANF assistance.

Are there any restrictions on IDA funds?

(§ 273.22)

IDAs are similar to savings accounts

and enable recipients to save earned

income for certain, specified, significant

items. Individuals may spend IDA funds

only to purchase a home, pay for a

college education, or start a business.

How does a State prevent a recipient

from using the IDA account for

unqualified purposes? (§ 273.23)

Money in an IDA account will not

affect a recipient’s eligibility for

assistance. Withdrawals from the IDA

should be paid directly to a college or

university, to a bank, savings and loan

institution, or to an individual selling a

home or to a special account if the

recipient is starting a business. Thus,

IDAs may provide an incentive for

recipients to find jobs and use their

earned income to save for the future.

Section 404(h) authorizes the

Secretary to establish regulations to

ensure that individuals do not withdraw

funds held in an IDA except for one or

more of the above qualified purposes.

In our research, we found several

States had established Individual

Development Accounts under their

Welfare Reform Demonstration Projects

and subsequently transferred those

provisions to their TANF programs.

Each State had designed its own

procedures for preventing withdrawals

or penalizing recipients who withdrew

funds from their IDAs for unauthorized

purposes. For example, several States

count a withdrawal for a non-qualified

purpose as earned income in the month

of withdrawal unless the funds were

already counted as earned income.

Other States treat such withdrawals

against a family’s resource limit. Still

another State calculates a period of

ineligibility using a complex formula.
62160 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

With this in mind, we did not feel

that it was necessary to be overly

prescriptive in mandating how States

ensure that individuals do not make

unauthorized withdrawals from IDA

accounts. In keeping with the intent of

PRWORA, we have tried to give States

maximum flexibility to establish

procedures that ensure that only

qualified withdrawals are made.

In addition, section 404(h)(5)(D) gives

the Secretary the authority to determine

whether or not a business contravenes

law or public policy. We have decided

that we should base our determination

on the business’s compliance with State

law or policies. Our proposal will allow

States maximum flexibility in setting up

these programs, while assuring that a

business established by a needy family

meets State requirements.

We have incorporated statutory

provisions in the regulations for the

reader’s convenience.

E. Part 274—Other Accountability

Provisions

Subpart A—What Specific Rules Apply

for Other Program Penalties?

What definitions apply to this part?

(§ 274.0)

This section cross-references the

general TANF regulatory definitions

established under part 270.

What restrictions apply to the length of

time Federal TANF assistance may be

provided? (§ 274.1)

Under the former AFDC program,

families could receive assistance as long

as necessary, if they continued to meet

program eligibility rules. Under the

TANF program, Congress established a

maximum length of time in which a

family may receive assistance funded by

Federal funds.

Sections 408(a)(1)(B) and 408(a)(7)

stipulate that States may not use Federal

funds to provide assistance to a family

that includes an adult who has received

assistance for more than five years.

Therefore, when a parent or other adult

caretaker relative of a minor child

applies for and receives federallyfunded assistance under the State’s

TANF program on behalf of him/herself

and his/her family, Federal funding of

that assistance may not last longer than

five years. (Certain exceptions are

covered later in the discussion of this

section.)

As discussed earlier in this preamble

(e.g., at § 271.22), we are concerned that

States might define eligibility in such a

way as to avoid the time limits (i.e., by

converting cases to be child-only cases).

Thus, under this section, we would

prohibit States from excluding adults

from their definition of families for the

purpose of avoiding this penalty, and

we would require annual reporting of

the number of such families excluded

(along with the basis for excluding

them). Further, if we determine that

States were defining ‘‘families that

include an adult’’ so as to avoid a timelimit penalty, we would add the childonly cases back and recalculate the

number of cases over the limit. We

would determine whether a State was

subject to a penalty based on this

recalculation.

The five-year limit on Federal funding

is calculated as a cumulative total of 60

months. Section 408(a)(7)(B) clarifies

that the State must disregard any month

for which assistance has been provided

to an individual who is a minor child

who is not the head of a household or

married to the head of a household.

However, any month when a pregnant

minor or minor parent is the head-ofhousehold or married to the head-ofhousehold does count toward the fiveyear limit. The five-year limitation on

Federal funding also disregards any

months that an adult received assistance

while living in Indian country (as

defined by section 1151 of title 18,

United States Code) or in an Alaska

Native Village where at least 50 percent

of the adults are not employed (see

§ 274.1(b)(2)).

Section 5001(d) of Pub. L. 105–33

added subsection (G) to section

408(a)(7). This subsection provides for

special treatment of assistance provided

to a family with Welfare-to-Work grant

funds (formula or competitive) under

the time-limit provision. First, months

in which a family receives cash

assistance funded with Welfare-to-Work

grant funds (under section 403(a)(5) of

the Act) do count towards the five-year

limit; however, months in which a

family receives only non-cash assistance

under WTW do not count towards the

five-year limit. Secondly, families may

receive assistance funded with Welfareto-Work grant funds even though they

are precluded from receiving other

TANF assistance because of the fiveyear limit.

Some families may receive assistance

from Federal funds for more than five

years based on hardship or if the family

includes an individual who has been

battered or subjected to extreme cruelty

as defined in section 408(a)(7)(C)(iii).

Under section 408(a)(7)(C), the average

monthly number of such families may

not exceed 20 percent of the State’s

average monthly caseload during either

the fiscal year or the immediately

preceding fiscal year, whichever the

State elects.

The Act does not specifically

prescribe whether a family can be

excepted from the time limit before they

have received 60 cumulative months of

Federal assistance or whether it can

only be applied after the limit is

reached. As the purpose of the provision

is to provide an extension to the 60-

month limit, we propose that it would

only apply after that limit is reached. No

determination of whether a State has

exceeded the cap will be made until

some families in the TANF program

have received at least 60 cumulative

months of federally-funded assistance.

We believe that this approach is the

most straightforward and comports with

Congressional intent that TANF

assistance be provided on a temporary

basis while a family becomes selfsufficient. Thus, unless the minor child

or Native American statutory disregard

applies, Federal support would cease

once any adult in the family has been

assisted for 60 total months with

Federal funds unless the State chooses

at that time to include the family in its

20 percent exception. However, the

State may elect to use State funds to

continue to pay eligible families.

The provision is a time limit on

Federal funding, and does not set an

upper or lower bound on the amount of

time a State could provide assistance to

an individual family with State funds.

States are free to impose shorter time

limits on the receipt of assistance under

their programs. They are also free to

allow receipt for longer periods if the

assistance is paid from State funds or if

the family meets the criteria the State

has chosen for extension and fits with

the 20 percent limit.

We are very interested in comments

on our approach to clarifying the time

limit on assistance. We will also be

paying close attention to learn what is

happening to families as they begin to

reach time limits under waiver and

TANF rules. In this regard, tracking the

number of months that each family has

received TANF assistance is very

important, both to the State and to the

family. We urge States to regularly

provide families with information on

how close they are to reaching the time

limit. This information should help

strengthen the family’s focus on

achieving self-sufficiency.

We have received numerous inquiries

regarding the relationship between good

cause waivers of the time limit

permitted under the Family Violence

Option at section 402(a)(7) and the limit

on the exceptions to the Federal time

limit at section 408(a)(7)(C)(ii). The key

issue is whether the 20 percent limit on

hardship exceptions includes families of

domestic violence victims.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62161

Section 402(a)(7)(B) expressly refers

to section 408(a)(7)(C)(iii) in applying

the meaning of the term ‘‘domestic

violence’’ to the Family Violence Option

at section 402(a)(7)(A). Section

408(a)(7)(C)(iii) defines ‘‘battered’’ or

‘‘subjected to extreme cruelty’’ for

purposes of describing families who

may qualify for a hardship exemption at

section 408(a)(7)(C)(i), and section

408(a)(7)(C)(ii) specifies a 20 percent

limit on the exceptions to the time limit

due to hardship. Consequently, we

conclude that the statutory language

includes the number of families waived

from the five-year time limit per section

402(a)(7) within the 20 percent ceiling

established under section

408(a)(7)(C)(ii).

We further note that Congress chose

not to amend the statute as part of

budget reconciliation. Thus, our

proposed policy includes these cases

within the 20 percent limitation.

However, our policy would enable a

State to claim ‘‘reasonable cause’’ when

its failure to meet the five-year limit

could be attributed to its provision of

bona fide good cause domestic violence

waivers. See § 274.3 for additional

information.

As previously discussed, section

408(a)(7)(D) provides an exemption to

the time limit on receipt of federallyfunded TANF assistance for families

living in Indian country or in an

Alaskan Native village. The months a

family, that includes an adult, lives in

Indian country or in an Alaskan Native

village, where at least 50 percent of the

adults are not employed, do not count

when determining whether the adult

has received federally-funded assistance

for 60 cumulative months. In

accordance with section 408(a)(7)(D), as

amended by section 5505(d)(2) of Pub.

L. 105–33, the percentage of adults who

are not employed in a month will be

determined by the State using the most

reliable data available for the month, or

for a period including the month.

This exception does not include

families receiving assistance under an

approved Tribal family assistance plan

because these families are covered by

the requirements at section 412.

In our consultations on the

regulations, questions were raised about

the relationship of section 415, the

application of waivers inconsistent with

PRWORA, and the time limit on Federal

assistance. Some waivers include

provisions for time limiting assistance.

As discussed in the preamble to

§ 270.30, we define what it means for a

provision of the Act to be inconsistent

with provision(s) in a waiver. We

believe it is crucial to define what

‘‘inconsistent’’ means because: (1) the

Act does not define it; (2) States need to

know whether any time-limit policies in

their waivers are inconsistent with the

provisions in sections 408(a)(1)(B) and

408(a)(7); and (3) if there is an

inconsistency, States need to know how

the time-limit restrictions under

408(a)(1)(B) and 408(a)(7) apply in

relation to the State’s policy. We must

define the term to implement the time

limit penalty provision at section

409(a)(9), and States must understand

what it means when it is applied to the

five-year limit, in order to avoid that

penalty.

Under our proposed definition of

inconsistency, the five-year limit on

Federal assistance is inconsistent with a

State’s waiver only: (1) if the State has

an approved waiver (a) that provides for

terminating cash assistance to

individuals or families because of the

receipt of assistance for a period of time

specified by the approved waiver(s), and

(b) under which the State would have to

change its waiver policies (including

policies regarding exemptions and

extensions) in order to comply with the

five-year limit on Federal assistance; or

(2) for a control or experimental

treatment group where a State chooses

to maintain prior law policies

applicable to research group cases for

the purpose of completing an impact

evaluation using an experimental

design.

We believe that this proposed

regulation is consistent with the

language in the conference report, H.

Rept. 104–725 at 311, indicating

agreement by the conferees that:

* * * such waivers may only apply * * *

to the specific program features for which the

waiver was granted. All * * * program

features of the State program not specifically

covered by the waiver must conform to this

part (i.e., to TANF).

Except for control and experimental

treatment group cases maintained for

the purpose of completing an impact

evaluation of the waiver policies, a State

that does not have an approved timelimit provision in its waiver that meets

the above criteria must adhere to the

provisions set forth in sections

408(a)(1)(B) and 408(a)(7). A State that

does have an approved time-limit

provision in its waiver that meets the

above criteria does not have to follow

the provisions of the five-year limit, to

the extent they are inconsistent, until

the waiver expires. Several examples of

the application of the proposed policy

follow.

A State has an approved seven-year

waiver that terminates a family’s cash

benefits after 18 months of benefits if

the adult fails to participate in a work

program. Assistance does not end

because of the passage of time, but

because of the adult’s failure to

participate in a required work activity.

The waiver policy does not meet the

first prong of the test for time limit

inconsistency, as it is a work policy.

Therefore, it is not inconsistent with the

Federal time-limit provision. The State

will have to adhere to the five-year limit

under sections 408(a)(1)(B) and

408(a)(7).

Even if a State has an approved timelimit waiver policy, we believe that the

waiver policy and the Federal five-year

limit can operate concurrently. In most

cases, the State would not have to

change waiver policy because of the

Federal limit, and, thus, there would not

be an inconsistency. As a general rule,

individuals subject to a State time limit

under an approved waiver will

concurrently be subject to the Federal

time limit.

For example, a State has been granted

an eleven-year waiver to operate a

demonstration that limits the receipt of

assistance by a family to two years (with

extensions under certain

circumstances). Because the Federal

time limit can run concurrently, a

family receiving assistance for two years

under the State’s time limit is also

receiving two years of assistance under

the Federal five-year limit. Once the

demonstration ends, if the family has

received just two years of TANF

assistance, then the family can receive

three more years of federally-funded

assistance under the five-year limit

(assuming all other eligibility criteria

are met per the State’s TANF plan).

Alternatively, should the family move to

another State, that State can provide

three more years of federally-funded

assistance (assuming the State provides

five years of TANF assistance).

Under this policy, there will be

circumstances under which the State

may use Federal funds for longer than

five years to provide assistance to a

family that includes an adult. For

example, under the terms of the waiver,

assistance is extended so long as the

eligible adult in the family complies

with his/her personal responsibility

plan. In such situations, we propose that

a State may apply extensions of its time

limit in accordance with the terms of

the approved waiver in lieu of the

provision under section 408(a)(7)(C)(ii).

We believe that this approach

comports with the intent of section 415.

Section 408(a)(7)(C) permits Federal

funds to be used to continue to assist

families beyond the five-year limit

based on hardship. Under section

408(a)(7)(C)(ii), a State may apply this

extension for up to only 20 percent of
62162 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

its average monthly caseload during the

fiscal year or the immediately preceding

fiscal year, whichever the State elects. A

State’s approved waiver may very well

include a provision for extending

assistance as needed to cases meeting

the waiver requirements, without limit.

Under the above proposal, a State may

apply extensions of its time limit,

without caseload limits, in accordance

with the terms of its approved waiver.

Another State might have waivers

approved for a nine-year period that

apply a three-year time limit on receipt

of assistance to adults in the family

(with extensions under certain

circumstances). The children in the

family continue to receive assistance

even after assistance ends for the adults.

If the adults receive no extension, there

is no inconsistency and the children

may continue to receive benefits. If the

adults receive extensions under the

demonstration, and thus more than five

years of assistance, there would be an

inconsistency because the State would

need to change its waiver policy and

terminate assistance. Therefore, the

family can continue to receive

assistance as long as the adults have an

extension and the children can receive

assistance even if the adult is

terminated. (Note that once the adults

are removed from the State-defined

family, the Federal time limit clock does

not advance.) When the waiver

authority ends, the State will need to

determine if the adults in demonstration

families received five years of federallyfunded TANF assistance. If not, the

families will be eligible to receive

assistance with Federal TANF funds for

up to a total of 60 cumulative months

(assuming all other eligibility criteria

are met per the State’s TANF plan).

We recognize that there will be

situations, although limited, in which,

as a result of a waiver policy, a family

will not accrue months towards the

Federal time limit even though it

receives assistance with Federal (or

commingled) funds. For months when a

family is exempt from the State time

limit (e.g., when the adult in the family

is aged or disabled), the family is also

exempt from the Federal time limit

during the duration of the waiver

authority. To subject such families to a

time limit would be inconsistent with

the State’s approved waiver policy.

Therefore, for the period of the waiver

authority, the number of months the

family receives assistance do not accrue

against the Federal five-year time limit

as long as the family remains exempt

under the State time limit. These

exemptions cease once the waiver

authority ends or if the family moves to

another State.

A family that is in the control or

experimental treatment group

maintained for the purpose of

completing an impact evaluation of a

waiver demonstration program would

not be subject to a time limit. Therefore,

it would not begin to accrue months

towards the Federal time limit until the

end of the waiver demonstration (or

sooner if the evaluation is discontinued)

and would not count towards the 20

percent limit on extensions.

What happens if a State does not

comply with the five-year limit?

(§ 274.2)

Congress created a penalty under

section 409(a)(9) to ensure that States

comply with the five-year restriction on

the receipt of federally-funded TANF

assistance. If we determine that a State

has not complied with the five-year time

limit during a fiscal year, then we will

reduce the SFAG payable for the

immediately succeeding fiscal year by

five percent of the adjusted SFAG.

Five years is the maximum period of

time permitted under the statute for

families to receive federally-funded

TANF assistance. Therefore, the penalty

under this section does not apply if the

State exceeds any shorter time limits on

the receipt of federally-funded

assistance that it may choose to impose.

It also does not apply to any time limits

on receipt of State-funded assistance or

the receipt of non-cash assistance

through participation in an allowable

activity financed through Federal

Welfare-to-Work grant funds.

In defining the requirement, section

409(a)(9) refers to section 408(a)(7). This

section provides the circumstances

under which assistance may be

extended. It provides exceptions to the

time limit requirement for minors,

hardship, or families living in Indian

country or in an Alaskan Native village.

Therefore, we will take into account the

exceptions described under paragraphs

(B), (C), or (D) of section 408(a)(7) when

deciding whether the State complied

with the five-year time limitation.

We do not intend to hold States

immediately accountable for knowing

about and verifying all months of

assistance received in other States, since

we are aware that, in general, States’

data processing systems generally are

not currently capable of accomplishing

interstate tracking of the number of

months an individual has received

TANF assistance. We will use the

information required to be reported by

the proposed rules in part 275 to learn

whether a State is complying with the

five-year time restriction on the receipt

of federally-funded assistance.

How can a State avoid a penalty for

failure to comply with the five-year

limit? (§ 274.3)

In § 272.5, we have proposed general

circumstances under which we would

find reasonable cause to waive potential

penalties. We also propose to consider

an additional factor in determining

whether there is reasonable cause for

failure to meet the five-year limit. The

additional factor relates to a State’s

implementation of the Family Violence

Option (FVO) and its provision of

temporary waivers of time limits, when

necessary, for victims of domestic

violence.

We want to encourage States to adopt

this amendment and to provide

appropriate assistance that reflects the

safety and employment-related needs of

these families. In adding this reasonable

cause factor, we recognize that some of

these individuals may need special

assistance, at least over the short term.

However, we also want to ensure that

States make timely, good-faith efforts to

help victims of domestic violence

become independent. To ensure that

States make such efforts, we would limit

this reasonable cause provision to States

that have implemented the FVO; we

reference the criteria we included at

§ 270.30 to define what qualifies as a

good cause domestic violence waiver;

and we have set forth a strategy for

monitoring the implementation of these

provisions.

Under our proposal, as under the

work participation penalty, States

would have to grant good cause

domestic violence waivers

appropriately. In the case of time limits,

we would only allow States to exclude

from their calculations families that had

good cause domestic violence waivers

and service plans in effect at the time of,

or after, the family had reached the 60-

month limit on federally-funded

assistance. We would not stop the

Federal clock for families that receive

good cause domestic violence waivers

during the five-year period, and we

would only recognize waivers that

reflected a State assessment that the

individual’s or family’s situation was

temporarily preventing them from work.

There are several reasons why we

have taken a restrictive approach on this

reasonable cause provision.

The most important is that the 20

percent hardship exemption already

provides considerable flexibility for

States—for example, it only applies to

federally-funded assistance, and it

excludes certain types of families.

A related reason is that we think the

time-limit provision gives States added

incentive to work vigorously with
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62163

families in making the transition from

welfare to work. We want States to have

similar motivation to assist victims of

domestic violence in becoming

independent. If we are too generous in

granting reasonable cause for domestic

violence cases, we believe there will be

a risk that States will divert resources

and attention from these cases and

unnecessarily prolong their

dependence.

We tie the availability of reasonable

cause to the family’s ability to work

because that factor is the most critical in

determining whether a family could

support itself or would continue to need

assistance. Families facing the most

serious domestic violence situations are

likely to have waivers of work

requirements because their lives will be

too unstable to expect ongoing work.

These same families will be the ones

whose situations may take more time to

resolve and will have the most trouble

becoming self-sufficient within the time

limits. Thus, it makes sense to address

these cases through reasonable cause.

Other cases can be served under the 20

percent hardship exemption or a Statefunded program, if they fail to become

self-sufficient within five years.

We do not expect that victims of

domestic violence will routinely need

more than five years of assistance before

becoming self-sufficient. However, our

proposal recognizes that there may be

special circumstances when that is not

possible. For example, a woman could

suffer recurrent episodes of domestic

violence, including one at the end of the

five-year period, that prevent her from

securing or maintaining a stable work

situation. The reasonable cause

provision in this section of the proposed

rule would give special consideration to

States if such situations arose.

Under our proposed rules, a State

must substantiate its case for all claims

of reasonable cause. We will examine

each situation on its own merits and

determine whether to assess a penalty

on a case-by-case basis.

Must States do computer matching of

data records under IEVS to verify

recipient information? (§ 274.10)

The Income and Eligibility

Verification System (IEVS) was

originally established on July 18, 1984

under section 1137. PRWORA created a

penalty at section 409(a)(4) requiring the

reduction of a State’s SFAG for the

immediately succeeding fiscal year by

up to two percent if the State is not

participating in IEVS.

This IEVS provision was intended to

improve the accuracy of eligibility

determinations and grant computations

for the public assistance (AFDC,

Medicaid, Food Stamp and SSI)

programs. It achieves this goal by

expanding access to, and exchanges of,

available computer files to verify clientreported earned and unearned income.

Specifically, it makes the following files

available to the State public assistance

agencies: (1) IRS unearned income; (2)

State Wage Information Collection

Agencies (SWICA) employer quarterly

reports of income and unemployment

insurance benefit payments; (3) IRS

earned income maintained by the Social

Security Administration (SSA); and (4)

with the passage of the Immigration

Control and Reform Act of 1986,

immigration status information

maintained by the Immigration and

Naturalization Service (INS).

Currently, regulations at §§ 205.51

through 205.62 and section 1137(d)

describe what is meant by ‘‘participating

* * * in the income and eligibility

verification system required by section

1137.’’ The regulation at § 205.60(a)

requires each State to maintain statistics

on its use of IEVS. In general,

‘‘participation’’ means that a State

agency submits electronic requests to

IRS, SWICA, SSA and INS for

information listed in the preceding

paragraph, for all TANF applicants and

recipients. IRS, SWICA, SSA and INS

provide the State agencies with an

electronic response regarding the

information requested. The frequency of

the request and the timeliness of the

response is a function of the agency

(IRS, SWICA, SSA and INS) data

processing systems design. The State

agency worker compares the

information provided by IRS, SWICA,

SSA and INS to determine the accuracy

of client reporting of case

circumstances.

How much is the penalty for not

participating in IEVS? (§ 274.11)

We are proposing to use an audit

pursuant to the Single Audit Act as the

primary means of monitoring a State’s

IEVS participation. Statistics

maintained by the State, as required by

§ 205.60(a), will be one of the sources of

information that will be reviewed

during the audit. However, we may

conduct additional Federal reviews or

audits as needed.

Since IEVS has been in existence for

more than 12 years, we believe that

States have had significant time to

become full participants in IEVS.

Therefore, we believe it is appropriate to

impose the maximum two-percent

penalty upon all findings that a State is

not participating in IEVS.

What happens if a State sanctions a

single parent of a child under six who

cannot get needed child care? (§ 274.20)

To support the intent of the statute to

move people to work, section 407(e)

requires that States reduce or terminate

assistance to individuals who refuse to

engage in work as required by section

402(a)(1)(A)(ii), as amended by section

5501(b) of Pub. L. 105–33, and section

407. However, section 407(e)(2) gives an

exception for single custodial parents

with a child under six if the State

determines they have a demonstrated

inability to obtain needed child care.

Parents refusing to participate in work

must demonstrate that they could not

obtain child care for one or more of the

following three reasons: (1) appropriate

child care was not available within a

reasonable distance from the parent’s

home or work site; (2) informal child

care, by a relative or under other

arrangements, was unavailable or

unsuitable; and (3) appropriate and

affordable formal child care

arrangements were unavailable.

Section 409(a)(11)(A) directs the

Secretary to reduce by no more than five

percent of the adjusted SFAG, the SFAG

payable to the State that reduces or

terminates assistance to parents who

refuse to work because they cannot

obtain needed child care for a child

under six years of age. The

determination that a State is liable for a

penalty would be dependent on a

finding that the State reduced or

terminated assistance to a parent who

qualified for an exception under the

definitions or criteria that the State

developed regarding a parent’s

‘‘demonstrated inability’’ to obtain

needed child care.

We expect that, because of the

interrelationship between TANF and

CCDF, the TANF staff would work in

close coordination with the Lead

Agency for child care. Our expectation

is that the TANF staff will provide

families information about the penalty

exception. Under the CCDF proposed

rule, ACF would also require that the

Lead Agency for the CCDF program

inform parents in the CCDF system

about the penalty exception to the

TANF work requirement and the

process or procedures developed by the

State by which they can demonstrate

their inability to obtain needed child

care. ACF would also require the Lead

Agency for child care to include the

TANF agency’s definitions in the CCDF

plan for ‘‘appropriate child care,’’

‘‘reasonable distance,’’ ‘‘unsuitability of

informal care,’’ ‘‘affordable,’’ and ‘‘child

care arrangements.’’ Thus, we would

expect the TANF agency to share its
62164 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

definitions of these items with the child

care agency. Both agencies would then

be able to share them with families

whom they may be assisting with child

care arrangements.

Following are the factors that ACF

would consider in determining if a State

violated the exception to the penalty

provided at section 407(e)(2):

• Whether the State informs families

about the exception to the penalty for

refusing to work, including the fact that

the exception does not extend the time

limit on benefits;

• Whether the State informs families

about the process or procedures by

which they can demonstrate an inability

to obtain needed child care;

• Whether the State has defined and

informed parents of its definitions of

‘‘appropriate child care,’’ ‘‘reasonable

distance,’’ ‘‘unsuitability of informal

care,’’ and ‘‘affordable child care

arrangements’’;

• Whether the State notifies the

parent of its decision to accept or reject

the parent’s demonstration in a timely

manner;

• Whether the State has developed

alternative strategies to minimize the

amount of time parents are excepted

from work requirements due to their

inability to obtain needed child care.

For example, a State that uses the

services of a child care resource and

referral (CCR&R) office might accept a

statement from that office noting the

unavailability of appropriate or

affordable child care. Or, if the refusal

to work is due to difficulty in arranging

transportation, the State could refer to

bus and rail rates and schedules to

determine if the appropriateness and/or

reasonable distance criteria had been

met.

We are not specifying the process or

procedures that States should develop,

or the documents, if any, States should

require. However, we suggest that if

States plan to require documents, they

select ones that are readily available to

families. We recommend that the

process or procedures be simple and

straight forward. In addition, we

recommend frequent contact with

parents since the penalty exception does

not stay the time limits and there may

be fluctuations in the availability of

child care services.

We propose to impose the maximum

penalty if States do not have a process

or procedure in place that enables

families, who refuse to work because

they are unable to find needed child

care, to demonstrate that they have met

the guidelines provided by the State.

Additionally, we will impose the

maximum penalty if there is a pattern of

substantiated complaints from parents

or organizations verifying that a State

has reduced or terminated assistance in

violation of the requirement at section

409(a)(11). We will impose a reduced

penalty if the State demonstrates that

the incidents were isolated or that a

minimal number of families were

affected. States faced with a penalty

under this requirement can claim

reasonable cause and/or submit a

corrective compliance plan as described

in part 272.

What procedures exist to ensure

cooperation with child support

enforcement requirements? (§ 274.30)

One of TANF’s purposes is to provide

assistance to needy families so that

children may be cared for in their own

homes or the homes of relatives.

Another is to end the dependence of

needy parents on government benefits

by promoting job preparation, work,

marriage, and parental responsibility. A

third is to prevent and reduce the

incidence of out-of-wedlock pregnancies

and to encourage the formation and

maintenance of two-parent families.

Child support enforcement provides an

important means of achieving all of

these goals.

The law has long recognized that

paternity establishment is an important

first step toward self-sufficiency in cases

where a child is born out of wedlock.

The earlier paternity is established, the

sooner the child may have a

relationship with the father and access

to child support, the father’s medical

benefits, information on his medical

history, and other benefits resulting

from paternity establishment.

Establishment of paternity may also

help establish entitlement to other

financial benefits, including Social

Security benefits, pension benefits,

veterans’ benefits, and rights of

inheritance. Accordingly, establishing

paternity and obtaining child support

from the non-custodial parent are

critical components of achieving

independence.

To ensure that a legal relationship

protecting the interests of the children

is established quickly and in accordance

with State law, the State agency (the IV–

A agency) must refer all appropriate

individuals in the family of a child, for

whom paternity has not been

established or for whom a child support

order needs to be established, modified

or enforced, to the Child Support

Enforcement Agency (the IV–D agency).

Those individuals must cooperate in

establishing paternity and in

establishing, modifying or enforcing a

support order with respect to the child.

The IV–D agency will determine

whether the individual is cooperating

with the State as required. If the IV–D

agency determines that an individual

has not cooperated, and the individual

does not qualify for any good cause or

other exception established by the State,

the IV–D agency will notify the IV–A

agency promptly. The IV–A agency

must then take appropriate action. The

IV–A agency may either reduce the

family’s assistance by an amount equal

to not less than 25 percent of the

amount that the family would otherwise

receive or deny the family assistance

under TANF.

What happens if a State does not

comply with the IV–D sanction

requirement? (§ 274.31)

As stated in section 409(a)(5) of the

Act and § 272.1 of these proposed rules,

we will impose a penalty of up to five

percent of the adjusted SFAG if the IV–

A agency fails to enforce penalties

requested by the IV–D agency against

individuals who fail to cooperate

without good cause. We propose to

monitor State adherence to this

requirement primarily through the

single audit process. We further propose

that the amount of the penalty will be

equal to one percent of the adjusted

SFAG for the first year there is such a

finding. For the second year, the amount

of the penalty will equal two percent of

the adjusted SFAG. We will apply the

maximum penalty of five percent only

if there is such a finding in a third, or

subsequent year.

In determining the appropriate

penalty for this provision, we took into

account the comments made during our

consultations with States and other

organizations. Although States have

been required to establish paternity and

enforce other child support provisions

for several years, and States already

have systems and procedures in place

for dealing with these requirements, the

division of responsibility between the

IV–A and IV–D agencies is now slightly

different. Accordingly, the proposal that

we gradually increase the amount of the

penalty was made to give States the

opportunity to make procedural

adjustments before they are subject to

the full impact of the penalty. We

believe that the suggestion has merit

and, therefore, are proposing an

incremental approach, with reduced

penalties for the first two violations, i.e.,

one percent for the first and two percent

for the second. However, since this is

not an entirely new requirement, we are

proposing to apply the full five percent

penalty beginning with the third

violation of the provision.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62165

What happens if a State does not repay

a Federal loan? (§ 274.40)

Section 406 permits States to borrow

funds to operate their TANF programs.

States must use these loan funds for the

same purposes as apply to other Federal

TANF funds. In addition, the statute

also specifically provides that States

may use such loans for welfare antifraud activities and for the provision of

assistance to Indian families that have

moved from the service area of an

Indian Tribe operating a Tribal TANF

program. States have three years to

repay loans and must pay interest on

any loans received. We will be issuing

a program instruction notifying States of

the application process and the

information needed for the application.

Section 409(a)(6) establishes a penalty

for States that do not repay loans

provided under section 406. If the State

fails to repay its loan in accordance with

its agreement with ACF, we will reduce

the adjusted SFAG for the immediately

succeeding fiscal year by the

outstanding loan amount, plus any

interest owed.

Sections 409(b)(2) and 409(c)(3)

provide that States cannot avoid this

penalty either through reasonable cause

or corrective compliance.

What happens if, in a fiscal year, a State

does not expend, with its own funds, an

amount equal to the reduction to the

adjusted SFAG resulting from a penalty?

(§ 274.50)

Section 409(a)(12), as amended by

PRWORA, requires States to expend

under the TANF program an amount

equal to the reduction made to its

adjusted SFAG as a result of one or

more of the TANF penalties. States are

thus required to maintain a level of

TANF spending that is equivalent to the

funding provided through the SFAG

even though Federal funding was

reduced as a result of penalties.

However, PRWORA did not establish a

penalty for a State’s failure to meet this

requirement. Section 5506(j) of Pub. L.

105–33 further amended section

409(a)(12) to create such a penalty. If a

State fails to expend its own funds to

pay for State TANF expenditures in an

amount equal to the reduction made to

its adjusted SFAG for a penalty under

§ 272.1, the State’s SFAG for the next

fiscal year will be reduced by an amount

equal to not more than two percent of

its adjusted SFAG plus the amount that

should have been expended (reduced

for any portion of the required amount

actually expended by the State in the

fiscal year).

As discussed in § 272.3, we will

monitor closely a State’s efforts to

replace the reduced SFAG with its own

expenditures. A State’s investment in its

TANF program must not be diminished

as a result of actions violative of the

TANF requirements. Therefore, if a

State fails to make any expenditures in

the TANF program to compensate for

penalty reductions, we will penalize the

State in the maximum amount, i.e., two

percent of the adjusted SFAG plus the

amount it was required to expend. The

penalty will be reduced based on the

percentage of any expenditures that are

made by the State. For example, if a

State were required to replace an SFAG

reduction by $1,000,000, but its increase

in expenditures equalled only $500,000,

its penalty would be equal to two

percent of the adjusted SFAG times 50

percent (because $500,000 is 50 percent

of $1,000,000), plus the $500,000 it

failed to expend as required.

States should note that if they do not

expend State-only funds as required, the

effect will be that the amounts to be

deducted from the SFAG will

compound yearly, as the penalty for

failure to replace SFAG funds with State

expenditures also applies to the penalty

at § 272.1(a)(12). We believe that this is

appropriate because full resources must

be available to ensure that the goals of

the TANF program are met.

State expenditures that are used to

replace reductions to the SFAG as the

result of TANF penalties must be

expenditures made under the State

TANF program, not under ‘‘separate

State programs.’’ This requirement is

stated in section 409(a)(12). However, as

noted in § 273.6, regarding the limits on

MOE expenditures, State expenditures

made to replace reductions to the SFAG

as a result of penalties cannot be

counted as TANF MOE expenditures.

In addition, sections 5508(k) and (m)

of Pub. L. 105–33 provide that the

reasonable cause and corrective

compliance plan provisions at §§ 272.4,

272.5, and 272.6 do not apply to the

penalty for failure to replace SFAG

reductions due to penalties with State

expenditures.

Subpart B—What are the Funding

Requirements for the Contingency

Fund?

Optional Use of the Contingency Fund

In addition to the funding they

receive under section 403(a), States may

receive funding from the Contingency

Fund under section 403(b). The purpose

of the Fund is to make additional funds

available to States, at their request, for

periods when unfavorable economic

conditions threaten their ability to

operate their TANF programs. For each

month of the fiscal year that they meet

the eligibility criteria, States may

receive up to 1/12th of 20 percent of

their SFAG annual allocation. The

actual amount of funds a State may

realize from the Contingency Fund will

vary depending on the level of State

expenditures and the number of months

that a State is eligible. States eligible in

one month may automatically receive a

payment for the following month. We

have issued a program instruction to

States on the Contingency Fund, which

provides guidance on the requirements

of the Fund as well as the associated

MOE requirement.

As noted in the definitions at

§ 270.30, the term ‘‘Contingency

Funds,’’ when used in these proposed

rules, refers to the Federal funds a State

may receive under section 403(b). It

does not refer to any required State

expenditures.

Unless otherwise indicated, the terms

‘‘MOE requirement’’ and ‘‘MOE level,’’

when used in this Subpart, refer to the

Contingency Fund MOE requirement.

For funding from the Contingency

Fund, a State must: (1) be a ‘‘needy

State,’’ i.e., meet one of two eligibility

triggers—unemployment or Food Stamp

caseload; (2) submit a request for these

funds; (3) meet a maintenance-of-effort

level based on 100 percent of historic

State expenditures for FY 1994; (4)

complete an annual reconciliation after

the end of the fiscal year to ensure that

contingency funds are matched by the

expenditure of State funds above a

certain level; and (5) provide State

matching funds.

To be eligible for contingency funds

under the unemployment trigger, the

State’s unemployment rate for the most

recent three-month period must be at

least 6.5 percent and at least equal to

110 percent of the State’s rate for the

corresponding three-month period in

either of the two preceding calendar

years. To be eligible for contingency

funds under the Food Stamp trigger, a

State’s monthly average of individuals

(as of the last day of each month)

participating in the Food Stamp

program for the most recent three-month

period must exceed by at least ten

percent its monthly average of

individuals in the corresponding threemonth period in the Food Stamp

caseload for FY 1994 or FY 1995 had the

immigrant provisions under title IV and

the Food Stamp provisions under title

VIII of PRWORA been in effect in those

years.

In general, contingency funds may be

used for the same purposes as other

Federal TANF funds. However, the

Contingency Fund provisions contain

several unique requirements that are

discussed below.
62166 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Unlike the TANF funds provided

under section 403(a), contingency funds

(provided under section 403(b)) cannot

be transferred to the Child Care and

Development Block Grant Program (also

known as the Discretionary Fund of the

Child Care and Development Fund)

and/or the Social Services Block Grant

Program under title XX of the Act.

Section 404(d) permits the transfer of

funds received pursuant to section

403(a) only.

Territories and Tribal TANF grantees

are not eligible to participate in the

Contingency Fund. Section 403(a)(7)

provides that only the 50 States and the

District of Columbia are eligible.

The TANF MOE requirement is 80

percent (or 75 percent if a State meets

its participation rate) of historic State

expenditures. The Contingency Fund

MOE requirement is 100 percent of

historic State expenditures. However,

meeting the Contingency Fund MOE

requirement is not accomplished by

increasing State expenditures by 20 (or

25) percent. The calculation is more

complicated because the MOE is

calculated differently for purposes of

determining compliance with the TANF

MOE requirements and determining

eligibility for the Contingency Fund. For

example, Contingency Fund MOE

expenditures must be the expenditure of

State funds within TANF and not

expenditures made under ‘‘separate

State programs.’’ Therefore, TANF MOE

‘‘separate program’’ expenditures under

separate State programs cannot count

toward the Contingency Fund MOE

requirement. However, TANF MOE

expenditures may also count as

Contingency Fund MOE expenditures.

Contingency funds are available only

for expenditures made in the fiscal year

for which the funds were received.

Unlike TANF funds under section

403(a), contingency funds are not

available until expended.

Section 403(b)(4) provides that the

funds are to be used to match State

funds for expenditures above a specified

MOE level and requires an annual

reconciliation to determine if the State

is entitled to the amount of funds it has

received for the fiscal year. We will use

the term ‘‘matching expenditures’’ to

mean State and Contingency Fund

expenditures that exceed the MOE level

specified in this section.

‘‘Qualifying State expenditures’’ refers

to matching expenditures, excluding

Contingency Fund expenditures, and

the expenditure of State funds made to

meet the Contingency Fund MOE

requirement.

In this part of the proposed rule, we

explain the reconciliation and MOE

requirements and the actions that we

will take if the State does not remit its

contingency funds under the annual

reconciliation requirement.

What funding restrictions apply to the

use of contingency funds? (§ 274.70)

Annual Reconciliation

Annual reconciliation involves first

computing the amount, if any, by which

countable State expenditures, in a fiscal

year, exceed the State’s section 403(b)(6)

MOE requirement. If the countable

expenditures exceed 100 percent of that

level, then the State is entitled to all or

a portion of the contingency funds paid

to it.

If the State has met its requirement,

the amount of contingency funds it may

retain is the lesser of two amounts. The

first amount is the amount of

contingency funds paid to it for the

fiscal year. The second amount is its

expenditures above its MOE level,

multiplied by (1) the State’s Federal

Medical Assistance Percentage (FMAP)

applicable for the fiscal year for which

funds were awarded and (2) 1⁄12 times

the number of months during the fiscal

year that the State received contingency

funds. (Note that if the State was eligible

for, and received contingency funds for

fewer than 12 months during the fiscal

year, the effective rate for contingency

funds will be less than its FY FMAP.)

The annual reconciliation provision

of section 403(b)(6) is clear that

contingency funds are available only to

match expenditures that exceed a State’s

MOE level.

How will we determine 100 percent of

historic State expenditures, the MOE

level, for the annual reconciliation?

(§ 274.71)

Pub. L. 105–33 amended section

403(b), by deleting an alternative MOE

requirement.

For the Contingency Fund, historic

State expenditures, or MOE level, (i.e.,

expenditures for FY 1994) include the

State share of AFDC benefit payments,

administration, FAMIS, EA, and JOBS

expenditures. They do not include the

State share of AFDC/JOBS, Transitional

and At-Risk child care expenditures.

We will use the same data sources

and date, i.e., pril 28, 1995, to determine

each State’s historic State expenditures

as we used to determine the TANF MOE

requirement. However, we will exclude

the State share of child care

expenditures for FY 1994. States must

meet 100 percent of this MOE level.

Reduction to MOE Level

States should note that we will reduce

the MOE level for the Contingency Fund

if a Tribe within the State receives a

Tribal Family Assistance Grant under

section 412. This reduction is provided

for in the last paragraph of section

409(a)(7)(B)(iii). For the TANF MOE

requirement, we have provided that we

will reduce the State’s TANF MOE level

by the same percentage as a State’s

SFAG annual allocation is reduced for

Tribal Family Assistance Grants in the

State for a fiscal year. For example, if a

State’s SFAG amount is $1,000 and

Tribes receive $100 of that amount, the

State’s TANF MOE requirement is

reduced by ten percent. If the same State

also receives contingency funds in the

same fiscal year, the Contingency Fund

MOE level will also be reduced by ten

percent.

For the annual reconciliation

requirement, what restrictions apply in

determining qualifying State

expenditures? (§ 274.72)

Section 403(b)(6)(B)(ii)(I) provides

that the expenditure of State funds

counted toward the Contingency Fund

MOE must only be expenditures made

under the State program funded under

this part. Thus, the State expenditures

that the State makes to meet this

Contingency Fund MOE level and its

‘‘matching expenditures’’ include the

expenditure of State funds within TANF

only; they do not include expenditures

made under ‘‘separate State programs.’’

In addition, the provision specifies that

the State’s expenditures for child care

cannot be used to meet the requirement.

What other requirements apply to

qualifying State expenditures? (§ 274.73)

Section 403(b)(6)(B)(ii) defines the

amounts required to meet the MOE level

and ‘‘matching expenditures’’ as

‘‘countable’’ expenditures under the

TANF program. Since these

expenditures are covered under title IVA and are supplemental to the TANF

MOE, we believe the same requirements

that apply to the TANF MOE should

also apply to these expenditures.

Therefore, except where they conflict

with section 403(b)(6)(B)(ii), we propose

that the TANF MOE provisions at

section 409(a)(4)(7)(B) apply to State

expenditures under the Contingency

Fund provision. Thus, to be qualifying

State expenditures for Contingency

Fund purposes, expenditures would be

subject to the following proposed

regulations: (1) § 273.2, which discusses

types of expenditures (except for

paragraph 273.2(a)(2), which pertains to

child care); (2) § 273.4, which discusses

educational expenditures; and (3)

§ 273.6, which describes the kinds of

expenditures that cannot count as MOE.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62167

When must a State remit contingency

funds under the annual reconciliation?

(§ 274.74)

After reconciliation, if a State fails to

meet the section 403(a)(6) MOE level, it

must remit all the contingency funds we

paid to it for the fiscal year. If the State

does not have sufficient matching

expenditures above its MOE level to

retain all the funds paid to it, then it

must remit a portion of the funds paid

to it. The amount the State must remit

in this instance is the difference

between the amount it received and the

amount determined by multiplying: (1)

the matching expenditures it made

above the MOE level; by (2) the State’s

FMAP rate for the fiscal year; and (3) 1/

12 times the number of months during

the fiscal year that the State received

contingency funds.

Below we provide an example

requiring the remittance of funds.

Assume State expenditures are $103

million (which includes $2.5 million in

contingency funds for the six months

that the State met the Unemployment or

Food Stamp trigger and excludes $2

million in child care expenditures). The

required expenditure of State funds to

meet the 100 percent MOE level would

be $95 million, i.e., $100 million minus

$5 million for child care expenditures.

Assume the State’s FMAP is 50 percent.

In determining if any funds must be

remitted, we must subtract from the

expenditures made by the State, the

MOE level, i.e., $103 million minus $95

million. This difference of $8 million

must then be multiplied by the State’s

FMAP rate for FY 1997. In this example,

the FMAP is 50 percent. Thus, $8

million multiplied by 50 percent is $4

million. Next, we must multiply the $4

million by 1/12 times the number of

months the State received funding for

the Contingency Fund, in this case, six

months. The result is $2 million, i.e.,

the amount of contingency funds the

State is entitled to for the fiscal year.

However, if a State has received $2.5

million, then it must remit $500,000. A

simplified formula is presented below:

$103M¥95M = $8M

$8M x 50% = $4M

$4M x 1/12 x 6 mos. = $2M

$2.5M (Received)—$2M = $500,000

(Amount that must be remitted.)

Under section 5502(e) of Pub. L. 105–

33, a State is not required to remit

contingency funds until one year after it

has failed to meet either the Food Stamp

trigger or the unemployment trigger for

three consecutive months. Thus, States

may retain these funds for at least 14

months after the fiscal year has ended.

For example, FY 1997 ends

September 30, 1997. The State fails to

meet either trigger for the months of

October, November, and December,

1997. The State has until December 31,

1998, to remit the funds.

It is possible that a State will have

used the contingency funds it received

for expenditures meeting the

requirements included in this proposed

rule, but still have to return a part of the

funds used to make these expenditures

because of the formula that determines

how much a State may retain. This is

evident in the example above where the

State had to remit $500,000 of the $2.5

million received even though it had

made expenditures above the MOE

level. We will not consider use of funds

which later must be returned under the

reconciliation formula as an improper

use of contingency funds since the

statute specifies a separate consequence

in this situation.

Contingency funds are for use in the

fiscal year only; States may not use

funds for a fiscal year for expenditures

made in either the subsequent fiscal

year or a prior fiscal year.

What action will we take if a State fails

to remit funds as required? (§ 274.75)

PRWORA established a penalty at

section 409(a)(10) for this failure. As

amended by Pub. L. 105–33, section

409(a)(10) provides that if a State does

not remit funds as required, then the

State’s SFAG payable for the next fiscal

year will be reduced by the amount of

funds not remitted. Other amendments

in Pub. L. 105–33 eliminated the

Secretary’s ability to waive this penalty

for reasonable cause or corrective

compliance. However, the State may

appeal our decision to reduce the State’s

SFAG pursuant to the proposed

regulations at § 272.7.

How will we determine if a State has

met its Contingency Fund reconciliation

MOE level requirement and made

expenditures that exceed its MOE

requirement? (§ 274.76)

ACF has created a TANF Financial

Report, the ACF-196. States will use the

ACF–196 to report on their use of

Federal TANF funds, including the

contingency funds. For the Contingency

Fund, States will report ‘‘matching

expenditures’’ and expenditures also

required to meet their MOE level. We

will use this report to complete the

annual reconciliation after the end of

the fiscal year. We will review it to

ensure that expenditures reported are

consistent with the statute and these

proposed rules. Please see the

discussion of part 275 for additional

information.

Are contingency funds subject to the

same restrictions that apply to other

Federal TANF Funds? (§ 274.77)

In general, as Federal TANF funds,

the same requirements that apply to

other Federal TANF funds apply to the

Contingency Fund. For example,

Federal assistance cannot be paid to a

family with contingency funds if the

family has already received Federal

assistance for 60 months. (See the

discussion in § 273.21 on ‘‘Misuse of

Federal TANF Funds’’ for additional

information.) However, contingency

funds may not be transferred to the

Social Services Block Grant or the

Discretionary Fund of the Child Care

Development Fund, as section 404(d)

authorizes these transfers only for those

Federal funds provided under section

403(a).

Meeting FY 1997 MOE Requirements

Unlike the TANF MOE level, the

Contingency Fund MOE level for FY

1997 will not be prorated based on the

fraction of the year the State was under

TANF. Pub. L. 104–327 amended

section 116(b)(1)(B)(ii)(II)(aa) and (b) of

PRWORA to provide that we will

increase the SFAG of any State for FY

1997 in an amount ‘‘that the State

would have been eligible to be paid

under the Contingency

Fund . . . during the period beginning

October 1, 1996, and ending on the date

the Secretary of Health and Human

Services’’ deems that the State plan is

complete, if the State otherwise would

have been eligible for contingency funds

but for the fact that it was not under

TANF. That is, for all States regardless

of the TANF implementation date, the

SFAG for FY 1997 may be increased in

any month by the amount of

contingency funds for which a State

would qualify had it been under TANF

requirements. The Program Instruction

mentioned previously provides

additional guidance to States on how

their SFAG amounts can be increased

for FY 1997. As the increase to the FY

1997 SFAG is a one-time occurrence, we

are not regulating on this matter.

In order to compute the amount of

this increase for a State meeting this

criteria, and to ensure equity among all

States, regardless of the dates they

elected to come under TANF, we must

use the MOE level for all of FY 1997.

(For this limited purpose, amounts

expended by a State in FY 1997 prior to

the date the State came under TANF,

i.e., to fulfill a State’s matching

requirement for AFDC, EA and JOBS,

will count toward meeting the State’s

FY 1997 Contingency Fund MOE

requirement.)
62168 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Subpart C—What Rules Pertain

Specifically to the Spending Levels of

the Territories?

Section 103(b) of PRWORA amended

section 1108. Section 1108 establishes a

funding ceiling for Guam, the Virgin

Islands, American Samoa and Puerto

Rico. Prior to PRWORA, the following

programs authorized in the Act were

subject to this ceiling: AFDC and EA

under title IV–A; Transitional and AtRisk Child Care programs under title

IV–A; the adult assistance programs

under titles I, X, XIV, and XVI; and the

Foster Care, Adoption Assistance, and

Independent Living programs under

title IV–E. Funding for the JOBS

program, which covered AFDC/JOBS

child care, was excluded from the

ceiling.

Under the amendments in PRWORA,

the funding ceiling at section 1108

applies to the TANF program under title

IV–A, the adult programs, and title IV–

E programs. Section 1108(b) provides a

separate appropriation for a Matching

Grant, which is also subject to a ceiling.

The Matching Grant is not a new

program; rather it is a funding

mechanism that Territories can use to

fund expenditures under the TANF and

title IV–E programs.

We had not previously regulated the

provisions of section 1108. However, in

light of this new MOE requirement

within section 1108, as discussed later,

we believe that we need to regulate to

clarify the requirements and the

consequences if a Territory fails to meet

the new section 1108 requirements. We

have authority to issue rules on this

provision under section 1102, which

permits us to regulate where necessary

for the proper and efficient

administration of the program, but not

inconsistent with the Act. (The limit at

section 417 does not apply.) In addition,

we have prepared a program instruction

for the Territories to provide additional

guidance on receiving funds under

section 1108.

In February 1997, we provided to the

Territories: (1) their FAG annual

allocations; (2) their TANF MOE levels

under section 409(a)(7); (3) their

Matching Grant MOE levels; (4) their

section 1108(e) MOE levels (which were

created by PRWORA, and were

subsequently eliminated by Pub. L. 105–

33); and (5) a detailed explanation of the

methodology and expenditures we used

to determine each of these amounts.

If a Territory receives a Matching Grant,

what funds must it expend? (§ 274.80)

Section 1108(b) provides that

Matching Grant funds are available: (1)

to cover 75 percent of expenditures for

the TANF program and the Foster Care,

Adoption Assistance and Independent

Living programs under title IV–E of the

Act; and (2) for transfer to the Social

Services block Grant program under title

XX of the Act or the Child Care and

Development Grant (CCDBG) program

(also known as the Discretionary Fund)

pursuant to section 404(d), as amended

by PRWORA and Pub. L. 105–33.

However, Matching Grant funds used

for these purposes must exceed the sum

of: (a) the amount of the FAG without

regard to the penalties at section 409;

and (b) the total amount expended by

the Territories during FY 1995 pursuant

to parts A and F of title IV (as so in

effect), other than for child care.

Under the first requirement, the

Territory must spend an amount up to

its Family Assistance Grant annual

allocation using Federal TANF or

Federal title IV–E funds or funds of its

own for TANF or title IV–E programs.

The second requirement establishes

an MOE requirement at 100 percent of

historic expenditures, based on FY

1995, separate from the TANF MOE

requirement, and applicable only if a

Territory requests and receives a

Matching Grant. Historic expenditures

include 100 percent of State

expenditures made for the AFDC

program (including administrative costs

and FAMIS), EA, and the JOBS program.

Territorial expenditures made to meet

this requirement include Territorial, not

Federal, expenditures made under the

TANF program or title IV–E programs.

Territorial expenditures used to meet

the FAG amount requirement, the MOE

requirement and the matching

requirement, can only be used for one

of these purposes. We believe this is

appropriate because our interpretation

of the statute is that Congress intended

that the provisions on spending up to

the FAG amount, meeting the MOE

requirement, and meeting the matching

requirement be separate requirements.

What expenditures qualify for

Territories to meet the Matching Grant

MOE requirement? (§ 274.81)

For the TANF MOE, section 409(a)(7)

includes specific provisions on what

States and Territories may count as

‘‘qualifying State expenditures’’ (i.e.,

expenditures that may count towards

the TANF MOE requirement).

However, the statute provides little

guidance on what expenditures a

Territory may count toward the

Matching Grant MOE for IV–A

expenditures. Because the Matching

Grant is intended to be used for the

TANF program, we will apply many of

the TANF MOE requirements in part

273, subpart A, to the Matching Grant

MOE. These sections are: 273.2 (What

kinds of State expenditures count

toward meeting a State’s annual

spending requirement?); 273.3 (When

do child care expenditures count?);

273.4 (When do educational

expenditures count?); and, 273.6 (What

kinds of expenditures do not count?).

Section 273.5 (When do expenditures in

separate State programs count?) does

not apply because section

1108(b)(1)(B)(ii) requires that these MOE

expenditures must be expenditures

made under the TANF program. Thus,

TANF expenditures that are made to

meet the Matching Grant MOE

requirement must be expenditures made

under TANF, not expenditures made

under separate State programs. (Because

Territories do not receive Matching

Child Care funds, the limit on child care

expenditures in § 273.3 does not apply.)

Also, Territorial expenditures made in

accordance with Federal IV–E program

requirements may count toward this

MOE requirement. These include the

State share of IV–E expenditures and

expenditures funded with the State’s

own funds that meet Federal title IV–E

program requirements.

Territories may also count toward

their Matching Grant MOE requirement

expenditures made under the TANF

program that meet the TANF MOE

requirement.

What expenditures qualify for meeting

the Matching Grant FAG amount

requirement? (§ 274.82)

The statute intends that expenditures

made to meet this requirement must be

TANF or title IV–E expenditures. For

TANF expenditures, allowable

expenditures made with Federal TANF

funds may be used to meet this

requirement. These include amounts

that have been transferred from TANF to

title XX and the Discretionary Fund in

accordance with section 404(d). (See

§ 273.11, which describes the proper

uses of Federal TANF funds.) Also, the

Territory’s own funds, when used for

the TANF program, may be used for this

purpose. Because IV–A expenditures

made with the Territories’ own funds

must be for the TANF program, it is

reasonable that we apply to these TANF

expenditures the MOE requirements

applicable for the Matching Grant to this

FAG amount requirement.

For IV–E expenditures, as with the

Matching Grant MOE, expenditures

made in accordance with Federal IV–E

program requirements may count

toward this MOE requirement. These

include the Federal share and the

Territories’ share of IV–E expenditures

and expenditures funded with the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62169

Territories’ own funds that meet Federal

IV–E program requirements.

How will we know if a Territory failed

to meet the Matching Grant funding

requirements at § 274.80? (§ 274.83)

We are currently developing a

separate Territorial Financial Report for

the Territories. We will require this

report to be filed quarterly; it will apply

to all programs subject to section 1108.

This report will cover TANF MOE and

Matching Grant MOE requirements. For

the Matching Grant, Territories will

report expenditures claimed under title

IV–E and IV–A and the total

expenditures (including Federal) made

to meet the requirement that they spend

up to their Family Assistance Grant

annual allocations.

We would not require Territories to

file the TANF Financial Report;

however, they must report comparable

information on the Territorial Financial

Report. Furthermore, if one of the

Territories fails to file the Territorial

Financial Report or to include certain

information in that report, it would be

treated like a State that fails to file its

TANF Financial Report and subject to

the penalty for failure to report at

§ 272.1(a)(3).

What will we do if a Territory fails to

meet the Matching Grant funding

requirements at § 274.80? (§ 274.84)

The statute does not address the

consequences for a Territory if it fails to

meet the Matching Grant MOE and the

FAG amount requirements. The

proposed rule provides that we disallow

the entire amount of a fiscal year’s

Matching Grant if the Territory fails to

meet either requirement. This is because

the statute provides that the Matching

Grant funds are only allowable if both

requirements are met. Thus, if the

Territory does not meet either one or

both of the requirements, it must return

the funds to us. We will get the funds

back by taking a disallowance action.

A disallowance represents a debt to

the Federal government. Therefore, we

will apply our existing regulations at 45

CFR part 30. Once we issue a

disallowance notice, we can require a

Territory to pay interest on the unpaid

amount.

What rights of appeal are available to

the Territories? (§ 274.85)

The Territory may appeal a

disallowance decision in accordance

with 45 CFR part 16. As these are not

penalties, the reasonable cause and

corrective compliance provisions of

section 409 do not apply. Section 410,

covering the appeals process in TANF,

also does not apply.

F. Part 275—Data Collection and

Reporting Requirements

General Approach

There are a substantial number of

specific data reporting requirements on

States under the TANF program. Some

of these reporting requirements are

explicit, primarily in section 411(a);

others are implicit, e.g., States represent

the source of information for reports

that the Secretary must submit to

Congress and for the determination of

penalties.

These data requirements support two

complementary purposes: (1) they

enable determinations about the success

of TANF programs in meeting the

purposes described in section 401; and

(2) they assure State accountability for

key programmatic requirements. In

particular, they ensure accurate

measurement of State performance in

achieving the work participation rates in

section 407 and other objectives of the

Act.

These purposes can only be achieved

if data are comparable across States and

over time. At section 411(a)(6), the

TANF statute provides that, to the

extent necessary, the Secretary shall

provide definitions of the data elements

required in the reports mandated by

section 411(a). That this is one of the

few places in which the law authorizes

regulation by the Secretary reflects the

importance of collecting comparable

data.

With respect to the first purpose,

measuring the success of TANF

programs, the data requirements of

section 411(a) reflect particular features

of the TANF program. States have

collected and reported similar data on

the characteristics, financial

circumstances, and assistance received

by families served by the AFDC and

JOBS programs for many years. By

requiring the collection of similar data

under TANF, the statute enables the

Congress, the public, and States to

observe how welfare reform changes the

demographic characteristics and the

financial circumstances of, and the selfsufficiency services received by, needy

families. In so doing, it facilitates

comparisons across States and over time

and promotes better understanding of

what is happening nationwide—how

States are assisting needy families; how

they are promoting job preparation,

work, and marriage; what is happening

to the number of out-of-wedlock births

among assisted families; and what kinds

of support two-parent families are

receiving.

With respect to ensuring accurate

measurement of work participation,

section 411(a)(1)(A)(xii) specifically

requires States to report on the

‘‘information necessary to calculate

participation rates under section 407.’’

Given the significance of the work rates

for achieving the objectives of TANF

and for determining whether States face

penalties, this is an area where accurate

and timely measurement is particularly

important.

Our goal in implementing the data

collection and reporting requirements of

the Act is to collect the data required

and necessary to monitor program

performance. A secondary goal is to give

States clear guidance about what these

requirements entail and the

consequences of failing to meet the

requirements.

At the same time, however, we are

sensitive to the issue of paperwork

burden and committed to minimizing

the reporting burden on States,

consistent with the TANF statutory

framework. In this context, where

applicable, we have considered the

comments we received when we

proposed the draft Emergency TANF

Data Report. (OMB subsequently

approved this reporting form, and we

issued it on September 30 as TANF–

ACF–PI–97–6, Form ACF–198.)

However, we welcome additional

comments on whether these proposed

rules, and appendices, are consistent

with our interest in both minimizing

reporting burdens and meeting TANF

requirements.

External Consultation

Data collection and reporting issues

were a critical part of the agenda for the

external consultations ACF held during

the past fall and winter. We also

engaged in consultations when we

issued a draft Emergency TANF Data

Report for public comment this past

summer.

In general, States expressed the view

that the statutory provisions on data

collection are too onerous. They

recommended that ACF limit the

burden on States and issue minimum

regulatory requirements. However, some

State officials acknowledged that they

were currently collecting and reporting

most of the case-specific data required

by the Act as a part of the previous

AFDC/JOBS program and the Quality

Control reporting system.

Advocates and researchers generally

recommended more data collection in

order to track program effects on

employment and child and family wellbeing.

Other Federal agencies (e.g., Census

Bureau, Bureau of Economic Analysis of

the Department of Commerce,

Congressional Research Service) have

been major users of our past program
62170 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

data and strongly recommended the

continuation of a number of current data

elements or collection instruments, e.g.,

the monthly Caseload Data (or FLASH)

Report.

Overview of Part 275

Under this NPRM, States must submit

two quarterly reports (the TANF Data

Report and the TANF Financial Report)

and two annual reports (a program and

performance report for the annual report

to Congress and, as an addendum to the

fourth quarter Financial Report, State

definitions and other information).

Most of the information we propose to

collect is required by section 411(a). We

do not have the authority to permit

States to report only some of the data

required in section 411(a), and our

authority to require expanded data

reporting is limited. We are, however,

proposing to require some additional

data elements necessary to: ensure

accountability under section 409(a)

(penalties); meet other statutory

requirements, e.g., under section 403

(grants to States) and section 405

(administrative provisions); and assess

State achievement of program goals, e.g.,

rankings of State programs under

section 413(e).

Before we discuss each of the

quarterly and annual reports in detail,

we present an overview of the major

provisions of this part.

1. We are proposing that each State,

in the TANF Data Report—

• Collect and report the case record

information on individuals and families

and other data, as required in section

411(a).

• Collect and report information to

monitor State compliance with the work

requirements in section 407, as

authorized by section 411(a)(1)(A)(xii).

• Collect and report information to

implement the penalty provisions in

section 409(a)(9). This penalty applies

to time limits on receipt of assistance.

• Collect and report a minimum

number of items as break-outs of the

data elements specified in section

411(a), such as citizenship status,

educational level, and earned and

unearned income; and a few additional

items necessary to the operation of a

data collection system, including Social

Security Numbers.

• Collect and report a minimum

number of data elements related to child

care.

2. We are proposing that each State,

in the TANF Financial Report (or, as

applicable, the Territorial Financial

Report)—

• Collect and report information

necessary to estimate the amounts to be

paid to a State each quarter pursuant to

section 405(c)(1).

• Collect and report information on

Federal, State, and MOE expenditures

under sections 411 (a)(2), (a)(3), and

(a)(5); information for the purpose of

implementing section 409(a)(1) (penalty

for misuse of funds), section 409(a)(7)

(maintenance of effort), section

409(a)(10) (Contingency Fund MOE

requirements), section 409(a)(12)

(replacement of funds requirement),

section 403(b)(4) (Contingency Fund

reconciliation); and data to carry out our

financial management responsibilities

for Federal grant programs under 45

CFR part 92.

3. We are proposing that each State—

• At State option, collect and report

data on individuals and families served

by separate State MOE programs if a

State wishes to receive a high

performance bonus, qualify for work

participation caseload reduction credit,

or be considered for a reduction in the

amount of the penalty for failing to meet

the work participation requirements.

4. We also propose to—

• Define ‘‘TANF family’’ for data

collection and reporting purposes only.

• Define ‘‘a complete and accurate

report.’’ This definition will serve as a

compliance standard for implementing

the penalty in section 409(a)(2) for

failure to submit quarterly reports

required under section 411(a).

• Define ‘‘scientifically acceptable

sampling method’’ as a basis for State

sampling systems and reporting

disaggregated data in the TANF Data

Report.

• Require States to file quarterly

reports electronically.

5. We propose to minimize reporting

burden by—

• Limiting required reports to a

quarterly TANF Data Report, a quarterly

TANF Financial Report (or Territorial

Financial Report), an annual program

and performance report, and an annual

addendum to the fourth quarter

Financial Report.

• Requiring States to report

information only on the demographic

and financial characteristics of families

applying for assistance whose

applications are approved. We will

conduct special studies to obtain

information on families who apply but

are not approved, e.g., families denied,

diverted, or otherwise referred. These

data are required for purposes of section

411(b).

• Consolidating all aggregate financial

and expenditure data into a single

financial report. States had to submit

three separate financial reports for the

prior programs.

• Using the data collected under

section 411(a) to conduct annual

reviews and rankings of successful State

work programs under section 413(d) and

adding two data elements in order to

conduct rankings of State efforts to

reduce out-of-wedlock births, as

required under section 413(e).

• Clarifying how States may use

sampling to collect and report data as

specified in section 411(a)(1)(B).

As an additional aid to States, we will

develop a pc-based software package.

This package will facilitate data entry

and create transmission files for each

report. We also plan to provide some

edits in the system to ensure data

consistency, and we invite States to

comment on what sort of edit capability

they would like to see in the system.

The transmission files created by the

system will use a standard file format

for electronic submission to ACF.

Finally, in order to provide an

opportunity for maximum review and

public comment on the reporting

requirements, we have attached the

proposed quarterly reports (including

the specific data elements and

instructions) as Appendices A through

G to part 275. We will revise these

instruments following the comment

period on the NPRM and will issue

them to States through the ACF policy

issuance system. We will not re-publish

these appendices as a part of the final

rule. However, we will make

appropriate changes in the data

collection instruments in the

Appendices as a result of comments

received.

We have submitted copies of this

proposed rule and the proposed data

reporting requirements to OMB for its

review of the information collection

requirements. We encourage States,

organizations, individuals, and others to

submit comments regarding the

information collection requirements to

ACF (at the address above) and to the

Office of Information and Regulatory

Affairs, OMB, Room 3208, New

Executive Office Building, Washington,

DC 20503, ATTN: Desk Officer for ACF.

Section-by-Section Discussion of this

Part

The following discussion provides

additional background information on,

and a discussion of, each section in part

275. We discuss the specific data

elements we are proposing, the statutory

authority and other bases for their

inclusion, the issues and options

considered in developing the proposals

in this part, and our rationale for taking

a particular approach.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62171

What does this part cover? (§ 275.1)

This section provides an overview of

the scope and content of part 275.

Paragraph (a) specifies the statutory

provisions on which our data collection

proposals are based. We will reference

these statutory citations throughout our

discussion of the specific reports, data

collection instruments, and data

elements in subsequent sections of this

preamble.

Paragraph (b) describes the two

quarterly reports and the two annual

reports we propose to require. We

discuss each of these reports and the

specific data elements in the reports

more fully in § 275.3 and § 275.9 below.

Paragraph (c) describes the optional

reporting of case-record data for

separate State MOE programs. We

discuss our rationale for this proposal

more fully in the discussion on

§ 275.3(d) below so that States may

understand how we will evaluate

certain benefits and options in deciding

whether to report MOE case-record data.

Paragraph (d) describes the other

provisions we propose to cover in part

275. These are the use of sampling to

meet the data collection and reporting

requirements, electronic submission of

reports, due dates, and our plan to

implement the penalty for failure to

submit a timely report, as required by

section 409(a)(2). You can find a more

complete discussion of these matters in

§§ 275.4–10.

Paragraph (e) calls attention to the

eleven Appendices at the end of part

275. These Appendices contain the

proposed data collection instruments

and instructions for all of the quarterly

reports. The Appendices also contain a

summary of sampling specifications and

three reference charts that link each data

element in the three sections of the

TANF Data Report to its specific

statutory authority and our rationale for

collecting these data. We have included

these materials in order to obtain more

informed comment on the proposed

reporting requirements.

Although the Act requires that the

reporting requirements for States under

section 411 also apply to Indian tribal

grantees, we will address data collection

and reporting by Tribes in a separate

NPRM that will deal with the full range

of Tribal issues.

We will also address additional data

collection requirements, if any, to

implement the high performance bonus

in a separate NPRM scheduled to be

published later this year.

What definitions apply to this part?

(§ 275.2)

The data collection and reporting

regulations rely on the general TANF

definitions at part 270.

In this part, we are proposing one

additional definition—for data

collection and reporting purposes

only—a definition of ‘‘TANF family.’’

This definition will apply to data

collection for both the TANF program

and any separate State programs.

The law uses various terms to

describe persons being served under the

TANF program, e.g., eligible families,

families receiving assistance, and

recipients. Unlike the AFDC program,

there are no persons who must be

served under the TANF program.

Therefore, each State will develop its

own definition of ‘‘eligible family,’’ to

meet its unique program design and

circumstances; similarly, each State will

have its own definition of ‘‘eligible

family’’ for State MOE programs.

We do not expect coverage and family

eligibility definitions to be comparable

across States. Therefore, we have

proposed a definition that will enable us

to better understand the different State

programs and their effects. We are

proposing that the definition of ‘‘TANF

family’’ start with the persons in the

family who are actually receiving

assistance under the State program.

(Any non-custodial parents

participating in work activities will be

included as a person receiving

assistance in an ‘‘eligible family’’ since

States may only serve non-custodial

parents on that basis.) We, then, would

include three additional categories of

persons living in the household, if they

are not already receiving assistance.

These three additional categories are:

(1) Parent(s) or caretaker relative(s) of

any minor child receiving assistance;

(2) Minor siblings of any child

receiving assistance; and

(3) Any person whose income and

resources would be counted in

determining the family’s eligibility for

or amount of assistance.

We believe information on these

additional individuals is critical to

understanding the effects of TANF on

families and the variability among State

caseloads, e.g., to what extent are

differences due to, or artifacts of, State

eligibility rules.

• We need information on the

parent(s) or caretaker relative(s) (i.e., an

adult relative, living in the household

but not receiving assistance, and caring

for a minor child) to understand the

circumstances that exist in no-parent

(e.g., child-only) cases not covered by

key program requirements, such as time

limits and work requirements.

• We need information on minor

siblings in order to understand the

impact of ‘‘family cap’’ provisions.

• We also need information on other

persons whose income or resources are

considered in order to understand the

paths by which families avoid

dependence.

We considered alternative terms on

which to base TANF data collection

such as the ‘‘TANF assistance unit’’ or

‘‘TANF reporting unit.’’ However, as

participants in the external consultation

process pointed out, these terms no

longer have a commonly understood

meaning, particularly as States re-design

their assistance and service programs.

For research and other purposes, there

was interest in collecting data on a

broader range of persons in the

household, e.g., any other person living

in the household such a grandmother or

a non-marital partner of the mother.

We determined that we should limit

reporting to those categories of persons

on whom the States will gather data for

their own purposes and for which

information will be directly relevant to

administration of the TANF program.

In the interest of greater comparability

of data, we also considered defining

terms such as ‘‘parent,’’ ‘‘caretaker

relative,’’ and ‘‘sibling.’’ We chose not to

define these terms because we were

concerned that our data collection

policies could inadvertently constrain

State flexibility in designing their

programs. We believe that variation

among State definitions in these areas

will not be significant and will not

decrease the usefulness of the data.

We believe this definition of family

will not create an undue burden on

States since these additional persons are

either all individuals who are a part of

an aided child’s immediate family or

whose income or resources the State

already considers in determining

eligibility.

We offer one clarifying note regarding

data collection in relation to noncustodial parents. As we indicated in

the discussion of part 271, the provision

of work activities to a non-custodial

parent need not cause a State to

consider the family a two-parent family

for the purposes of the work

participation rate. States could define

two-parent families as those with two

parents living in the same household.

Finally, we want to emphasize that

we have proposed this definition of

‘‘TANF family’’ for reporting purposes

only. Our aim is to obtain data that will

be as comparable as possible under the

statute, and, to the extent possible, over

time. Some comparability in data

collection is necessary for assessing

program performance; understanding
62172 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

the impact of program changes on

families and children; and informing the

States, the Congress, and the public of

the progress of welfare reform.

What reports must the State file on a

quarterly basis? (§ 275.3)

We are proposing in paragraph (a) to

require that each State must file two

reports on a quarterly basis—the TANF

Data Report and the TANF Financial

Report (or, as applicable, the Territorial

Financial Report). We are also

establishing the circumstances under

which a State may opt to submit a

quarterly TANF–MOE Data Report.

The TANF Data Report consists of

three sections whose contents are

discussed below. You will find these

proposed sections in their entirety in

Appendices A–C to this part. You will

find the proposed TANF Financial

Report in Appendix D and the three

sections of the proposed TANF–MOE

Report in Appendices E–G. (The

Territorial Financial Report is under

development.)

By publishing these data collection

instruments in the NPRM, we are

providing the public with an

opportunity for a thorough review of the

specific data elements proposed to be

collected. We anticipate that this

opportunity for an in-depth public

review of these instruments will result

in more useful and informed

suggestions and recommendations.

Section 411(a)(1)(A)(i)–(xvii)

authorizes monthly collection and

quarterly reporting of a specified list of

more than 30 data elements. Sections

411(a)(2)–(5) also authorize quarterly

reports on administrative costs, program

expenditures for needy families, noncustodial parents’ participation in work

activities, and transitional services to

families who no longer receive

assistance due to employment.

The data elements specified in section

411(a) represent the overwhelming

majority of the data elements we are

proposing to collect in the TANF Data

Report and the TANF–MOE Report.

Some section 411(a) data elements are

also included in the TANF Financial

Report in addition to information

required by section 403(b)(4)

(Contingency Fund reconciliation

requirements), section 405(c)(1)

(computation of payments to States),

section 409(a)(10) (Contingency Fund

MOE requirements), section 409(a)(12)

(failure to expend additional State funds

to replace grant reductions), and

information to carry out our financial

management and oversight

responsibilities.

Where we have added data elements

beyond those explicitly stated in section

411(a), we explain our rationale for their

inclusion.

As a further aid to public analysis and

comment, we have attached three

statutory reference tables that

correspond to the three sections in the

TANF Data Report. These tables list

each data element we are proposing to

collect and the applicable statutory

citation or other rationale for its

collection. See Appendices I–K.

TANF Data Report: Disaggregated

Data—Sections One and Two

(§ 275.3(b)(1))

Paragraph (b)(1) of this section

proposes to require that each State must

file the disaggregated case record

information, as specified in section

411(a), on: (1) families receiving TANF

assistance (Section One); and (2)

families no longer receiving TANF

assistance (Section Two). (See

Appendices A and B respectively for the

specific data elements.)

The information we propose to be

collected includes identifying and

demographic information; data on the

types and amount of assistance received

under the TANF program; the reasons

for and amount of any reductions in

assistance; data on adults, including the

Social Security Number, educational

level, citizenship status, work

participation activities, employment

status, and earned and unearned

income; and data on children, including

the Social Security Number, educational

level, and child care information.

The statute requires that, in her

Annual Report to Congress, the

Secretary must report on the financial

and demographic characteristics of

families leaving assistance. However, it

does not directly specify the data

elements that States must submit. In

specifying the data elements in Section

Two of the TANF Data Report (for

families no longer eligible), we

borrowed heavily from the data

elements specified for families receiving

TANF assistance. We have assumed that

States will not have a great deal of

difficulty collecting these data because:

(1) they are reporting similar data for

TANF cases; (2) we only expect States

to collect these data at the time the

families are leaving the rolls; and (3) we

substantially reduced the total number

of elements States must report.

However, we invite comments on

whether the value of the data required

in this section (e.g., in terms of

preparing the Annual Report,

conducting research, and tracking the

impacts of State policies) justifies the

burden on States. We encourage

commenters to be specific about the

value and burden of individual data

elements.

Appendix A contains 99 data

elements, most of which are required to

be reported by section 411(a)(1)(A). As

indicated above, we have prepared, at

Appendix I, a list of each data element

in section one of the TANF Data Report

(Appendix A) and its statutory basis or

other rationale for its inclusion. The

data elements not specified in section

411(a) are discussed more fully below.

a. Administration of a data collection

system. The following items are not

required by statute, but they are

necessary to, and implicit in, the

administration of a data collection

system:

1. State FIPS Code

2. Reporting Month

3. Sampling Stratum

4. Family Case Number

5. Sample Case Disposition

Other proposed data elements

necessary for the administration of the

data collection system and our rationale

for their inclusion are as follows:

6. ZIP Code—This information is

readily available and is needed for

geographic coding and rural/urban

analyses.

7. Family Affiliation—We need this

information to identify which persons

in the family are receiving assistance in

order to monitor work participation,

receipt of assistance, and time limits.

We also need this information to

understand the relationship between the

members of the household.

8. Social Security Number—This

information is also readily available.

States use Social Security Numbers to

carry out the requirements of IEVS. (See

sections 409(a)(4) and 1137.) This

element will enable us to track

recipients who move or become part of

a different family. We also need this

information for research on the

circumstances of children and families

as required in section 413(g).

9. Gender—This is a standard

demographic data element. The

information could be collected under a

relationship element (e.g., father,

mother, brother). However, by using this

single element, the coding is simpler; it

is easier to report; and, thus, is less

burdensome.

b. Break-outs. We are proposing to

collect additional information as breakouts of certain single data elements in

section 411(a). Some break-outs are

required by section 411(a). See

‘‘Amount and Type of Assistance’’ (10

items), ‘‘Reason for and Amount of

Reduction in Assistance’’ (11 items),

‘‘Adult Work Participation Activities’’

(14 items), and ‘‘Educational Level’’

(two items).
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Other specific break-outs not

specified in section 411(a) but that we

believe States have available and that

are necessary for comparability of data

are:

1. Earned income. Two break-outs ask

for the dollar amount of wages, salaries

and other earnings and the amount of

EITC.

2. Unearned income. Five break-outs

ask for the amount of Social Security

benefits, SSI benefits, Worker’s

Compensation benefits, child support,

and other.

3. Subsidized housing. Data element

#13 asks for an indication of the source

of the subsidy, e.g., public housing,

HUD rent subsidy, or other.

4. Food Stamps. Data element #15

asks for the type of Food Stamps

assistance, i.e., allotment, cash, or

subsidy.

On these last two items, in particular,

we are interested in receiving comments

on whether the value of the break-out

information (e.g., in terms of enabling

comparisons with historical

information, conducting research, and

assessing dependency) justifies the

additional reporting burden on States.

One final break-out area is

Citizenship. We propose to require nine

break-outs of the data element

‘‘citizenship’’ in section

411(a)(1)(A)(xv). We believe it is

necessary to track the proper use of

TANF funds in terms of the types of

aliens served to ensure that TANF

benefits are going to eligible aliens.

Section 409(a)(1) provides for a penalty

if funds are used in violation of the

requirements of the law. PRWORA

created complex and potentially

confusing eligibility criteria for different

types of qualified aliens; the

requirements are made even more

confusing by the imposition of certain

time limits in terms of United States

residency for certain groups of qualified

aliens, such as refugees, and by the time

limit on receipt of TANF assistance for

everyone. We also believe States will

need the information in the break-outs

to carry out their eligibility

determinations.

c. Data elements necessary to

implement other sections of the Act.

The following items are not required by

section 411(a) but are necessary to

implement other statutory requirements:

1. Cooperation with child support—

Section 409(a)(5). (Data element #94)

2. Time limits for receipt of

assistance—Section 409(a)(9). (Data

elements #44 and #62–65)

3. New Applicants—Section 411(b).

(Data element #10)

4. Amount of the family’s cash

resources—Section 411(b). (Data

element #21)

d. Child Care. Five data elements are

identical to the child care information

required to be reported on families

served by the Child Care Development

Fund (CCDF). The purpose of this

collection of information is to track

child care provided under TANF in

relation to a State’s provision of CCDF

child care. (Child care provided under

CCDBG with funds transferred from

TANF is captured through the CCDF

program, not TANF data collection.) It

is also necessary for assessing program

performance and the total financial

commitment a State is making to

achieve the work objectives of the Act.

The second section of the TANF Data

Report, Appendix B, contains 46

elements applicable to families no

longer receiving assistance. The data

elements in Appendix B are identical to

those in Appendix A except that some

elements are omitted as not applicable

and others consist of a single data

element with no break-outs. See

Appendix J for the statutory reference

table applicable to Appendix B.

TANF Data Report: Aggregated Data—

Section Three (§ 275.3(b)(2))

Paragraph (b)(2) of this section

proposes that each State must file

quarterly aggregated information. (See

Appendix C for the list of data

elements.)

The data elements in this section of

the TANF Data Report cover families

receiving, applying for, and no longer

receiving TANF assistance. They

include total figures on the number of

approved and denied applications; the

number of no-parent (e.g., child-only),

one-parent, and two-parent families; the

number of child and adult recipients;

the number of minor child heads-ofhouseholds; the number of out-ofwedlock births; the number of births;

the number of non-custodial parents

participating in work activities; the

number of closed cases; and the total

amount of TANF assistance provided.

This third section of the TANF Data

Report contains 19 data elements. Ten

of the 19 are specified in, or are breakouts of data elements in, section 411(a).

Technical amendments to PRWORA

under section 5507 of Pub. L. 105–33

added a new section 411(a)(6) to the

TANF data collection and reporting

requirements. This new paragraph (6)

requires reports on ‘‘the number of

families and individuals receiving

assistance . . . (including the number of

2-parent and 1-parent families).’’ It also

asks for the total dollar value of such

assistance received by all families.

We propose two break-outs for these

new data elements in section 411(a)(6).

As a break-out under the ‘‘number of

families,’’ we are proposing to collect

data on the number of no-parent

families and the number of minor-child

heads-of-household. As a break-out

under ‘‘number of individuals,’’ we are

proposing to require data on the number

of adult recipients and the number of

child recipients.

In addition to the statutorily-based

data elements, we have added nine data

elements. We are proposing to require

three data elements (#1–3) as necessary

to administer a data collection system

and two data elements (#5 and #19) as

necessary to verify and validate the

quality and consistency of the

disaggregated data. Because we allow

States to report disaggregated data on a

sample basis, we need certain

aggregated data to test the reliability of

estimates and the representativeness of

the disaggregated sample data.

Finally, two data elements (#4 and #6)

are required by section 411(b) for the

report to Congress, and two elements

(#17–18) are required by section 413(e)

for the annual rankings of States related

to their efforts to prevent out-of-wedlock

births. See Appendix K for the Statutory

Reference Table for Appendix C.

This section of the TANF Data Report

is made up of aggregate data almost all

of which was previously reported under

the AFDC and JOBS programs. We have:

consolidated the data elements in the

previously required monthly FLASH

Report and two quarterly aggregated

data reports—the 3637 Report and the

3800 Report—into a single quarterly

report; eliminated the monthly report;

and greatly reduced the number of data

elements. We believe the States will

welcome the reduced burden in this

area.

In addition, we have further

minimized the reporting burden on

States by how we propose to collect

‘‘demographic and financial

characteristics of families applying for

assistance.’’ In interpreting this

requirement in section 411(b), we

propose to collect information, not on

all families who apply, but only on

those whose applications are newly

approved. We propose to collect any

additional information that is needed on

applicants who are not approved

through a special study or studies.

We adopted this approach because the

question of ‘‘what is an application’’

and ‘‘what is a denied application’’ (as

opposed to a referral or a diverted

family, for example) is often very

difficult to determine. If we were to

require data on all applications, we

believe that considerable portions of the
62174 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

demographic and financial data would

be incomplete or entirely missing. We

also believe that there would be

extraordinary variability in the

information provided across States. This

variability would have an adverse

impact on the quality of any estimates

based on these data and on our ability

to interpret the data.

Also, data collection on all applicants

could be very burdensome on States as

they would need to create an additional

sample frame to select samples for all

applications and to collect data on

families who are not receiving

assistance. These families may be

difficult to locate and unwilling to

cooperate.

As noted earlier, in our external

consultation, users of these data

expressed strong support for continued

collection of this information.

We received recommendations that

additional data elements should be

added. In many instances, we agreed

with the importance of the data, but we

could not justify its necessity for the

administration of the program, given our

limited regulatory authority.

We also considered various options in

how to design a data collection system

to minimize the burden on States. The

statutory requirements include monthly

collection, quarterly reports, annual

reports, and other periodic activities

(e.g., annual rankings of States,

application of penalties). We have tried

to simplify these requirements in our

proposal to include all data collection in

the quarterly TANF Data Report and the

TANF Financial Report (or, as

applicable, the Territorial Financial

Report), including a fourth quarter

addendum, and one annual program

and performance report. Since the data

being collected apply to individuals and

families, it is easier for a State to modify

its current data collection system than

to set up new systems with different

periodicities. We believe that: (1) States

will be able to accommodate to this

proposed system of quarterly reports,

one annual addendum to the quarterly

reports, and one annual report; and (2)

by this simplification of data collection

and reporting, we will have come a long

way to increasing the completeness and

accuracy of the data.

TANF Financial Report (§ 275.3(c))

We propose in paragraph (c) to

require each State to file a TANF

Financial Report quarterly. See

Appendix D for the content of the TANF

Financial Report and the content of the

addendum that must be filed with the

fourth quarter TANF Financial Report as

described in § 275.9.

We will be issuing a separate

Territorial Financial Report for the

Territories because they have different

funding sources and different MOE

requirements. The Territorial Financial

Report will incorporate the

requirements of the TANF Financial

Report—including the data elements,

fourth quarter addendum, and filing

deadlines. Also, if one of the Territories

fails to file the Territorial Financial

Report or to include certain information

in that report, it would be treated like

a State that fails to file its TANF

Financial Report and subject to the

penalty for failure to report at

§ 272.1(a)(3).

We propose that States report

information in two broad categories—

‘‘Expenditures on Assistance’’ and

‘‘Expenditures on Non-Assistance’’—

because we need to track the

reasonableness of the definition of

assistance for Federal funding and State

MOE purposes. These data will assist us

in understanding the extent to which

recipients of benefits and services are

covered by program requirements. As

we indicated in the discussion of the

definition of ‘‘assistance’’ in § 270.30,

we want to make sure that our

definition does not have the effect of

undermining the objectives of the Act.

The data will also be important in

helping us validate the data received on

disaggregated cases.

The TANF Financial Report is

designed to serve multiple purposes:

(1) To gather data required under

section 411 (a)(2), (a)(3), and (a)(4), i.e.,

data on administrative costs, State

expenditures on programs for needy

families, and transitional services for

families no longer receiving assistance

due to employment;

(2) To gather quarterly estimates for

Federal TANF grants as authorized by

section 405(c)(1);

(3) To monitor expenditures and

closeout TANF grants for a fiscal year,

in accordance with standard financial

reporting requirements for federal grant

programs;

(4) To determine if a State has met its

TANF MOE requirement under section

409(a)(7);

(5) To determine compliance with the

limitations on administrative costs as

specified in section

409(a)(7)(B)(i)(I)(dd);

(6) To accomplish the annual

reconciliation for the Contingency Fund

under section 403(b);

(7) To assure compliance with section

409(a)(1) (misuse of funds), section

409(a)(10) (Contingency Fund MOE

requirements), and section 409(a)(14)

(State reduction of assistance for

recipients refusing without good cause

to work; and

(8) To monitor the expenditure of

additional State funds to replace grant

reductions.

With respect to MOE and Contingency

funds, TANF MOE and Contingency

Fund reporting for a fiscal year

culminate with the submission of the

fourth quarter financial report for the

fiscal year. However, because Federal

TANF funds granted for a fiscal year are

available until expended, States must

continue reporting on State

expenditures of Federal funds each

quarter until they have expended all

their funds.

Paragraph (c)(4) proposes to require

that if a State is expending funds

received in a prior fiscal year, it must

file a separate quarterly TANF Financial

Report (or, as applicable, Territorial

Financial Report) for each fiscal year

that provides information on how that

fiscal year’s funds were expended.

For example, if a State reserves FY

1997 funds through the second quarter

of FY 1999, the State must submit

quarterly reports on FY 1997 funds with

the final report covering the second

quarter of FY 1999. During this same

period, a State must submit its reports

for FYs 1998 and 1999.

The MOE expenditure information in

the TANF Financial Report is not an

optional reporting requirement, as is the

information on families served by

separate State programs in the TANF

Data Report. States must report such

expenditure data as a part of the

evidence required to assure that State

MOE expenditures are ‘‘qualified.’’

OMB has approved the use of an

interim financial reporting form (#0970–

0165) on an emergency basis until it

approves the TANF Financial Report.

We have not attached a statutory

reference chart for Appendix D. With a

few exceptions, the data elements in the

TANF Financial Report are required by

section 411, are needed to determine if

a State has met the TANF MOE

requirements under section 409(a)(7),

and are necessary to carry out our

financial management responsibilities

under 45 CFR part 92.

The exceptions and our rationale for

their inclusion are as follows:

1. Expenditure data on cash

assistance, work subsidies and

activities, and child care. These

expenditure categories provide

information to assess a State’s use of

funds (see penalty sections 409(a)(1)

and 409(a)(7)) and are a basis for

determining a State’s total commitment

to work (see sections 409(a)(3) and

409(a)(9)).
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62175

2. Expenditures on systems. For

Federal TANF funds, the statute

excludes systems costs from the 15

percent limit on administrative costs.

The statute is silent as to whether such

costs are within the 15 percent limit on

administrative costs for State MOE

expenditures. We are proposing that

systems costs may also be excluded

from the State calculation. Attaching

information on State systems

expenditures will enable us to judge the

implications of our proposal to exclude

such costs from the administrative cost

cap applicable to State funding.

3. Fourth Quarter Addendum.

• State reporting of families excluded

from work rates and time-limit

calculations under the State definition

of families receiving assistance.

States must annually report the

number of families excluded from the

overall work participation rate (at

§ 271.22), the two-parent rate (at

§ 271.24), and the time-limit

calculations (at § 274.1), together with a

description of the family circumstances

that explains why they were excluded.

The purpose of this information is to

provide a national perspective as to

whether States are avoiding critical

provisions of the law by creating childonly cases.

• State definition of work activities.

This State definition must also be

reported annually. We need this

information to monitor the work

participation requirements in section

407. See also our preamble discussion

in § 271.30, ‘‘What are work activities?’’

• Description of transitional services.

This description of transitional

services provided to families that are

not receiving TANF assistance because

of employment implements section

411(a)(5).

• Description of how a State will

reduce the amount of assistance

payable to a family when the individual

refuses to engage in work.

This description of how a State carries

out pro rata (or more) reductions

provides information that is necessary

to implement section 409(a)(14). See

also § 271.54 and 55.

• Descriptive and expenditure-related

information on the State’s separate MOE

program.

This information is necessary to carry

out requirements of section 409(a)(7).

See the discussion of § 273.7 for

additional details.

TANF–MOE Data Report (§ 275.3(d))

Paragraph (d) proposes to require that

a State must report case record data on

separate MOE programs if it wishes to

be considered for certain benefits and

options under the Act.

The data elements we are proposing

to collect on separate State programs are

identical in content to but fewer in

number than the demographic and work

activity data we have proposed in

paragraphs (b) and (c) of this section.

(See Appendices E, F, and G.)

We are proposing to collect

information on separate State programs

in order to help ensure that State

decisions to establish such programs do

not undermine the work provisions of

the new law, undercut Congressional

intent to share child support collections

between the Federal and State

governments, or have other negative

consequences.

We believe that it is not possible to

judge the impacts and accomplishments

of the State’s TANF program by looking

only at how a part of the State’s program

is operating. We need information on

the separate State programs so that we

can better identify which States are

truly successful in serving needy

families, promoting work, and meeting

other legislative goals.

For example, a State could score well

on a measure of its TANF performance

by relegating the most-difficult-to-serve

families to a separate State program in

which they received no self-sufficiency

services. In reality, this State would be

performing more poorly than a State

that achieved the same level of success

with its TANF population, but served

all families through its TANF program.

Similarly, a State that ‘‘reduced’’ its

TANF caseload by simply splitting its

program into a TANF program and a

separate State program should not get

credit for caseload reduction in

determining its work participation rate.

Thus, collection of data on separate

State programs would give us the

capacity to look broadly at issues of

work effort, caseload reductions, family

structure, and other measures of

performance.

We plan to look at overall

participation levels, including

participation by families receiving

assistance under separate State

programs, to assess how well States are

meeting their responsibilities to help

families toward self-sufficiency. These

overall participation levels could affect

the size of a State’s penalty if it does not

meet the rates at section 407. However,

we base our initial determination that a

State is subject to a penalty under

section 407 on the work participation

rates of families receiving TANF

assistance, not these overall

participation levels.

The differences between the TANF

Data Report and the TANF–MOE Data

Report are minor. Appendix A contains

six data elements not included in

Appendix E. They are: Tribal Code,

Amount of Monthly Child Care CoPayment, Is the TANF Family Exempt

from the Federal Time Limit Provision,

Type of Child Care, Total Monthly Cost

of Child Care, and Total Monthly Hours

of Child Care Provided During the

Reporting Month.

Appendix B contains one data

element not in Appendix F—Tribal

Code Number. Appendix C contains

four data elements that do not appear in

Appendix G. They are: Tribal Code,

Total Number of Applications, Total

Number of Approved Applications, and

Total Number of Denied Applications.

The statutory authority and rationale

for these data elements are found in

Appendices I–K.

When are quarterly reports due?

(§ 275.4)

Paragraph (a) of this section

implements section 409(a)(2), as

amended by Pub. L. 105–33, which

requires that States file quarterly reports

within 45 days following the end of the

fiscal quarter or be subject to a penalty.

Paragraph (c) implements section 116

of PRWORA in defining the effective

date of the reporting requirements for

individual States, depending on the date

they began implementation of the TANF

program. Section 116 states that the

reporting requirements shall take effect

on the later of July 1, 1997, or six

months after the Secretary receives a

TANF Plan from the State. For

operational purposes, we interpret this

to mean that the reporting period begins

six months after the State implements

the program.

For example—

If a State implements TANF Reporting period Reports due

March 1, 1997 ............................................................................... September 1, 1997–September 30, 1997 .................................... 11/14/97

April 10, 1997 ............................................................................... October 10, 1997–December 31, 1997 ........................................ 02/14/98

July 1, 1997 .................................................................................. January l, 1998–March 31, 1998 ................................................. 05/15/98
62176 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

These effective dates apply to the

TANF Data Report and the TANF

Financial Report, including the annual

addendum to the fourth quarter TANF

Financial Report.

Paragraph (b) proposes that a State

may collect and submit its quarterly

TANF–MOE Data Reports at the same

time as it submits TANF Data Reports,

or it may submit them at the time it

seeks to be considered for a high

performance bonus, a caseload

reduction credit, or a reduction in the

penalty for failing to meet work

participation requirements, as long as

the data submitted are for the full period

on which these decisions will be based.

Although we believe that it will be

easier for States (and State data

collection systems) to file all data

reports at the same time, this additional

flexibility may be useful for some States.

May States use sampling? (§ 275.5)

This section implements section

411(a)(1)(B) in permitting the States to

meet the disaggregated data collection

and reporting requirements by

submitting data based on the use of a

scientifically acceptable sampling

method approved by us. States may not

submit aggregated data based on a

sample, e.g., the TANF Financial

Report.

We have proposed a definition of

‘‘scientifically acceptable sampling

method’’ in paragraph (b) of this section.

This definition reflects generally

acceptable statistical standards for

selecting samples and is consistent with

existing AFDC/JOBS statistical policy.

(See Appendix H for a summary of the

sampling specifications.)

At a later date we will issue the TANF

Sampling and Statistical Manual that

will contain instructions on the

approved procedures and more detailed

specifications for sampling methods.

Must States file reports electronically?

(§ 275.6)

We are proposing to require that

States must submit all quarterly

reports—the TANF Data Report, the

TANF Financial Report (or, as

applicable, the Territorial Financial

Report), and the TANF–MOE Data

Report—electronically.

We are proposing electronic

submission for several reasons. For each

collection of information, OMB

regulations at 5 CFR 1320.8 require

Federal agencies to evaluate whether the

burden on respondents can be reduced

by use of automatic, electronic,

mechanical, or other technological

collection techniques. This Department

has for many years encouraged

programs and grantees to use such nonpaperwork approaches to meet data

collection requirements.

All States submitted data reports

electronically under the prior AFDC,

JOBS, and the Quality Control data

reporting systems. In external

consultation meetings, State

representatives supported electronic

submission of both data and financial

reports. Therefore, we conclude that

continuing electronic submission of

data reports will not be a burden on

States and that requiring electronic

submission of all data and financial

reports will reduce paperwork and

administrative costs, be less expensive

and time-consuming, and be more

efficient for both States and the Federal

government.

As noted earlier, we will develop and

provide for State use a pc-based

software package to facilitate data entry

and create transmission files for each

quarterly report.

We are considering developing, when

feasible, an electronic reporting format

for the annual addendum to the TANF

Financial Report and the annual

program and performance report as

required in § 275.9. We would

appreciate comments and suggestions

on the desirability and usefulness of this

approach.

How will we determine if the State is

meeting the quarterly reporting

requirements? (§ 275.7)

In order to set a standard of

compliance for monitoring and penalty

purposes, we have proposed definitions

of what will constitute ‘‘a complete and

accurate report’’ for disaggregated data

reports, for aggregated data reports, and

for the TANF Financial Report (and, as

applicable, the Territorial Financial

Report). We will use these definitions in

determining if the State is subject to any

of the penalties for which we are

collecting data. (See § 275.8 of this part

for the specific circumstances under

which we will impose the penalty for

failure to report complete, accurate, and

timely data under section 409(a)(2).)

We will also use these definitions for

monitoring the completeness and

accuracy of the data and financial

reports under our authority in section

411(a)(1)(B) to verify the quality of data

submitted.

We believe these definitions are

necessary to ensure that we receive data

reports that are in good order. We

considered not providing a definition or

a standard of compliance, but rejected

that option because the data reports are

so critical to our ability to provide

information to Congress, States, and the

public on how welfare reform is

proceeding as well as to assess and hold

States accountable for program

performance.

In the past, we have had problems

obtaining complete and accurate data.

Errors have been common, thus creating

substantial burdens for ACF (in

conducting edit checks) and for States

(in revising and correcting their reports).

Because of errors and omissions, we

have also experienced significant delays

in reporting national program data to

States, Congress, and the public. We

welcome suggestions and

recommendations on ways to help

assure more accurate data reporting

without creating undue burden on

States.

We are concerned about complete,

accurate, and timely data for another

reason. We are considering posting

information from the quarterly TANF

Data Reports on the Internet for access

by other Federal agencies, legislators,

researchers, the public, and others for a

variety of analytic and evaluation

purposes. Posted data would allow

States and others to make comparisons

among State programs,

accomplishments, outcomes, and levels

of performance. If we put these data in

the public domain, the need for

completeness and accuracy is much

greater because the likelihood increases

that the numbers would be used or

published without appropriate caveats

or consideration of their limitations. In

addition, posting data that could not be

relied upon defeats the purpose of

making the data more accessible.

The standards for ‘‘completeness and

accuracy’’ that we are proposing for the

TANF Financial Report (and Territorial

Financial Report) in paragraph (d) apply

to all expenditures reported; i.e.,

Federal TANF, State TANF,

Contingency Fund, and State MOE

expenditures. We propose that these

expenditures be made in accordance

with the requirements at 45 CFR

92.20(a). Under this provision, all

expenditures must be traceable, so that

we can determine if funds have been

used properly, and made in accordance

with Federal and State laws and

procedures. For the ‘‘completeness’’

standard, we expect that States will

report expenditures for all data elements

for which expenditures are made in the

quarter.

Also in paragraph (b), the proposed

definition of ‘‘a complete and accurate

report’’ includes the statement that

‘‘where estimates are necessary, the

State uses reasonable methods to

develop these estimates.’’ We plan to

review each State’s methods and

procedures for developing these

estimates through on-site verifications

or technical assistance visits.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62177

Finally, regarding verification of data,

the Secretary has the authority under

section 411(a)(1)(B) to verify the quality

of the data submitted by States. We will

be exploring several approaches to

verification of data, including audits

and reviews. We also remind States, in

paragraph (f), that backup documents

need to be retained to support the

information in any report and for

verification purposes.

Under what circumstances will a State

be subject to a reporting penalty for

failure to submit quarterly reports?

(§ 275.8)

In order to ensure that States file

required reports, section 409(a)(2)(A)

requires us to impose a penalty on a

State if the State has not filed the

required report within 45 days

following the last month of a fiscal

quarter. However, section 409(a)(2)(B)

allows us to rescind the penalty if the

State files the report before the end of

the quarter immediately following the

quarter for which the report was

required. These provisions are reflected

in paragraphs (c) and (d) of this section.

In paragraph (a), we propose to

impose the penalty only with respect to

the two quarterly reports—the TANF

Data Report and the TANF Financial

Report (or Territorial Financial Report),

including the fourth quarter annual

addendum—and only under one or

more of the following five

circumstances:

• The State fails to file the TANF Data

Report or the TANF Financial Report (or

Territorial Financial Report) on a timely

basis.

• The disaggregated data in the TANF

Data Report is not accurate or does not

include all of the data elements required

by section 411(a) (other than section

411(a)(1)(A)(xii) regarding work

participation requirements) or the nine

additional data elements necessary to

carry out the data collection system

requirements.

• The aggregated data in the TANF

Data Report does not include complete

and accurate information on the ten data

elements required by section 411(a) and

the five data elements necessary to carry

out the data collection system

requirements and verify and validate

disaggregated data.

• The TANF Financial Report (or

Territorial Financial Report) does not

contain complete and accurate

information on total expenditures and

expenditures on administrative costs

and transitional services, as required by

section 411(a).

• The annual addendum to the fourth

quarter TANF Financial Report (or

Territorial Financial Report) does not

contain the required information on

families excluded from the work

participation and time-limit

calculations, the State’s definition of

work activities, and the descriptive

information on transitional services in

the TANF program as required by

section 411(a).

This means that:

(1) For the disaggregated data in

section one of the TANF Data Report

(Appendix A), we will impose a penalty

if the section 411(a)-based data elements

are not complete and accurate and if the

items identified as necessary to carry

out the data collection system

requirements are also not complete and

accurate;

(2) For the disaggregated information

in section two of the TANF Data Report

(Appendix B), the information required

by section 411(a) must be complete and

accurate;

(3) For the aggregated data in section

three of the TANF Data Report

(Appendix C), the section 411(a)-based

data elements, and the data elements

necessary to meet the data collection

systems requirements and verify and

validate the disaggregated data, must be

complete and accurate; and

(4) For the TANF Financial Report (or

Territorial Financial Report), a State

must file complete and accurate

information on its definition of work

activities, any families excluded from

the work participation or time-limit

calculations because of the State’s

definition of families receiving

assistance, total program expenditures

and expenditures on administrative

costs and transitional services as

specified in section 411(a).

The Statutory Reference Tables at

Appendices I–K identify the specific

statutory bases for the data elements and

those that are necessary to carry out the

data collection system requirements.

Paragraph (b) specifies that we will

not apply the penalty to the TANF–

MOE Data Report, the annual program

and performance report proposed in

§ 275.9, or the other information on

individuals and families required based

on section 411(b).

We took this approach because the

penalty for failure to submit a timely

report at section 409(a)(2) applies to the

data collection requirements in section

411(a). We considered applying the

penalty to all of the data elements in the

disaggregated sections of the TANF Data

Report (Appendices A and B) as the

overwhelming majority of the data

elements in these two instruments are

specified in section 411(a). In addition

to the importance of the information, we

thought that this approach would be

simpler and easier to administer.

We concluded, however, that we do

not have the authority to impose a

penalty for failure to report on

additional elements (other than those

relating to section 411(a)) in the TANF

Data Report or the TANF Financial

Report. Nor do we have authority to

impose a penalty for failure to file the

TANF-MOE Data Report or the annual

report on program and performance.

This means we will not impose a

penalty under this part for failure to file

data elements necessary to carry out

other statutory provisions. However, the

failure to file data elements based on

other statutory provisions will subject

the State to any penalty relating to those

provisions. For example, the TANF Data

Report includes five elements based on

section 409(a)(9) (time limits on receipt

of assistance). The penalty for failure to

file the section 409(a)(9) data elements

is tied to the penalty provisions in

section 409. If a State does not file the

complete and accurate information

necessary to administer section

409(a)(9) in the TANF Data Report, we

will determine that the State has not

met this requirement, and we will

impose the penalty specified under

section 409(a)(9).

We cannot over-emphasize how

seriously we look upon the matter of

complete, accurate, and timely

reporting. As noted earlier, the data

collected will serve many functions—for

States, the Congress, the public, and for

us. Adequate data will be critical to

many policy and administrative

implementation activities.

For example, a State’s failure to file

complete, accurate, and timely TANF

Financial Reports may jeopardize the

timely payment of TANF grants to the

State and will raise questions as to

whether a State is subject to a penalty

for misuse of funds, intentional misuse

of funds, or failure to make sufficient

‘‘qualified State expenditures’’ for

TANF MOE or Contingency Fund MOE

purposes.

We propose in paragraph (c) that,

when a State meets one or more of the

conditions set forth in paragraph (a), we

will notify the State that we intend to

impose a penalty and reduce the SFAG

for the immediately succeeding fiscal

year by four percent.

However, paragraph (d) specifies that,

if the State meets the requirements by

the end of the next fiscal quarter that

immediately follows the quarter for

which the report was due, we will not

impose the penalty. For example, if a

State fails to file a complete and

accurate report for the first quarter of

the fiscal year by February 14, but does

file the report by March 31, we will not

penalize the State.
62178 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

If a State does not meet the reporting

requirements, we intend to impose the

penalty. Before we do so, paragraph (e)

provides that States will have an

opportunity to submit ‘‘reasonable

cause’’ justifications and/or corrective

compliance plans in accordance with

§§ 272.4–272.6.

If we find that a penalty is

appropriate, we propose, in paragraph

(f), that we will reduce, by four percent,

the State’s family assistance grant for

the next fiscal year as specified in

section 409(a)(2) unless we determine

that a reduction is not appropriate

pursuant to sections 409(c) (2) and (3).

What information must the State file

annually? (§ 275.9)

We propose in this section that States

must submit two reports annually.

Paragraphs (a) and (b) refer to the State’s

definitions and other information that

must be submitted as an addendum to

the fourth quarter TANF Financial

Report (or Territorial Financial Report).

See Section 3 of Appendix D for details.

Paragraph (c) proposes that an annual

program and performance report must

be submitted to meet the requirements

of section 411(b), the report to Congress.

In paragraph (a), we propose to

require four items of information on the

State’s TANF program: the number of

families excluded from the two work

participation rates and time-limit

calculations under the State’s definition

of families receiving assistance (with the

basis for the exclusions); the State’s

definition of each work activity; a

description of the transitional services

provided to families no longer receiving

assistance due to employment, as

specified in sections 411(a)(1)(A)(xi),

(a)(2) and (a)(5); and a description of

how the State carries out pro rata (or

more) reductions in assistance for

recipients refusing without good cause

to work. This last item would provide

information necessary to implement

section 409(a)(14).

In paragraph (b), we propose to

require the eight items of descriptive

and expenditure-related information on

the State’s separate MOE program, as

specified in § 273.7.

States must submit the information in

both paragraphs (a) and (b) at the same

time as the fourth quarter TANF

Financial Report.

We believe the information in

paragraphs (a) and (b) is readily

available, will be easy to report

annually, and will not be burdensome

for States. The information related to the

State’s separate MOE program is

important to our ability to track and

monitor the MOE expenditures and

program effects. (See also our discussion

of the importance of MOE program

information in § 273.7.)

In order to reflect the most current

and accurate information about State

TANF programs in the Secretary’s

annual report to Congress, we propose

in paragraph (c) that each State must file

an annual program and performance

report. The content of this report, as

described in paragraph (c), will address

the provisions of section 411(b) and the

concerns of Congress and others about

the implementation of the TANF

program.

At a later date, following public

comment on this NPRM, we will

develop and obtain further public

comment on, and OMB approval for, a

reporting form that includes both the

specific content of the report and

instructions for filing.

In order to minimize the reporting

burden on States, we will collect some

information for our report to Congress

from the quarterly Data and Financial

Reports, State Plans, annual rankings

and reviews, and/or other special

studies. We also plan to take advantage

of, and work in conjunction with other

efforts to acquire information on the

TANF program, including research

agencies and organizations currently

gathering information on program

design and implementation.

To the extent that we may be able to

build on existing collaborations, we can

avoid duplication of effort and produce

a better, more complete national picture

of the TANF program.

When are annual reports due? (§ 275.10)

Paragraph (a) proposes that the

information in the addendum to the

fourth quarter TANF Financial Report,

specified in § 275.9 (a) and (b), must be

filed at the same time as the fourth

quarter TANF Financial Report. This

means that this information is due one

month following the end of the fourth

quarter.

Paragraph (b) proposes that States

must file the annual program and

performance report to meet the

provisions of section 411(b) within 90

days after the close of the fiscal year.

This means that the annual report

describing State activities carried out in

FY 1997 will be due December 30, 1997.

This annual report requirement in

section 411(b) is not covered by the

statutory effective date for reporting in

section 116 of PRWORA. The proposed

deadline is consistent, however, with

the deadline for most annual reports

under DHHS grant programs as

specified in 45 CFR 92.40(b)(1).

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 proposed rule is consistent

with these priorities and principles.

This proposed rulemaking implements

statutory authority based on broad

consultation and coordination.

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

and their representative organizations as

well as a broad range of advocacy

groups, researchers and others to obtain

their views.

We discuss the input received during

the consultation process in the

‘‘supplementary information’’ section of

the preamble and in discussions of

individual regulatory provisions. To a

considerable degree, these proposed

rules reflect the discussion and

concerns of the groups with whom we

consulted.

These proposed rules reflect the

intent of PRWORA to achieve a balance

between granting States the flexibility

they need to develop and operate

effective and responsive programs and

ensuring that the objectives of the

program are met. Under the new law,

State flexibility is achieved by

converting the welfare program into a

block grant and limiting Federal rules;

ensuring that program goals are

accomplished is achieved through a

number of penalty and bonus provisions

and extensive data collection.

We support State flexibility in

numerous ways—such as by exercising

regulatory restraint; giving States the

ability to define key program terms; and

clarifying that States have the ability to

continue their welfare reform

demonstrations and serve victims of

domestic violence, non-custodial

parents, and immigrants (with State

funds).

We support the achievement of

program goals by ensuring that we

capture key information on what is

happening under the State TANF

programs and maintaining the integrity

of the work and other penalty

provisions. We take care, in provisions

such as the proposed MOE data

collection and caseload reduction factor

approval process, to protect against

negative impacts on needy families.

(Subsequent rules on the high

performance bonus, illegitimacy bonus,
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62179

child poverty rates and Tribal TANF

programs will reinforce these

objectives.)

One of our key goals in drafting the

penalty rules was to ensure State

performance in all key areas provided

under statute—including work

participation, time limits, State

maintenance-of-effort, proper use of

Federal funds and data reporting. The

law specified that we should enforce

State actions in these areas and

specified the penalty for each failure.

Through the ‘‘reasonable cause’’ and

‘‘corrective compliance’’ provisions in

the proposed rules we give some

consideration to special circumstances

within a State to help ensure that

neither the State nor needy families

within the State will be unfairly

penalized for circumstances beyond

their control.

In the work and penalty areas, this

rulemaking provides information to the

States that will help them understand

our specific expectations and take the

steps necessary to avoid penalties.

These rules may ultimately affect the

number and size of penalties that are

imposed on States, but the basic

expectations on States are statutory, and

the effect of these rules is non-material.

The financial impacts of these

proposed rules should be minimal

because of the fixed level of funding

provided through the block grant. (We

expect Federal outlays for State Family

Assistance Grants, exclusive of any

bonuses, to amount to nearly $15.6

billion in FY 1998.) A State’s Federal

grant could be affected by the penalty

decisions made under the law and these

rules, and State expenditures on needy

families could be affected by the

proposed rules on the caseload

reduction. Otherwise, we do not believe

that the rulemaking will affect the

overall level of funding or expenditures.

However, it could have minor impacts

on the nature and distribution of such

expenditures.

In the area of data collection, the

statutory requirements are very specific

and extensive—especially with respect

to case-record or disaggregated data.

These proposed rules include additional

data reporting with respect to program

expenditures and MOE cases. They

expand upon the expenditure data

explicitly mentioned by the statute in

order to ensure that: needy families

continue to receive assistance and

services; monies go for the intended

purposes; and the financial integrity of

the program is maintained. They also

include additional, optional data

collection for MOE cases. We included

this additional MOE data collection in

order to assess the overall impact of the

program and ensure that the creation of

separate State programs does not

undermine the objectives of the Act.

The impacts of these rules on needy

individuals and families will depend on

the choices the State makes in

implementing the new law. We expect

our proposed data collection to enable

tracking of these effects over time and

across States. Overall, our assessment of

these proposed rules indicates that they

represent the least burdensome

approach and that the impacts and

consequences are non-material for

individuals, States, and other entities.

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5

U.S.C. Ch. 6) 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 Act to include small

businesses, small non-profit

organizations, and small governmental

entities. This rule will affect only the 50

States, the District of Columbia, and

certain territories. Therefore, the

Secretary certifies that this rule will not

have a significant impact on small

entities.

C. Paperwork Reduction Act

This proposed rule contains

information collection activities that are

subject to review and approval by the

Office of Management and Budget

(OMB) under the Paperwork Reduction

Act of 1995. Under this Act, no persons

are required to respond to a collection

of information unless it displays a valid

OMB control number. As required by

the Paperwork Reduction Act, we have

submitted the proposed data collection

requirements to OMB for review and

approval. We are concurrently using

this NPRM as a vehicle for seeking

comment from the public on these

information collection activities.

The proposed rules contain

provisions covering three quarterly

reports and one annual report. In

addition, we are proposing that States

provide documentation for caseload

reduction credit and the reasonable

cause/corrective action process and that

they file certain program definitions and

descriptions annually. In order to

provide an opportunity for maximum

review and public comment on the

reporting requirements, we have

attached the proposed quarterly reports

(including the specific data elements)

and the annual addendum as

Appendices to part 275. We will revise

these instruments following the

comment period on the NPRM and will

issue them to States through the ACF

policy issuance system. We will not republish these appendices as a part of the

final rule.

The three quarterly reports are the

TANF Data Report (Appendices A

through C), the TANF MOE Data Report

(Appendices E through G), and the

TANF Financial Report (Appendix D)

(or, as applicable, the Territorial

Financial Report). The TANF Data

Report and the TANF MOE Data Report

consist of three sections each. Two of

these three sections consist of

disaggregated case-record data elements,

and one consists of aggregated data

elements.

We need this proposed information

collection to meet the requirements of

section 411(a) and to implement other

sections, including sections 407 (work

participation requirements), 409

(penalties), 413 (annual rankings), and

411(b) (Annual report to Congress).

Reporting on the separate State MOE

program(s) is optional. However, if a

State claims MOE expenditures under a

separate State program and wishes to

receive a high performance bonus,

qualify for work participation caseload

reduction credit, or be considered for a

reduction in the penalty for failing to

meet the work participation

requirements, it must file disaggregated

and aggregated information on the

separate State program(s) that is similar

to that reported for the TANF program.

(See Appendices E, F, and G for the

proposed data elements.)

The TANF Financial Report consists

of one form with an annual addendum

to be submitted at the same time as the

TANF Financial Report for the fourth

quarter. (See Appendix D.)

We need this report to meet the

requirements of sections 405(c)(2),

411(a)(2), 411(a)(3), and 411(a)(5), and

to carry out our other financial

management and oversight

responsibilities. These include

providing information that could be

used in determining whether States are

subject to penalties under section

409(a)(1), 409(a)(3), 409(a)(7), 409(a)(9),

or 409(a)(14), tracking the

reasonableness of our definition of

‘‘assistance,’’ learning the extent to

which recipients of benefits and

services are covered by program

requirements, and helping to validate

the disaggregated data we receive on

TANF and MOE cases.

We are also proposing an annual

report in order to collect the data

required by section 411(b). This report

requires the submission of information

about the characteristics of each State

program; the design and operation of the

program; the services, benefits, and

assistance provided; the State’s
62180 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

eligibility criteria; and the State’s

definition of work activities. At its

option, each State may also include a

description of any unique features,

accomplishments, innovations, or

additional information appropriate for

inclusion in the Department’s annual

report to the Congress.

We will work with representatives of

States and others to identify the specific

form that will be used for this report,

building on the information currently

being collected on the TANF program

by research organizations and others.

Before we issue a reporting form to

gather this information and instructions

for filing the report, we will give the

public another opportunity to comment

on its content and the burden imposed.

Besides the data collection

instruments discussed above, there are

two other circumstances in the

proposed rules that will create a

reporting burden. The first circumstance

would be in cases where a State wants

to qualify for caseload reduction credit.

The second would be in cases where a

State is subject to a penalty under

section 409 and wishes to avoid the

penalty or receive a reduced penalty.

If a State elects to request a decrease

in its participation rates based on

caseload reduction, we are proposing in

§ 271.41 that it must file certain data. In

addition, if a State wishes to dispute a

penalty determination or wants to be

considered for a waiver of a penalty

based on ‘‘reasonable cause’’ or

corrective compliance, we are proposing

in § 272.4 that the State would provide

us with information. We are proposing

that a State would use a similar process

if it is seeking a reduced penalty for

failure to meet the work participation

rates, as discussed at § 271.51.

Therefore, we also address the burden

issues related to these processes below.

The respondents for the TANF

Financial Report are the 50 States of the

United States and the District of

Columbia. The respondents for the

TANF Data Report, the TANF MOE Data

Report, the TANF Annual Report, the

Caseload Reduction Credit

documentation process, and the

Reasonable Cause/Corrective Action

documentation process are the 50 States

of the United States, the District of

Columbia, Guam, Puerto Rico, and the

United States Virgin Islands. American

Samoa is eligible for the TANF program

and could use funds that it receives

under section 1108 to operate the TANF

program. However, it did not elect to

operate an AFDC program, and we

assumed that it would elect not to

operate a TANF program.

While the statute requires Tribal

organizations with TANF programs to

submit some of the same data as States,

we have not calculated the burden for

the Tribal organizations in this NPRM

because a separate NPRM will address

Tribal TANF programs.

Tribal TANF programs will not be

required to submit all of the data

required for State TANF programs

because some provisions for which data

are being collected apply only to States.

In addition, because Tribal

organizations have not previously

operated AFDC programs, the burden

imposed on them by reporting will be

substantially different than it is for the

States. In light of these special

considerations, we considered it more

appropriate to address the burden on

Tribes in that separate NPRM.

In providing these estimates of

reporting burden, we would like to

point out that some of the reporting

burden that used to exist in the AFDC

program has disappeared, including the

‘‘FLASH Report’’ and several other

reports. Nevertheless, most of the data

elements required under the TANF Data

Report are similar to previous data

elements required in the AFDC or JOBS

program. Therefore, the existence of

these data elements should reduce the

systems development and modification

that the States will undertake. In

calculating the estimates of the

reporting burden, we assumed that all

States would collect the data by means

of a review sample. We believe that a

number of States will eventually choose

to undertake the one-time burden and

cost of developing or modifying their

systems to provide the required data

directly from their automated systems,

thus substantially reducing or

eliminating the ongoing annual burden

and cost reflected in these estimates.

In a very limited number of cases, we

have proposed collecting information

quarterly where the statute only requires

annual reporting, or we have added

elements not directly specified in the

statute. We did this because one of our

goals was to limit the number of

reporting forms and systems

modifications that States would be

required to make.

Specifically, we believe that adding a

data element like gender, that had been

developed for other purposes such as

Quality Control, would be useful to

understanding the impact of the

program and would not impose an

additional burden. Similarly, while the

reporting of the demographic and

financial characteristics of families that

become ineligible to receive assistance

is only required annually, these data can

be collected and reported more

efficiently and without creating another

form by inclusion in the quarterly TANF

Data Report.

Overall, the proposed reporting

burden represents a substantial decrease

from the burden imposed by the

reporting requirements of the prior

programs that TANF has replaced.

Nevertheless, we encourage States and

members of the public to comment and

provide suggestions on how the burden

can be further reduced and whether we

have taken the right course regarding

frequency of reporting. The annual

burden estimates include any time

involved pulling records from files,

abstracting information, returning

records to files, assembling any other

material necessary to provide the

requested information, and transmitting

the information.

Because of the constraints of the

Administrative Procedure Act (APA),

we were unable to consult with the

States directly on the development of

the specific data collection instruments.

However, prior to the development of

the data collection instruments, we

conducted extensive consultations on

general data collection issues with

representative groups such as the

American Public Welfare Association

(APWA), the National Governors’

Association (NGA), and the National

Conference of State Legislatures (NCSL).

We also researched the burden estimates

for similar OMB-approved data

collections in our inventory and

consulted with knowledgeable Federal

officials.

The annual burden estimates for these data

collections are:

Instrument or requirement Number of respondents

Number of responses per

respondent

Average burden

hours per response

Total burden

hours

TANF Data Report-§ 275.3(b) ........................................................................ 1 54 4 526.5 113,724

TANF MOE Data Report-§ 275.3(d) ............................................................... 2 54 4 523.5 113,076

TANF Financial Report-§ 275.3(c) & § 275.9(a)-(b) ....................................... 3 51 4 12 2,448

TANF Annual Report-§ 275.9(c) ..................................................................... 1 54 1 20 1,080

Caseload Reduction Documentation Process-§ 271.41 & § 271.44 .............. 4 54 1 40 2,160
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62181

Instrument or requirement Number of respondents

Number of responses per

respondent

Average burden

hours per response

Total burden

hours

Reasonable Cause/Corrective Action Documentation Process-§§ 272.4,

272.6, & 272.7; § 271.51 ............................................................................. 4 54 1 160 8,640

1We estimate that the 50 States, the District of Columbia, Guam, Puerto Rico, and the United States Virgin Islands will be respondents.

2We estimate that the 50 States, the District of Columbia, Guam, Puerto Rico, and the United States Virgin Islands will be respondents,

though not necessarily all 54 of these States and Territories will elect to have MOE programs and respond the first year. 3We estimate that the 50 States and the District of Columbia will be respondents.

4We estimate that the 50 States, the District of Columbia, Guam, Puerto Rico, and the United States Virgin Islands will be respondents,

though not necessarily all 54 States and Territories will elect to respond the first year.

Estimated Total Annual Burden

Hours: 241,128.

We encourage States, organizations,

individuals, and other parties to submit

comments regarding the information

collection requirements to ACF (at the

address above) and to the Office of

Information and Regulatory Affairs,

OMB, Room 3208, New Executive Office

Building, 725 17th Street, Washington,

DC 20503, ATTN: Desk Officer for ACF.

To ensure that public comments have

maximum effect in developing the final

regulations and the data collection

forms, we urge that each comment

clearly identify the specific section or

sections of the proposed rule or data

collection form that the comment

addresses and follow the same order as

the regulations and forms.

We will consider comments by the

public on these proposed collections of

information in:

• Evaluating whether the proposed

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 proposed

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.

OMB is required to make a decision

concerning the collections of

information contained in these

proposed rules between 30 and 60 days

after publication of this document in the

Federal Register. Therefore, a comment

is assured of having its full effect if

OMB receives it within 30 days of

publication. This OMB review schedule

does not affect the deadline for the

public to comment to ACF on the

proposed rules. Written comments to

OMB for the proposed information

collection should be sent directly to the

following: Office of Management and

Budget, Paperwork Reduction Project,

725 17th Street, N.W., Washington, D.C.

20502, Attn: Ms. Laura Oliven.

D. Unfunded Mandates Reform Act of

1995

Section 202 of the Unfunded

Mandates Reform Act of 1995

(Unfunded Mandates Act) 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 proposed

rule.

We have determined that the

proposed rules will not result in the

expenditure by State, local, and Tribal

governments, in the aggregate, 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.

List of Subjects in 45 CFR Parts 270

through 275

Administrative practice and

procedure, Day care, Employment,

Grant programs—Social programs, Loan

programs—Social programs, Manpower

training programs, Penalties, Public

assistance programs, Reporting and

recordkeeping requirements, Vocational

education.

(Catalogue of Federal Domestic Assistance

Programs: 93.558 TANF programs—State

Family Assistance Grants, Assistance grants

to Territories, Matching grants to Territories,

Supplemental Grants for Population

Increases and Contingency Fund; 93.559—

Loan Fund; 93.595—Welfare Reform

Research, Evaluations and National Studies)

Dated: August 14, 1997.

Olivia A. Golden,

Principal Deputy Assistant Secretary for

Children and Families.

Approved: September 2, 1997.

Donna E. Shalala,

Secretary, Department of Health and Human

Services.

For the reasons set forth in the

preamble, we propose to amend 45 CFR

chapter II by adding parts 270 through

275 to read as follows:

PART 270—GENERAL TEMPORARY

ASSISTANCE FOR NEEDY FAMILIES

(TANF) PROVISIONS

Sec.

270.10 What does this part cover?

270.20 What is the purpose of the TANF

program?

270.30 What definitions apply under the

TANF regulations?

270.40 When are these provisions in effect?

Authority: 42 U.S.C. 601, 601 note, 603,

604, 606, 607, 608, 609, 610, 611, 619, and

1308.

§ 270.10 What does this part cover?

This part includes regulatory

provisions that generally apply to the

Temporary Assistance for Needy

Families (TANF) program.

§ 270.20 What is the purpose of the TANF

program?

The TANF program has the following

four purposes:

(a) Provide assistance to needy

families so that children may be cared

for in their own homes or in the homes

of relatives;

(b) End the dependence of needy

parents on government benefits by

promoting job preparation, work, and

marriage;

(c) Prevent and reduce the incidence

of out-of-wedlock pregnancies and

establish annual numerical goals for

preventing and reducing the incidence

of these pregnancies;
62182 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

(d) Encourage the formation and

maintenance of two-parent families.

§ 270.30 What definitions apply under the

TANF regulations?

The following definitions apply under

parts 270 through 275 of this chapter:

ACF means the Administration for

Children and Families.

Act means Social Security Act, unless

otherwise specified.

Adjusted State Family Assistance

Grant, or adjusted SFAG, means the

SFAG amount, minus any reductions for

Tribal Family Assistance Grants paid to

Tribal grantees on behalf of Indian

families residing in the State.

Adult means an individual who is not

a ‘‘minor child,’’ as defined elsewhere

in this section.

AFDC means Aid to Families with

Dependent Children.

Aid to Families with Dependent

Children means the welfare program in

effect under title IV-A of prior law.

Assistance means every form of

support provided to families under

TANF (including child care, work

subsidies, and allowances to meet living

expenses), except: Services that have no

direct monetary value to an individual

family and that do not involve implicit

or explicit income support, such as

counseling, case management, peer

support, and employment services that

do not involve subsidies or other forms

of income support; and one-time, shortterm assistance (i.e., assistance paid

within a 30-day period, no more than

once in any twelve-month period, to

meet needs that do not extend beyond

a 90-day period, such as automobile

repair to retain employment and avoid

welfare receipt and appliance repair to

maintain living arrangements). This

definition does not apply to the use of

the term assistance at part 273, subpart

A, of this chapter.

CCDF means the Child Care and

Development Fund, or those child care

programs and services funded either

under section 418(a) of the Act or the

Child Care and Development Block

Grant Act of 1990, 42 U.S.C. 9801.

Commingled State TANF

expenditures means expenditure of

State funds that are made within the

TANF program and commingled with

Federal funds.

Contingency Fund means Federal

funds available at section 403(b) of the

Act, and contingency funds means the

Federal monies made available to States

under that section. It does not include

any State funds expended as a

requirement of that section.

Contingency Fund MOE means the

MOE expenditures that a State must

make in order to: Meet the MOE

requirements at sections 403(b)(4) and

409(a)(10) of the Act and subpart B of

part 274 of this chapter; and retain

contingency funds made available to the

State. The only expenditures that

qualify for Contingency Fund MOE are

State TANF expenditures and, in certain

cases, child care expenditures made

under the Child Care and Development

Fund (CCDF).

EA means Emergency Assistance.

Eligible State means a State that,

during the 2-year period immediately

preceding the fiscal year, has submitted

a TANF plan that we have determined

is complete.

Emergency Assistance means the

program option available to States under

sections 403(a)(5) and 406(e) of prior

law to provide short-term assistance to

needy families with children.

Family Violence Option (or FVO)

means the provision at section 402(a)(7)

of the Act under which States may elect

to implement comprehensive strategies

for identifying and serving victims of

domestic violence.

FAMIS means the automated

statewide management information

system under sections 402(a)(30),

402(e), and 403 of prior law.

Federal expenditures means

expenditures by a State of Federal

TANF funds.

Federal funds and Federal TANF

funds have the same meaning as TANF

funds, as defined in this section.

Fiscal year means the 12-month

period beginning on October 1 of the

preceding calendar year and ending on

September 30.

FY means fiscal year.

Good cause domestic violence waiver

means a waiver of one or more program

requirements granted by a State to a

victim of domestic violence under the

Family Violence Option that is:

(1) Granted appropriately, based on

need, as determined by an

individualized assessment;

(2) Temporary, for a period not to

exceed six months; and

(3) Accompanied by an appropriate

services plan designed to provide safety

and lead to work.

IEVS means the Income and

Eligibility Verification System operated

pursuant to the provisions in section

1137 of the Act.

Inconsistent means that complying

with a TANF requirement would

necessitate that a State change a policy

reflected in an approved waiver.

Indian, Indian Tribe and Tribal

Organization have the meaning given

such terms by section 4 of the Indian

Self-Determination and Education

Assistance Act (25 U.S.C. 450b), except

that the term ‘‘Indian tribe’’ means, with

respect to the State of Alaska, only the

Metlakatla Indian Community of the

Annette Islands Reserve and the

following Alaska Native regional

nonprofit corporations:

(1) Arctic Slope Native Association;

(2) Kawerak, Inc.;

(3) Maniilaq Association;

(4) Association of Village Council

Presidents;

(5) Tanana Chiefs Council;

(6) Cook Inlet Tribal Council;

(7) Bristol Bay Native Association;

(8) Aleutian and Pribilof Island

Association;

(9) Chugachmuit;

(10) Tlingit Haida Central Council;

(11) Kodiak Area Native Association;

and

(12) Copper River Native Association.

Job Opportunities and Basic Skills

Training Program means the program

under title IV–F of prior law to provide

education, training and employment

services to welfare recipients.

JOBS means the Job Opportunities

and Basic Skills Training Program.

Minor child means an individual who:

(1) Has not attained 18 years of age;

or

(2) Has not attained 19 years of age

and is a full-time student in a secondary

school (or in the equivalent level of

vocational or technical training).

MOE means maintenance-of-effort.

Needy State is a term that pertains to

the provisions on the Contingency Fund

and the penalty for failure to meet

participation rates. It means, for a

month, a State where:

(1)(i) The average rate of total

unemployment (seasonally adjusted) for

the most recent 3-month period for

which data are published for all States

equals or exceeds 6.5 percent; and

(ii) The average rate of total

unemployment (seasonally adjusted) for

such 3-month period equals or exceeds

110 percent of the average rate for either

(or both) of the corresponding 3-month

periods in the two preceding calendar

years; or

(2) The Secretary of Agriculture has

determined that the average number of

individuals participating in the Food

Stamp program in the State has grown

at least ten percent in the most recent

three-month period for which data are

available.

Prior law means the provisions of title

IV–A and IV–F of the Act in effect as of

August 21, 1996. They include

provisions related to Aid to Families

with Dependent Children (or AFDC),

Emergency Assistance (or EA), Job

Opportunities and Basic Skills Training

(or JOBS), and FAMIS.

PRWORA means the Personal

Responsibility and Work Opportunity
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62183

Reconciliation Act of 1996, or Pub. L.

104–193, 42 U.S.C. 1305.

Qualified Aliens has the meaning

prescribed under section 431 of

PRWORA, as amended by the Illegal

Immigration Reform and Immigrant

Responsibility Act of 1996, or Pub. L.

104–208, 8 U.S.C. 1101.

Qualified State Expenditures means

the total amount of State funds

expended during the fiscal year that

count for TANF MOE purposes. It

includes expenditures, under any State

program, for any of the following with

respect to eligible families:

(1) Cash assistance;

(2) Child care assistance;

(3) Educational activities designed to

increase self-sufficiency, job training,

and work, excluding any expenditure

for public education in the State except

expenditures involving the provision of

services or assistance of an eligible

family that is not generally available to

persons who are not members of an

eligible family;

(4) Any other use of funds allowable

under subpart A of part 273 of this

chapter; and

(5) Administrative costs in connection

with the matters described in

paragraphs (1), (2), (3) and (4) of this

definition, but only to the extent that

such costs do not exceed 15 percent of

the total amount of qualified State

expenditures for the fiscal year.

Secretary means Secretary of the

Department of Health and Human

Services or any other Department

official duly authorized to act on the

Secretary’s behalf.

Segregated State TANF expenditures

means the expenditure of State funds

within the TANF program that are not

commingled with Federal funds.

Separate State program means a

program operated outside of TANF in

which the expenditures of State funds

may count for TANF MOE purposes.

SFAG means State Family Assistance

Grant, as defined in this section.

SFAG payable means the SFAG

amount, reduced, as appropriate, for any

Tribal Family Assistance Grants made

on behalf of Indian families residing in

the State and any penalties imposed on

a State under this chapter.

Single audit means an audit or

supplementary review conducted under

the authority of the Single Audit Act at

31 U.S.C. chapter 75.

State means the 50 States of the

United States, the District of Columbia,

the Commonwealth of Puerto Rico, the

United States Virgin Islands, Guam, and

American Samoa, unless otherwise

specified.

State Family Assistance Grant means

the amount of the basic block grant

allocated to each eligible State under the

formula at section 403(a)(1) of the Act.

State MOE expenditures means the

expenditure of State funds that may

count for purposes of the TANF MOE

requirements at section 409(a)(7) of the

Act and the Contingency Fund MOE

requirements at sections 403(b)(4) and

409(a)(10) of the Act.

State TANF expenditures means the

expenditure of State funds within the

TANF program.

TANF means The Temporary

Assistance for Needy Families Program.

TANF funds means all funds provided

to the State under section 403 of the

Act, including the SFAG, any bonuses,

supplemental grants, or contingency

funds.

TANF MOE means the expenditure of

State funds that must be made in order

to meet the MOE requirement at section

409(a)(7) of the Act.

TANF program means a State program

of family assistance operated by an

‘‘eligible State’’ under its State TANF

plan.

Territories means Puerto Rico, the

Virgin Islands, Guam, and American

Samoa.

Title IV–A refers to the title and part

of the Act that now includes TANF, but

previously included AFDC and EA. For

the purpose of the TANF program

regulations, this term does not include

child care programs authorized and

funded under section 418 of the Act, or

their predecessors, unless we specify

otherwise.

Tribal Family Assistance Grant means

a grant paid to a Tribe that has an

approved Tribal family assistance plan

under section 412(a)(1) of the Act.

Tribal grantee means a Tribe that

receives Federal funds to operate a

Tribal TANF program under section

412(a) of the Act.

Tribal TANF program means a TANF

program developed by an eligible Tribe,

Tribal organization, or consortium and

approved by us under section 412 of the

Act.

Tribe means Indian Tribe or Tribal

organization, as defined elsewhere in

this section. The definition may include

Tribal consortia (i.e., groups of federally

recognized Tribes or Alaska Native

entities that have banded together in a

formal arrangement to develop and

administer a Tribal TANF program).

Victim of domestic violence means an

individual who is battered or subject to

extreme cruelty under the definition at

section 408(a)(7)(B)(iii) of the Act.

Waiver refers to a specific action

taken by the Secretary under the

authority of section 1115 of the Act to

allow a State to operate a program that

does not follow specific requirements of

prior law. For the purpose of parts 270

through 275 of this chapter and section

415 of the Act, it consists of provisions

necessary to achieve the State’s policy

objective. It includes the approved

revised AFDC requirements, articulated

in the State’s waiver list. It also includes

those provisions of prior law that:

(1) Did not need to be waived as part

of the waiver package; and

(2) Were integral and necessary to

achieve the State’s policy objective for

the approved waiver.

We (and any other first person plural

pronouns) means the Secretary of

Health and Human Services or any of

the following individuals or

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.

Welfare-to-Work means the new

program for funding work activities at

section 403(a)(5) of the Act.

WTW means Welfare-to-Work.

§ 270.40 When are these provisions in

effect?

(a) The TANF statutory requirements

go into effect no sooner than a State’s

implementation of its TANF program.

Each State must implement its TANF

program no later than July 1, 1997.

(b) In determining whether a State is

subject to a penalty under parts 271

through 275 of this chapter, we will not

apply the regulatory provisions in parts

270 through 275 of this chapter

retroactively. We will judge State

behavior and actions that occur prior to

[effective date of final rules] only

against a reasonable interpretation of the

statutory provision in title IV–A of the

Act.

PART 271—ENSURING THAT

RECIPIENTS WORK

Sec.

271.1 What does this part cover?

271.2 What definitions apply to this part?

Subpart A—Individual Responsibility

271.10 What work requirements must an

individual meet?

271.11 Which recipients must have an

assessment under TANF?

271.12 What is an individual responsibility

plan?

271.13 May an individual be penalized for

not following an individual

responsibility plan?

271.14 What is the penalty if an individual

refuses to engage in work?

271.15 Can a family be penalized if a parent

refuses to work because (s)he cannot find

child care?
62184 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

271.16 Does the imposition of a penalty

affect an individual’s work requirement?

Subpart B—State Accountability

271.20 How will we hold a State

accountable for achieving the work

objectives of TANF?

271.21 What overall work rate must a State

meet?

271.22 How will we determine a State’s

overall work rate?

271.23 What two-parent work rate must a

State meet?

271.24 How will we determine a State’s

two-parent work rate?

271.25 Does a State include Tribal families

in calculating these rates?

Subpart C—Work Activities and How to

Count Them

271.30 What are ‘‘work activities’’?

271.31 How many hours must an individual

participate to count in the numerator of

the overall rate?

271.32 How many hours must an individual

participate to count in the numerator of

the two-parent rate?

271.33 What are the special requirements

concerning educational activities in

determining monthly participation rates?

271.34 Are there any limitations in

counting job search and job readiness

assistance toward the participation rates?

271.35 Are there any special work

provisions for single custodial parents?

271.36 Do welfare reform waivers affect

what activities count as engaged in

work?

Subpart D—Caseload Reduction Factor for

Minimum Participation Rates

271.40 Is there a way for a State to reduce

the work participation rates?

271.41 How will we determine the caseload

reduction factor?

271.42 Which reductions count in

determining the caseload reduction

factor?

271.43 What is the definition of a ‘‘case

receiving assistance’’ in calculating the

caseload reduction factor?

271.44 When must a State report the

required data on the caseload reduction

factor?

Subpart E—State Work Penalties

271.50 What happens if a State fails to meet

the participation rates?

271.51 Under what circumstances will we

reduce the amount of the penalty below

the maximum?

271.52 Is there a way to waive the State’s

penalty for failing to achieve either of the

participation rates?

271.53 Can a State correct the problem

before incurring a penalty?

271.54 Is a State subject to any other

penalty relating to its work program?

271.55 Under what circumstances will we

reduce the amount of the penalty for not

properly imposing penalties on

individuals?

Subpart F—Waivers

271.60 How do existing welfare waivers

affect the participation rate?

Subpart G—Non-displacement

271.70 What safeguards are there to ensure

that participants in work activities do

not displace other workers?

Authority: 42 U.S.C. 601, 602, 607, and

609.

§ 271.1 What does this part cover?

This part includes the regulatory

provisions relating to the mandatory

work requirements of TANF.

§ 271.2 What definitions apply to this part?

The general TANF definitions at

§ 270.30 of this chapter apply to this

part.

Subpart A—Individual Responsibility

§ 271.10 What work requirements must an

individual meet?

(a) A parent or caretaker receiving

assistance must engage in work

activities when the State has determined

that the individual is ready to engage in

work or when (s)he has received

assistance for a total of 24 months,

whichever is earlier. The State must

define what it means to engage in work

for this requirement, which can include

participation in work activities in

accordance with section 407 of the Act.

(b) If a parent or caretaker has

received assistance for two months,

(s)he must participate in community

service employment, unless the State

has exempted the individual from work

requirements or (s)he is already engaged

in work activities as described at

§ 271.30. The State will determine the

minimum hours per week and the tasks

the individual must perform as part of

the community service employment.

This requirement takes effect no later

than August 22, 1997, unless the

governor of the State opts out of this

provision by notifying HHS.

§ 271.11 Which recipients must have an

assessment under TANF?

(a) The State must make an initial

assessment of the skills, prior work

experience, and employability of each

recipient who is at least age 18 or who

has not completed high school (or

equivalent) and is not attending

secondary school.

(b) The State may make any required

assessments within 90 days (180 days,

at State option) of the date it

implements the TANF program for

anyone receiving assistance as of that

date. For anyone else who must have an

assessment, the State may assess an

individual within 30 days (90 days, at

State option) of the date (s)he becomes

eligible for assistance.

§ 271.12 What is an individual

responsibility plan?

An individual responsibility plan is a

plan developed at State option, in

consultation with the individual, on the

basis of the assessment made under

§ 271.11. The plan:

(a) Should set an employment goal for

the individual and a plan for moving

immediately into private sector

employment;

(b) Should describe the obligations of

the individual. These could include

going to school, maintaining certain

grades, keeping school-age children in

school, immunizing children, going to

parenting or money management

classes, or doing other things that will

help the individual become and remain

employed in the private sector;

(c) Should be designed to move the

individual into whatever private sector

employment (s)he is capable of handling

as quickly as possible, and to increase

over time the responsibility and the

amount of work the individual handles;

(d) Should describe the services the

State will provide the individual; and

(e) May require the individual to

undergo appropriate substance abuse

treatment.

§ 271.13 May an individual be penalized for

not following an individual responsibility

plan?

Yes. If an individual fails without

good cause to comply with an

individual responsibility plan that (s)he

has signed, the State may reduce the

amount of assistance otherwise payable

to the family, by whatever amount it

considers appropriate. This penalty is in

addition to any other penalties under

the State’s TANF program.

§ 271.14 What is the penalty if an

individual refuses to engage in work?

If an individual refuses to engage in

work required under section 407 of the

Act, the State must reduce or terminate

the amount of assistance payable to the

family, subject to any good cause or

other exceptions the State may

establish. A grant reduction must be at

least prorated, based on the portion of

the month in which the individual

refuses to work, but could be greater.

§ 271.15 Can a family be penalized if a

parent refuses to work because (s)he

cannot find child care?

(a) If the individual is a single

custodial parent caring for a child under

age six, the State may not reduce or

terminate assistance for the parent’s

refusal to engage in required work if

(s)he demonstrates an inability to obtain

needed child care for one or more of the

following reasons:
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62185

(1) Appropriate child care within a

reasonable distance from the home or

work site is unavailable;

(2) Informal child care by a relative or

under other arrangements is unavailable

or unsuitable; or

(3) Appropriate and affordable formal

child care arrangements are unavailable.

(b)(1) The State will determine when

the individual has demonstrated that

(s)he cannot find child care, in

accordance with criteria established by

the State.

(2) These criteria must:

(i) Address the procedures that the

State uses to determine if the parent has

a demonstrated inability to obtain

needed child care;

(ii) Include definitions of the terms

‘‘appropriate child care,’’ ‘‘reasonable

distance,’’ ‘‘unsuitability of informal

care,’’ and ‘‘affordable child care

arrangements’’; and

(iii) Be submitted to us.

§ 271.16 Does the imposition of a penalty

affect an individual’s work requirement?

A penalty imposed by a State against

the family of an individual by reason of

the failure of the individual to comply

with a requirement under TANF shall

not be construed to be a reduction in

any wage paid to the individual, and

shall not result in a reduction in the

number of hours of work required.

Subpart B—State Accountability

§ 271.20 How will we hold a State

accountable for achieving the work

objectives of TANF?

(a) Each State must meet two separate

work participation rates, one based on

how well it succeeds in helping adults

in two-parent families find work

activities described at § 271.30 (the twoparent rate), the other based on how

well it succeeds in finding those

activities for adults in all families it

serves (the overall rate).

(b) Each State must submit data to

allow us to measure its success in

requiring adults to participate in work

activities, as specified at § 275.3 of this

chapter.

(c) If the data show that a State met

both participation rates in a fiscal year,

then the percentage of historic State

expenditures that it must expend under

TANF, pursuant to § 273.1 of this

chapter, decreases from 80 to 75 percent

for that fiscal year. This is also known

as the State’s ‘‘maintenance of effort’’

requirement.

(d) If the data show that a State did

not meet either minimum work

participation rate for a fiscal year, a

State could be subject to a financial

penalty.

(e) Before we impose a penalty, a

State will have the opportunity to claim

reasonable cause or enter into a

corrective compliance plan, pursuant to

§§ 272.5 and 272.6 of this chapter.

§ 271.21 What overall work rate must a

State meet?

Each State must achieve the following

minimum overall participation rate:

If the fiscal year is:

Then the minimum participation rate is:

1997 ...................................... 25

1998 ...................................... 30

1999 ...................................... 35

2000 ...................................... 40

2001 ...................................... 45

2002 and thereafter .............. 50

§ 271.22 How will we determine a State’s

overall work rate?

(a) The overall participation rate for a

fiscal year is the average of the State’s

overall participation rates for each

month in the fiscal year.

(b)(1) We determine a State’s overall

participation rate for a month as

follows:

(i) The number of families receiving

TANF assistance that include an adult

or a minor head-of-household who is

engaged in work for the month (the

numerator); divided by

(ii) The number of families receiving

TANF assistance during the month that

include an adult or a minor head-ofhousehold minus the number of families

that are subject to a penalty for refusing

to work in that month (the

denominator). However, if a family has

been sanctioned for more than three of

the last 12 months, we will not deduct

it from the denominator.

(2) States may define families

receiving TANF assistance . . . that

include an adult or a minor child headof household, but may not exclude

families from the definition solely for

the purpose of avoiding penalties under

§ 271.50.

(i) States shall report to us annually

on the number of families excluded

because of the State’s definition and the

circumstances underlying each

exclusion.

(ii) Where we find that a State has

excluded families for the purpose of

avoiding a penalty for work

participation, we shall include those

families in the calculation in paragraph

(b)(1) of this section in determining

whether a State is subject to the penalty

described in § 271.50.

(c) A State has the option of not

requiring a single custodial parent

caring for a child under age one to

engage in work. If the State adopts this

option, it may disregard such a family

in the participation rate calculation for

a maximum of 12 months.

(d) If a family receives assistance for

only part of a month, the State may

count it as a month of participation if an

adult in the family is engaged in work

for the minimum average number of

hours in each full week that the family

receives assistance in that month.

§ 271.23 What two-parent work rate must a

State meet?

A State receiving a TANF grant for a

fiscal year must achieve the following

minimum two-parent participation rate:

If the fiscal year is:

Then the minimum participation rate is:

1997 ...................................... 75

1998 ...................................... 75

1999 and thereafter .............. 90

§ 271.24 How will we determine a State’s

two-parent work rate?

(a) The two-parent participation rate

for a fiscal year is the average of the

State’s two-parent participation rates for

each month in the fiscal year.

(b)(1) We determine a State’s twoparent participation rate for a month as

follows:

(i) The number of two-parent families

receiving TANF assistance that include

an adult (or minor child head-ofhousehold) and other parent who meet

the requirements set forth in § 271.32 for

the month (the numerator); divided by

(ii) The number of two-parent families

receiving TANF assistance during the

month minus the number of two-parent

families that are subject to a penalty for

refusing to work in that month (the

denominator). However, if a family has

been sanctioned for more than three of

the last 12 months, we will not deduct

it from the denominator.

(2) States may define families

receiving TANF assistance . . . that

include an adult or a minor child headof household, but may not exclude

families from the definition solely for

the purpose of avoiding penalties under

§ 271.50.

(i) States shall report to us annually

on the number of families excluded

because of the State’s definition and the

circumstances underlying each

exclusion.

(ii) Where we find that a State has

excluded families for the purpose of

avoiding a penalty for work

participation, we shall include those

families in the calculation in paragraph

(b)(1) of this section in determining

whether a State is subject to the penalty

described in § 271.50.
62186 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

(c) If a family receives assistance for

only part of a month, the State may

count it as a month of participation if an

adult in the family (both adults, if they

are both required to work) is engaged in

work for the minimum average number

of hours in each full week that the

family receives assistance in that month.

(d) If a family includes a disabled

parent, the family is not considered a

two-parent family for the participation

rate. Such a family is not included in

either the numerator or denominator of

the two-parent rate.

§ 271.25 Does a State include Tribal

families in calculating these rates?

A State has the option of including

families that are receiving assistance

under an approved tribal family

assistance plan or under a tribal work

program in calculating the State’s

participation rates under §§ 271.22 and

271.24.

Subpart C—Work Activities and How to

Count Them

§ 271.30 What are ‘‘work activities’’?

Work activities include:

(a) Unsubsidized employment;

(b) Subsidized private sector

employment;

(c) Subsidized public sector

employment;

(d) Work experience;

(e) On-the-job training (OJT);

(f) Job search and job readiness

assistance;

(g) Community service programs;

(h) Vocational educational training;

(i) Job skills training directly related

to employment;

(j) Education directly related to

employment, in the case of a recipient

who has not received a high school

diploma or a certificate of high school

equivalency;

(k) Satisfactory attendance at

secondary school or in a course of study

leading to a certificate of general

equivalence, if a recipient has not

completed secondary school or received

such a certificate; and

(l) Providing child care services to an

individual who is participating in a

community service program.

§ 271.31 How many hours must an

individual participate to count in the

numerator of the overall rate?

(a) An individual counts as engaged

in work for a month for the overall rate

if (s)he participates in work activities

during the month for at least the

minimum average number of hours per

week listed in the following table:

If the fiscal year is:

Then the minimum average

hours per

week is:

1997 ...................................... 20

1998 ...................................... 20

If the fiscal year is:

Then the minimum average

hours per

week is:

1999 ...................................... 25

2000 or thereafter ................. 30

(b)(1) In addition, for the individual to

count as engaged in work, at least 20 per

week of the above hours must come

from participation in certain of the

activities listed in § 271.30. The

following nine activities count for the

first 20 hours of participation:

Unsubsidized employment; subsidized

private sector employment; subsidized

public sector employment; work

experience; on-the-job training; job

search and job readiness assistance;

community service programs; vocational

educational training; and providing

child care services to an individual who

is participating in a community service

program.

(2) Above 20 hours per week, the

following three activities may also count

for participation: Job skills training

directly related to employment;

education directly related to

employment; and satisfactory

attendance at secondary school or in a

course of study leading to a certificate

of general equivalence.

(c) The following chart below lists

when each activity counts, for both the

overall and the two-parent rates:

Activity

When does the activity count?

Overall rate

2-parent rate

20 hours hours above

20

30/50 hours

(without/with

Fed child

care)

Hours

above 30/50

(a) unsubsidized employment .......................................................................................... ✔ ✔ ✔ ✔

(b) subsidized private sector employment ....................................................................... ✔ ✔ ✔ ✔

(c) subsidized public sector employment ......................................................................... ✔ ✔ ✔ ✔

(d) work experience .......................................................................................................... ✔ ✔ ✔ ✔

(e) OJT ............................................................................................................................. ✔ ✔ ✔ ✔

(f) job search & job readiness .......................................................................................... ✔ ✔ ✔ ✔

(g) community service programs ...................................................................................... ✔ ✔ ✔ ✔

(h) vocational educational training ................................................................................... ✔ ✔ ✔ ✔

(i) job skills training ........................................................................................................... No ✔ No ✔

(j) education directly related to employment .................................................................... No 1 ✔ No 1 ✔

(k) high school or GED ..................................................................................................... No 1 ✔ No 1 ✔

(l) providing child care services to a community service participant ............................... ✔ ✔ ✔ ✔

1Teen parents may count due to participation in these activities. Refer to § 271.33.

§ 271.32 How many hours must an

individual participate to count in the

numerator of the two-parent rate?

(a) If an individual and the other

parent in the family are participating in

work activities for an average of at least

35 hours per week during the month,

then (s)he counts as engaged in work for

a two-parent family for the month,

subject to paragraph (c) of this section.

(b)(1) In addition, at least 30 of the 35

hours per week must come from

participation in certain of the activities

listed in § 271.30 for the individual to

count as engaged in work. The following

nine activities count for the first 30

hours of participation: Unsubsidized

employment; subsidized private sector

employment; subsidized public sector

employment; work experience; on-thejob training; job search and job

readiness assistance; community service

programs; vocational educational

training; and providing child care

services to an individual who is
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62187

participating in a community service

program.

(2) Above 30 hours per week, the

following three activities may also count

for participation: Job skills training

directly related to employment;

education directly related to

employment; and satisfactory

attendance at secondary school or in a

course of study leading to a certificate

of general equivalence.

(c)(1) If the family receives federallyfunded child care assistance and an

adult in the family is not disabled or

caring for a severely disabled child, then

the individual and the other parent

must be participating in work activities

for an average of at least 55 hours per

week for the individual to count as

engaged in work for a two-parent family

for the month.

(2) At least 50 of the 55 hours per

week must come from participation in

the activities listed in paragraph (b)(1)

of this section.

(3) Above 50 hours per week, the

three activities listed in paragraph (b)(2)

of this section may also count for

participation.

(d) The chart in § 271.31 lists when

each activity counts in the two-parent

rate.

§ 271.33 What are the special

requirements concerning educational

activities in determining monthly

participation rates?

(a) Vocational educational training

may only count for a total of 12 months

for any individual.

(b) A married or single head-ofhousehold under 20 years old counts as

engaged in work in a month if (s)he:

(1) Maintains satisfactory attendance

at a secondary school or the equivalent

during the month; or

(2) Participates in education directly

related to employment for an average of

at least 20 hours per week during the

month.

(c) In counting individuals for each

participation rate, not more than 30

percent of individuals engaged in work

may be included because they are

participating:

(1) In vocational educational training;

or

(2) In fiscal year 2000 or thereafter, as

a teen parent in educational activities

described in paragraph (b) of this

section.

§ 271.34 Are there any limitations in

counting job search and job readiness

assistance toward the participation rates?

Yes. There are four limitations

concerning job search and job readiness.

(a) Except as provided in paragraph

(b) of this section, an individual’s

participation in job search or job

readiness assistance counts for only six

weeks in any fiscal year.

(b) If the State’s total unemployment

rate for a fiscal year is at least 50 percent

greater than the United States’ total

unemployment rate for that fiscal year

or if the State meets the definition of a

needy State, specified at § 270.30 of this

chapter, then an individual’s

participation in job search or job

readiness assistance counts for up to 12

weeks in that fiscal year.

(c) An individual’s participation in

job search and job readiness assistance

counts for no more than four

consecutive weeks in a fiscal year.

(d) Not more than once for any

individual in a fiscal year, a State may

count three or four days of job search

and job readiness assistance during a

week as a full week of participation.

§ 271.35 Are there any special work

provisions for single custodial parents?

Yes. A single custodial parent or

caretaker relative with a child under age

six will count as engaged in work if

(s)he participates for at least an average

of 20 hours per week.

§ 271.36 Do welfare reform waivers affect

what activities count as engaged in work?

A welfare reform waiver could affect

what activities count as engaged in

work, if it meets the requirements at

§ 271.60.

Subpart D—Caseload Reduction

Factor for Minimum Participation Rates

§ 271.40 Is there a way for a State to

reduce the work participation rates?

(a) If the average monthly number of

cases receiving assistance, including

assistance under a separate State

program, in a State in the preceding

fiscal year was lower than the average

monthly number of cases that received

assistance in FY 1995, the minimum

participation rate the State must meet

for the fiscal year will decrease by the

number of percentage points the

caseload fell in comparison to the FY

1995 caseload. The number of

percentage points by which the caseload

falls is referred to as the caseload

reduction factor.

(b) The calculation in paragraph (a) of

this section must disregard any caseload

reductions due either to requirements of

Federal law or to changes that a State

has made in its eligibility criteria in

comparison to its criteria in effect in FY

1995.

(c) To establish the caseload base for

fiscal year 1995, we will use the number

of AFDC cases reported on ACF–3697,

Statistical Report on Recipients Under

Public Assistance. For subsequent years,

we will use AFDC data from this same

report, supplemented by caseload

information from the TANF Data Report

and the TANF MOE Data Report for

appropriate States beginning with the

fourth quarter of fiscal year 1997. To

qualify for a caseload reduction, a State

must have reported monthly caseload

information, including cases in separate

State programs, for the preceding year

for cases receiving assistance as defined

at § 271.43.

§ 271.41 How will we determine the

caseload reduction factor?

(a) We will determine the appropriate

caseload reduction that applies to each

State based on reliable, validated

information and estimates reported to us

by the State. We will determine whether

the information and estimates provided

are acceptable, based on the criteria

listed in paragraph (d) of this section.

We will also conduct periodic, on-site

reviews and inspect administrative

records on applications and

terminations to validate the accuracy of

the State estimates.

(b) In order to receive a reduction in

the overall participation rate, a State

must submit the Caseload Reduction

Report to us containing the following

information:

(1) A complete listing of and

implementation dates for all eligibility

changes, as defined at § 271.42, made by

the State since the beginning of FY

1995, all changes in Federal

requirements and implementation dates

for each change since FY 1995, and a

listing of the reasons (such as found

employment) for case closures;

(2) A numerical estimate of the impact

on the caseload of each eligibility

change or case closure reason;

(3) A description of the methodology

and the supporting data that it used to

calculate its caseload reduction

estimates; and

(4) A certification from the Governor

that it has taken into account all

reductions resulting from changes in

Federal and State eligibility.

(c) A State requesting a caseload

reduction shall provide separate

estimates and information for the

overall and two-parent family rates.

(1) The State must base its estimate

for the overall case rate on decreases in

its overall caseload compared to the

AFDC caseload in FY 1995.

(2) The State must base its estimate

for two-parent cases on decreases in its

two-parent caseload compared to the

AFDC Unemployed Parent caseload in

FY 1995.

(d)(1) For each State, we will assess

the adequacy of information and

estimates using the following criteria:

Methodology, estimates and impact
62188 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

compared to other States; quality of

data; and completeness and adequacy of

the documentation.

(2) If we request additional

information, the State must provide the

information within two weeks of the

date of our request.

(3) The State must provide sufficient

data to document the information

submitted under paragraph (b) of this

section.

(e) We will not consider a caseload

reduction factor for approval unless the

State reports case-record data on

individuals and families served by any

separate State program, as required

under § 275.3(d) of this chapter.

(f) A State may only apply the

caseload reduction factor that we have

determined to its participation rate. If a

State disagrees with our caseload

reduction factor, then the determination

may be considered an adverse action;

therefore, a State has the right to appeal

such a decision, as specified at § 272.7

of this chapter.

§ 271.42 Which reductions count in

determining the caseload reduction factor?

(a)(1) Each State’s estimate must

factor out any caseload decreases due to

Federal requirements or State changes

in eligibility rules since FY 1995 that

directly affect a family’s eligibility for

assistance (e.g., more stringent income

and resource limitations, time limits).

(2) A State need not factor out

calculable effects of enforcement

mechanisms or procedural requirements

that are used to enforce existing

eligibility criteria (e.g., fingerprinting or

other verification techniques) to the

extent that such mechanisms or

requirements identify or deter families

ineligible under existing rules.

(b) States must include cases

receiving assistance in separate State

programs as part of its caseload.

However, we will consider excluding

cases in the separate State program

under the following circumstances, if

adequately documented:

(1) The cases overlap with or

duplicate cases in the TANF caseload;

(2) They are cases made ineligible for

Federal benefits by Pub. L. 104–193 that

are receiving only State-funded cash

assistance, nutrition assistance, or other

benefits; or

(3) They are cases that are receiving

only State earned income tax credits,

child care, transportation subsidies or

benefits for working families that are not

directed at their basic needs.

§ 271.43 What is the definition of a ‘‘case

receiving assistance’’ in calculating the

caseload reduction factor?

(a) The caseload reduction factor is

based on decreases in caseload (other

than those excluded pursuant to

§ 271.42) in both a State’s TANF

program and in any separate State

programs that are used to meet the

maintenance-of-effort requirement.

(b)(1) For fiscal year 1995, we will use

AFDC caseload data.

(2) For all other fiscal years, we will

determine the caseload based on all

cases in a State receiving assistance

(according to the definition of assistance

at § 270.30).

§ 271.44 When must a State report the

required data on the caseload reduction

factor?

(a) A State must report the necessary

documentation on the caseload

reduction factor for the preceding fiscal

year by November 15.

(b) We will notify the State of whether

we approve or reject the proposed

reduction factor by the following

February 15.

Subpart E—State Work Penalties

§ 271.50 What happens if a State fails to

meet the participation rates?

(a) If we determine that a State did not

achieve one of the required minimum

work participation rates, we must

reduce the SFAG payable to the State.

(b)(1) If there was no penalty for the

preceding fiscal year, the penalty for the

current fiscal year is five percent of the

adjusted SFAG.

(2) For each consecutive year that the

State is subject to a penalty under this

part, we will increase the amount of the

penalty by two percentage points over

the previous year’s penalty. However,

the penalty can never exceed 21 percent

of the State’s adjusted SFAG.

(c) We impose a penalty by reducing

the SFAG payable for the fiscal year that

immediately follows our final

determination that a State is subject to

a penalty and our final determination of

the penalty amount.

(d) In accordance with the procedures

specified at § 272.4 of this chapter, a

State may dispute our determination

that it is subject to a penalty.

§ 271.51 Under what circumstances will we

reduce the amount of the penalty below the

maximum?

(a) In order to qualify for a penalty

reduction under paragraphs (b)(3) and

(c) of this section, the State must

demonstrate that it has not diverted

cases to a separate State program for the

purpose of avoiding the work

participation requirements.

(b) We will reduce the amount of the

penalty based on the degree of the

State’s noncompliance.

(1) If the State fails only the twoparent participation rate specified at

§ 271.23, its maximum penalty will be a

percentage of the penalty specified at

§ 271.50. This percentage will equal the

percentage of the State’s two-parent

cases.

(2) If the State fails the overall

participation rate specified at § 271.21,

or both rates, its maximum penalty will

be the penalty specified at § 271.50.

(3)(i) In order to receive a reduction

of the penalty amounts determined

under paragraphs (b)(1) or (b)(2) of this

section, the State must achieve

participation rates equal to a threshold

level defined as 90 percent of the

applicable minimum participation rate,

at § 271.23 or § 271.21. If a State met

this threshold, we would base its

reduction on the severity of the failure.

(ii) For this purpose, we will calculate

the severity of the State’s failure as the

ratio of:

(A) The difference between the

participation rate achieved by the State

and the 90 percent ‘‘threshold’’ level;

and

(B) The difference between the

minimum applicable participation rate

and the threshold level.

(c)(1) We may reduce the penalty if

the State failed to achieve a

participation rate because:

(i) It meets the definition of a needy

State, specified at § 270.30 of this

chapter, or

(ii) Noncompliance is due to

extraordinary circumstances such as a

natural disaster or regional recession.

(2) In determining noncompliance

under paragraph (c)(1)(ii) of this section,

we will consider objective evidence of

extraordinary circumstances if the State

chooses to submit it.

§ 271.52 Is there a way to waive the State’s

penalty for failing to achieve either of the

participation rates?

(a) We will not impose a penalty

under this part if we determine that the

State has reasonable cause for its failure.

(b) In addition to the general

reasonable cause criteria specified at

§ 272.5 of this chapter, a State may also

submit a request for a reasonable cause

exemption from the requirement to meet

the minimum participation rate in two

specific case situations, if it

demonstrates that it has not diverted

cases to a separate State program for the

purpose of avoiding the work

participation rates.

(1) We will determine that a State has

reasonable cause if it demonstrates that

failure to meet the work participation

rates is attributable to its provision of

good cause domestic violence waivers

as follows:

(i) To demonstrate reasonable cause, a

State must provide evidence that it
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achieved the applicable work rates,

except with respect to any individuals

receiving good cause waivers of work

requirements (i.e., when cases with

good cause waivers are removed from

the calculations in §§ 271.22(b) and

271.24(b)); and

(ii) A State must grant good cause

domestic violence waivers

appropriately, in accordance with the

criteria specified at § 270.30 of this

chapter. If a State fails to meet the

criteria for ‘‘good cause domestic

violence waivers’’ specified at § 270.30

of this chapter, the Secretary will not

grant reasonable cause under this

paragraph (b).

(2) We will determine that a State has

reasonable cause if it demonstrates that

its failure to meet the work participation

rates is attributable to its provision of

assistance to refugees in federallyapproved alternative projects under

section 412(e)(7) of the Immigration and

Nationality Act (8 U.S.C. 1522(e)(7)).

(c) In accordance with the procedures

specified at § 272.4 of this chapter, a

State may dispute our determination

that it is subject to a penalty.

§ 271.53 Can a State correct the problem

before incurring a penalty?

(a) Yes. A State may enter into a

corrective compliance plan to remedy a

problem that caused its failure to meet

a participation rate, as specified at

§ 272.6 of this chapter.

(b) To qualify for a penalty reduction

under § 272.6(i)(1) of this chapter, based

on significant progress in discontinuing

a violation, a State must reduce the

difference between the participation rate

it achieved in the year for which it is

subject to a penalty and the rate

applicable during the penalty year by 50

percent.

§ 271.54 Is a State subject to any other

penalty relating to its work program?

(a) If we determine that, during a

fiscal year, a State has violated section

407(e) of the Act, relating to imposing

penalties against individuals, we must

reduce the SFAG payable to the State.

(b) The penalty amount for a fiscal

year will equal between one and five

percent of the adjusted SFAG.

(c) We impose a penalty by reducing

the SFAG payable for the fiscal year that

immediately follows our final

determination that a State is subject to

a penalty and our final determination of

the penalty amount.

§ 271.55 Under what circumstances will we

reduce the amount of the penalty for not

properly imposing penalties on individuals?

(a) We will reduce the amount of the

penalty based on the degree of the

State’s noncompliance.

(b) In determining the size of any

reduction, we will consider objective

evidence of:

(1) Whether the State has established

a control mechanism to ensure that the

grants of individuals are reduced for

refusing to engage in required work; and

(2) The percentage of cases for which

the grants have not been appropriately

reduced.

(c) Neither the reasonable cause

provisions at § 272.5 of this chapter nor

the corrective compliance plan

provisions at § 272.6 of this chapter

applies to this penalty.

Subpart F—Waivers

§ 271.60 How do existing welfare waivers

affect the participation rate?

(a) If a State is implementing policies

in accordance with an approved waiver

that meets the provisions of section

415(a)(1)(A) of the Act and the

definition of a waiver at § 270.30 of this

chapter, the provisions of section 407 of

the Act do not apply, to the extent that

they are inconsistent with the waiver.

(b)(1) In the case of waivers

addressing activities in which an

individual may participate in order to

be ‘‘engaged in work’’ and count toward

the minimum participation rates (as

specified at § 271.30):

(i) We will include provisions of prior

law as part of such waivers; and

(ii) We will recognize such waivers as

inconsistent.

(2) In the case of waivers addressing

minimum average hours of work per

week necessary to be ‘‘engaged in work’’

for a month (as specified at §§ 271.31

and 271.32):

(i) We will recognize the waiver as

inconsistent if it specifies an

individual’s mandated hours of

participation in accordance with his/her

particular circumstances, either as

specified by criteria described in the

waiver or under an individualized plan

or similar agreement for achieving selfsufficiency; and

(ii) We will not recognize as

inconsistent any waiver designed to

increase the mandatory work hours for

a class of recipients under the former

JOBS program.

(c) Except as applicable to research

cases in paragraph (d) of this section, we

will not recognize any prior law

exemptions as part of the waiver with

respect to the denominator of the

participation rates, found at §§ 271.21

and 271.23.

(d) If a State is continuing research

group policies in order to complete an

impact evaluation of a waiver

demonstration, the demonstration’s

control group may be subject to prior

law and its experimental treatment

group may be also subject to prior law,

except as modified by the waiver.

(e) The additional requirements at

§ 272.8 of this chapter apply to the use

of continuing waiver alternative work

requirements in the calculation of the

work participation penalty.

Subpart G—Non-displacement

§ 271.70 What safeguards are there to

ensure that participants in work activities

do not displace other workers?

(a) An adult taking part in a work

activity outlined in § 271.30 may not fill

a vacant employment position if:

(1) Another individual is on layoff

from the same or any substantially

equivalent job; or

(2) The employer has terminated the

employment of any regular employee or

caused an involuntary reduction in its

work force in order to fill the vacancy

with an adult taking part in a work

activity.

(b) A State must establish and

maintain a grievance procedure to

resolve complaints of alleged violations

of the displacement rule in this section.

(c) This section does not preempt or

supersede State or local laws providing

greater protection for employees from

displacement.

PART 272—ACCOUNTABILITY

PROVISIONS—GENERAL

Sec.

272.0 What definitions apply to this part?

272.1 What penalties will apply to States?

272.2 When do the TANF penalty

provisions apply?

272.3 How will we determine if a State is

subject to a penalty?

272.4 What happens if we determine that a

State is subject to a penalty?

272.5 Under what general circumstances

will we determine that a State has

reasonable cause?

272.6 What if a State does not demonstrate

reasonable cause?

272.7 How can a State appeal our decision

to take a penalty?

272.8 What is the relationship of continuing

waivers on the penalty process for work

participation and time limits?

Authority: 31 U.S.C. 7501 et seq.; 42 U.S.C.

606, 609, and 610.

§ 272.0 What definitions apply to this part?

The general TANF definitions at

§ 270.30 of this chapter apply to this

part.

§ 272.1 What penalties will apply to

States?

(a) We will assess fiscal penalties

against States under circumstances

defined in parts 271 through 275 of this

chapter. The penalties are:

(1) A penalty of the amount by which

a State misused its TANF funds;
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(2) A penalty of five percent of the

adjusted SFAG for intentional misuse of

such funds;

(3) A penalty of four percent of the

adjusted SFAG for failure to submit an

accurate, complete and timely required

report;

(4) A penalty of up to 21 percent of

the adjusted SFAG for failure to satisfy

the minimum participation rates;

(5) A penalty of no more than two

percent of the adjusted SFAG for failure

to participate in IEVS;

(6) A penalty of no more than five

percent of the adjusted SFAG for failure

to enforce penalties on recipients who

are not cooperating with the State Child

Support Enforcement (IV–D) Agency;

(7) A penalty equal to the outstanding

loan amount, plus interest, for failure to

repay a Federal loan;

(8) A penalty equal to the amount by

which a State fails to meet its TANF

MOE requirement;

(9) A penalty of five percent of the

adjusted SFAG for failure to comply

with the five-year limit on Federal

assistance;

(10) A penalty equal to the amount of

contingency funds unremitted by a State

for a fiscal year;

(11) A penalty of no more than five

percent of the adjusted SFAG for the

failure to maintain assistance to an adult

single custodial parent who cannot

obtain child care for a child under age

six;

(12) A penalty of no more than two

percent of the adjusted SFAG plus the

amount a State has failed to expend of

its own funds to replace the reduction

to its SFAG due to the assessment of

penalties in this section in the year of

the reduction;

(13) A penalty equal to the amount of

the State’s Welfare-to-Work formula

grant for failure to meet its TANF MOE

requirement during a year in which the

formula grant is received; and

(14) A penalty equal to not less than

one percent and not more than five

percent of the adjusted SFAG for failure

to reduce assistance for recipients

refusing without good cause to work.

(b) In the event of multiple penalties

for a fiscal year, we will add all

applicable penalty percentages together.

We will then assess the penalty amount

against the adjusted SFAG that would

have been payable to the State if no

penalties were assessed. As a final step,

we will subtract other (fixed) penalty

amounts from the adjusted SFAG.

(c)(1) We will take the penalties

specified in paragraphs (a)(1), (a)(2) and

(a)(6) of this section by reducing the

SFAG payable for the quarter that

immediately follows our final decision.

(2) We will take the penalties

specified in paragraphs (a)(3), (a)(4),

(a)(5), (a)(7), (a)(8), (a)(9), (a)(10), (a)(11),

(a)(12), (a)(13), and (a)(14) of this section

by reducing the SFAG payable for the

fiscal year that immediately follows our

final decision.

(d) When imposing the penalties in

paragraph (a) of this section, the total

reduction in an affected State’s grant

must not exceed 25 percent. If this 25

percent limit prevents the recovery of

the full penalty amount imposed on a

State during a fiscal year, we will apply

the remaining amount of the penalty to

the SFAG payable for the immediately

succeeding fiscal year.

(e)(1) In the same fiscal year, a State

must expend additional State funds to

replace any reduction in the SFAG

resulting from penalties.

(2) The State must document

compliance with this provision on its

TANF Financial Report (or Territorial

Financial Report).

§ 272.2 When do the TANF penalty

provisions apply?

(a) A State will be subject to the

penalties specified in §§ 272.1(a)(1), (2),

(7), (8), (9), (10), (11), (12), (13), and (14)

for conduct occurring on and after the

first day the State operates the TANF

program.

(b) A State will be subject to the

penalties specified in §§ 272.1(a)(3), (4),

(5), and (6) for conduct occurring on and

after July 1, 1997, or the date that is six

months after the first day the State

operates the TANF program, whichever

is later.

(c) For the period of time prior to

[effective date of final rules], we will

assess State conduct as specified in

§ 270.40(b) of this chapter.

§ 272.3 How will we determine if a State is

subject to a penalty?

(a) We will use the single audit, as

implemented through OMB Circular A–

133, to determine if a State is subject to

a penalty for misusing Federal TANF

funds (§ 273.10 of this chapter),

intentionally misusing Federal TANF

funds (§ 273.12 of this chapter), failing

to participate in IEVS (§ 274.10 of this

chapter), failing to comply with

paternity establishment and child

support requirements (§ 274.31 of this

chapter), failing to maintain assistance

to an adult single custodial parent who

cannot obtain child care for child under

six (§ 274.20 of this chapter), and failing

to reduce assistance to a recipient who

refuses without good cause to work

(§ 271.14 of this chapter).

(b) We will use data reports required

under part 275 of this chapter to

determine if a State failed to meet

participation rates (§ 271.21 of this

chapter) or failed to comply with the

five-year limit on Federal assistance

(§ 274.1 of this chapter).

(1) Data in these reports are subject to

our verification in accordance with

§ 275.7 of this chapter.

(2) States may not revise the sampling

frames or program designations for cases

in the quarterly TANF and TANF MOE

Data Reports retroactively (i.e., after

submission).

(c) We will use the TANF Financial

Report (or, as applicable, the Territorial

Financial Report) to determine if a State

should be penalized for failure to meet

the TANF MOE requirement (§ 273.7 of

this chapter), the Contingency Fund

MOE requirement (§ 274.76 of this

chapter), and to replace SFAG

reductions with State-only funds

(§ 274.50 of this chapter). Data in these

reports are subject to our verification in

accordance with § 275.6 of this chapter.

(d) We will determine that a State is

subject to the specific penalties for

failure to perform, if we find

information in the reports under

paragraphs (b) and (c) of this section to

be insufficient or if we determine that

the State has not adequately

documented actions verifying that it has

met the participation rates.

(e) To determine if a State has met its

TANF MOE requirement, we will use

the additional information listed at

§ 273.7 of this chapter.

(f) States should maintain records in

accordance with § 92.42 of this title.

§ 272.4 What happens if we determine that

a State is subject to a penalty?

(a) If we determine that a State is

subject to a penalty, we will notify the

State in writing, specifying which

penalty we will impose and the reasons

for the penalty.

(b) Within 60 days of when it receives

our notification, the State may submit to

ACF, a written response that:

(1) Demonstrates that our

determination is incorrect because our

data or the method we used in

determining the penalty was in error or

was insufficient, or that the State acted,

prior to [effective date of final

regulations], on a reasonable

interpretation of the statute;

(2) Demonstrates that the State had

reasonable cause for failing to meet the

requirement(s); and/or

(3) Provides a corrective compliance

plan, pursuant to § 272.6.

(c) If we find that we determined the

penalty erroneously, or that the State

has adequately demonstrated that it had

reasonable cause for failing to meet one

or more requirements, we will not

impose the penalty.
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(d) Reasonable cause and a corrective

compliance plan are not available for

failing to repay a Federal loan; failing to

meet the TANF MOE requirement;

failing to maintain 100 percent TANF

MOE after receiving Contingency Funds;

failing to expend additional State funds

to replace adjusted SFAG reductions

due to the imposition of one or more

penalties listed in § 272.1; or failing to

maintain 80, or 75, percent, as

appropriate, TANF MOE during a year

in which a Welfare-to-Work grant is

received.

(e) We will notify the State in writing

of our findings regarding its response.

(f) If we request additional

information from a State, it must

provide the information within two

weeks of the date of our request.

§ 272.5 Under what general circumstances

will we determine that a State has

reasonable cause?

(a) We will not impose a penalty

against a State if we determine that the

State had reasonable cause for its

failure. The general factors a State may

use to claim reasonable cause are

limited to the following:

(1) Natural disasters and other

calamities (e.g., hurricanes, earthquakes,

fire) whose disruptive impact was so

significant as to cause the State’s failure;

(2) Formally issued Federal guidance

that provided incorrect information

resulting in the State’s failure; or

(3) Isolated, non-recurring problems

of minimal impact that are not

indicative of a systemic problem.

(b) A State may also use the

additional factors for claiming

reasonable cause for failure to satisfy the

five-year limit at § 274.3 of this chapter

and to meet the minimum participation

rates at § 271.52 of this chapter.

(c) We will not forgive a State penalty

under §§ 272.1(a)(4), (a)(9), (a)(11), or

(a)(14) based on reasonable cause if we

detect a significant pattern of diversion

of families to a separate State program

that achieves the effect of avoiding the

work participation rates at §§ 271.22 or

271.24.

(d) We will not forgive a State penalty

under §§ 272.1(a)(4), (a)(6), (a)(9), or

(a)(14) based on reasonable cause if we

detect a significant pattern of diversion

of families to a separate State program

that achieves the effect of diverting the

Federal share of child support

collections.

§ 272.6 What if a State does not

demonstrate reasonable cause?

(a) A State may accept the penalty or

enter into a corrective compliance plan

that will correct or discontinue the

violation within six months in order to

avoid the penalty if:

(1) A State does not claim reasonable

cause; or

(2) We find that the State does not

have reasonable cause.

(b) A State that does not claim

reasonable cause will have 60 days from

receipt of our notice described in

§ 272.4(a) to submit its corrective

compliance plan.

(c) A State that unsuccessfully

claimed reasonable cause will have 60

days from the date it received our

second notice, described in § 272.4(f), to

submit its corrective compliance plan.

(d) The corrective compliance plan

must include:

(1) A complete analysis of why the

State did not meet the requirements;

(2) A detailed description of how the

State will correct or discontinue, as

appropriate, the violation in a timely

manner;

(3) The milestones, including interim

process and outcome goals, the State

will achieve to assure it comes into

compliance within the specified time

period; and

(4) A certification by the Governor

that the State is committed to correcting

or discontinuing the violation, in

accordance with the plan.

(e) During the 60-day period following

our receipt of the State’s corrective

compliance plan, we may request

additional information and consult with

the State on modifications to the plan.

(f) If an acceptable corrective

compliance plan is not submitted on

time, we will assess the penalty

immediately.

(g) A corrective compliance plan is

deemed to be accepted if we take no

action during the 60-day period

following our receipt of the plan.

(h) We will not impose a penalty

against a State with respect to any

violation covered by a corrective

compliance plan that we accept if the

State completely corrects or

discontinues, as appropriate, the

violation within the period covered by

the plan. This period must be no longer

than six months from the date we accept

a State’s compliance plan.

(i)(1) Under limited circumstances,

and subject to paragraph (i)(2) of this

section, we may reduce the penalty if

the State fails to completely correct or

discontinue the violation pursuant to its

corrective compliance plan and in a

timely manner. To receive a reduced

penalty, the State must demonstrate that

it met one or both of the following

conditions:

(i) Although it did not achieve full

compliance, the State made substantial

progress towards correcting or

discontinuing the violation; or

(ii) The State’s failure to comply fully

was attributable to either a natural

disaster or regional recession.

(2) We will not reduce a State’s

penalty:

(i) Under §§ 272.1(a)(4), (a)(9), (a)(11),

or (a)(14) if we detect a significant

pattern of diversion of families to a

separate State program that achieves the

effect of avoiding the work participation

rates and the State fails to correct the

diversion; or

(ii) Under §§ 272.1(a)(4), (a)(6), (a)(9),

or (a)(11) if we detect a significant

pattern of diversion of families to a

separate State program that achieves the

effect of diverting the Federal share of

child support collections and the State

fails to correct the diversion.

§ 272.7 How can a State appeal our

decision to take a penalty?

(a) We will formally notify the chief

executive officer of the State of an

adverse action (i.e., the reduction in the

SFAG) within five days after we

determine that a State is subject to a

penalty under parts 271 through 275 of

this chapter.

(b) The State may file an appeal of the

action, in whole or in part, to the HHS

Departmental Appeals Board (the Board)

within 60 days after the date it receives

notice of the adverse action. The State

must include the brief and all

supporting documents with its appeal

when it is filed. The State must send a

copy of the appeal to the Office of the

General Counsel, Children, Families and

Aging Division, Room 411–D, 200

Independence Avenue, S.W.,

Washington, D.C. 20201.

(c) ACF must file its reply brief and

supporting documentation within 30

days after the State files its appeal.

(d) The appeal to the Board must

follow the provisions of the rules under

this section and those at §§ 16.2, 16.9,

16.10, and 16.13 through 16.22 of this

title.

(e) The Board will consider an appeal

filed by a State on the basis of the

documentation and briefs submitted,

along with any additional information

the Board may require to support a final

decision. In deciding whether to uphold

an adverse action or any portion of such

action, the Board will conduct a

thorough review of the issues and make

a final determination within 60 days

after the appeal is filed.

(f)(1) The filing date shall be the date

materials are received by the Board in

a form acceptable to it.

(2) If the Board requires additional

documentation to reach its decision, the

60 days shall be tolled for a reasonable

period, specified by the Board, to allow

production of the documentation.
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(g)(1) A State may obtain judicial

review of a final decision by the Board

by filing an action within 90 days after

the date of such decision. It should file

this action with the district court of the

United States in the judicial district

where the State agency is located or in

the United States District Court for the

District of Columbia.

(2) The district court will review the

final decision of the Board on the record

established in the administrative

proceeding, in accordance with the

standards of review prescribed by 5

U.S.C. 706(2). The court will base its

review on the documents and

supporting data submitted to the Board.

§ 272.8 What is the relationship of

continuing waivers on the penalty process

for work participation and time limits?

(a) In order for the State’s alternative

waiver requirements to be considered in

the calculation of the work participation

rate and the time limit requirement, the

Governor must certify in writing to the

Secretary:

(1) The specific inconsistencies (i.e.,

alternative waiver requirements) that

the State chooses to continue;

(2) The reasons for continuing the

alternative waiver requirements,

including how their continuation is

consistent with the purposes of the

waiver; and

(3) Consistent with the waiver and its

purpose, the standards that the State

will use to:

(i) Assign individuals to the

alternative waiver work activities or to

an alternative number of hours; and

(ii) Determine exemptions from or

extensions to the time limit.

(b) If a State using the alternative

waiver requirements fails to meet the

work participation rate or the time limit

requirement:

(1) The State is not eligible for a

reasonable cause exception from the

applicable penalty under §§ 272.2 (a)(4)

or (a)(9), nor for any reduction of the

work penalty under §§ 271.51 (b)(3) or

(c) of this chapter;

(2) The State must consider

modification of its alternative waiver

requirements as part of its corrective

compliance plan; and

(3) If the State continues waivers

related to the failure to achieve

compliance with the work requirements

described in subparts B and C of part

271 of this chapter or the time limits

described in §§ 274.1 and 274.2 of this

chapter and still fails to correct the

violation, it will not be eligible for a

reduced penalty for related

noncompliance under § 272.6(i)(1).

(c) The Secretary will use the data

submitted by the States pursuant to

§ 275.3 of this chapter to calculate and

make public the work participation rates

and the percentage of families with an

adult that received Federal TANF

benefits for more than 60 months under

both the TANF requirement and the

State’s alternative waiver requirement.

PART 273—STATE TANF

EXPENDITURES

Subpart A—What Rules Apply to a State’s

Maintenance of Effort?

Sec.

273.0 What definitions apply to this part?

273.1 How much State money must a State

expend annually to meet the TANF MOE

requirement?

273.2 What kinds of State expenditures

count toward meeting a State’s annual

MOE expenditure requirement?

273.3 When do child care expenditures

count?

273.4 When do educational expenditures

count?

273.5 When do expenditures in separate

State programs count?

273.6 What kinds of expenditures do not

count?

273.7 How will we determine the level of

State expenditures?

273.8 What happens if a State fails to meet

the TANF MOE requirement?

273.9 May a State avoid a TANF MOE

penalty because of reasonable cause or

through corrective compliance?

Subpart B—What Rules Apply to the Use of

Federal Funds?

273.10 What actions are to be taken against

a State if it uses Federal TANF funds in

violation of the Act?

273.11 What uses of Federal TANF funds

are improper?

273.12 How will we determine if a State

intentionally misused Federal TANF

funds?

273.13 What types of activities are subject

to the administrative cost limit on

Federal TANF grants?

Subpart C—What Rules Apply to Individual

Development Accounts?

273.20 What definitions apply to Individual

Development Accounts (IDAs)?

273.21 May a State use the TANF grant to

fund IDAs?

273.22 Are there any restrictions on IDA

funds?

273.23 How does a State prevent a recipient

from using the IDA account for

unqualified purposes?

Authority: 42 U.S.C. 604, 607, 609, and

862a.

Subpart A—What Rules Apply to a

State’s Maintenance of Effort?

§ 273.0 What definitions apply to this part?

(a) Except as noted in § 273.2(d), the

general TANF definitions at § 270.30 of

this chapter apply to this part.

(b) Administrative costs means costs

necessary for the proper administration

of the TANF program or separate State

programs. It includes the costs for

general administration and coordination

of these programs, including indirect (or

overhead) costs. Examples of

administrative costs include:

(1) Salaries and benefits and all other

indirect (or overhead) costs not

associated with providing program

services (such as diversion, assessment,

development of employability plans,

work activities and post-employment

services, and supports) to individuals;

(2) Preparation of program plans,

budgets, and schedules;

(3) Monitoring of programs and

projects;

(4) Fraud and abuse units;

(5) Procurement activities;

(6) Public relations;

(7) Services related to accounting,

litigation, audits, management of

property, payroll, and personnel;

(8) Costs for goods and services

required for administration of the

program such as rental and purchase of

equipment, utilities, office supplies,

postage, and rental and maintenance of

office space;

(9) Travel costs incurred for official

business;

(10) Management information systems

not related to the tracking and

monitoring of TANF requirements (e.g.,

for a personnel and payroll system for

State staff); and

(11) Preparing reports and other

documents related to program

requirements.

§ 273.1 How much State money must a

State expend annually to meet the TANF

MOE requirement?

(a)(1) The minimum TANF MOE for a

fiscal year is 80 percent of a State’s

historic State expenditures.

(2) However, if a State meets the

minimum work participation rate

requirements in a fiscal year, as required

under §§ 271.21 and 271.23 of this

chapter, then for that fiscal year, the

minimum TANF MOE is 75 percent of

the State’s historic State expenditures.

(b) The TANF MOE level also

depends on whether a Tribe or

consortium of Tribes residing in a State

has received approval to operate its own

TANF program. The State’s TANF MOE

level for a fiscal year will be reduced the

same percentage as the SFAG was

reduced as the result of any Tribal

Family Assistance Grants awarded to

Tribal grantees in the State for that year.

§ 273.2 What kinds of State expenditures

count toward meeting a State’s annual MOE

expenditure requirement?

(a) Expenditures of State funds in

TANF or separate State programs may
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62193

count if they were made for the

following types of services:

(1) Cash assistance, including

assigned child support collected by the

State, distributed to the family, and

disregarded in determining eligibility

for, and amount of the TANF assistance

payment;

(2) Child care assistance (see § 273.3);

(3) Education activities designed to

increase self-sufficiency, job training,

and work (see § 273.4);

(4) Any other use of funds allowable

under section 404(a)(1) of the Act and

consistent with the goals at § 270.20 of

this chapter; and

(5) Administrative costs for activities

listed in paragraphs (a)(1) through (a)(4)

of this section, if these costs do not

exceed 15 percent of the total amount of

countable expenditures. Information

technology and computerization needed

for tracking or monitoring services are

excluded from this determination.

‘‘Administrative costs’’ has the meaning

specified at § 273.0(b).

(b) The services listed under

paragraph (a) of this section may be

counted only if they have been provided

to or on behalf of eligible families. An

‘‘eligible family,’’ as defined by the

State, must:

(1) Be comprised of citizens, qualified

aliens (as defined in § 270.30 of this

chapter), non-immigrants under the

Immigration and Nationality Act, aliens

paroled into the U.S. for less than one

year, or, in the case of aliens not

lawfully present in the U.S., provided

that the State enacted a law after August

22, 1996, that ‘‘affirmatively provides’’

for such services; and

(2) Include a child living with a

custodial parent or other adult caretaker

relative (or consist of a pregnant

individual); and

(3) Be financially eligible according to

the TANF income and resource

standards established by the State under

its TANF plan.

(c) Services listed under paragraph (a)

of this section may also be provided to

a family that meets the criteria under

paragraphs (b) (1) and (2) of this section,

but which became ineligible solely due

to the time limitation given under

§ 274.1 of this chapter.

(d) Assistance does not have the

meaning given in § 270.30 of this

chapter, but for MOE purposes can be

ongoing, short-term or one-time only

and may include services.

(e) The expenditures for services in

separate State programs listed under

paragraph (a) of this section only count

if they also meet the requirements of

§ 273.5. Expenditures that fall within

the prohibitions in § 273.6 do not count.

§ 273.3 When do child care expenditures

count?

(a) State funds expended to meet the

requirements of the Matching Fund of

the Child Care and Development Fund

(i.e., match and MOE amounts) that also

count as TANF MOE expenditures are

limited to the State’s child care MOE

amount pursuant to section 418(a)(2)(C)

of the Act.

(b) The child care expenditures must

be made to or on behalf of eligible

families, as defined in § 273.2(b).

§ 273.4 When do educational expenditures

count?

(a) Expenditures for educational

activities or services count if:

(1) They are targeted to eligible

families (as defined in § 273.2(b)) to

increase self-sufficiency, job training,

and work; and

(2) They are not generally available to

other residents of the State.

(b) Expenditures on behalf of eligible

families for educational services or

activities provided through the public

education system do not count unless

they meet the requirements under

paragraph (a) of this section.

§ 273.5 When do expenditures in separate

State programs count?

(a) If the expenditures in the separate

State program(s) were previously

authorized and were allowable under

section 403 of prior law, then they may

count in their entirety.

(b) If the expenditures under the

separate State program(s) had not been

previously authorized and allowable

under section 403 of prior law, then

only the amount expended in excess of

money expended on such program(s) in

FY 1995 may count.

§ 273.6 What kinds of expenditures do not

count?

The following kinds of expenditures

do not count:

(a) Expenditures of funds that

originated with the Federal government;

(b) State funds that are used to match

Federal funds (or expenditures of

State funds that support claims for

Federal matching funds), including

State expenditures under the Medicaid

program under title XIX of the Act;

(c) Expenditures that States make as a

condition of receiving Federal funds

under other programs except as

provided under § 273.3;

(d) Expenditures made in a prior

fiscal year;

(e) Expenditures used to match

Federal Welfare-to-Work funds provided

under section 403(a)(5) of the Act; and

(f) Expenditures made in the TANF

program to replace the reductions in the

SFAG as a result of penalties pursuant

to § 274.50 of this chapter.

§ 273.7 How will we determine the level of

State expenditures?

(a) Each State must report its

expenditures quarterly to us as required

under part 275 of this chapter.

(b) Each State must also submit an

annual addendum to its TANF Financial

Report (or, as applicable, its Territorial

Financial Report) on separate State

programs for the fourth quarter

containing:

(1) A description of the specific Statefunded program activities provided to

eligible families;

(2) Each program’s statement of

purpose (how the program serves

eligible families);

(3) The definitions of each work

activity in which families in the

program are participating;

(4) A statement whether the program/

activity had been previously authorized

and allowable as of August 21, 1996,

under section 403 of prior law;

(5) The FY 1995 State expenditures

for each program/activity not authorized

and allowable as of August 21, 1996 (see

§ 273.5(b));

(6) The total number of eligible

families served by each program as of

the end of the fiscal year;

(7) The eligibility criteria for the

families served under each program/

activity; and

(8) A certification that those families

served met the State’s criteria for

‘‘eligible families.’’

§ 273.8 What happens if a State fails to

meet the TANF MOE requirement?

(a) If any State fails to meet its TANF

MOE requirement for any fiscal year,

then we will reduce dollar-for-dollar the

amount of the SFAG payable to the State

for the following fiscal year.

(b) If a State fails to meet its TANF

MOE requirement for any fiscal year,

and the State received a Welfare-toWork formula grant provided under

section 403(a)(5)(A) of the Act for the

same fiscal year, we will reduce the

amount of the SFAG payable to the State

for the following fiscal year by the

amount of the Welfare-to-Work formula

grant paid to the State.

§ 273.9 May a State avoid a TANF MOE

penalty because of reasonable cause or

through corrective compliance?

The reasonable cause and corrective

compliance provisions at §§ 272.4,

272.5, and 272.6 of this chapter do not

apply.
62194 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Subpart B—What Rules Apply to the

Use of Federal Funds?

§ 273.10 What actions are to be taken

against a State if it uses Federal TANF

funds in violation of the Act?

(a) If a State misuses such funds, we

will reduce the SFAG payable for the

immediately succeeding fiscal year

quarter by the amount misused.

(b) If we determine that the misuse

was intentional, we will reduce the

SFAG payable for the immediately

succeeding fiscal year quarter in an

amount equal to five percent of the

adjusted SFAG.

(c) The reasonable cause and

corrective compliance provisions of

§§ 272.4 through 272.6 of this chapter

apply to penalties under paragraphs (a)

and (b) of this section.

§ 273.11 What uses of Federal TANF funds

are improper?

(a) States may use Federal TANF

funds for expenditures that:

(1) Are reasonably related to the

purposes of TANF, as specified at

§ 270.20 of this chapter; or

(2) The State was authorized to use

IV–A or IV–F funds under prior law, as

in effect on September 30, 1995, or (at

the option of the State) August 21, 1996.

(b) We will consider use of funds in

violation of paragraph (a) of this section,

the provisions of the Act, section 115 of

PRWORA, the provisions of part 92 of

this title, or OMB Circular A–87 to be

misuse of funds.

§ 273.12 How will we determine if a State

intentionally misused Federal TANF funds?

(a) The State must show, to our

satisfaction, that it used the funds for

purposes that a reasonable person

would consider to be within the

purposes of the TANF program (as

specified at § 270.20 of this chapter) and

the provisions listed in § 273.11.

(b) We will consider funds to be

misused intentionally if there is

supporting documentation, such as

Federal guidance or policy instructions,

indicating that Federal TANF funds

could not be used for that purpose.

(c) We will also consider funds to be

misused intentionally if, after

notification that we have determined

such use to be improper, the State

continues to use the funds in the same

or similarly improper manner.

§ 273.13 What types of activities are

subject to the administrative cost limit on

Federal TANF grants?

(a) Activities that fall within the

definition of ‘‘administrative costs’’ at

§ 273.0(b) are subject to this limit.

(b) Information technology and

computerization for tracking and

monitoring are not administrative costs

for this purpose.

Subpart C—What Rules Apply to

Individual Development Accounts?

§ 273.20 What definitions apply to

Individual Development Accounts (IDAs)?

The following definitions apply with

respect to IDAs:

Date of acquisition means the date on

which a binding contract to obtain,

construct, or reconstruct the new

principal residence is entered into.

Eligible educational institution means

an institution described in section

481(a)(1) or section 1201(a) of the

Higher Education Act of 1965 (20 U.S.C.

1088(a)(1) or 1141(a)), as such sections

were in effect on August 21, 996. Also,

an area vocational education school (as

defined in subparagraph (C) or (D) of

section 521(4) of the Carl D. Perkins

Vocational and Applied Technology

Education Act (20 U.S.C. 2471(4)) that is

in any State (as defined in section

521(33) of such Act), as such sections

were in effect on August 22, 1996.

Individual Development Account

(IDA) means an account established by

or for an individual who is eligible for

TANF assistance to allow the individual

to accumulate funds for specific

purposes.

Post-secondary educational expenses

means a student’s tuition and fees

required for the enrollment or

attendance at an eligible educational

institution, and required course fees,

books, supplies, and equipment

required at an eligible educational

institution.

Qualified acquisition costs means the

cost of obtaining, constructing, or

reconstructing a residence. The term

includes any usual or reasonable

settlement, financing, or other closing

costs.

Qualified business means any

business that does not contravene State

law or public policy.

Qualified business capitalization

expenses means business expenses

pursuant to a qualified plan.

Qualified entity means a non-profit,

tax-exempt organization, or a State or

local government agency that works

cooperatively with a non-profit, taxexempt organization.

Qualified expenditures means

expenses entailed in a qualified plan,

including capital, plant equipment,

working capital, and inventory

expenses.

Qualified first-time home buyer

means a taxpayer (and, if married, the

taxpayer’s spouse) who has not owned

a principal residence during the threeyear period ending on the date of

acquisition of the new principal

residence.

Qualified plan means a business plan

that is approved by a financial

institution, or by a nonprofit loan fund

having demonstrated fiduciary integrity.

It includes a description of services or

goods to be sold, a marketing plan, and

projected financial statements, and it

may require the eligible recipient to

obtain the assistance of an experienced

entrepreneurial advisor.

Qualified principal residence means

the place a qualified first-time home

buyer will reside in in accordance with

the meaning of section 1034 of the

Internal Revenue Code of 1986 (26

U.S.C. 1034). The qualified acquisition

cost of the residence cannot exceed the

average purchase price of similar

residences in the area.

§ 273.21 May a State use the TANF grant

to fund IDAs?

States may use TANF grants to fund

IDAs for individuals who are eligible for

TANF assistance.

§ 273.22 Are there any restrictions on IDA

funds?

(a) A recipient may deposit only

earned income into an IDA.

(b) A recipient’s contributions to an

IDA may be matched only by a qualified

entity.

(c) A recipient may withdraw funds

only for the following reasons:

(1) To cover post-secondary education

expenses, if the amount is paid directly

to an eligible educational institution;

(2) For the recipient to purchase a first

home, if the amount is paid directly to

the person to whom the amounts are

due and it is a qualified acquisition cost

for a qualified principal residence by a

qualified first-time home buyer; or

(3) For business capitalization, if the

amounts are paid directly to a business

capitalization account in a federallyinsured financial institution and used

for a qualified business capitalization

expense.

§ 273.23 How does a State prevent a

recipient from using the IDA account for

unqualified purposes?

To prevent recipients from using the

IDA account improperly, States may do

the following:

(a) Count withdrawals as earned

income in the month of withdrawal

(unless already counted as income);

(b) Count withdrawals as resources in

determining eligibility; or

(c) Take such other steps as the State

has established in its State plan or

written State policies to deter

inappropriate use.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62195

PART 274—OTHER ACCOUNTABILITY

PROVISIONS

Subpart A—What Specific Rules Apply for

Other Program Penalties?

Sec.

274.0 What definitions apply to this part?

274.1 What restrictions apply to the length

of time Federal TANF assistance may be

provided?

274.2 What happens if a State does not

comply with the five-year limit?

274.3 How can a State avoid a penalty for

failure to comply with the five-year

limit?

274.10 Must States do computer matching

of data records under IEVS to verify

recipient information?

274.11 How much is the penalty for not

participating in IEVS?

274.20 What happens if a State sanctions a

single parent of a child under six who

cannot get needed child care?

274.30 What procedures exist to ensure

cooperation with the child support

enforcement requirements?

274.31 What happens if a State does not

comply with the IV–D sanction

requirement?

274.40 What happens if a State does not

repay a Federal loan?

274.50 What happens if, in a fiscal year, a

State does not expend, with its own

funds, an amount equal to the reduction

to the adjusted SFAG resulting from a

penalty?

Subpart B—What are the Funding

Requirements for the Contingency Fund?

274.70 What funding restrictions apply to

the use of contingency funds?

274.71 How will we determine 100 percent

of historic State expenditures, the MOE

level, for the annual reconciliation?

274.72 For the annual reconciliation

requirement, what restrictions apply in

determining qualifying State

expenditures?

274.73 What other requirements apply to

qualifying State expenditures?

274.74 When must a State remit

contingency funds under the annual

reconciliation?

274.75 What action will we take if a State

fails to remit funds as required?

274.76 How will we determine if a State has

met its Contingency Fund reconciliation

MOE level requirement and made

expenditures that exceed its MOE

requirement?

274.77 Are contingency funds subject to the

same restrictions that apply to other Federal

TANF funds?

Subpart C—What Rules Pertain Specifically

to the Spending Levels of the Territories?

274.80 If a Territory receives Matching

Grant funds, what funds must it expend?

274.81 What expenditures qualify for

Territories to meet the Matching Grant

MOE requirement?

274.82 What expenditures qualify for

meeting the Matching Grant FAG amount

requirement?

274.83 How will we know if a Territory

failed to meet the Matching Grant

funding requirements at § 274.80?

274.84 What will we do if a Territory fails

to meet the Matching Grant funding

requirements at § 274.80?

274.85 What rights of appeal are available

to the Territories?

Authority: 31 U.S.C. 7501 et seq.; 42 U.S.C.

609, 654, 1302, 1308, and 1337.

Subpart A—What Specific Rules Apply

for Other Program Penalties?

§ 274.0 What definitions apply to this part?

The general TANF definitions at

§ 270.30 of this chapter apply to this

part.

§ 274.1 What restrictions apply to the

length of time Federal TANF assistance may

be provided?

(a)(1) Subject to the exceptions in this

section, no State may use any of its

Federal TANF funds to provide

assistance (as defined in § 270.30 of this

chapter) to a family that includes an

adult who has received assistance for a

total of five years (60 cumulative

months, whether or not consecutive).

(2) Assistance provided under section

403(a)(5) of the Act (WTW) is not

subject to the time limit in paragraph

(a)(1) of this section.

(3) States may define ‘‘a family that

includes an adult,’’ but may not exclude

families from their definition solely for

the purpose of avoiding penalties under

§ 274.2.

(i) States shall report to us annually

on the number of families excluded

because of the State’s definition and the

circumstances underlying each

exclusion.

(ii) Where we find that a State has

excluded families for the purpose of

avoiding a penalty for the five-year time

limit, we shall include those families in

the calculation under paragraph (c) of

this section in determining whether a

State has complied with time-limit

extension rules and is subject to the

penalty described in § 274.2.

(b) States must not count towards the

five-year limit:

(1) Any month of receipt of assistance

by an individual when she was a minor

who was not the head-of-household or

married to the head-of-household;

(2) Any month in which an adult

lived in Indian country (as defined in

section 1151 of title 18, United States

Code) or Native Alaskan Village and at

least 50 percent of the adults were not

employed; and

(3) Non-cash assistance provided

under section 403(a)(5) of the Act

(WTW).

(c) States have the option to extend

assistance from Federal TANF funds

beyond the five-year limit for up to 20

percent of their cases. This provision

requires computation of an average

monthly percentage for each fiscal year,

with the numerator for each month

equal to the number of families that

includes an adult receiving assistance

beyond the five-year limit and the

denominator equal to the average

monthly number of families that

includes an adult receiving assistance

during the fiscal year or the

immediately preceding fiscal year,

whichever the State elects. States are

permitted to extend assistance to a

family only on the basis of:

(1) Hardship, as defined by the State;

or

(2) The fact that the family includes

someone who has been battered, or

subject to extreme cruelty based on the

fact that the individual has been

subjected to:

(i) Physical acts that resulted in, or

threatened to result in, physical injury

to the individual;

(ii) Sexual abuse;

(iii) Sexual activity involving a

dependent child;

(iv) Being forced as the caretaker

relative of a dependent child to engage

in non-consensual sexual acts or

activities;

(v) Threats of, or attempts at, physical

or sexual abuse;

(vi) Mental abuse; or

(vii) Neglect or deprivation of medical

care.

(d) If a State opts to extend assistance

to part of its caseload as permitted

under paragraph (c) of this section, it

only determines whether or not the

extension applies to a specific family

once an adult in the family has received

60 cumulative months of assistance.

(e) If the five-year limit is inconsistent

with a State’s waiver granted under

section 1115 of the Act, which was

submitted before August 22, 1996, and

was approved by July 1, 1997, the State

need not comply with the inconsistent

provisions of the five-year limit until

the waiver expires.

(1) The five-year limit would be

inconsistent with the State’s waiver:

(i) If the State has an approved waiver

that provides for terminating cash

assistance to individuals or families

because of the receipt of assistance for

a period of time, specified by the

approved waiver; and

(ii) The State would have to change its

waiver policy in order to comply with

the five-year limit.

(2)(i) Generally, under an approved

waiver, a State will count, toward the

five-year limit, all months for which the

adult subject to a State waiver time limit

receives assistance with Federal TANF
62196 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

funds, just as it would if it did not have

an approved waiver.

(ii) The State need not count, toward

the five-year limit, any months for

which an adult receives assistance with

Federal TANF funds while the adult is

exempt from the State’s time limit under

the terms of the State’s approved

waiver.

(3) The State may continue to provide

assistance with Federal TANF funds for

more than 60 cumulative months,

without a numerical limit, to families

provided extensions to the time limit,

under the provisions of the terms and

conditions of its approved waiver, as

long as the State’s waiver authority has

not expired.

(4) The five-year limit would also be

inconsistent with a State’s waiver to the

extent that the State needs to maintain

prior law policies for control group or

experimental treatment cases in order to

continue an experimental research

design for the purpose of completing an

impact evaluation of the waiver

policies.

(5) The additional requirements at

§ 272.8 of this chapter apply to the use

of continuing waivers with alternative

time-limit requirements in the

calculation of the time limit penalty.

§ 274.2 What happens if a State does not

comply with the five-year limit?

If we determine that a State has not

complied with the requirements of

§ 274.1, we will reduce the SFAG

payable to the State for the immediately

succeeding fiscal year by five percent of

the adjusted SFAG unless the State

demonstrates to our satisfaction that it

had reasonable cause or we approve a

corrective compliance plan.

§ 274.3 How can a State avoid a penalty for

failure to comply with the five-year limit?

(a) We will not impose the penalty if

the State demonstrates to our

satisfaction that it had reasonable cause

for failing to meet the five-year limit or

it completes a corrective compliance

plan pursuant to §§ 272.5 and 272.6 of

this chapter.

(b)(1) In addition, we will determine

a State has reasonable cause if it

demonstrates that it exceeded the 20

percent limitation on exceptions to the

time limit because of good cause

waivers provided to victims of domestic

violence.

(2)(i) To demonstrate reasonable cause

under paragraph (b)(1) of this section, a

State must provide evidence that, when

individuals with active good cause

waivers and their families are excluded

from the calculation, the percentage of

families receiving federally-funded

assistance for more than 60 months did

not exceed 20 percent of the total.

(ii) To qualify for exclusion, such

families must have good cause domestic

violence waivers that:

(A) Reflect the State’s assessment that

an individual in the family was, at the

time the waiver was granted,

temporarily unable to work because of

domestic violence;

(B) Were in effect after the family had

received a hardship exemption from the

limit on receiving federally-funded

assistance for 60 or more months; and

(C) Were granted appropriately, in

accordance with the criteria specified at

§ 270.30 of this chapter.

(iii) If a State fails to meet the criteria

specified for ‘‘good cause domestic

violence waivers’’ at § 270.30 of this

chapter or any of the other conditions in

paragraph (b)(2)(ii) of this section, the

Secretary will not grant reasonable

cause under paragraph (b)(1) of this

section.

§ 274.10 Must States do computer

matching of data records under IEVS to

verify recipient information?

(a) States must meet the requirements

of IEVS pursuant to section 1137 of the

Act and request the following

information from the Internal Revenue

Service (IRS), the State Wage

Information Collections Agencies

(SWICA), the Social Security

Administration (SSA), and the

Immigration and Naturalization Service

(INS):

(1) IRS unearned income;

(2) SWICA employer quarterly reports

of income and unemployment insurance

benefit payments;

(3) IRS earned income maintained by

SSA; and

(4) Immigration status information

maintained by the INS. (States may

request a waiver of this match under the

authority of 42 U.S.C. 1320–1327, note.)

(b) The requirements at §§ 205.51

through 205.62 of this chapter also

apply to the TANF IEVS requirement.

§ 274.11 How much is the penalty for not

participating in IEVS?

If we determine that the State has not

complied with the requirements of

§ 274.10, we will reduce the SFAG

payable for the immediately succeeding

fiscal year by two percent of the

adjusted SFAG unless the State

demonstrates to our satisfaction that it

had reasonable cause or we approve a

corrective compliance plan pursuant to

§§ 272.5 and 272.6 of this chapter.

§ 274.20 What happens if a State sanctions

a single parent of a child under six who

cannot get needed child care?

(a) If we determine that a State has not

complied with the requirements of

§ 271.15 of this chapter, we will reduce

the SFAG payable to the State by no

more than five percent for the

immediately succeeding fiscal year

unless the State demonstrates to our

satisfaction that it had reasonable cause

or we approve a corrective action plan

pursuant to §§ 272.5 and 272.6 of this

chapter.

(b) We will impose the maximum

penalty if:

(1) The State does not have a

statewide process in place that enables

families to demonstrate that they have

been unable to obtain child care; or

(2) There is a pattern of substantiated

complaints from parents or

organizations verifying that a State has

reduced or terminated assistance in

violation of this requirement.

(c) We will impose a reduced penalty

if the State demonstrates that the

violations were isolated or that they

affected a minimal number of families.

§ 274.30 What procedures exist to ensure

cooperation with the child support

enforcement requirements?

(a) The State (the IV–A agency) must

refer all appropriate individuals in the

family of a child, for whom paternity

has not been established or for whom a

child support order needs to be

established, modified or enforced, to the

child support enforcement agency (the

IV–D agency). Those individuals must

cooperate in establishing paternity and

in establishing, modifying, or enforcing

a support order with respect to the

child.

(b) If the IV–D agency determines that

an individual is not cooperating, and

the individual does not qualify for a

good cause or other exception

established by the State in accordance

with section 454(29) of the Act, then the

IV–D agency must notify the IV–A

agency promptly.

(c) The IV–A agency must then take

appropriate action by:

(1) Deducting from the assistance that

would otherwise be provided to the

family of the individual an amount

equal to not less than 25 percent of the

amount of such assistance; or

(2) Denying the family any assistance

under the program.

§ 274.31 What happens if a State does not

comply with the IV–D sanction

requirement?

(a)(1) If we find, for a fiscal year, that

the State IV–A agency did not enforce

the penalties against recipients required

under § 274.30(c), we will reduce the

SFAG payable for the next fiscal year by

one percent of the adjusted SFAG.

(2) Upon a finding for a second fiscal

year, we will reduce the SFAG by two

percent of the adjusted SFAG for the

following year.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62197

(3) A third or subsequent finding will

result in the maximum penalty of five

percent.

(b) We will not impose a penalty if the

State demonstrates to our satisfaction

that it had reasonable cause or we

approve a corrective compliance plan

pursuant to §§ 272.5 and 272.6 of this

chapter.

§ 274.40 What happens if a State does not

repay a Federal loan?

(a) If a State fails to repay the amount

of principal and interest due at any

point under a loan agreement:

(1) The entire outstanding loan

balance, plus all accumulated interest,

becomes due and payable immediately;

and

(2) We will reduce the SFAG payable

for the immediately succeeding fiscal

year quarter by the outstanding loan

amount plus interest.

(b) Neither the reasonable cause

provisions at § 272.5 of this chapter nor

the corrective compliance plan

provisions at § 272.6 of this chapter

apply when a State fails to repay a

Federal loan.

§ 274.50 What happens if, in a fiscal year,

a State does not expend, with its own

funds, an amount equal to the reduction to

the adjusted SFAG resulting from a

penalty?

(a) We will assess a penalty of no

more than two percent of the adjusted

SFAG plus the amount equal to the

difference between the amount the State

was required to expend and the amount

it actually expended in the fiscal year.

(1) We will take the full two percent

of the adjusted SFAG plus the amount

the State was required to expend if the

State made no additional expenditures

to compensate for reductions to its

adjusted SFAG resulting from penalties.

(2) We will reduce the percentage

portion of the penalty if the State has

expended some of the amount required.

In such case, we will calculate the

applicable percent by multiplying the

percentage of the required expenditures

actually made in the fiscal year by two

percent.

(b) The reasonable cause and

corrective compliance plan provisions

at §§ 272.4, 272.5, and 272.6 of this

chapter do not apply to this penalty.

(c) State expenditures that are used to

replace reductions to the SFAG as the

result of TANF penalties must be used

for expenditures made under the State

TANF program, not under ‘‘separate

State programs.’’

Subpart B—What are the Funding

Requirements for the Contingency

Fund?

§ 274.70 What funding restrictions apply to

the use of contingency funds?

(a) Contingency funds are available to

a State only if expenditures by the State,

excluding all Federal funds but the

contingency funds, exceed the State’s

historic State expenditures.

(b) The maximum amount payable to

a State in a fiscal year may not exceed

an amount equal to 1⁄12 times 20 percent

of that State’s SFAG for that fiscal year,

multiplied by the number of eligible

months for which the State has

requested contingency funds.

§ 274.71 How will we determine 100

percent of historic State expenditures, the

MOE level, for the annual reconciliation?

(a)(1) The State historic State

expenditures, the MOE level, include

the State share of expenditures for

AFDC benefit payments, administration,

FAMIS, EA, and the JOBS programs for

FY 1994.

(2) We will use the same data sources

and date, i.e., April 28, 1995, that we

used to determine the TANF MOE levels

for FY 1994. We will exclude the State

share of expenditures from the former

IV-A child care programs (AFDC/JOBS,

Transitional and At-Risk child care) in

the calculation.

(b) We will reduce a State’s MOE level

for the Contingency Fund by the same

percentage that we reduce the TANF

MOE level for any fiscal year in which

the State’s SFAG annual allocation is

reduced to provide funding to Tribal

grantees operating a Tribal TANF

program.

§ 274.72 For the annual reconciliation

requirement, what restrictions apply in

determining qualifying State expenditures?

Qualifying State expenditures are

expenditures of State funds made in the

State TANF program, excluding child

care expenditures.

§ 274.73 What other requirements apply to

qualifying State expenditures?

The regulations at §§ 273.2 (except for

§ 273.2(a)(2)), 273.4, and 273.6 of this

chapter apply.

§ 274.74 When must a State remit

contingency funds under the annual

reconciliation?

(a) A State may retain its contingency

funds only if it matches them with the

expenditure of State funds above a

specified MOE level. If the amount of

contingency funds paid to a State for a

fiscal year exceeds the amount equal to

qualifying State expenditures (as

defined at § 274.72), plus contingency

funds, minus the MOE level, multiplied

by the Federal Medical Assistance

Percentage (FMAP), then multiplied by

1⁄12 times the number of months the

State received contingency funds, then

such excess amount must be remitted.

(b) If a State does not meet its MOE

requirement, all contingency funds paid

to a State for a fiscal year must be

remitted.

(c) If required to remit funds, the State

must remit all (or a portion) of the funds

paid to it for a fiscal year within one

year after it has failed to meet either the

Food Stamp trigger or the

Unemployment trigger for three

consecutive months.

§ 274.75 What action will we take if a State

fails to remit funds as required?

(a) If a State fails to remit funds as

required, we will reduce the SFAG

payable for the next fiscal year by the

amount of funds not remitted.

(b) A State may appeal this decision

as provided in § 272.7 of this chapter.

(c) The reasonable cause exceptions

and corrective compliance regulations at

§§ 272.5 and 272.6 of this chapter do not

apply to this penalty.

§ 274.76 How will we determine if a State

has met its Contingency Fund

reconciliation MOE level requirement and

made expenditures that exceed its MOE

requirement?

(a) States receiving contingency funds

for a fiscal year must complete the

quarterly TANF Financial Report (or, as

applicable, the Territorial Financial

Report). As part of the fourth quarter’s

report, a State must complete its annual

reconciliation.

(b) The TANF Financial Report and

State reporting on expenditures are

subject to our review.

§ 274.77 Are contingency funds subject to

the same restrictions that apply to other

Federal TANF funds?

As Federal TANF funds, contingency

funds are subject to the restrictions and

prohibitions in effect for Federal TANF

funds. The provisions of § 273.11 of this

chapter apply.

Subpart C—What Rules Pertain

Specifically to the Spending Levels of

the Territories?

§ 274.80 If a Territory receives Matching

Grant funds, what funds must it expend?

(a) If a Territory receives Matching

Grant funds under section 1108(b) of the

Act, it must:

(1) Contribute 25 percent of

expenditures funded under the

Matching Grant for title IV–A or title

IV–E expenditures;

(2) Expend up to 100 percent of the

amount of historic expenditures for FY
62198 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

1The Appendices contain the specific data

elements in the quarterly Data Report and the

quarterly Financial Report, as well as the

instructions for filing these reports. The

Appendices also contain a summary of the

applicable sampling specifications and three

reference tables that summarize the statutory basis

and rationale for collecting the data elements in the

Data Report.

1995 for the AFDC program (including

administrative costs and FAMIS), the

EA program, and the JOBS program; and

(3) Expend up to 100 percent of the

amount of the Family Assistance Grant

annual allocation using Federal TANF,

title IV–E funds and/or Territory-only

funds.

(b) Territories may not use the same

Territorial expenditures to satisfy the

requirements of paragraph (a) of this

section.

§ 274.81 What expenditures qualify for

Territories to meet the Matching Grant MOE

requirement?

To meet the Matching Grant MOE

requirements, Territories may count:

(a) Territorial expenditures made

pursuant to §§ 273.2, 273.3, 273.4, and

273.6 of this chapter that are

commingled with Federal TANF funds

or made under a segregated TANF

program; and

(b) Territorial expenditures made

pursuant to the regulations at 45 CFR

parts 1355 and 1356 for the Foster Care

and Adoption Assistance programs and

section 477 of the Act for the

Independent Living program.

§ 274.82 What expenditures qualify for

meeting the Matching Grant FAG amount

requirement?

To meet the Matching Grant FAG

amount requirement, Territories may

count:

(a) Expenditures made with Federal

TANF funds pursuant to § 273.11 of this

chapter;

(b) Expenditures made pursuant to

§§ 273.2, 273.3, 273.4, and 273.6 of this

chapter that are commingled with

Federal TANF funds or made under a

segregated TANF program;

(c) Amounts transferred from TANF

funds pursuant to section 404(d) of the

Act; and

(d) The Federal and Territorial shares

of expenditures made pursuant to the

regulations at 45 CFR parts 1355 and

1356 for the Foster Care and Adoption

Assistance programs and section 477 of

the Act for the Independent Living

program.

§ 274.83 How will we know if a Territory

failed to meet the Matching Grant funding

requirements at § 274.80?

We will require the Territories to

report the expenditures required by

§ 274.80 (a)(2) and (a)(3) on the

quarterly Territorial Financial Report.

§ 274.84 What will we do if a Territory fails

to meet the Matching Grant funding

requirements at § 274.80?

If a Territory does not meet the

requirements at either or both of

§ 274.80 (a)(2) and (a)(3), we will

disallow all Matching Grant funds

received for the fiscal year.

§ 274.85 What rights of appeal are

available to the Territories?

The Territories may appeal our

decisions to the Departmental Appeals

Board in accordance with our

regulations at part 16 of this title if we

decide to take disallowances under

1108(b).

PART 275—DATA COLLECTION AND

REPORTING REQUIREMENTS

Sec.

275.1 What does this part cover?

275.2 What definitions apply to this part?

275.3 What reports must the State file on a

quarterly basis?

275.4 When are quarterly reports due?

275.5 May States use sampling?

275.6 Must States file reports

electronically?

275.7 How will we determine if the State is

meeting the quarterly reporting

requirements?

275.8 Under what circumstances will a

State be subject to a reporting penalty for

failure to submit quarterly reports?

275.9 What information must the State file

annually?

275.10 When are annual reports due?

Authority: 42 U.S.C. 603, 605, 607, 609,

611, and 613.

§ 275.1 What does this part cover?

(a) This part explains how we will

collect the information required by

section 411(a) of the Act (data collection

and reporting); the information required

to implement section 407 of the Act

(work participation requirements), as

authorized by section 411(a)(1)(A)(xii);

the information required to implement

section 409 (penalties), section 403

(grants to States), section 405

(administrative provisions), section

411(b) (report to Congress), and section

413 (research and annual rankings); and

the data necessary to carry out our

financial management and oversight

responsibilities.

(b) This part describes the information

in the quarterly and annual reports that

each State must file, as follows:

(1) The case record information

(disaggregated and aggregated) on

individuals and families in the quarterly

TANF Data Report;

(2) The expenditure data in the

quarterly TANF Financial Report (or, as

applicable, the Territorial Financial

Report);

(3) The annual information related to

definitions and expenditures that must

be filed with the fourth quarter

Financial Report; and

(4) The annual information on State

programs and performance for the report

to Congress.

(c) If a State claims MOE expenditures

under a separate State program, this part

specifies the circumstances under

which the State must collect and report

case-record information on individuals

and families served by the separate State

program.

(d) This part describes when reports

are due, how we will determine if

reporting requirements have been met,

and how we will apply the statutory

penalty for failure to file a timely report.

It also specifies electronic filing and

sampling requirements.1

§ 275.2 What definitions apply to this part?

(a) Except as provided in paragraph

(b) of this section, the general TANF

definitions at § 270.30 of this chapter

apply to this part.

(b) For data collection and reporting

purposes only, TANF family means:

(1) All individuals receiving

assistance as part of a family under the

State’s TANF or separate State program;

and

(2) The following additional persons

living in the household, if not included

under paragraph (b)(1) of this section:

(i) Parent(s) or caretaker relative(s) of

any minor child receiving assistance;

(ii) Minor siblings of any child

receiving assistance; and

(iii) Any person whose income or

resources would be counted in

determining the family’s eligibility for

or amount of assistance.

§ 275.3 What reports must the State file on

a quarterly basis?

(a) Quarterly reports. Each State must

collect on a monthly basis, and file on

a quarterly basis, the data specified in

the TANF Data Report and the TANF

Financial Report (or, as applicable, the

Territorial Financial Report). Under the

circumstances described in paragraph

(d)(1) of this section, the State must

collect and file the data specified in the

TANF-MOE Data Report.

(b) TANF Data Report. The TANF

Data Report consists of three sections.

Two sections contain disaggregated data

elements and one section contains

aggregated data elements.

(1) TANF Data Report: Disaggregated

Data—Sections one and two. Each State

must file disaggregated information on

families receiving TANF assistance

(section one) and families no longer

receiving TANF assistance (section
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62199

2See Appendices A and B for the specific data

elements we are proposing.

3See Appendix C for the specific data elements

we are proposing.

4See Appendix D for the proposed content of the

TANF Financial Report.

5See Appendices E through G for the proposed

reporting requirements.

6See Appendix H for a summary of the applicable

sampling specifications.

two).2 These two sections specify

identifying and demographic data such

as the individual’s Social Security

Number; and information such as the

type and amount of assistance received,

educational level, employment status,

work participation activities, citizenship

status, and earned and unearned

income. These reports also specify items

pertaining to child care and child

support. The data requested cover

adults (including non-custodial parents

who are participating in work activities)

and children.

(2) TANF Data Report: Aggregated

Data—Section three. Each State must

file aggregated information on families

receiving, applying for, and no longer

receiving TANF assistance.3 This

section of the Report asks for aggregate

figures in the following areas: the total

number of applications and their

disposition; the total number of

recipient families, adult recipients, and

child recipients; the total number of

births, out-of-wedlock births, and minor

child heads-of-households; the total

number of non-custodial parents

participating in work activities; and the

total amount of TANF assistance

provided.

(c) The TANF Financial Report (or

Territorial Financial Report). (1) Each

State must file quarterly expenditure

data on the State’s use of Federal TANF

funds, State TANF expenditures, and

State expenditures of MOE funds in

separate State programs.4

(2) In addition, each State must file

annually with the fourth quarter TANF

Financial Report (or, as applicable, the

Territorial Financial Report) definitions

and descriptive information on the

TANF program and descriptive and

expenditure-related information on the

State’s separate MOE program as

specified in § 275.9.

(3) If a State makes a substantive

change in its definition of work

activities, its description of transitional

services provided to families no longer

receiving assistance due to employment

under the TANF program, or how it

reduces the amount of assistance when

an individual refuses to engage in work,

as specified in § 275.9, it must file a

copy of the changed definition or

description with the next quarterly

report. The State must also indicate the

effective date of the change.

(4) If a State is expending TANF funds

received in prior fiscal years, it must file

a separate quarterly TANF Financial

Report (or, as applicable, Territorial

Financial Report) for each fiscal year

that provides information on the

expenditures of that year’s TANF funds.

(5) Territories must report their

expenditure and other fiscal data on the

Territorial Financial Report, as provided

at § 274.85 of this chapter, in lieu of the

TANF Financial Report.

(d) TANF—MOE Data Report. (1) If a

State claims MOE expenditures under a

separate State program, it must collect

and file similar disaggregated and

aggregated information on families

receiving and families no longer

receiving assistance under the separate

State program if it wishes to:

(i) Receive a high performance bonus;

(ii) Qualify for work participation

caseload reduction credit; or

(iii) Be considered for a reduction in

the penalty for failing to meet the work

participation requirements.

(2) The TANF–MOE Data Report

consists of three sections. Two sections

contain disaggregated data elements and

one contains aggregated data elements.5

Except for data elements that do not

apply to individuals and families under

the MOE program, such as time limits,

the data elements in the TANF–MOE

Data Report are the same as those in the

TANF Data Report as described in

paragraph (b) of this section.

§ 275.4 When are quarterly reports due?

(a) Each State must file the TANF

Data Report and the TANF Financial

Report (or, as applicable, the Territorial

Financial Report), including the

addendum to the fourth quarter

Financial Report, within 45 days

following the end of the quarter.

(b) The State may collect and submit

its TANF–MOE Data Report quarterly at

the same time as it submits its TANF

Data Report, or the State may submit

this report at the time it seeks to be

considered for a high performance

bonus, a caseload reduction credit, or a

reduction in the work participation rate

penalty as long as the data submitted are

for the full period for which these

decisions will be made.

(c) The effective date for filing these

reports depends on when the State

implemented the TANF program as

follows:

(1) If a State implemented the TANF

program by January 1, 1997, the first

reports cover the July–September 1997

quarter and are due November 14, 1997.

(2) If a State implemented its TANF

program between January 1, 1997, and

July 1, 1997, the first reports cover the

period that begins six months after the

date of implementation and are due 45

days following the end of the applicable

quarter.

§ 275.5 May States use sampling?

(a) Each State may report the

disaggregated data in the TANF Data

Report and in the TANF–MOE Data

Report on all recipient families or on a

sample of families selected through the

use of a scientifically acceptable

sampling method that we have

approved. States may not use a sample

to generate the aggregated data.6

(b) ‘‘Scientifically acceptable

sampling method’’ means a probability

sampling method in which every

sampling unit in the population has a

known, non-zero chance to be included

in the sample and our sample size

requirements are met.

§ 275.6 Must States file reports

electronically?

Each State must file all quarterly

reports (i.e., the TANF Data Report, the

TANF Financial Report (or, as

applicable, the Territorial Financial

Report), and the TANF–MOE Data

Report) electronically, based on format

specifications that we will provide.

§ 275.7 How will we determine if the State

is meeting the quarterly reporting

requirements?

(a) Each State’s quarterly reports (the

TANF Data Report, the TANF Financial

Report (or Territorial Financial Report),

and the TANF–MOE Data Report) must

be complete and accurate and filed by

the due date.

(b) For a disaggregated data report, ‘‘a

complete and accurate report’’ means

that:

(1) The reported data accurately

reflect information available to the State

in its case records, financial records,

and automated data systems;

(2) The data are free from

computational errors and are internally

consistent (e.g., items that should add to

totals do so);

(3) The data are reported for all

elements (i.e., no data are missing);

(4)(i) The data are provided for all

families; or

(ii) If the State opts to use sampling,

the data are provided for all families

selected in a sample that meets the

minimum sample size requirements

(except for families listed in error); and

(5) Where estimates are necessary

(e.g., some types of assistance may

require cost estimates), the State uses

reasonable methods to develop these

estimates.
62200 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

7See Section 3 of Appendix D for the specific

information we are proposing to collect.

(c) For an aggregated data report, ‘‘a

complete and accurate report’’ means

that:

(1) The reported data accurately

reflect information available to the State

in its case records, financial records,

and automated data systems;

(2) The data are free from

computational errors and are internally

consistent (e.g., items that should add to

totals do so);

(3) The data are reported for all

applicable elements; and

(4) Monthly totals are unduplicated

counts for all families (e.g., the number

of families and the number of out-ofwedlock births are unduplicated

counts).

(d) For the TANF Financial Report

(or, as applicable, the Territorial

Financial Report), ‘‘a complete and

accurate report’’ means that:

(1) The reported data accurately

reflect information available to the State

in its case records, financial records,

and automated data systems;

(2) The data are free from

computational errors and are internally

consistent (e.g., items that should add to

totals do so);

(3) The data are reported for all

applicable elements; and

(4) All expenditures have been made

in accordance with § 92.20(a) of this

title.

(e) We will review the data filed in

the quarterly reports to determine if

they meet these standards. In addition,

we will use audits and reviews to verify

the accuracy of the data filed by the

States.

(f) States must maintain records to

adequately support any report in

accordance with § 92.42 of this title.

§ 275.8 Under what circumstances will a

State be subject to a reporting penalty for

failure to submit quarterly reports?

(a) We will impose a reporting penalty

under § 272.1(a)(3) of this chapter if:

(1) A State fails to file the TANF Data

Report and the TANF Financial Report

(or, as applicable, the Territorial

Financial Report) on a timely basis;

(2) The disaggregated data in the

TANF Data Report is not accurate or

does not include all the data required by

section 411(a) of the Act (other than

section 411(a)(1)(A)(xii) of the Act) or

those nine additional elements

necessary to carry out the data

collection system requirements;

(3) The aggregated data in the TANF

Data Report does not include complete

and accurate information on the data

elements required by section 411(a) of

the Act and the data elements necessary

to carry out the data collection system

requirements and verify and validate

disaggregated data;

(4) The TANF Financial Report (or, as

applicable, the Territorial Financial

Report) does not contain complete and

accurate information on total

expenditures and expenditures on

administrative costs and transitional

services; or

(5) The addendum to the fourth

quarter TANF Financial Report (or, as

applicable, the Territorial Financial

Report) does not contain the

information required under §§ 271.22,

271.24, and 274.1 of this chapter on

families excluded from the calculations

in those sections because of the State’s

definition of families receiving

assistance; the definition of work

activities; and the description of

transitional services provided by a State

to families no longer receiving

assistance due to employment.

(b) We will not apply the reporting

penalty to the TANF–MOE Data Report,

the annual program and performance

report specified in § 275.9, or other

information on individuals and families

required by section 411(b) of the Act.

(c) If we determine that a State meets

one or more of the conditions set forth

in paragraph (a) of this section, we will

notify the State that we intend to reduce

the SFAG payable for the immediately

succeeding fiscal year.

(d) We will not impose the penalty at

§ 272.1(a)(3) of this chapter if the State

files the complete and accurate reports

before the end of the fiscal quarter that

immediately succeeds the fiscal quarter

for which the reports were required.

(e) If the State does not file all reports

as required by the end of the

immediately succeeding fiscal quarter,

the penalty provisions of §§ 272.4

through 272.6 of this chapter will apply.

(f) For each quarter for which the

State fails to meet a reporting

requirement, we will reduce the SFAG

payable by an amount equal to four

percent of the adjusted SFAG.

§ 275.9 What information must the State

file annually?

(a) Each State must file annually, as

an addendum to the fourth quarter

TANF Financial Report (or, as

applicable, the Territorial Financial

Report), the following definitions and

information with respect to the TANF

program for that year:

(1) The number of families excluded

from the calculations at §§ 271.22,

271.24, and 274.1 of this chapter

because of the State’s definition of

families receiving assistance, together

with the basis for such exclusions;

(2) The State’s definition of each work

activity;

(3) A description of the transitional

services provided to families no longer

receiving assistance due to employment;

and

(4) A description of how a State will

reduce the amount of assistance payable

to a family when an individual refuses

to engage in work without good cause.

(b) Each State must also file with the

fourth quarter TANF Financial Report

(or, as applicable, the Territorial

Financial Report) the information on

separate State MOE programs for that

year specified at § 273.7 of this chapter.7

(c) Each State must file an annual

program and performance report that

provides information about the

characteristics and achievements of

each State program; the design and

operation of the program; the services,

benefits, assistance provided; the

eligibility criteria; and the extent to

which the State has met its goals and

objectives for the program. Each State

may also include a description of any

unique features, accomplishments,

innovations, or additional information

appropriate for the Department’s annual

report to Congress.

§ 275.10 When are annual reports due?

(a) The annual report of State

definitions and expenditures required

by § 275.9 (a) and (b) is due at the same

time as the fourth quarter TANF

Financial Report (or, as applicable, the

Territorial Financial Report).

(b) The annual program and

performance report to meet the

requirements of section 411(b) of the

Act (report to Congress) is due 90 days

after the end of the fiscal year. The first

report, covering FY 1997, is due

December 30, 1997.

Note: The following appendixes will not

appear in the Code of Federal Regulations.

Appendices

Appendix A—Proposed TANF Data Report—

Section One (Disaggregated Data

Collection for Families Receiving

Assistance under the TANF Program)

Appendix B—Proposed TANF Data Report—

Section Two (Disaggregated Data

Collection for Families No Longer

Receiving Assistance under the TANF

Program)

Appendix C—Proposed TANF Data Report—

Section Three (Aggregated Data

Collection for Families Applying for,

Receiving, and No Longer Receiving

Assistance under the TANF Program)

Appendix D—Proposed TANF Financial

Report and Fourth Quarter Addendum

Appendix E—Proposed TANF MOE Data

Report—Section One (Disaggregated Data

Collection for Families Receiving

Assistance under the Separate State

Programs)
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Appendix F—Proposed TANF MOE Data

Report—Section Two (Disaggregated

Data Collection for Families No Longer

Receiving Assistance under the Separate

State Programs)

Appendix G—Proposed TANF MOE Data

Report—Section Three (Aggregated Data

Collection for Families Receiving

Assistance under the Separate State

Programs)

Appendix H—Sampling Specifications

Appendix I—Statutory Reference Table for

Appendix A

Appendix J—Statutory Reference Table for

Appendix B

Appendix K—Statutory Reference Table for

Appendix C

Appendix A—TANF Data Report—

Section One—Disaggregated Data

Collection for Families Receiving

Assistance Under the TANF Program

Instructions and Definitions

General Instruction: The State agency or

Tribal grantee should collect and report data

for each data element, unless explicitly

instructed to leave the field blank.

1. State FIPS Code: Enter your two-digit

State code from the following listing. These

codes are the standard codes used by the

National Institute of Standards and

Technology. Tribal grantees should leave this

field blank.

State Code

Alabama .................................... 01

Alaska ....................................... 02

American Samoa ...................... 60

Arizona ...................................... 04

Arkansas ................................... 05

California ................................... 06

Colorado ................................... 08

Connecticut ............................... 09

Delaware ................................... 10

District of Columbia .................. 11

Florida ....................................... 12

Georgia ..................................... 13

Guam ........................................ 66

Hawaii ....................................... 15

Idaho ......................................... 16

Illinois ........................................ 17

Indiana ...................................... 18

Iowa .......................................... 19

Kansas ...................................... 20

Kentucky ................................... 21

Louisiana ................................... 22

Maine ........................................ 23

Maryland ................................... 24

Massachusetts .......................... 25

Michigan .................................... 26

Minnesota ................................. 27

Mississippi ................................. 28

Missouri ..................................... 29

Montana .................................... 30

Nebraska ................................... 31

Nevada ...................................... 32

New Hampshire ........................ 33

New Jersey ............................... 34

New Mexico .............................. 35

New York .................................. 36

North Carolina ........................... 37

North Dakota ............................. 38

Ohio .......................................... 39

Oklahoma .................................. 40

State Code

Oregon ...................................... 41

Pennsylvania ............................. 42

Puerto Rico ............................... 72

Rhode Island ............................. 44

South Carolina .......................... 45

South Dakota ............................ 46

Tennessee ................................ 47

Texas ........................................ 48

Utah .......................................... 49

Vermont .................................... 50

Virgin Islands ............................ 78

Virginia ...................................... 51

Washington ............................... 53

West Virginia ............................. 54

Wisconsin .................................. 55

Wyoming ................................... 56

2. County FIPS Code: Enter the three-digit

code established by the National Institute of

Standards and Technology for classification

of counties and county equivalents. Codes

were devised by listing counties

alphabetically and assigning sequentially odd

codes is available in Appendix F of the

TANF Sampling and Statistical Methods

Manual. Tribal grantees should leave this

field blank.

3. Tribal Code: For Tribal grantees, enter

the three-digit Tribal code that represents

your Tribe (See Appendix E of the TANF

Sampling and Statistical Methods Manual for

a complete listing of Tribal Codes). State

agencies should leave this field blank.

4. Reporting Month: Enter the four-digit

year and two-digit month code that identifies

the year and month for which the data are

being reported.

5. Stratum:

Guidance: All TANF families selected in

the sample from the same stratum must be

assigned the same stratum code. Valid

stratum codes may range from ‘‘00’’ to ‘‘99.’’

States and Tribes with stratified samples

should provide the ACF Regional Office with

a listing of the numeric codes utilized to

identify any stratification. If a State or Tribe

opts to provide data for its entire caseload,

enter the same stratum code (any two-digit

number) for each TANF family.

Instruction: Enter the two-digit stratum

code.

Family-Level Data

Definition: For reporting purposes, the

TANF family means (a) all individuals

receiving assistance as part of a family under

the State’s TANF Program; and (b) the

following additional persons living in the

household, if not included under (a) above:

(1) Parent(s) or caretaker relative(s) of any

minor child receiving assistance;

(2) Minor siblings (including unborn

children) of any child receiving assistance;

and

(3) Any person whose income or resources

would be counted in determining the

family’s eligibility for or amount of

assistance.

6. Case Number—TANF:

Guidance: If the case number is less than

the allowable eleven characters, a State may

use lead zeros 1to fill in the number.

Instruction: Enter the number assigned by

the State agency or Tribal grantee to uniquely

identify the case after formal approval to

receive assistance.

7. ZIP Code: Enter the five-digit ZIP code

for the TANF family’s place of residence for

the reporting month.

8. Funding Stream: For States that bifurcate

their caseloads, enter the appropriate code

for the funding stream used to provide

assistance to this TANF family. If the State

(Tribe) does not bifurcate its caseload, enter

code ‘‘1.’’

1=Funded, in whole or in part, with Federal

TANF block grant funds

2=Funded entirely from State-only funds

(segregated State TANF program) which

are subject to TANF rules.

9. Disposition:

Guidance: A family that did not receive

any assistance for the reporting month but

was listed on the monthly sample frame for

the reporting month is ‘‘listed in error.’’

States are to complete data collection for all

sampled cases that are not listed in error.

Instruction: Enter one of the following

codes for each TANF sampled case.

1=Data collection completed

2=Not subject to data collection/listed in

error

10. New Applicant:

Guidance: A newly-approved applicant

means the current reporting month is the first

month for which the TANF family has

received TANF assistance (and thus has had

a chance to be selected into the TANF

sample). This may be either the first month

that the TANF family has ever received

assistance or the first month of a new spell

on assistance. A TANF family that is

reinstated from a suspension is not a newly,

approved applicant.

Instruction: Enter the one-digit code that

indicates whether or not the TANF family is

a newly-approved applicant.

1=Yes, a newly-approved application

2=No

11. Number of Family Members: Enter two

digits that represent the number of members

in the family receiving assistance under the

State’s (Tribe’s) TANF Program during the

reporting month.

12. Type of Family for Work Participation:

Guidance: This data element will be used

to identify the type of family (i.e., the number

of parents or care-taker relatives in the family

receiving assistance) in order to calculate the

all family and the two-parent family work

participation rates. A family with a minor

child head-of-household should be coded as

either a single-parent family or two-parent

family, whichever is appropriate. A family

that includes a disabled parent will not be

considered a two-parent family for purposes

of the work participation rate. A

noncustodial parent, who lives in the State,

may participate in work activities funded

under the State TANF Program and receive

other assistance. In order for the

noncustodial parent to participate in work

activities and receive assistance, (s)he must

be a member of the eligible family receiving

assistance and be reported as part of the

TANF family. However, it is up to the State

to consider whether a family with a noncustodial parent is a one-parent or two-parent

family for the purposes of calculating the

work participation rate.
62202 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Instruction: Enter the one-digit code that

represents the type of family for purposes of

calculating the work participation rates.

1=Single-Parent Family for participation rate

purposes

2=Two-Parent Family for participation rate

purposes

3=No Parent Family for participation rate

purposes (does not include parents, caretaker relatives, or minor child heads-ofhousehold

13. Receives Subsidized Housing:

Guidance: Subsidized housing refers to

housing for which money was paid by the

Federal, State, or Local government or

through a private social service agency to the

family or to the owner of the housing to assist

the family in paying rent. Two families

sharing living expenses does not constitute

subsidized housing.

Instruction: Enter the one-digit code that

indicates whether or not the TANF family

received subsidized housing for the reporting

month.

1=Public housing

2=HUD rent subsidy

3=Other rent subsidy

4=No housing subsidy

14. Receives Medical Assistance: Enter ‘‘1’’

if, for the reporting month, any TANF family

member is eligible to receive (i.e., a certified

recipient of) medical assistance under the

State plan approved under Title XIX or ‘‘2’’

if no TANF family member is eligible to

receive medical assistance under the State

plan approved under Title XIX.

1=Yes, receives medical assistance

2=No

15. Receives Food Stamps: If the TANF

family received Food Stamps for the

reporting month, enter the one-digit code

indicating the type of Food Stamp assistance.

Otherwise, enter ‘‘4.’’

1=Yes, Food Stamp coupon allotment

2=Yes, cash

3=Yes, wage subsidy

4=No

16. Amount of Food Stamp Assistance:

Guidance: For situations in which the

Food Stamp household differs from the

TANF family, code this element in a manner

that most accurately reflects the resources

available to the TANF family.

Instruction: Enter the TANF family’s

authorized dollar amount of Food Stamp

assistance for the reporting month.

17. Receives Subsidized Child Care:

Guidance: For the purpose of coding this

data element, ubsidized Child Care funded

under the Child Care and Development Fund

with funds that were transferred from the

State TANF Program should be coded as ‘‘2.’’

Instruction: If the TANF family receives

subsidized child care for the reporting

month, enter code ‘‘1’’, ‘‘2’’, ‘‘3’’, or ‘‘4’’,

whichever is appropriate. Otherwise, enter

code ‘‘5.’’

1=Yes, funded under the State (Tribal) TANF

Program

2=Yes, funded under the Child Care and

Development Fund

3=Yes, funded under another Federal

program (e.g., SSBG)

4=Yes, funded under a State, Tribal, or local

program

5=No

18. Amount of Subsidized Child Care:

Guidance: Subsidized child care means a

grant by the Federal, State or Local

government to a parent (or care-taker relative)

to support, in part or whole, the cost of child

care services provided by an eligible provider

to an eligible child. The grant may be paid

directly to the parent (or care-taker relative)

or to a child care provider on behalf of the

parent (or care-taker relative).

Instruction: Enter the dollar amount of

subsidized child care that the TANF family

has received for services in the reporting

month. If the TANF family did not receive

any subsidized child care for the reporting

month, enter ‘‘00.’’

19. Amount of Child Care Disregard: Enter

the total dollar amount of the TANF family’s

actual disregard allowed for child care

expenses during the reporting month. If there

is no child care disregard, enter ‘‘0’’ as the

amount.

20. Amount of Child Support: Enter the

total dollar value of child support received

on behalf of the TANF family in the reporting

month, which includes arrearages,

recoupments, and pass-through amounts

whether paid to the State or the family.

21. Amount of the Family’s Cash

Resources: Enter the total dollar amount of

the TANF family’s cash resources for the

reporting month.

Amount of Assistance Received and the

Number of Months that the Family Has

Received Each Type of Assistance under the

State (Tribal) TANF Program:

Guidance: Assistance means every form of

support provided to TANF families under the

State (Tribal) TANF Program (including child

care, work subsidies, and allowances to meet

living expenses), except for the following:

(1) services that have no direct monetary

value to an individual family and that do not

involve implicit or explicit income support,

such as counseling, case management, peer

support and employment services that do not

involve subsidies or other forms of income

support; and

(2) one-time, short-term assistance (i.e.,

assistance paid within a 30-day period, no

more than once in any twelve-month period,

to meet needs that do not extend beyond a

90-day period, such as automobile repair to

retain employment and avoid welfare receipt

and appliance repair to maintain living

arrangements).

Instruction: For each type of assistance

provided under the State’s (Tribal) TANF

Program, enter the dollar amount of

assistance that the TANF family received or

that was paid on behalf of the TANF family

for the reporting month and the number of

months that the TANF family has received

assistance under the State’s (Tribe’s) TANF

program. If, for a ‘‘type of assistance’’, no

dollar amount of assistance was provided

during the reporting month, enter ‘‘0’’ as the

amount. If, for a ‘‘type of assistance’’, no

assistance has been received (since the State

began its TANF Program) by the TANF

eligible family, enter ‘‘0’’ as the number of

months of assistance.

22. Cash and Cash Equivalents:

A. Amount

B. Number of Months

23. Educational:

A. Amount

B. Number of Months

24. Employment Services:

A. Amount

B. Number of Months

25. Work Subsidies:

A. Amount

B. Number of Months

26. TANF Child Care:

Guidance: Include only the child care

funded directly by the State (Tribal) TANF

Program. Do not include child care funded

under the Child Care and Development Fund,

even though some of the funds were

transferred to the CCDF from the TANF

program.

A. Amount

B. Number of Months

27. Transportation:

A. Amount

B. Number of Months

28. Other Supportive Services and Special

Needs, including Assistance with Meeting

Home Heating and Air Conditioning Costs:

A. Amount

B. Number of Months

29. Transitional Services:

A. Amount

B. Number of Months

30. Contributions to Individual

Development Accounts:

A. Amount

B. Number of Months

31. Other:

A. Amount

B. Number of Months

Reason for and Amount of Reduction in

Assistance. For each reason for which the

TANF family received a reduction in

assistance for the reporting month, enter the

dollar amount of the reduction in assistance.

Otherwise, enter ‘‘0.’’

32. Work Requirements Sanction

33. Family Sanction for an Adult with No

High School Diploma or Equivalent

34. Sanction for Teen Parent not Attending

School

35. Non-Cooperation with Child Support

36. Failure to Comply with an Individual

Responsibility Plan

37. Other Sanction

38. Recoupment of Prior Overpayment

39. Family Cap

40. Reduction Based on Family Moving

into State From Another State

41. Reduction Based on Length of Receipt

of Assistance

42. Other, Non-sanction

43. Waiver Evaluation Research Group:

Guidance: In connection with waivers,

approved to allow States to implement

Welfare Reform Demonstrations, a State

assigned a portion of its cases to a research

group consisting of a control group (subject

to the provisions of the regular, statutory

AFDC program as defined by prior law) and

an experimental group (subject to the

provisions of the regular, statutory AFDC
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62203

program as defined by prior law as modified

by waivers). A state may choose, for the

purpose of completing impact analyses, to

continue a research group and thus maintain

applicable control and experimental group

treatment policies as they were implemented

under their welfare reform demonstration

(including prior law policies not modified by

waivers), even if such policies are

inconsistent with TANF. However, cases

assigned to a non-experimental treatment

group (i.e., not part of the research group)

may not apply prior law policies inconsistent

with TANF unless such policies are

specifically linked to approved waivers.

Where a state continues waivers, but does not

continue a research group for impact

evaluation purposes, all cases in the

demonstration site will be treated as nonexperimental treatment group cases

regardless of their original assignment as

control or experimental cases.

Instruction: Enter the one-digit code that

indicates the family’s waiver evaluation case

status.

Blank=Not applicable (no waivers apply to

this case)

1=Control group (for impact analysis

purposes)

2=Experimental group

3=Non-experimental treatment group

44. Is the TANF Family Exempt from the

Federal Time Limit Provisions:

Guidance: Under TANF rules, an eligible

family that does not include an adult (or

minor child head-of-household) recipient,

who has received assistance for 60 countable

months, may continue to receive assistance.

A countable month is a month of assistance

for which the adult (or minor child head-ofhousehold) is not exempt from the Federal

time limit provisions. TANF rules provide for

two categories of exceptions. First, a family

which does not include an adult (or minor

child head-of-household) who has received

60 countable months of assistance may be

exempt from the accrual of months of

assistance (i.e., clock not ticking). Second, a

family with an adult (or minor child headof-household), who has received 60

countable months of assistance may be

exempt from termination of assistance.

Exemptions from termination of assistance

include a hardship exemption which allows

up to 20% of the families to receive

assistance beyond the 60 month time limit.

In lieu of the 20% hardship exemptions,

States may choose to employ extension

policies prescribed under approved waivers.

Instruction: If the TANF family has no

exemption from the Federal five-year time

limit, enter code ‘‘1.’’ If the TANF family

does not include an adult (or minor child

head-of-household) who has received

assistance for 60 countable months and is

exempt from accrual of months of assistance

under the Federal five-year time limit for the

reporting month, enter ‘‘2’’, ‘‘3’’, or ‘‘4’’,

whichever is appropriate. If the TANF family

includes an adult (or minor child head-ofhousehold) who has received assistance for

60 countable months and the family is

exempt from termination of assistance, enter

code ‘‘5’’, ‘‘6’’, ‘‘7’’ or ‘‘8’’, whichever is

appropriate.

01=Family is not exempt from Federal time

limit.

Family does not include an adult (or minor

child head-of-household) who has received

assistance for 60 countable months

02=Yes, family is exempt from accrual of

months under the Federal five-year time

limit for the reporting month because no

adult or minor child head-of-household

in eligible family receiving assistance.

03=Yes, family is exempt from accrual of

months under the Federal five-year time

limit for the reporting month because

assistance to family is funded entirely

from State-only funds.

04=Yes, family is exempt from accrual of

months under the Federal five-year time

limit for the reporting month because the

family is living on an Indian country of

at least 1,000 persons at least 50 percent

of whose adults are unemployed.

05=Yes, family is exempt from accrual of

months under the Federal five-year time

limit for the reporting month based on an

approved waiver policy.

Family includes an adult (or minor child

head-of-household) who has received

assistance for 60 countable month

06=Yes, family is exempt from termination of

assistance under the Federal five-year

time limit for the reporting month

because assistance to family is funded

entirely from State-only funds.

07=Yes, family is exempt from termination of

assistance under the Federal five-year

time limit for the reporting month due to

a temporary good cause domestic

violence waiver (and an inability to

work).

08=Yes, family is exempt from termination of

assistance under the Federal five-year

time limit for the reporting month due to

a hardship exemption for reason other

than domestic violence.

09=Yes, family is exempt from termination of

assistance under the Federal five-year

time limit for the reporting month

because the adult’s (minor child head-ofhousehold’s) residence is on an Indian

country of at least 1,000 persons at least

50 percent of whose adults are

unemployed.

10=Yes, family (including adults) is exempt

from termination of assistance under the

Federal five-year time limit for the

reporting month in accordance with

extension policies prescribed under

approved waivers.

11=Yes, the children in the family are

receiving assistance beyond the 60

countable months and the family is

exempt from termination of assistance

under the Federal five-year time limit for

the reporting month in accordance with

extension policies prescribed under

approved waivers (i.e., adult-only time

limit).

Person-Level Data

Person-level data has two sections: the

adult and minor child head-of-household

characteristic section and the child

characteristics section. Section 419 of the Act

defines adult and minor child. An adult is an

individual that is not a minor child. A minor

child is an individual who (a) has not

attained 18 years of age or (b) has not

attained 19 years of age and is a full-time

student in a secondary school (or in the

equivalent level of vocational or technical

training.)

Adult and Minor Child Head-of-Household

Characteristics

This section allows for coding up to six

adults (or a minor child who is either a headof-household or married to the head-ofhousehold and up to five adults) in the TANF

family. A minor child who is either a headof-household or married to the head-ofhousehold should be coded as an adult and

will hereafter be referred to as a ‘‘minor child

head-of-household.’’ For each adult (or minor

child head-of-household) in the TANF

family, complete the adult characteristics

section. If a noncustodial parent is

participating in work activities funded under

the State (Tribal) TANF Program for the

reporting month, the noncustodial parent

must also be reported in this section as a

member of the family receiving assistance.

If there are more than six adults (or a minor

child head-of-household and five adults) in

the TANF family, use the following order to

identify the persons to be coded: (1) the

head-of-household; (2) parents in the eligible

family receiving assistance; (3) other adults

in the eligible family receiving assistance; (4)

Parents not in the eligible family receiving

assistance; (5) caretaker relatives not in the

eligible family receiving assistance; and (6)

other persons, whose income or resources

count in determining eligibility for or amount

of assistance of the eligible family receiving

assistance, in descending order the person

with the most income to the person with

least income.

45. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the one-digit code that

shows the adult’s (or minor child head-ofhousehold’s) relation to the eligible family

receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible family

receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income or resources are

considered in determining eligibility for

or amount of assistance for the eligible

family receiving assistance

46. Noncustodial Parent Indicator:

Guidance: A noncustodial parent means a

parent who does not live with his/her

child(ren). A noncustodial parent, who lives

in the State, may participate in work

activities funded under the State TANF
62204 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Program. In order for the noncustodial parent

to participate in work activities, (s)he must

be a member of the eligible family receiving

assistance and be reported as part of the

TANF family.

Instruction: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) noncustodial parent status.

1=Yes, a noncustodial parent

2=No

47. Date of Birth: Enter the eight-digit code

for date of birth for the adult (or minor child

head-of-household) under the State (Tribal)

TANF Program in the format YYYYMMDD.

48. Social Security Number: Enter the ninedigit Social Security Number for the adult (or

minor child head-of-household) in the format

nnnnnnnnn.

49. Race: Enter the one-digit code for the

race of the TANF adult (or minor child headof-household).

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

50. Gender: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) gender.

1=Male

2=Female

Receives Disability Benefits

The Act specifies five types of disability

benefits. For each type of disability benefits,

enter the one-digit code that indicates

whether or not the adult (or minor child

head-of-household) received the benefit.

51. Receives Federal Disability Insurance

Benefits: Enter the one-digit code that

indicates the adult (or minor child head-ofhousehold) received Federal disability

insurance benefits for the reporting month.

1=Yes, received Federal disability insurance

2=No

52. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the adult (or minor child headof-household) received benefits based on

Federal disability status for the reporting

month.

1=Yes, received benefits based on Federal

disability status

2=No

53. Receives Aid Under Title XIV–APDT:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XIV for the reporting month.

1=Yes, received aid under Title XIV–APDT

2=No

54. Receives Aid Under Title XVI–AABD:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI–AABD for the reporting

month.

1=Yes, received aid under Title XVI–AABD

2=No

55. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI–SSI for the reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

56. Marital Status: Enter the one-digit code

for the adult’s (or minor child head-ofhousehold’s) marital status for the reporting

month.

1=Single, never married

2=Married, living together

3=Married, but separated

4=Widowed

5=Divorced

57. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the two-digit code that

shows the adult’s relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or as

determined by the State (Tribe), (i.e., the

relationship to the principal person of each

person living in the household). If minor

child head-of-household, enter code ‘‘01.’’

01=Head of household

02=Spouse

03=Parent

04=Daughter or son

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

58. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the TANF family.

Instruction: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts:

the highest level of education attained and

the highest degree attained.

59. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

adult (or minor child head-of-household).

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

60. Highest Degree Attained: If the adult (or

minor child head-of-household) has a

degree(s), enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) highest degree attained.

Otherwise, leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

61. Citizenship/Alienage:

Guidance: As described in TANF–ACF–

PA–97–1, States have the flexibility to: (1)

use State MOE funds to serve ‘‘qualified’’

aliens, including those who enter on or after

August 22, 1996; (2) use Federal TANF funds

to serve ‘‘qualified’’ aliens who arrived prior

to the enactment of the PRWORA on August

22, 1996 [such aliens who arrived after

enactment are barred from receiving Federal

TANF funds for five years from the date of

entry, except for certain aliens such as

refugees and asylees]; (3) use State MOE

funds to serve legal aliens who are not

‘‘qualified’’; and (4) use, under section 411(d)

of PRWORA, State MOE funds to serve aliens

who are not lawfully present in the U.S., but

only through enactment of a State law, after

the date of PRWORA enactment, which

‘‘affirmatively provides’’ for such benefits.

The citizenship/alienage is divided into

four groups: individuals eligible (for the

TANF Program based on citizenship/

alienage), individuals eligible at State option,

individuals not eligible, and status unknown.

Instruction: Enter the two-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) citizenship/alienage.

Individuals Eligible for the TANF Program

01=U.S. citizen, including naturalized

citizens

02=Permanent resident who has worked forty

qualifying quarters; alien who is a

veteran with an honorable discharge

from the U.S. Armed Forces or is on

active duty in the U.S. Armed Forces, or

spouse or unmarried dependent children

of such alien

03=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. five years or less

04=Qualified alien granted political asylum

five or less years ago; qualified alien

granted a withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) five or less years ago.

Individuals Eligible for the TANF Program

at State Option

05=Qualified alien, (including immigrant

accorded permanent resident status

(‘‘green card’’), parolee granted parole for

at least one year under sec. 212(d)(5) of

the INA, and certain battered aliens and

their children who are determined to be

qualified), who arrived in the U.S. prior

to enactment (August 22, 1996) or who

arrived in the U.S. on or after enactment

and has resided in the U.S. more than

five years

06=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. more than five

years

07=Qualified alien granted political asylum

or granted withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) more than five years ago;
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62205

Individuals Not Eligible for the TANF

Program

08=Qualified alien (other than a refugee,

Cuban or Haitian entrant, Amerasian

immigrant, asylee, or alien whose

deportation has been withheld under

sec. 243(h) or sec. 241(b)(3) of the INA)

who arrived in the U.S. on or after

enactment and has resided in the U.S.

less than 5 years.

09=Any alien who is not a qualified alien.

Status Unknown

99=Unknown

62. Number of Months Countable toward

Federal Time Limit in Own State (Tribe):

Enter the number of months countable

toward the adult’s (or minor child head-ofhousehold’s) Federal five-year time limit

based on assistance received from the State

(Tribe).

63. Number of Months Countable toward

Federal Time Limit in Other States or Tribes:

Enter the number of months countable

toward the adult’s (or minor child head-ofhousehold’s) Federal five-year time limit

based on assistance received from other

States or Tribes.

64. Number of Countable Months

Remaining Under State’s (Tribe’s) Time

Limit: Enter the number of months that

remain countable toward the adult’s (or

minor child head-of-household’s) State

(Tribal) time limit.

65. Is Current Month Exempt from the

State’s (Tribe’s) Time Limit: Enter the onedigit code that indicates the adult’s (or minor

child head-of-household’s) current exempt

status from State’s (Tribe’s) time limit.

1=Yes, adult (or minor child head-ofhousehold) is exempt from the State’s

(Tribe’s) time limit for the reporting

month

2=No

66. Employment Status: Enter the one-digit

code that indicates the adult’s (or minor

child head-of-household’s) employment

status.

1=Employed

2=Unemployed, looking for work

3=Not in labor force (i.e, unemployed, not

looking for work, includes discouraged

workers)

67. Work Participation Status:

Guidance: Disregarded from the

participation rate means the TANF family is

not included in the calculation of the work

participation rate.

Exempt means that the individual will not

be penalized for failure to engage in work

(i.e., good cause exception); however, the

TANF family is included in the calculation

of the work participation rate.

Instruction: Enter the two-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) work participation status.

01=Disregarded from participation rate,

single custodial parent with child under

12 months

02=Disregarded from participation rate

because all of the following apply:

required to participate, but not

participating, sanctioned for the

reporting month, but not sanctioned for

more than 3 months within the

preceding 12-month period

03=Disregarded, family is part of an ongoing

research evaluation (as a member of a

control group or experimental treatment

group) approved under Section 1115 of

the Social Security Act

04=Disregarded from participation rate, is

participating in a Tribal Work Program,

and State has opted to exclude all Tribal

Work Program participants from its work

participation rate

05=Exempt, single custodial parent with

child under age 6 and unavailability of

child care

06=Exempt, disabled (not using an extended

definition under a State waiver)

07=Exempt, caring for a severely disabled

child (not using an extended definition

under a State waiver)

08=A temporary good cause domestic

violence waiver (not using an extended

definition under a State waiver)

09=Exempt, State waiver

10=Exempt, other

11=Required to participate, but not

participating, sanctioned for the

reporting month and sanctioned for more

than 3 months within the preceding 12-

month period

12=Required to participate, but not

participating, sanctioned for the

reporting month but not sanctioned for

more than 3 months within the

preceding 12-month period

13=Required to participate, but not

participating and not sanctioned for the

reporting month

14=Deemed engaged in work, teen head-ofhousehold who maintains satisfactory

school attendance

15=Deemed engaged in work, single parent

with child under age 6 and parent

engaged in work activities for at least 20

hours per week

16=Required to participate, participating but

not meeting minimum participation

requirements

17=Required to participate, and meeting

minimum participation requirements

99=Not applicable (e.g., person living in

household and whose income or

resources are counted in determining

eligibility for or amount of assistance of

the family receiving assistance, but not

in eligible family receiving assistance)

Adult Work Participation Activities

Guidance: To calculate the average number

of hours per week of participation in a work

activity, add the number of hours of

participation across all weeks in the month

and divide by the number of weeks in the

month. Round to the nearest whole number.

Some weeks have days in more than one

month. Include such a week in the

calculation for the month that contains the

most days of the week (e.g., the week of July

27–August 2, 1997 would be included in the

July calculation). Acceptable alternatives to

this approach must account for all weeks in

the fiscal year. One acceptable alternative is

to include the week in the calculation for

whichever month the Friday falls (i.e., the

JOBS approach.) A second acceptable

alternative is to count each month as having

4.33 weeks.

During the first or last month of any spell

of assistance, a family may happen to receive

assistance for only part of the month. If a

family receives assistance for only part of a

month, the State (Tribe) may count it as a

month of participation if an adult (or minor

child head-of-household) in the family (both

adults, if they are both required to work) is

engaged in work for the minimum average

number of hours for the full week(s) that the

family receives assistance in that month.

Special Rules: Each adult (or minor child

head-of-household) has a life-time limit for

vocational educational training. Vocational

educational training may only count as a

work activity for a total of 12 months. For

any adult (or minor child head-of-household)

that has exceeded this limit, enter ‘‘0’’ as the

average number of hours per week of

participation in vocational education

training, even if (s)he is engaged in

vocational education training. The additional

participation in vocational education training

may be coded under ‘‘Other.’’

The exception to the above 12 month rule

may be a State that received a waiver which

is inconsistent with the provision limiting

vocational education training. In this case the

State would adhere to the terms and

conditions of the waiver.

Limitations: The four limitations

concerning job search and job readiness are:

(1) Job search and job readiness assistance

only count for 6 weeks in any fiscal year; (2)

An individual’s participation in job search

and job readiness assistance counts for no

more than 4 consecutive weeks; (3) If the

State’s (Tribe’s) total unemployment rate for

a fiscal year is at least 50 percent greater than

the United States’ total unemployment rate

for that fiscal year or the State is a needy

State (within the meaning of Section 403

(b)(6), then an individual’s participation in

job search or job readiness assistance counts

for up to 12 weeks in that fiscal year; and (4)

A State may count 3 or 4 days of job search

and job readiness assistance during a week as

a full week of participation, but only once for

any individual.

For each week in which an adult (or minor

child head-of-household) exceeds any of

these limitations, use ‘‘0’’ as the number of

hours in calculating the average number of

hours per week of job search and job

readiness, even if (s)he may be engaged in job

search or job readiness activities.

If a State is operating its TANF Program

under a waiver which permits broader rules

for participation in job search and job

readiness training, the TANF rules apply for

coding this element and any additional

participation in job search and job readiness

training permitted under the waiver rules
62206 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

should be coded under the item ‘‘Additional

Work Activities Permitted Under Waiver

Demonstration.’’

Instruction: For each work activity in

which the adult (or minor child head-ofhousehold) participated during the reporting

month, enter the average number of hours per

week of participation, except as noted above.

For each work activity in which the adult (or

minor child head-of-household) did not

participate, enter zero as the average number

of hours per week of participation.

68. Unsubsidized Employment

69. Subsidized Private Sector Employment

70. Subsidized Public Sector Employment

71. Work Experience

72. On-the-job Training

73. Job Search and Job Readiness

Assistance

Instruction: Do not count hours of

participation in job search and job readiness

training beyond the TANF limit where

allowed by waivers in this item. Instead

count the hours of participation beyond the

TANF limit in the item ‘‘Additional Work

Activities Permitted Under Waiver

Demonstration.’’ Otherwise, count the

additional hours of work participation under

the work activity ‘‘Other Work Activities.’’

74. Community Service Programs

75. Vocational Educational Training

Instruction: Do not count hours of

participation in vocational educational

training beyond the TANF 12 month life-time

limit where allowed by waivers in this item.

Instead count the hours of participation

beyond the TANF limit in the item

‘‘Additional Work Activities Permitted Under

Waiver Demonstration.’’ Otherwise, count

the additional hours of work participation

under the work activity ‘‘Other Work

Activities.’’

76. Job Skills Training Directly Related to

Employment

77. Education Directly Related to

Employment for Individuals with no High

School Diploma or Certificate of High School

Equivalency

78. Satisfactory School Attendance for

Individuals with No High School Diploma or

Certificate of High School Equivalency

79. Providing Child Care Services to an

Individual Who Is Participating in a

Community Service Program

80. Additional Work Activities Permitted

Under Waiver Demonstration

Instruction: Hours of participation in job

search, job readiness training, or other work

activities beyond the TANF limits as

permitted by the State waiver should be

counted in this item. Otherwise, count the

additional hours of work participation in the

work activity ‘‘Other Work Activities.’’

81. Other Work Activities

Guidance: Reporting on this data element

is optional. States may want to demonstrate

their additional efforts at helping individuals

become self-sufficient even though these

activities are not considered in the

calculation of the work participation rates.

82. Required Hours of Work Under Waiver

Demonstration:

Guidance: In approving waivers, ACF

specified hours of participation in several

instances. One type of hour change in the

welfare reform demonstrations, was the

recognition, as part of a change in work

activities and/or exemptions, that the hours

individuals worked should be consistent

with their abilities and in compliance with

an employability or personal responsibility

plan or other criteria in accordance to waiver

terms and conditions. As the hour

requirement in this case was integral and

necessary to achieve the waiver purpose of

appropriately requiring work activities to

move individuals to self-sufficiency, the

State could show inconsistency and could

use the waiver hours instead of the hours in

section 407. A waiver that merely increased

work hour requirements would not be

deemed inconsistent.

Instruction: If applicable, enter the twodigit number that represents the average

number of hours per week of work

participation required of the individual as

described in the demonstration terms or in an

employability or personal responsibility

plan. Otherwise, leave blank or enter ‘‘0.’’

Amount of Earned Income

Earned income has two categories. For

each category of earned income, enter the

dollar amount of the adult’s (or minor child

head-of-household’s) earned income.

83. Earned Income Tax Credit (EITC):

Guidance: Earned Income Tax Credit is a

refundable tax credit for families and

dependent children. EITC payments are

received either monthly (as advance payment

through the employer), annually (as a refund

from IRS), or both.

Instruction: Enter the total dollar amount

of the earned income tax credit actually

received, whether received as an advance

payment or a single payment (e.g., tax

refund), by the adult (minor child head-ofhousehold) during the reporting month. If the

State counts the EITC as a resource, report it

here as earned income in the month received.

If the State assumes an advance payment is

applied for and obtained, only report what is

actually received for this item.

84. Wages, Salaries, and Other Earnings

Amount of Unearned Income

Unearned income has four categories. For

each category of unearned income, enter the

dollar amount of the adult’s (or minor child

head-of-household’s) unearned income.

85. Social Security: Enter the dollar

amount of Social Security that the adult in

the State (Tribal) TANF family has received

for the reporting month.

86. SSI: Enter the dollar amount of SSI that

the adult in the State (Tribal) TANF family

has received for the reporting month.

87. Worker’s Compensation: Enter the

dollar amount of Worker’s Compensation that

the adult in the State (Tribal) TANF family

has received for the reporting month.

88. Other Unearned Income:

Guidance: Other unearned income

includes (but is not limited to) RSDI benefits,

Veterans benefits, Unemployment

Compensation, other government benefits,

housing subsidy, contribution/income-inkind, deemed income, Public Assistance or

General Assistance, educational grants/

scholarships/loans, other. Do not include

Social Security, SSI, Worker’s Compensation,

value of Food Stamps assistance, the amount

of the Child Care subsidy, and the amount of

Child Support.

Instruction: Enter the dollar amount of

other unearned income that the adult in the

State TANF family has received for the

reporting month.

Child Characteristics

This section allows for coding up to ten

children in the TANF family. A minor child

head-of-household should be coded as an

adult, not as a child. The youngest child

should be coded as the first child in the

family, the second youngest child as the

second child, and so on. If the needs of an

unborn child are included in the amount of

assistance provided to the family, code the

unborn child as one of the children. Do this

by entering the Date-of-Birth as ‘‘99999999’’

and leave the other Child Characteristics

fields blank.

If there are more than ten children in the

TANF family, use the following order to

identify the persons to be coded: (1) children

in the eligible family receiving assistance in

order from youngest to oldest; (2) minor

siblings of child in the eligible family

receiving assistance from youngest to oldest;

and (3) any other children.

89. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the one-digit code that

shows the Child’s relation to the eligible

family receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible

family receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income or resources are

considered in determining eligibility for or

amount of assistance for the eligible family

receiving assistance

90. Date of Birth: Enter the eight-digit code

for date of birth for this child under the State

(Tribal) TANF Program in the format

YYYYMMDD.

91. Social Security Number: Enter the ninedigit Social Security Number for the child in

the format nnnnnnnnn.

92. Race: Enter the one-digit code for the

race of the TANF child.

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

93. Gender: Enter the one-digit code that

indicates the child’s gender.

1=Male

2=Female
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62207

Receives Disability Benefits

The Act specifies five types of disability

benefits. Two of these types of disability

benefits are applicable to children. For each

type of disability benefits, enter the one-digit

code that indicates whether or not the child

received the benefit.

94. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the child received benefits

based on Federal disability status for the

reporting month.

1=Yes, received benefits based on Federal

disability status

2=No

95. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

child received aid under a State plan

approved under Title XVI–SSI for the

reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

96. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the two-digit code that

shows the child’s relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or as

determined by the State (Tribe), (i.e., the

relationship to the principal person of each

person living in the household.)

01=Head-of-household

02=Spouse

03=Parent

04=Daughter or son

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

97. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the TANF family.

Instruction: Enter the one-digit code that

indicates the child’s teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts:

the highest level of education attained and

the highest degree attained.

98. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

child.

00=no formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

99. Highest Degree Attained:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: If the child has a degree(s),

enter the one-digit code that indicates the

child’s highest degree attained. Otherwise,

leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

9=Not applicable

100. Citizenship/Alienage: Enter the twodigit code that indicates the child’s

citizenship/alienage. The coding for this data

element is the same as for item number 56,

on page 439.

101. Cooperation with Child Support: Enter

the one-digit code that indicates this child’s

parent has cooperated with child support for

this child.

1=Yes, child’s parent has cooperated with

child support

2=No

3=Not applicable

Amount of Unearned Income

Unearned income has two categories. For

each category of unearned income, enter the

dollar amount of the child’s unearned

income.

102. SSI: Enter the dollar amount of SSI

that the child in the State (Tribal) TANF

family has received for the reporting month.

103. Other Unearned Income: Enter the

dollar amount of other unearned income that

the child in the State (Tribal) TANF family

has received for the reporting month.

Child Care Reporting Section

Complete this section for each child in the

TANF family for which a TANF child care

subsidy is received (i.e., funded under the

State or Tribal TANF Program). If child care

is provided by more than one provider, enter

the child care data for the greatest number of

hours on the Primary Care line, and the next

highest number of child care hours on the

Secondary Care line.

104. Type of Child Care:

Definition: Provider types are divided into

two broad categories of licensed/regulated

and legally operating (no license category

available in State or locality). Under each of

these categories are four types of providers:

in-home, family home, group home, and

centers. A relative provider is defined as one

who is at least 18 years of age and who is

a grandparent, great-grandparent, aunt or

uncle, or sibling living outside the child’s

home.

Instruction: Enter the two-digit code

indicating the type of care for each child. The

following codes specify who cared for the

child and where such care took place during

the reporting month.

01=Licensed/regulated in-home child care

02=Licensed/regulated family child care

03=Licensed/regulated group home child

care

04=Licensed/regulated center-based child

care

05=Legally operating (no license category

available in State or locality) in-home

child care provided by a non-relative

06=Legally operating (no license category

available in State or locality) in-home

child care provided by a relative

07=Legally operating (no license category

available in State or locality) family

child care provided by a non-relative

08=Legally operating (no license category

available in State or locality) family

child care provided by a relative

09=Legally operating (no license category

available in State or locality) group child

care provided by a non-relative

10=Legally operating (no license category

available in State or locality) group child

care provided by a relative

11=Legally operating (no license category

available in State or locality) centerbased child care

A. Primary

B. Secondary

105. Total Monthly Cost of Child Care: For

each child receiving child care, enter the

total dollar amount (round to the nearest

dollar) that the provider charges for the

service. Include both the fee the family pays

and the child care subsidy.

A. Primary

B. Secondary

106. Total Monthly Hours of Child Care

Provided During the Reporting Month: Enter

the three-digit number for the total monthly

number of child care hours provided for the

reporting month.

States (Tribes) may use their own formula

to estimate the number of child care hours

provided. If the State payment system is

based on daily or part day rates, the

calculated number of hours of service would

be based on the number of full or part days

given in each week (as defined by the State)

multiplied by the number of hours for the

full or part day. The calculated number

should be reported as the actual number of

hours provided.

Example:

Full day=8 hours

Part day=5 hours

Care given=3 full days and 2 part days

Average hours of care

provided=(3*8+2*5)=34

A. Primary

B. Secondary

Appendix B—TANF Data Report—

Section Two—Disaggregated Data

Collection for Families No Longer

Receiving Assistance Under the TANF

Program

Instructions and Definitions

General Instruction: The State agency or

Tribal grantee should collect and report data

for each data element, unless explicitly

instructed to leave the field blank.

1. State FIPS Code: Enter your two-digit

State code from the following listing. These

codes are the standard codes used by the

National Institute of Standards and

Technology. Tribal grantees should leave this

field blank.
62208 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

State Code

Alabama .................................... 01

Alaska ....................................... 02

American Samoa ...................... 60

Arizona ...................................... 04

Arkansas ................................... 05

California ................................... 06

Colorado ................................... 08

Connecticut ............................... 09

Delaware ................................... 10

District of Columbia .................. 11

Florida ....................................... 12

Georgia ..................................... 13

Guam ........................................ 66

Hawaii ....................................... 15

Idaho ......................................... 16

Illinois ........................................ 17

Indiana ...................................... 18

Iowa .......................................... 19

Kansas ...................................... 20

Kentucky ................................... 21

Louisiana ................................... 22

Maine ........................................ 23

Maryland ................................... 24

Massachusetts .......................... 25

Michigan .................................... 26

Minnesota ................................. 27

Mississippi ................................. 28

Missouri ..................................... 29

Montana .................................... 30

Nebraska ................................... 31

Nevada ...................................... 32

New Hampshire ........................ 33

New Jersey ............................... 34

New Mexico .............................. 35

New York .................................. 36

North Carolina ........................... 37

North Dakota ............................. 38

Ohio .......................................... 39

Oklahoma .................................. 40

Oregon ...................................... 41

Pennsylvania ............................. 42

Puerto Rico ............................... 72

Rhode Island ............................. 44

South Carolina .......................... 45

South Dakota ............................ 46

Tennessee ................................ 47

Texas ........................................ 48

Utah .......................................... 49

Vermont .................................... 50

Virgin Islands ............................ 78

Virginia ...................................... 51

Washington ............................... 53

West Virginia ............................. 54

Wisconsin .................................. 55

Wyoming ................................... 56

2. County FIPS Code: Enter the three-digit

code established by the National Institute of

Standards and Technology for classification

of counties and county equivalents. Codes

were devised by listing counties

alphabetically and assigning sequentially odd

integers; e.g., 001, 003, 005, * * *. A

complete list of codes is available in

Appendix F of the TANF Sampling and

Statistical Methods Manual. Tribal grantees

should leave this field blank.

3. Tribal Code: For Tribal grantees, enter

the three-digit Tribal code that represents

your Tribe (See Appendix E of the TANF

Sampling and Statistical Methods Manual for

a complete listing of Tribal Codes). State

agencies should leave this field blank.

4. Reporting Month: Enter the four-digit

year and two-digit month code that identifies

the year and month for which the data are

being reported.

5. Stratum:

Guidance: All families selected in the

sample from the same stratum must be

assigned the same stratum code. Valid

stratum codes may range from ‘‘00’’ to ‘‘99.’’

States and Tribes with stratified samples

should provide the ACF Regional Office with

a listing of the numeric codes utilized to

identify any stratification. If a State or Tribe

uses a non-stratified sample design or opts to

provide data for its entire caseload, enter the

same stratum code any two-digit number) for

each family.

Instruction: Enter the two-digit stratum

code.

Family-Level Data

Definition: For reporting purposes, the

TANF family means (a) all individuals

receiving assistance as part of a family under

the State’s TANF Program; and (b) the

following additional persons living in the

household, if not included under (a) above:

(1) Parent(s) or caretaker relative(s) of any

minor child receiving assistance;

(2) Minor siblings (including unborn

children) of any child receiving assistance;

and

(3) Any person whose income or resources

would be counted in determining the

family’s eligibility for or amount of

assistance.

6. Case Number—TANF:

Guidance: If the case number is less than

the allowable eleven characters, a State may

use lead zeros to fill in the number.

Instruction: Enter the number that was

assigned by the State agency or Tribal grantee

to uniquely identify the TANF family.

7. ZIP Code: Enter the five-digit ZIP code

for the family’s place of residence for the

reporting month.

8. Disposition: Enter one of the following

codes for each TANF family.

1=Data collection completed

2=Not subject to data collection/listed in

error

9. Reason for Closure:

Guidance: A closed case is a family whose

assistance was terminated for the reporting

month, but received assistance under the

State’s TANF Program in the prior month. A

temporally suspended case is not a closed

case. If there is more than one applicable

reason for closure, determine the principal

(i.e., most relevant) reason. If two or more

reasons are equally relevant, use the reason

with the lowest numeric code.

Instruction: Enter the one-digit code that

indicates the reason for the TANF family no

longer receiving assistance.

1=Employment

2=Marriage

3=Five-Year Time Limit

4=Sanction

5=State (Tribal) policy

6=Minor child absent from the home for a

significant time period

7=Transfer to Separate State MOE Program

8=Other

10. Number of Family Members: Enter two

digits that represent the number of members

in the family, which received assistance

under the State’s (Tribe’s) TANF Program.

11. Receives Subsidized Housing:

Guidance: Subsidized housing refers to

housing for which money was paid by the

Federal, State, or Local government or

through a private social service agency to the

family or to the owner of the housing to assist

the family in paying rent. Two families

sharing living expenses does not constitute

subsidized housing.

Instruction: Enter the one-digit code that

indicates whether or not the TANF family

received subsidized housing for the reporting

month.

1=Public housing

2=HUD rent subsidy

3=Other rent subsidy

4=No housing subsidy

12. Receives Medical Assistance: Enter ‘‘1’’

if, for the reporting month, any TANF family

member is eligible to receive (i.e., a certified

recipient of) medical assistance under the

State plan approved under Title XIX or ‘‘2’’

if no TANF family member is eligible to

receive medical assistance under the State

plan approved under Title XIX.

1=Yes, receives medical assistance

2=No

13. Receives Food Stamps: If the TANF

family received Food Stamps for the sample

month, enter the one-digit code indicating

the type of Food Stamp assistance.

Otherwise, enter ‘‘4.’’

1=Yes, Food Stamp coupon allotment

2=Yes, cash

3=Yes, wage subsidy

4=No

14. Amount of Food Stamp Assistance:

Guidance: For situations in which the

Food Stamp household differs from the

TANF family, code this element in a manner

that most accurately reflects the resources

available to the TANF family.

Instruction: Enter the TANF family’s

authorized dollar amount of Food Stamp

assistance for the reporting month.

15. Receives Subsidized Child Care:

Guidance: For the purpose of coding this

data element, subsidized child care funded

under the Child Care and Development Fund

with funds that were transferred from the

State TANF Program should be coded as ‘‘2.’’

Instruction: If the TANF family receives

subsidized child care for the reporting

month, enter code ‘‘1’’, ‘‘2’’, ‘‘3’’, or ‘‘4’’,

whichever is appropriate. Otherwise, enter

code ‘‘5.’’

1=Yes, funded under the State (Tribal) TANF

Program

2=Yes, funded under the Child Care and

Development Fund

3=Yes, funded under another Federal

program (e.g., SSBG)

4=Yes, funded under a State, Tribal, or local

program

5=No

16. Amount of Subsidized Child Care:

Guidance: Subsidized child care means a

grant by the Federal, State or Local

government to a parent (or care-taker relative)

to support, in part or whole, the cost of child

care services provided by an eligible provider

to an eligible child. The grant may be paid

directly to the parent (or care-taker relative)

or to a child care provider on behalf of the

parent (or care-taker relative).
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62209

Instruction: Enter the dollar amount of

subsidized child care that the TANF family

has received for services in the reporting

month. If the TANF family did not receive

any subsidized child care for the reporting

month, enter ‘‘00.’’

Person-Level Data

Person-level data has two sections: the

adult and minor child head-of-household

characteristic section and the child

characteristics section. Section 419 of the Act

defines adult and minor child. An adult is an

individual that is not a minor child. A minor

child is an individual who (a) has not

attained 18 years of age or (b) has not

attained 19 years of age and is a full-time

student in a secondary school (or in the

equivalent level of vocational or technical

training.)

Adult and Minor Child Head-of-Household

Characteristics

This section allows for coding up to six

adults (or a minor child head-of-household

and up to five adults) in the TANF family.

A minor child head-of-household should be

coded as an adult. For each adult (or minor

child head-of-household) in the TANF

family, complete the adult characteristics

section. If a noncustodial parent is

participating in work activities funded under

the State (Tribal) TANF Program for the

reporting month, the noncustodial parent

must also be reported in this section as a

member of the family receiving assistance.

If there are more than six adults (or a minor

child head-of-household and five adults) in

the TANF family, use the following order to

identify the persons to be coded: (1) the

head-of-household; (2) parents in the eligible

family receiving assistance; (3) other adults

in the eligible family receiving assistance; (4)

Parents not in the eligible family receiving

assistance; (5) caretaker relatives not in the

eligible family receiving assistance; and (6)

other persons, whose income or resources

count in determining eligibility for or amount

of assistance of the eligible family receiving

assistance, in descending order the person

with the most income to the person with

least income.

17. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the one-digit code that

shows the adult’s relation to the eligible

family receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible family

receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income or resources are

considered in determining eligibility for

or amount of assistance for the eligible

family receiving assistance

18. Date of Birth: Enter the eight-digit code

for date of birth for this adult (or minor child

head-of-household) under TANF in the

format YYYYMMDD.

19. Social Security Number: Enter the ninedigit Social Security Number for the adult (or

minor child head-of-household) in the format

nnnnnnnnn.

20. Race: Enter the one-digit code for the

race of the TANF adult (or minor child headof-household).

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

21. Gender: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) gender.

1=Male

2=Female

Receives Disability Benefits

The Act specifies five types of disability

benefits.For each type of disability benefits,

enter the one-digit code that indicates

whether or not the adult (or minor child

head-of-household) received the benefit.

22. Receives Federal Disability Insurance

Benefits: Enter the one-digit code that

indicates the adult (or minor child head-ofhousehold) received Federal disability

insurance benefits for the reporting month.

1=Yes, received Federal disability insurance

2=No

23. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the adult (or minor child headof-household) received benefits based on

Federal disability status for the reporting

month.

1=Yes, received benefits based on Federal

disability status

2=No

24. Receives Aid Under Title XIV–APDT:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XIV for the reporting month.

1=Yes, received aid under Title XIV-APDT

2=No

25. Receives Aid Under Title XVI–AABD:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI-AABD for the reporting

month.

1=Yes, received aid under Title XVI-AABD

2=No

26. Receives Aid Under Title XVI-SSI:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI-SSI for the reporting month.

1=Yes, received aid under Title XVI-SSI

2=No

27. Marital Status: Enter the one-digit code

for the marital status of the recipient.

1=Single, never married

2=Married, living together

3=Married, but separated

4=Widowed

5=Divorced

28. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the two-digit code that

shows the adult’s relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or as

determined by the State (Tribe), (i.e., the

relationship to the principal person of each

person living in the household.) If a minor

child head-of-household, enter code ‘‘01.’’

01=Head of household

02=Spouse

03=Parent

04=Daughter or son

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

29. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the TANF family.

Instruction: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts:

the highest level of education attained and

the highest degree attained.

30. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

adult (or minor child head-of-household).

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

31. Highest Degree Attained: If the adult (or

minor child head-of-household) has a

degree(s), enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) highest degree attained.

Otherwise, leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

32. Citizenship/Alienage:

Guidance: As described in TANF-ACF-PA–

97–1, States have the flexibility to: (1) use

State MOE funds to serve ‘‘qualified’’ aliens,

including those who enter on or after August

22, 1996; (2) use Federal TANF funds to

serve ‘‘qualified’’ aliens who arrived prior to

the enactment of the PRWORA on August 22,

1996 [such aliens who arrived after
62210 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

enactment are barred from receiving Federal

TANF funds for five years from the date of

entry, except for certain aliens such as

refugees and asylees]; (3) use State MOE

funds to serve legal aliens who are not

‘‘qualified’’; and (4) use, under section 411(d)

of PRWORA, State MOE funds to serve aliens

who are not lawfully present in the U.S., but

only through enactment of a State law, after

the date of PRWORA enactment, which

‘‘affirmatively provides’’ for such benefits.

The citizenship/alienage is divided into

four groups: individuals eligible (for the

TANF Program based on citizenship/

alienage), individuals eligible at State option,

individuals not eligible, and status unknown.

Instruction: Enter the two-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) citizenship/alienage.

Individuals Eligible for the TANF Program

01=U.S. citizen, including naturalized

citizens

02=Permanent resident who has worked forty

qualifying quarters; alien who is a

veteran with an honorable discharge

from the U.S. Armed Forces or is on

active duty in the U.S. Armed Forces, or

spouse or unmarried dependent children

of such alien

03=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. five years or less

04=Qualified alien granted political asylum

five or less years ago; qualified alien

granted a withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) five or less years ago.

Individuals Eligible for the TANF Program

at State Option

05=Qualified alien, (including immigrant

accorded permanent resident status

(‘‘green card’’), parolee granted parole for

at least one year under sec. 212(d)(5) of

the INA, and certain battered aliens and

their children who are determined to be

qualified), who arrived in the U.S. prior

to enactment (August 22, 1996) or who

arrived in the U.S. on or after enactment

and has resided in the U.S. more than

five years

06=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. more than five

years

07=Qualified alien granted political asylum

or granted withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) more than five years ago;

Individuals Not Eligible for the TANF

Program

08=Qualified alien (other than a refugee,

Cuban or Haitian entrant, Amerasian

immigrant, asylee, or alien whose

deportation has been withheld under

sec. 243(h) or sec. 241(b)(3) of the INA)

who arrived in the U.S. on or after

enactment and has resided in the U.S.

less than 5 years.

09=Any alien who is not a qualified alien.

Status Unknown

99=Unknown

33. Number of Months Countable toward

Federal Time Limit in Own State (Tribe):

Enter the number of months countable

toward the adult’s (or minor child head-ofhousehold’s) Federal five-year time limit

based on assistance received from the State

(Tribe).

34. Number of Months Countable toward

Federal Time Limit in Other States or Tribes:

Enter the number of months countable

toward the adult’s (or minor child head-ofhousehold’s) Federal five-year time limit

based on assistance received from other

States or Tribes.

35. Number of Countable Months

Remaining Under State’s (Tribe’s) Time

Limit: Enter the number of months that

remain countable toward the adult’s (or

minor child head-of-household’s) State

(Tribal) time limit.

36. Employment Status: Enter the one-digit

code that indicates the adult’s (or minor

child head-of-household’s) employment

status.

1=Employed

2=Unemployed, looking for work

3=Not in labor force (i.e, unemployed, not

looking for work, includes discouraged

workers)

Amount of Earned Income

For each category of earned income, enter

the amount of the adult’s (or minor child

head-of-household’s) earned income.

37. Earned Income Tax Credit (EITC):

Guidance: Earned Income Tax Credit is a

refundable tax credit for families and

dependent children. EITC payments are

received either monthly (as advance payment

through the employer), annually (as a refund

from IRS), or both.

Instruction: Enter the total dollar amount

of the earned income tax credit actually

received, whether received as an advance

payment or a single payment (e.g., tax

refund), by the adult (minor child head-ofhousehold) during the reporting month. If the

State counts the EITC as a resource, report it

here as earned income in the month received.

If the State assumes an advance payment is

applied for and obtained, only report what is

actually received for this item.

38. Wages, Salaries, and Other Earnings:

Amount of Unearned Income

39. Unearned Income: Enter the amount of

the adult’s (or minor child head-ofhousehold’s) unearned income.

Child Characteristics

This section allows for coding up to ten

children in the TANF family. A minor child

head-of-household should be coded as an

adult, not as a child. The youngest child

should be coded as the first child in the

family, the second youngest child as the

second child, and so on. If the needs of an

unborn child are included in the amount of

assistance provided to the family, code the

unborn child as one of the children. Do this

by entering the Date-of-Birth as ‘‘99999999’’

and leave the other Child Characteristics

fields blank.

If there are more than ten children in the

TANF family, use the following order to

identify the persons to be coded: (1) children

in the eligible family receiving assistance in

order from youngest to oldest; (2) minor

siblings of child in the eligible family

receiving assistance from youngest to oldest;

and (3) any other children.

40. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the one-digit code that

shows the Child’s relation to the eligible

family receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible family

receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income or resources are

considered in determining eligibility for

or amount of assistance for the eligible

family receiving assistance

41. Date of Birth: Enter the eight-digit code

for date of birth for this child under TANF

in the format YYYYMMDD.

42. Social Security Number: Enter the ninedigit Social Security Number for the child in

the format nnnnnnnnn.

43. Race: Enter the one-digit code for the

race of the TANF child.

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

44. Gender: Enter the one-digit code that

indicates the child’s gender.

1=Male

2=Female

Receives Disability Benefits

The Act specifies five types of disability

benefits. Two of these types of disability

benefits are applicable to children. For each

type of disability benefits, enter the one-digit

code that indicates whether or not the child

received the benefit.

45. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the child received benefits

based on Federal disability status for the

reporting month.

1=Yes, received benefits based on Federal

disability status

2=No

46. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

child received aid under a State plan

approved under Title XVI–SSI for the

reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

47. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-of-
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62211

household section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the two-digit code that

shows the child’s relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or as

determined by the State (Tribe), (i.e., the

relationship to the principal person of each

person living in the household.)

01=Head of household

02=Spouse

03=Parent

04=Daughter or son

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

48. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the TANF family.

Instruction: Enter the one-digit code that

indicates the child’s teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts:

the highest level of education attained and

the highest degree attained.

49. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

child.

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

50. Highest Degree Attained:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: If the child has a degree(s),

enter the one-digit code that indicates the

child’s highest degree attained. Otherwise,

leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

9=Not applicable

51. Citizenship/Alienage: Enter the twodigit code that indicates the child’s

citizenship/alienage. The coding for this data

element is the same as for item number 27,

on page 486.

52. Cooperation with Child Support: Enter

the one-digit code that indicates whether this

child’s parent has cooperated with child

support for this child.

1=Yes, child’s parent has cooperated with

child support

2=No, child’s parent has not cooperated with

child support

3=Not applicable

53. Unearned Income: Enter the dollar

amount of the child’s unearned income.

Appendix C—TANF Data Report—

Section Three—Aggregated Data

Collection for Families Applying for,

Receiving, and No Longer Receiving

Assistance Under the TANF Program

Instructions and Definitions

1. State FIPS Code: Enter your two-digit

State code. Tribal grantees should leave this

field blank.

2. Tribal Code: For Tribal grantees only,

enter the three-digit Tribal code that

represents your Tribe (See Appendix E of the

TANF Sampling and Statistical Methods

Manual for a complete listing of Tribal

Codes). State agencies should leave this field

blank.

3. Calendar Quarter: The four calendar

quarters are as follows:

First quarter ................. January–March.

Second quarter ............ April–June.

Third quarter ................ July–September.

Fourth quarter ............. October–December.

Enter the four-digit year and one-digit

quarter code (in the format YYYYQ) that

identifies the calendar year and quarter for

which the data are being reported (e.g., first

quarter of 1997 is entered as ‘‘19971’’).

Applications

Guidance: The term ‘‘application’’ means

the action by which an individual indicates

in writing to the agency administering the

State (or Tribal) TANF Program his/her

desire to receive assistance.

Instruction: All counts of applications

should be unduplicated monthly totals.

4. Total Number of Applications: Enter the

total number of approved and denied

applications received for each month of the

quarter. For each month in the quarter, the

total in this item should equal the sum of the

number of approved applications (in item #5)

and the number of denied applications (in

item #6).

A. First Month:

B. Second Month:

C. Third Month:

5. Total Number of Approved Applications:

Enter the number of applications approved

during each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

6. Total Number of Denied Applications:

Enter the number of applications denied (or

otherwise disposed of) during each month of

the quarter.

A. First Month:

B. Second Month:

C. Third Month:

Active Cases

For purposes of completing this report,

include all TANF eligible cases receiving

assistance (i.e., cases funded under the TANF

block grant and State MOE funded TANF

cases) as cases receiving assistance under the

State (Tribal) TANF Program. All counts of

families and recipients should be

unduplicated monthly totals.

7. Total Amount of Assistance: Enter the

dollar value of all assistance (cash and noncash) provided to TANF families under the

State (Tribal) TANF Program for each month

of the quarter. Round the amount of

assistance to the nearest dollar.

A. First Month:

B. Second Month:

C. Third Month:

8. Total Number of Families: Enter the

number of families receiving assistance

under the State (Tribal) TANF Program for

each month of the quarter. The total in this

item should equal the sum of the number of

two-parent families (in item #9), the number

of one-parent families (in item ι10) and the

number of no-parent families (in item #11).

A. First Month:

B. Second Month:

C. Third Month:

9. Total Number of Two-parent Families:

Enter the total number of 2-parent families

receiving assistance under the State (Tribal)

TANF Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

10. Total Number of One-Parent Families:

Enter the total number of one-parent families

receiving assistance under the State (Tribal)

TANF Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

11. Total Number of No-Parent Families:

Enter the total number of no-parent families

receiving assistance under the State (Tribal)

TANF Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

12. Total Number of Recipients: Enter the

total number of recipients receiving

assistance under the State (Tribal) TANF

Program for each month of the quarter. The

total in this item should equal the sum of the

number of adult recipients (in item #13) and

the number of child recipients (in item #14).

A. First Month:

B. Second Month:

C. Third Month:

13. Total Number of Adult Recipients:

Enter the total number of adult recipients

receiving assistance under the State (Tribal)

TANF Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

14. Total Number of Child Recipients:

Enter the total number of child recipients

receiving assistance under the State (Tribal)

TANF Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:
62212 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

15. Total Number of Non-Custodial Parents

Participating in Work Activities: Enter the

total number of non-custodial parents

participating in work activities under the

State (Tribal) TANF Program for each month

of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

16. Total Number of Minor Child Heads-ofHousehold: Enter the total number of minor

child head-of-household families receiving

assistance under the State (Tribal) TANF

Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

17. Total Number of Births: Enter the total

number of births for families receiving

assistance under the State (Tribal) TANF

Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

18. Total Number of Out-of-Wedlock

Births: Enter the total number of out-ofwedlock births for families receiving

assistance under the State (Tribal) TANF

Program for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

Closed Cases

19. Total Number of Closed Cases: Enter

the total number of closed cases for each

month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

BILLING CODE 4184–01–P
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62213

BILLING CODE 4184–01–C
62214 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Appendix D—Section 2—Instruction for

Completion of Form ACF–196

Financial Reporting Form for the Temporary

Assistance for Needy Families (TANF)

Program

All States must complete and submit this

report in accordance with these instructions

on behalf of the State agency administering

the TANF Program.

Due Dates: This form must be submitted

quarterly by February 14, May 15, August 14

and November 14.

States must submit quarterly reports for

each fiscal year until all Federal TANF funds

are expended. A State may be submitting

reports simultaneously to cover two or more

fiscal years.

Distribution: The original copy (with

original signatures) should be submitted to:

Administration for Children and Families,

Office of Program Support, Division of

Formula, Entitlement and Block Grants,

Aerospace Building, 7th Floor, 370 L’Enfant

Promenade, S.W., Washington, D.C. 20447.

An additional copy should be submitted to

the ACF Regional Administrator.

General Instructions

—Round all entries to the nearest dollar.

Omit cents.

—Enter State name.

—Enter the Fiscal Year for which this report

is being submitted. Funding for each fiscal

year is available until expended. Therefore,

for each fiscal year, a State may be

submitting reports simultaneously to cover

two or more fiscal years. It is important to

indicate the year for which information is

being reported.

—Enter the ending dates for the current

quarter (the quarter just ended for which

this constitutes the report of actual

expenditures and obligations) and the

ending date of the next quarter (the

upcoming quarter for which estimates are

being requested on line 11).

Example: The State is reporting for the 1st

quarter of the Federal fiscal year (10/1

through 12/31), the report is due February 14,

the current quarter ending date is 12/31, the

next quarter ending date for which estimates

are requested is 6/30. The estimate submitted

by the State will be for the quarter of 4/1

through 6/30. Estimates are not required on

quarterly reports submitted for prior fiscal

years.

—Enter whether this report is being used for

annual reconciliation of the Contingency

Fund.

—Enter the Federal Medical Assistance

Percentage Rate used by the State for the

fiscal year for which Contingency Funds

were received.

—Indicate whether this is a new report or a

revision of a report previously submitted

for the same period.

—Entries are not required or are not

applicable to blocks that are shaded.

Columns: All amounts reported in columns

(A) through (D) must be actual expenditures

or obligations made in accordance with all

applicable statutes and regulations. Amounts

reported in the estimates section are Federal

estimates of expenditures to be made during

the quarter indicated based on the best

information available to the State.

Explanation of Columns

Column (A) lines 1 through 4 refer to the

Federal State Family Assistance Grant

(SFAG) awards, amounts transferred to the

Child Care and Development Fund (CCDF)

(Discretionary Fund) and the Social Services

Block Grant (SSBG) program, and the amount

available for TANF.

Column (A) lines 5 through 10 refer to the

Federal SFAG funds the State expended and

obligated under its TANF program.

Column (A) line 11 is the SFAG grant

award amount or percentage the State

estimates it will need for the next quarter

ending referenced at the top of the form. (See

page 6 of Line Item Instructions)

Column (B) lines 5 through 8 refer to State

TANF expenditures the State is making to

meet its TANF Maintenance of Effort (MOE)

requirement. Includes State funds that are

commingled with Federal funds; or State

funds expended on the State program funded

under TANF.

Note: States receiving Contingency Funds

under section 403(b) for the fiscal year must

also use this same column to report State

TANF expenditures made to meet the

Contingency Fund (CF) MOE requirement

and matching expenditures made above the

100 percent MOE requirement. Expenditures

made to meet the CF MOE requirement and

expenditures made above the MOE level (for

matching purposes) must be expenditures

made under the State TANF program only;

they cannot include expenditures made

under ‘‘separate State programs.’’ In addition,

child care expenditures cannot be included

as MOE expenditures or expenditures that

are matched with Contingency Funds.

Column (C) lines 5 through 8 refer to State

expenditures the State is making in Separate

State Programs outside the State TANF

program to meet its TANF MOE requirement.

Note: For the TANF MOE requirement, the

cumulative total expenditures (Sum of

8(B)+8(C)) reported at the end of the Federal

fiscal year should add up to 75% of fiscal

year 1994 historic State expenditures if the

State met the TANF participation

requirements, or 80% of fiscal year 1994

historic State expenditures if the State did

not meet the TANF participation

requirements. TANF MOE requirements and

tables were published in Program Instruction

No. TANF–ACF–PI–96–2, dated December 6,

1996.

For States that received Contingency

Funds, line 8(B) minus line 5c(B) (child care)

must exceed 100 percent of the CF MOE

requirement.

Note: The State must submit an addendum

attached to the fourth quarter report for each

fiscal year that provides ‘‘separate State

program’’ information as required under

parts 273 and 274 of the proposed rules.

Column (D) line 1 refers to the Federal

Contingency Fund grant awards.

Column (D) lines 5 through 10 refer to the

Federal share of expenditures for which

Federal funding is available at the FMAP rate

for the fiscal year for which Contingency

Funds were received. Contingency Funds are

available for match for State expenditures in

excess of 100% of CF MOE requirements as

explained in the ‘‘Note’’ above.

Example: The State received Contingency

Funds of $100,000 for 6 months of the fiscal

year; the FMAP rate is 60% Federal and 40%

State; the CF 100% MOE requirement is

$1,000,000; the State reported expenditures

under Columns (B) and (D) of $1,200,000. To

determine how much of the Contingency

Funds the State can keep, the expenditures

of $1,000,000 (CF MOE requirement) must be

subtracted from the total expenditures of

$1,200,000. That difference ($200,000) is to

be multiplied by 60 percent, i.e.,

$200,000×60%=$120,000. The $120,000 must

then be multiplied by 1/12 times the number

of months a State received Contingency

Funds, i.e., $120,000×1/12×6=$60,000. The

State may keep only $60,000 of the $100,000

ACF awarded it for the Contingency Fund.

Determining how much, if any, a State can

keep of the Contingency Funds awarded to it

for a fiscal year, is known only after annual

reconciliation of the Contingency Fund

account is completed. This form will serve as

the annual reconciliation report when

submitted for the fourth quarter of the fiscal

year. Based on the example above, line 8 of

Column (D) (Total Expenditures-Contingency

Fund) must equal $60,000.

It is possible that a State will have received

Contingency Funds after the end of the fiscal

year that apply to expenditures made in the

prior fiscal year. For a State receiving

Contingency Funds for a fiscal year after it

has ended, the State will be required to

submit a revised fourth quarter report within

45 days of receipt of the additional

Contingency Funds. There is no carryover

from one fiscal year to the next.

State Replacement of Grant Reductions

Resulting From Penalties

If a State’s State Family Assistance Grant

is reduced because of the imposition of a

penalty under section 409, section 409(a)(12)

provides that the State must maintain a level

of spending at the SFAG amount. In place of

SFAG funds withheld for a penalty, the State

must substitute with its own funds an

amount that is no less than the amount

withheld. The State replacement funds must

be included in Column (B).

Line Item Instructions—Cumulative Fiscal

Year Expenditures and Obligations

Line 1. Awarded. Enter in column (A) the

cumulative total of State Family Assistance

Grant (SFAG) funds awarded to the State

from October 1 of the Federal fiscal year for

which the report is being submitted through

the current quarter being reported. Enter in

column (D) the cumulative total of

Contingency Funds awarded to the State

from October 1 of the Federal fiscal year for

which the report is being submitted through

the current quarter being reported.

Line 2. Transferred to Child Care and

Development Fund (CCDF). Enter in column

(A) the cumulative total of funds the State

transferred to the Discretionary Fund of the

Child Care and Development Fund from

October 1 of the Federal fiscal year for which

the report is being submitted through the

current quarter being reported. Section
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62215

404(d)(1) of the Act governs the transfer of

SFAG funds to the Discretionary Fund. In

compliance with section 404(d)(1), a State

may not transfer more than 30% of its total

annual SFAG grant. A State may transfer this

entire amount to the Discretionary Fund of

the CCDF program. All funds transferred to

the Discretionary Fund of the CCDF program

take on the rules and regulations of that

recipient Fund.

Line 3. Transferred to SSBG. Enter in

column (A) the cumulative total of funds the

State transferred to the Social Services Block

Grant (SSBG) program from October 1 of the

Federal fiscal year for which the report is

being submitted through the current quarter

being reported. Section 404(d)(2) of the Act

governs the transfer of SFAG funds to the

SSBG program; it limits the amount a State

may transfer to no more than 10% of its total

annual SFAG to SSBG. (Also, the combined

amount transferred to SSBG and the

Discretionary Fund may not exceed 30% of

the annual SFAG. In other words, for all

financial reports applicable to grant funds for

one fiscal year, the sum of the total

cumulative amount reported on line 3 and

the total cumulative amount reported on line

2 cannot exceed 30% of the annual SFAG.)

All funds transferred to the SSBG program

are subject to the statute and regulations of

the recipient SSBG program.

Line 4. Available for TANF. Enter in

column (A) the cumulative total of funds

available for TANF after subtracting the

amounts transferred to the CCDF program

(Discretionary Fund) (line 2(A)) and/or the

SSBG program (line 3(A)) from October 1 of

the Federal fiscal year for which the report

is being submitted through the current

quarter being reported.

Line 5. Expenditures on Assistance. Blocks

are shaded. Expenditures in this category

must be included in Lines 5a. through 5d.

Line 5a. Cash Assistance. Enter in columns

(A), (B), (C) and (D) the cumulative total

expenditures for cash assistance from

October 1 of the Federal fiscal year for which

the report is being submitted through the

current quarter being reported.

Line 5b. Work Subsidies. Enter in columns

(A), (B), (C) and (D) the cumulative total

expenditures for work subsidies from

October 1 of the Federal fiscal year for which

the report is being submitted through the

current quarter being reported.

Line 5c. Child Care. Enter in columns (A),

(B), (C) and (D) the cumulative total

expenditures for child care from October 1 of

the Federal fiscal year for which the report

is being submitted through the current

quarter being reported. The amounts reported

in this category do not include funds

transferred to the CCDF (Discretionary Fund)

or SSBG programs.

Line 5d. Other. Enter in columns (A), (B),

(C) and (D) the cumulative total expenditures

for other expenditures considered

‘‘expenditures on assistance’’ that were not

included on Lines 5a–5c from October 1 of

the Federal fiscal year for which the report

is being submitted through the current

quarter being reported.

Note: The State must submit as an

addendum attached to the fourth quarter

report for each fiscal year which identifies

the activities for which the ‘‘other

expenditures’’ under this line item applies.

Line 6. Expenditures on Non-Assistance.

Blocks are shaded. Expenditures in this

category must be included in Lines 6a

through 6e.

Line 6a. Work Activities. Enter in columns

(A), (B), (C) and (D) the cumulative total

expenditures for work activities from October

1 of the Federal fiscal year for which the

report is being submitted through the current

quarter being reported.

Note: The State must submit as an

addendum attached to the fourth quarter

report for each fiscal year (or more

frequently, if there are changes) the State’s

definition of each work activity.

Line 6b. Administration. Enter in columns

(A), (B), (C) and (D) the cumulative total

expenditures for administrative costs from

October 1 of the Federal fiscal year for which

the report is being submitted through the

current quarter being reported.

For State Family Assistance Grants (SFAG),

the 15% administrative cost cap applies to

the amount Available for TANF reported on

line 4(A) of this form. For the Contingency

Fund, the 15% administrative cost cap

applies to the amount of total Federal

expenditures reported on line 8(D). For State

expenditures reported in columns (B) and

(C), the 15% administrative cost cap applies

to the amount of Total Expenditures (line 8)

reported for each of these columns.

Line 6c. Systems. Enter in columns (A), (B),

(C) and (D) the cumulative total expenditures

for systems costs from October 1 of the

Federal fiscal year for which the report is

being submitted through the current quarter

being reported.

Note: Section 404(b)(1) of the Act limits

States to which a grant is made under section

403 to expend no more than 15% of the grant

for administrative costs. In addition, section

404(b)(2) of the Act states that the 15%

administrative cost cap shall not apply to the

use of a grant for information technology and

computerization needed for tracking or

monitoring required by or under this part.

Line 6d. Transitional Services for

Employed. Enter in columns (A), (B), (C) and

(D) the cumulative total expenditures to

provide transitional services to families that

cease to receive assistance under the TANF

program because of employment from

October 1 of the Federal fiscal year for which

the report is being submitted through the

current quarter being reported.

Note: The State must submit as an

addendum attached to the fourth quarter

report for each fiscal year which describes

the types of services the State provided under

this line item.

Line 6e. Other. Enter in columns (A), (B),

(C) and (D) the cumulative total expenditures

for other expenditures considered

‘‘expenditures on non-assistance’’ that were

not included on Lines 6a–6d. from October

1 of the Federal fiscal year for which the

report is being submitted through the current

quarter being reported.

Note: The State must submit as an

addendum attached to the fourth quarter

report for each fiscal year which identifies

the activities for which the ‘‘other

expenditures’’ under this line item applies.

Line 7. Other Expenditures. Enter in

columns (A), (B), (C) and (D) the cumulative

total other expenditures from October 1 of

the Federal fiscal year for which the report

is being submitted through the current

quarter being reported. ‘‘Other expenditures’’

are those expenditures that cannot be

reported under any other category on this

form.

Note: The State must submit as an

addendum attached to the fourth quarter

report for each fiscal year which identifies

the activities for which the ‘‘other

expenditures’’ under this line item applies.

Line 8. Total Expenditures. Enter in

columns (A), (B), (C) and (D) the cumulative

total expenditures (Sum of Line 5a through

Line 7) from October 1 of the Federal fiscal

year for which the report is being submitted

through the current quarter being reported.

Line 9. Federal Unliquidated Obligations.

Enter in columns (A) and (D) the cumulative

total Federal unliquidated obligations from

October 1 of the Federal fiscal year for which

the report is being submitted through the

current quarter being reported.

For the Contingency Fund, this line should

indicate $0 for the report submitted for the

fourth quarter.

Line 10. Unobligated Balance. Enter in

columns (A) and (D) the cumulative total

Federal unobligated balances from October 1

of the Federal fiscal year for which the report

is being submitted through the current

quarter being reported. After the end of the

Federal fiscal year any amount reported in

column (D) as an unobligated balance will be

de-obligated by ACF.

Line 11. Estimate for Next Quarter Ended.

Enter in column (A) the estimate of SFAG

grant award funds requested for the next

quarter ending (refer to the next quarter

ending entered at the top of this report).

Note: Section 405(c)(1) of the Act states

ACF shall estimate the amount to be paid to

each eligible State for each quarter, such

estimate is to be based on a report filed by

the State containing an estimate by the State

of the total sum to be expended by the State

in the quarter under the State program

funded under section 403.

Appendix D—Section 3

Information To Be Reported as an

Addendum to the Fourth Quarter TANF

Financial Report

A. The following definitions and

information with respect to the TANF

program:

(1) The number of cases excluded from the

overall work participation rate, the twoparent work participation rate, and the timelimit calculations because of the State’s

definition of ‘‘families receiving assistance,’’

together with an explanation of the basis for

such exclusions;

(2) The State’s definition of each work

activity;

(3) A description of the transitional

services provided to families no longer

receiving assistance due to employment; and

(4) The State’s description of how it will

reduce the amount of assistance otherwise
62216 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

payable to the family prorata (or more) with

respect to any period during a month in

which the individual refuses to engage in

work without good cause.

B. The following information on separate

State programs whose expenditures are

counted by the State as MOE:

(1) A description of the specific program

activities provided to eligible families;

(2) Each MOE program’s statement of

purpose (i.e., how the program activity serves

eligible families);

(3) The applicable definitions of each work

activity;

(4) Whether the program activity had been

previously authorized and allowable as of

August 21, 1996, under section 403 of prior

law;

(5) The FY 1995 State expenditures for

each program activity not authorized and

allowable as of August 21, 1996;

(6) The total number of eligible families

served by each program activity as of the end

of the fiscal year;

(7) The eligibility criteria for the families

served under each program; and

(8) A certification that those families

served met the State’s criteria for eligible

families.

Appendix E—TANF MOE Data

Report—Section One—Disaggregated

Data Collection for Families Receiving

Assistance Under the Separate State

Programs

Instructions and Definitions

General Instruction: The State agency

should collect and report data for each data

element shown below.

1. State FIPS Code: Enter your two-digit

State code from the following listing. These

codes are the standard codes used by the

National Institute of Standards and

Technology.

State Code

Alabama .................................... 01

Alaska ....................................... 02

American Samoa ...................... 60

Arizona ...................................... 04

Arkansas ................................... 05

California ................................... 06

Colorado ................................... 08

Connecticut ............................... 09

Delaware ................................... 10

District of Columbia .................. 11

Florida ....................................... 12

Georgia ..................................... 13

Guam ........................................ 66

Hawaii ....................................... 15

Idaho ......................................... 16

Illinois ........................................ 17

Indiana ...................................... 18

Iowa .......................................... 19

Kansas ...................................... 20

Kentucky ................................... 21

Louisiana ................................... 22

Maine ........................................ 23

Maryland ................................... 24

Massachusetts .......................... 25

Michigan .................................... 26

Minnesota ................................. 27

Mississippi ................................. 28

Missouri ..................................... 29

State Code

Montana .................................... 30

Nebraska ................................... 31

Nevada ...................................... 32

New Hampshire ........................ 33

New Jersey ............................... 34

New Mexico .............................. 35

New York .................................. 36

North Carolina ........................... 37

North Dakota ............................. 38

Ohio .......................................... 39

Oklahoma .................................. 40

Oregon ...................................... 41

Pennsylvania ............................. 42

Puerto Rico ............................... 72

Rhode Island ............................. 44

South Carolina .......................... 45

South Dakota ............................ 46

Tennessee ................................ 47

Texas ........................................ 48

Utah .......................................... 49

Vermont .................................... 50

Virgin Islands ............................ 78

Virginia ...................................... 51

Washington ............................... 53

West Virginia ............................. 54

Wisconsin .................................. 55

Wyoming ................................... 56

2. County FIPS Code: Enter the three-digit

code established by the National Institute of

Standards and Technology for classification

of counties and county equivalents. Codes

were devised by listing counties

alphabetically and assigning sequentially odd

integers; e.g., 001, 003, 005, * * * A

complete list of codes is available in

Appendix F of the TANF Sampling and

Statistical Methods Manual.

3. Reporting Month: Enter the four-digit

year and two-digit month code that identifies

the year and month for which the data are

being reported.

4. Stratum:

Guidance: All families that receive

assistance under separate State Programs (i.e,

State MOE families) and are selected in the

sample from the same stratum must be

assigned the same stratum code. Valid

stratum codes may range from ‘‘00’’ to ‘‘99.’’

States with stratified samples should provide

the ACF Regional Office with a listing of the

numeric codes utilized to identify any

stratification. If a State opts to provide data

for its entire caseload, enter the same stratum

code (any two-digit number) for each State

MOE family.

Instruction: Enter the two-digit stratum

code.

Family-Level Data

Definition: For reporting purposes, the

State MOE family means (a) all individuals

receiving assistance as part of a family under

the Separate State Programs; and (b) the

following additional persons living in the

household, if not included under (a) above:

(1) Parent(s) or caretaker relative(s) of any

minor child receiving assistance;

(2) Minor siblings (including unborn

children) of any child receiving assistance;

and

(3) Any person whose income or resources

would be counted in determining the

family’s eligibility for or amount of

assistance.

5. Case Number—Separate State MOE:

Guidance: If the case number is less than

the allowable eleven characters, a State may

use lead zeros to fill in the number.

Instruction: Enter the number assigned by

the State agency to uniquely identify the

case.

6. ZIP Code: Enter the five-digit ZIP code

for the State MOE family’s place of residence

for the reporting month.

7. Disposition:

Guidance: A family that did not receive

any assistance for the reporting month but

was listed on the monthly sample frame for

the reporting month is ‘‘listed in error.’’

States are to complete data collection for all

sampled cases that are not listed in error.

Instruction: Enter one of the following

codes for each State MOE sampled case.

1 = Data collection completed

2 = Not subject to data collection/listed in

error

8. Number of Family Members: Enter two

digits that represent the number of members

in the family receiving assistance under the

Separate State Programs.

9. Type of Family for Work Participation:

Guidance: This data element will be used

to identify the type of family (i.e., the number

of parents or care-taker relatives in the family

receiving assistance) in order to calculate the

all family and the two-parent family work

participation rates. A family with a minor

child head-of-household should be coded as

either a one-parent family or two-parent

family, whichever is appropriate. A family

that includes a disabled parent will not be

considered a two-parent family for purposes

of the work participation rate. It is up to the

State to consider whether a family with a

non-custodial parent is a one-parent or twoparent family for the purposes of calculating

the work participation rate.

Instruction: Enter the one-digit code that

represents the type of family for purposes of

calculating the work participation rates.

1=Single-Parent Family for participation rate

purposes

2=Two-Parent Family for participation rate

purposes

3=No Parent Family for participation rate

purposes (does not include parents, caretaker relatives, or minor child heads-ofhousehold

10. Has the family received assistance

under a State (Tribal) TANF Program within

the past six months: If the State MOE family

has received assistance under a State (Tribal)

TANF Program within the past six months,

enter code ‘‘1.’’ Otherwise, enter ‘‘2.’’

1=Yes, family has received assistance under

a State (Tribal) TANF program within

the past six months.

2=No

11. Receives Subsidized Housing:

Guidance: Subsidized housing refers to

housing for which money was paid by the

Federal, State, or Local government or

through a private social service agency to the

family or to the owner of the housing to assist

the family in paying rent. Two families

sharing living expenses does not constitute

subsidized housing.

Instruction: Enter the one-digit code that

indicates whether or not the State MOE
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62217

family received subsidized housing for the

reporting month.

1=Public housing

2=HUD rent subsidy

3=Other rent subsidy

4=No Housing subsidy

12. Receives Medical Assistance: Enter ‘‘1’’

if, for the reporting month, any State MOE

family member is eligible to receive (i.e., a

certified recipient of) medical assistance

under the State plan approved under Title

XIX or ‘‘2’’ if no State MOE family member

is eligible to receive medical assistance under

the State plan approved under Title XIX.

1=Yes, receives Medical Assistance

2=No

13. Receives Food Stamps: If the State

MOE family received Food Stamps for the

reporting month, enter the one-digit code

indicating the type of Food Stamp assistance.

Otherwise, enter ‘‘4.’’

1=Yes, Food Stamp coupon allotment

2=Yes, cash

3=Yes, wage subsidy

4=No

14. Amount of Food Stamp Assistance:

Guidance: For situations in which the

Food Stamp household differs from the State

MOE family, code this element in a manner

that most accurately reflects the resources

available to the State MOE family.

Instruction: Enter the State MOE eligible

family’s authorized dollar amount of Food

Stamps assistance for the reporting month. If

the State MOE family did not receive any

food stamps for the reporting month, enter

‘‘0.’’

15. Receives Subsidized Child Care:

Guidance: For the purpose of coding this

data element, subsidized child care funded

under the Child Care and Development Fund

with funds that were transferred from the

State TANF Program should be coded as ‘‘2.’’

Instruction: If the State MOE family

receives subsidized child care for the

reporting month, enter code ‘‘1’’, ‘‘2’’, ‘‘3’’, or

‘‘4’’, whichever is appropriate. Otherwise,

enter code ‘‘5.’’

1=Yes, funded under the Separate State

Programs

2=Yes, funded under the Child Care and

Development Fund

3=Yes, funded under other Federal program

(e.g., TANF or SSBG)

4=Yes, funded under other State or local

program 5=No

16. Amount of Subsidized Child Care:

Guidance: Subsidized child care means a

grant by the Federal, State or Local

government to a parent (or care-taker relative)

to support, in part or whole, the cost of child

care services provided by an eligible provider

to an eligible child. The grant may be paid

directly to the parent (or care-taker relative)

or to a child care provider on behalf of the

parent (or care-taker relative).

Instruction: Enter the dollar amount of

subsidized child care that the State MOE

family has received for services in the

reporting month. If State MOE family did not

receive any subsidized child care, enter ‘‘0’’

as the amount.

17. Amount of Child Care Disregard: Enter

the total dollar amount of the State MOE

family’s actual disregard allowed for child

care expenses.

18. Amount of Child Support: Enter the

total dollar value of child support received

on behalf of the State MOE family in the

reporting month, which includes arrearages,

recoupments, and pass-through amounts

whether paid to the State or the family.

19. Amount of the Families’ Cash

Resources: Enter the total dollar amount of

the State MOE family’s cash resources for the

reporting month.

Amount of Assistance Received and the

Number of Months that the Family Has

Received Each Type of Assistance Under the

Separate State Programs

Guidance: Assistance means every form of

support provided to State MOE families

under the Separate State Program (including

child care, work subsidies, and allowances to

meet living expenses), except for the

following:

(1) services that have no direct monetary

value to an individual family and that do not

involve implicit or explicit income support,

such as counseling, case management, peer

support and employment services that do not

involve subsidies or other forms of income

support; and

(2) one-time, short-term assistance (i.e.,

assistance paid within a 30-day period, no

more than once in any twelve-month period,

to meet needs that do not extend beyond a

90-day period, such as automobile repair to

retain employment and avoid welfare receipt

and appliance repair to maintain living

arrangements).

Instruction: For each type of assistance

provided under the State’s MOE Program,

enter the dollar amount of assistance that the

State MOE family received or that was paid

on behalf of the State MOE family for the

reporting month and the number of months

that the State MOE family has received

assistance under the State’s Separate MOE

programs. If, for a ‘‘type of assistance’’, no

dollar amount of assistance was provided

during the reporting month, enter ‘‘0’’ as the

amount. If, for a ‘‘type of assistance’’, no

assistance has ever been received by the

TANF eligible family, enter ‘‘0’’ as the

number of months of assistance.

20. Cash and Cash Equivalents:

A. Amount

B. Number of Months

21. Educational:

A. Amount

B. Number of Months

22. Employment Services:

A. Amount

B. Number of Months

23. Work Subsidies:

A. Amount

B. Number of Months

24. Child Care:

Guidance: Include only the child care

funded directly by the Separate State

Programs. Do not include child care funded

under the TANF Program or the Child Care

and Development Fund, even though some of

the funds were transferred to the CCDF from

the State TANF program.

A. Amount

B. Number of Months

25. Transportation:

A. Amount

B. Number of Months

26. Other Supportive Services and Special

Needs, including Assistance with Meeting

Home Heating and Air Conditioning Costs:

A. Amount

B. Number of Months

27. Transitional Services:

A. Amount

B. Number of Months

28. Contributions to Individual

Development Accounts:

A. Amount

B. Number of Months

29. Other:

A. Amount

B. Number of Months

Reason for and Amount of Reduction in

Assistance

For each reason for which the State MOE

family received a reduction in assistance for

the reporting month, enter the dollar amount

of the reduction in assistance. Otherwise,

enter ‘‘0.’’

30. Work Requirements Sanction

31. Family Sanction for an Adult with No

High School Diploma or Equivalent

32. Sanction for Teen Parent not Attending

School

33. Non-Cooperation with Child Support

34. Failure to Comply with an Individual

Responsibility Plan

35. Other Sanction

36. Recoupment of Prior Overpayment

37. Family Cap

38. Reduction Based on Family Moving

into State From Another State

39. Reduction Based on Length of Receipt

of Assistance

40. Other, Non-Sanction

41. Waiver Evaluation Research Group

Guidance: In connection with waivers,

approved to allow States to implement

Welfare Reform Demonstrations, a State

assigned a portion of its cases to a research

group consisting of a control group (subject

to the provisions of the regular, statutory

AFDC program as defined by prior law) and

an experimental group (subject to the

provisions of the regular, statutory AFDC

program as defined by prior law as modified

by waivers). A state may choose, for the

purpose of completing impact analyses, to

continue a research group and thus maintain

applicable control and experimental group

treatment policies as they were implemented

under their welfare reform demonstration

(including prior law policies not modified by

waivers), even if such policies are

inconsistent with TANF. However, cases

assigned to a non-experimental treatment

group (i.e., not part of the research group)

may not apply prior law policies inconsistent

with TANF unless such policies are

specifically linked to approved waivers.

Where a state continues waivers, but does not

continue a research group for impact

evaluation purposes, all cases in the

demonstration site will be treated as nonexperimental treatment group cases

regardless of their original assignment as

control or experimental cases.
62218 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Instruction: Enter the one-digit code that

indicates the family’s waiver evaluation case

status.

Blank=Not applicable (no waivers apply to

this case)

1=Control group (for impact analysis

purposes)

2=Experimental group

3=Non-experimental treatment group

Person-Level Data

Person-level data has two sections: the

adult and minor child head-of-household

characteristic section and the child

characteristics section. Section 419 of the Act

defines adult and minor child. An adult is an

individual that is not a minor child. A minor

child is an individual who (a) has not

attained 18 years of age or (b) has not

attained 19 years of age and is a full-time

student in a secondary school (or in the

equivalent level of vocational or technical

training.)

Adult and Minor Child Head-of-Household

Characteristics

This section allows for coding up to six

adults (or a minor child who is either a headof-household or married to the head-ofhousehold and up to five adults) in the State

MOE family. A minor child who is either a

head-of-household or married to the head-ofhousehold should be coded as an adult and

will hereafter be referred to as a ‘‘minor child

head-of-household.’’ For each adult (or minor

child head-of-household) in the State MOE

family, complete the adult characteristics

section.

If there are more than six adults (or a minor

child head-of-household and five adults) in

the State MOE family, use the following

order to identify the persons to be coded: (1)

the head-of-household; (2) parents in the

eligible family receiving assistance; (3) other

adults in the eligible family receiving

assistance; (4) Parents not in the eligible

family receiving assistance; (5) caretaker

relatives not in the eligible family receiving

assistance; and (6) other persons, whose

income or resources count in determining

eligibility for or amount of assistance of the

eligible family receiving assistance, in

descending order the person with the most

income to the person with least income.

42. Family Affiliation:

Guidance: This data element is used

both for (1) the adult or minor child

head-of-household section and (2) the

minor child section. The same coding

schemes are used in both sections. Some

of these codes may not be applicable for

adults.

Instruction: Enter the one-digit code that

shows the adult’s (or minor child head-ofhousehold’s) relation to the eligible family

receiving assistance.

1= Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2= Parent of minor child in the eligible

family receiving assistance

3= Caretaker relative of minor child in the

eligible family receiving assistance

4= Minor sibling of child in the eligible

family receiving assistance

5= Person whose income or resources are

considered in determining eligibility for

or amount of assistance for the eligible

family receiving assistance

43. Noncustodial Parent Indicator:

Guidance: A noncustodial parent means a

parent who does not live with his/her

child(ren). A noncustodial parent who lives

in the State, may participate in work

activities funded under the Separate State

Programs. If the noncustodial parent

participates in work activities, (s)he must be

a member of the eligible family receiving

assistance and be reported as part of the State

MOE family.

Instruction: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) noncustodial parent status.

1= Yes, a noncustodial parent

2= No, not a noncustodial parent

44. Date of Birth: Enter the eight-digit code

for date of birth for the adult (or minor child

head-of-household) under the Separate State

Program in the format YYYYMMDD.

45. Social Security Number: Enter the ninedigit Social Security Number for the adult (or

minor child head-of-household) in the format

nnnnnnnnn.

46. Race: Enter the one-digit code for the

race of the adult (or minor child head-ofhousehold).

1= White, not of Hispanic origin

2= Black, not of Hispanic origin

3= Hispanic

4= American Indian or Alaska Native

5= Asian or Pacific Islander

6= Other

9= Unknown

47. Gender: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) gender.

1= Male

2= Female

Receives Disability Benefits

The Act specifies five types of disability

benefits. For each type of disability benefits,

enter the one-digit code that indicates

whether or not the adult (or minor child

head-of-household) received the benefit.

48. Receives Federal Disability Insurance

Benefits: Enter the one-digit code that

indicates the adult (or minor child head-ofhousehold) received Federal disability

insurance benefits for the reporting month.

1=Yes, received benefits based on Federal

disability status

2=No

49. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the adult (or minor child headof-household) received benefits based on

Federal disability status for the reporting

month.

1=Yes, received benefits based on Federal

disability status

2=No

50. Receives Aid Under Title XIV–APDT:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XIV for the reporting month.

1=Yes, received aid under Title XIV–APDT

2=No

51. Receives Aid Under Title XVI–AABD:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI–AABD for the reporting

month.

1=Yes, received aid under Title XVI–AABD

2=No

52. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI–SSI for the reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

53. Marital Status: Enter the one-digit code

for the adult’s (or minor child head-ofhousehold’s) marital status for the reporting

month.

1=Single, never married

2=Married, living together

3=Married, but separated

4=Widowed

5=Divorced

54. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the two-digit code that

shows the adult’s (or minor child head-ofhousehold’s) relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or as

determined by the State, (i.e., the

relationship to the principal person of each

person living in the household.) If a minor

child head-of-household, enter code ‘‘01.’’

01=Head of household

02=Spouse

03=Parent

04=Daughter or son (Natural or adoptive)

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

55. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the State MOE

family.

Instruction: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts;

the highest level of education attained and

the highest degree attained.

56. Highest Level of Education Attained:

Enter the two-digit code to indicate the
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62219

highest level of education attained by the

adult (or minor child head-of-household).

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

57. Highest Degree Attained: If the adult (or

minor child head-of-household) has a

degree(s), enter the one-digit code that

indicates the highest degree attained.

Otherwise, leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

58. Citizenship/Alienage:

Guidance: As described in TANF–ACF–

PA–97–1, States have the flexibility to: (1)

use State MOE funds to serve ‘‘qualified’’

aliens, including those who enter on or after

August 22, 1996; (2) use Federal TANF funds

to serve ‘‘qualified’’ aliens who arrived prior

to the enactment of the PRWORA on August

22, 1996 [such aliens who arrived after

enactment are barred from receiving Federal

TANF funds for five years from the date of

entry, except for certain aliens such as

refugees and asylees]; (3) use State MOE

funds to serve legal aliens who are not

‘‘qualified’’; and (4) use, under section 411(d)

of PRWORA, State MOE funds to serve aliens

who are not lawfully present in the U.S., but

only through enactment of a State law, after

the date of PRWORA enactment, which

‘‘affirmatively provides’’ for such benefits.

Instruction: Enter the two-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) citizenship/alienage.

01=U.S. citizen, including naturalized

citizens

02=Permanent resident who has worked forty

qualifying quarters; alien who is a

veteran with an honorable discharge

from the U.S. Armed Forces or is on

active duty in the U.S. Armed Forces, or

spouse or unmarried dependent children

of such alien

03=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. five years or less

04=Qualified alien granted political asylum

five or less years ago; qualified alien

granted a withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) five or less years ago.

05=Qualified alien, (including immigrant

accorded permanent resident status

(‘‘green card’’), parolee granted parole for

at least one year under sec. 212(d)(5) of

the INA, and certain battered aliens and

their children who are determined to be

qualified), who arrived in the U.S. prior

to enactment (August 22, 1996) or who

arrived in the U.S. on or after enactment

and has resided in the U.S. more than

five years

06=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. more than five

years

07=Qualified alien granted political asylum

or granted withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) more than five years ago;

08=Qualified alien (other than a refugee,

Cuban or Haitian entrant, Amerasian

immigrant, asylee, or alien whose

deportation has been withheld under

sec. 243(h) or sec. 241(b)(3) of the INA)

who arrived in the U.S. on or after

enactment and has resided in the U.S.

less than 5 years.

09=Any alien who is not a qualified alien.

99=Unknown

59. Employment Status: Enter the one-digit

code that indicates the adult’s (or minor

child head-of-household’s) employment

status.

1=Employed

2=Unemployed, looking for work

3=Not in labor force (i.e, unemployed, not

looking for work, includes discouraged

workers)

60. Work Participation Status:

Guidance: Disregarded from the

participation rate means the State MOE

family is not included in the calculation of

the work participation rate.

Exempt means that the individual will not

be penalized for failure to engage in work

(i.e., good cause exception); however, the

State MOE family is included in the

calculation of the work participation rate.

Instruction: Enter the two-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) work participation status.

01=Disregarded from participation rate,

single custodial parent with child under

12 months

02=Disregarded from participation rate

because all of the following apply:

required to participate, but not

participating, sanctioned for the

reporting month, but not sanctioned for

more than 3 months within the

preceding 12-month period

03=Disregarded, family is part of an ongoing

research evaluation (as a member of a

control group or experimental treatment

group) approved under section 1115 of

the Social Security Act

04=Disregarded from participation rate, is

participating in a Tribal Work Program,

and State has opted to exclude all Tribal

Work Program participants from its Work

Participation rate

05=Exempt, single custodial parent with

child under age 6 and unavailability of

child care

06=Exempt, disabled (not using an extended

definition under a State waiver)

07=Exempt, caring for a severely disabled

child (not using an extended definition

under a State waiver)

08=A temporary good cause domestic

violence waiver (not using an extended

definition under a State waiver)

09=Exempt, State waiver

10=Exempt, other

11=Required to participate, but not

participating, sanctioned for the

reporting month and sanctioned for more

than 3 months within the preceding 12-

month period.

12=Required to participate, but not

participating, sanctioned for the

reporting month but not sanctioned for

more than 3 months within the

preceding 12-month period

13=Required to participate, but not

participating and not sanctioned for the

reporting month

14=Deemed engaged in work, single teen

head-of-household or married teen who

maintains satisfactory school attendance

or is participating in education directly

related to employment for an average of

at least 20 hours per week during the

reporting month

15=Deemed engaged in work, parent or

relative (who is the only parent or

caretaker relative in the family) with

child under age 6 and parent engaged in

work activities for at least 20 hours per

week

16=Required to participate, participating but

not meeting minimum participation

requirements

17=Required to participate, and meeting

minimum participation requirements

99=Not applicable (e.g., person in household,

but not in eligible family receiving

assistance)

Adult Work Participation Activities

Guidance: To calculate the average number

of hours per week of participation in a work

activity, add the number of hours of

participation across all weeks in the month

and divide by the number of weeks in the

month. Round to the nearest whole number.

Some weeks have days in more than one

month. Include such a week in the

calculation for the month that contains the

most days of the week (e.g., the week of July

27–August 2, 1997 would be included in the

July calculation). Acceptable alternatives to

this approach must account for all weeks in

the fiscal year. One acceptable alternative is

to include the week in the calculation for the

month in which the Friday falls (i.e., the

JOBS approach). A second acceptable

alternative is to count each month as having

4.33 weeks.

During the first or last month of any spell

of assistance, a family may happen to receive

assistance for only part of the month. If a

family receives assistance for only part of a

month, the State (Tribe) may count it as a

month of participation if an adult (or minor

child head-of-household) in the family (both

adults, if they are both required to work) is

engaged in work for the minimum average

number of hours for the full week(s) that the

family receives assistance in that month.

Instruction: For each work activity in

which the adult (or minor child head-ofhousehold) participated during the reporting

month, enter the average number of hours per

week of participation. For each work activity

in which the adult (or minor child head-ofhousehold) did not participate, enter zero as

the average number of hours per week of

participation.

61. Unsubsidized Employment
62220 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

62. Subsidized Private Sector Employment

63. Subsidized Public Sector Employment

64. Work Experience

65. On-the-job Training

66. Job Search and Job Readiness

Assistance

Instruction: Do not count hours of

participation in job search and job readiness

training beyond the TANF limit where

allowed by waivers in this item. Instead

count the hours of participation beyond the

TANF limit in the item ‘‘Additional Work

Activities Permitted Under Waiver

Demonstration.’’ Otherwise, count the

additional hours of work participation under

the work activity ‘‘Other Work Activities.’’

67. Community Service Programs

68. Vocational Educational Training

Instruction: Do not count hours of

participation in vocational educational

training beyond the TANF 12 month life-time

limit where allowed by waivers in this item.

Instead count the hours of participation

beyond the TANF limit in the item

‘‘Additional Work Activities Permitted Under

Waiver Demonstration.’’ Otherwise, count

the additional hours of work participation

under the work activity ‘‘Other Work

Activities.’’

69. Job Skills Training Directly Related to

Employment

70. Education Directly Related to

Employment for Individuals with no High

School Diploma or Certificate of High School

Equivalency

71. Satisfactory School Attendance for

Individuals with No High School Diploma or

Certificate of High School Equivalency

72. Providing Child Care Services to an

Individual who is Participating in a

Community Service Program

73. Additional Work Activities Permitted

Under Waiver Demonstration

Instruction: Hours of participation in job

search and job readiness training beyond the

TANF limits as permitted by State waiver

should be counted in this item. Otherwise,

count such additional hours of work

participation under the work activity ‘‘Other

Work Activities.’’

74. Other Work Activities

75. Required Hours of Work Under Waiver

Demonstration:

Guidance: In approving waivers, ACF

specified hours of participation in several

instances. One type of hour change in the

welfare reform demonstrations, was the

recognition, as part of a change in work

activities and/or exemptions, that the hours

individuals worked should be consistent

with their abilities and in compliance with

an employability or personal responsibility

plan or other criteria in accordance to waiver

terms and conditions. As the hour

requirement in this case was integral and

necessary to achieve the waiver purpose of

appropriately requiring work activities to

move individuals to self-sufficiency, the

State could show inconsistency and could

use the waiver hours instead of the hours in

section 407. The waiver that increase work

hour requirements would not be deemed

inconsistent.

Instruction: If applicable, enter the twodigit number that represents the average

number of hours per week of work

participation required of the individual as

described in the demonstration terms or in an

employability or personal responsibility

plan. Otherwise, leave blank or enter ‘‘00.’’

Amount of Earned Income

Earned income has two categories. For

each category of earned income, enter the

dollar amount of the adult’s (or minor child

head-of-household’s) earned income.

76. Earned Income Tax Credit (EITC):

Guidance: Earned Income Tax Credit is a

refundable tax credit for families and

dependent children. EITC payments are

received either monthly (as advance payment

through the employer), annually (as a refund

from IRS), or both.

Instruction: Enter the total dollar amount

of the earned income tax credit actually

received, whether received as an advance

payment or a single payment (e.g., tax

refund), by the adult (minor child head-ofhousehold) during the reporting month. If the

State counts the EITC as a resource, report it

here as earned income in the month received.

If the State assumes an advance payment is

applied for and obtained, only report what is

actually received for this item.

77. Wages, Salaries, and Other Earnings:

Amount of Unearned Income

Unearned income has four categories. For

each category of unearned income, enter the

dollar amount of the adult’s (minor child

head-of-household’s) unearned income.

78. Social Security: Enter the dollar

amount of Social Security that the adult in

the State MOE family has received for the

reporting month.

79. SSI: Enter the dollar amount of SSI that

the adult in the State MOE family has

received for the reporting month.

80. Worker’s Compensation: Enter the

dollar amount of Worker’s Compensation that

the adult in the State MOE family has

received for the reporting month.

81. Other Unearned Income:

Guidance: Other unearned income

includes RSDI benefits, Veterans benefits,

Unemployment Compensation, other

government benefits, housing subsidy,

contribution/income-in-kind, deemed

income, Public Assistance or General

Assistance, educational grants/scholarships/

loans, other. Do not include Social Security,

SSI, Worker’s Compensation, value of Food

Stamps assistance, the amount of the Child

Care subsidy, and the amount of Child

Support.

Instruction: Enter the dollar amount of

other unearned income that the adult in the

State MOE family has received for the

reporting month.

Child Characteristics

This section allows for coding up to ten

children in the State MOE family. A minor

child head-of-household should be coded as

an adult, not as a child. The youngest child

should be coded as the first child in the

family, the second youngest child as the

second child, and so on. If the needs of an

unborn child are included in the amount of

assistance provided to the family, code the

unborn child as one of the children. Do this

by entering the Date-of-Birth as ‘‘99999999’’

and leave the other Child Characteristics

fields blank.

If there are more than ten children in the

State MOE family, use the following order to

identify the persons to be coded: (1) children

in the eligible family receiving assistance in

order from youngest to oldest; (2) minor

siblings of child in the eligible family

receiving assistance from youngest to oldest;

and (3) any other children.

82. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the one-digit code that

shows the Child’s relation to the eligible

family receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible family

receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income is considered in

determining eligibility for and amount of

assistance for the eligible family

receiving assistance

83. Date of Birth: Enter the eight-digit code

for date of birth for this child under the

Separate State Programs in the format

YYYYMMDD.

84. Social Security Number: Enter the ninedigit Social Security Number for the child in

the format nnnnnnnnn.

85. Race: Enter the one-digit code for the

race of the State MOE child.

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

86. Gender: Enter the one-digit code that

indicates the child’s gender.

1=Male

2=Female

Receives Disability Benefits

The Act specifies five types of disability

benefits. Two of these types of disability

benefits are applicable to children. For each

type of disability benefits, enter the one-digit

code that indicates whether or not the child

received the benefit.

87. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the child received benefits

based on Federal disability status for the

reporting month.

1=Yes, received benefits based on Federal

disability status

2=No

88. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

child received aid under a State plan
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approved under Title XVI–SSI for the

reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

89. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the two-digit code that

shows the child’s relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or,

principal person of each person living in the

household.

01=Head of household

02=Spouse

03=Parent

04=Daughter or son (Natural or adoptive)

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

90. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the State MOE

family.

Instruction: Enter the one-digit code that

indicates the child’s teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts;

the highest level of education attained and

the highest degree attained.

91. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

child.

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

92. Highest Degree Attained:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: If the child has a degree(s),

enter the one-digit code that indicates the

child’s highest degree attained. Otherwise,

leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

9=Not applicable

93. Citizenship/Alienage: Enter the twodigit code that indicates the child’s

citizenship/alienage. The coding for this data

element is the same as for item number 52,

on page 548.

94. Cooperation with Child Support: Enter

the one-digit code that indicates whether this

child’s parent has cooperated with child

support for this child.

1=Yes, parent cooperates with child support

2=No

3=Not applicable

Amount of Unearned Income

Unearned income has two categories. For

each category of unearned income, enter the

dollar amount of the child’s unearned

income.

95. SSI: Enter the dollar amount of SSI that

the child in the State MOE family has

received for the reporting month.

96. Other Unearned Income: Enter the

dollar amount of other unearned income that

the child in the State MOE family has

received for the reporting month.

Appendix F—TANF MOE Data

Report—Section Two Disaggregated

Data Collection for Families No Longer

Receiving Assistance Under the

Separate State Programs

Instructions and Definitions

General Instruction: The State agency

should collect and report data for each data

element shown below.

1. State FIPS Code: Enter your two-digit

State code from the following listing. These

codes are the standard codes used by the

National Institute of Standards and

Technology.

State Code

Alabama .................................... 01

Alaska ....................................... 02

American Samoa ...................... 60

Arizona ...................................... 04

Arkansas ................................... 05

California ................................... 06

Colorado ................................... 08

Connecticut ............................... 09

Delaware ................................... 10

District of Columbia .................. 11

Florida ....................................... 12

Georgia ..................................... 13

Guam ........................................ 66

Hawaii ....................................... 15

Idaho ......................................... 16

Illinois ........................................ 17

Indiana ...................................... 18

Iowa .......................................... 19

Kansas ...................................... 20

Kentucky ................................... 21

Louisiana ................................... 22

Maine ........................................ 23

Maryland ................................... 24

Massachusetts .......................... 25

Michigan .................................... 26

Minnesota ................................. 27

Mississippi ................................. 28

Missouri ..................................... 29

Montana .................................... 30

Nebraska ................................... 31

Nevada ...................................... 32

New Hampshire ........................ 33

New Jersey ............................... 34

New Mexico .............................. 35

State Code

New York .................................. 36

North Carolina ........................... 37

North Dakota ............................. 38

Ohio .......................................... 39

Oklahoma .................................. 40

Oregon ...................................... 41

Pennsylvania ............................. 42

Puerto Rico ............................... 72

Rhode Island ............................. 44

South Carolina .......................... 45

South Dakota ............................ 46

Tennessee ................................ 47

Texas ........................................ 48

Utah .......................................... 49

Vermont .................................... 50

Virgin Islands ............................ 78

Virginia ...................................... 51

Washington ............................... 53

West Virginia ............................. 54

Wisconsin .................................. 55

Wyoming ................................... 56

2. County FIPS Code: Enter the three-digit

code established by the National Institute of

Standards and Technology for classification

of counties and county equivalents. Codes

were devised by listing counties

alphabetically and assigning sequentially odd

integers; e.g., 001, 003, 005, . . . . A complete

list of codes is available in Appendix F of the

TANF Sampling and Statistical Methods

Manual.

3. Reporting Month: Enter the four-digit

year and two-digit month code that identifies

the year and month for which the data are

being reported.

4. Stratum:

Guidance: All families that receive

assistance under separate State Programs

(i.e., State MOE families) and are selected in

the sample from the same stratum must be

assigned the same stratum code. Valid

stratum codes may range from ‘‘00’’ to ‘‘99.’’

States with stratified samples should provide

the ACF Regional Office with a listing of the

numeric codes utilized to identify any

stratification. If a State opts to provide data

for its entire caseload, enter the same stratum

code (any two-digit number) for each State

MOE family.

Instruction: Enter the two-digit stratum

code.

Family-Level Data

Definition: For reporting purposes, the

State MOE family means (a) all individuals

receiving assistance as part of a family under

the Separate State Programs; and (b) the

following additional persons living in the

household, if not included under (a) above:

(1) Parent(s) or caretaker relative(s) of any

minor child receiving assistance;

(2) Minor siblings (including unborn

children) of any child receiving assistance;

and

(3) Any person whose income or resources

would be counted in determining the

family’s eligibility for or amount of

assistance.

5. Case Number:

Guidance: If the case number is less than

the allowableeleven characters, a State may

use lead zeros to fill in thenumber.
62222 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Instruction: Enter the number that was

assigned by theState agency to uniquely

identify the State MOE family.

6. ZIP Code: Enter the five-digit ZIP code

for the family’s place of residence for the

reporting month.

7. Disposition: Enter one of the following

codes for each State MOE family.

1=Data collection completed

2=Not subject to data collection/listed in

error

8. Reason for Closure:

Guidance: A closed case is a family whose

assistance was terminated for the reporting

month, but received assistance under the

State’s MOE Program in the prior month. A

temporally suspended case is not a closed

case. If there is more than one applicable

reason for closure, determine the principal

(i.e., most relevant) reason. If two or more

reasons are equally relevant, use the reason

with the lowest numeric code.

Instruction: Enter the one-digit code that

indicates the reason for the State MOE family

no longer receiving assistance.

1=Employment

2=Marriage

3=Five-Year Time Limit

4=Sanction

5=State policy

6=Minor child absent from the home for a

significant time period

7=Transfer to State TANF Program

8=Other

9. Number of Family Members: Enter two

digits that represent the number of members

in the State MOE family, which received

assistance under the Separate State Programs.

10. Receives Subsidized Housing:

Guidance: Subsidized housing refers to

housing for which money was paid by the

Federal, State, or Local government or

through a private social service agency to the

family or to the owner of the housing to assist

the family in paying rent. Two families

sharing living expenses does not constitute

subsidized housing.

Instruction: Enter the one-digit code that

indicates whether or not the State MOE

family received subsidized housing for the

sample month.

1=Public housing

2=HUD rent subsidy

3=Other rent subsidy

4=No housing subsidy

11. Receives Medical Assistance: Enter ‘‘1’’

if, for the sample month, any State MOE

family member is eligible to receive (i.e., a

certified recipient of) medical assistance

under the State plan approved under Title

XIX or ‘‘2’’ if no State MOE family member

is eligible to receive medical assistance under

the State plan approved under Title XIX.

1=Yes, receives medical assistance

2=No

12. Receives Food Stamps: If the State

MOE family received Food Stamps for the

sample month, enter the one-digit code

indicating the type of Food Stamp assistance.

Otherwise, enter ‘‘4.’’

1=Yes, Food Stamp coupon allotment

2=Yes, cash

3=Yes, wage subsidy

4=No

13. Amount of Food Stamp Assistance:

Guidance: For situations in which the

Food Stamp household differs from the

TANF family, code this element in a manner

that most accurately reflects the resources

available to the TANF family.

Instruction: Enter the State MOE family’s

authorized dollar amount of Food Stamp

assistance for the reporting month. If the

State MOE family did not receive any food

stamps for the reporting month, enter ‘‘0.’’

14. Receives Subsidized Child Care:

Guidance: For the purpose of coding this

data element, ubsidized child care funded

under the Child Care and Development Fund

with funds that were transferred from the

State TANF Program should be coded as ‘‘2.’’

Instruction: If the State MOE family

receives subsidized child care for the

reporting month, enter code ‘‘1’’, ‘‘2’’, ‘‘3’’, or

‘‘4’’, whichever is appropriate. Otherwise,

enter code ‘‘5.’’

1=Yes, funded under the Separate State

Programs

2=Yes, funded under the Child Care and

Development Fund

3=Yes, funded under other Federal program

(e.g., TANF or SSBG)

4=Yes, funded under other State or local

program

5=No

15. Amount of Subsidized Child Care:

Guidance: Subsidized child care means a

grant by the Federal, State or Local

government to a parent (or care-taker relative)

to support, in part or whole, the cost of child

care services provided by an eligible provider

to an eligible child. The grant may be paid

directly to the parent (or care-taker relative)

or to a child care provider on behalf of the

parent (or care-taker relative).

Instruction: Enter the dollar amount of

subsidized child care that the State MOE

family has received for services in the

reporting month. If the State MOE family did

not receive any subsidized child care for the

reporting month, enter ‘‘0.’’

Person-Level Data

Person-level data has two sections: the

adult and minor child head-of-household

characteristic section and the child

characteristics section. Section 419 of the Act

defines adult and minor child. An adult is an

individual that is not a minor child. A minor

child is an individual who (a) has not

attained 18 years of age or (b) has not

attained 19 years of age and is a full-time

student in a secondary school (or in the

equivalent level of vocational or technical

training.)

Adult and Minor Child Head-of-Household

Characteristics

This section allows for coding up to six

adults (or a minor child head-of-household

and up to five adults) in the State MOE

family. A minor child head-of-Household

should be coded as an adult. For each adult

(or minor child head-of-household) in the

State MOE family, complete the adult

characteristics section.

If there are more than six adults (or a minor

child head-of-household and five adults) in

the State MOE family, use the following

order to identify the persons to be coded: (1)

the head-of-household; (2) parents in the

eligible family receiving assistance; (3) other

adults in the eligible family receiving

assistance; (4) Parents not in the eligible

family receiving assistance; (5) caretaker

relatives not in the eligible family receiving

assistance; and (6) other persons, whose

income or resources count in determining

eligibility for or amount of assistance of the

eligible family receiving assistance, in

descending order the person with the most

income to the person with least income.

16. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the one-digit code that

shows the adult’s (minor child head-ofhousehold’s) relation to the eligible family

receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible family

receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income or resources are

considered in determining eligibility for

or amount of assistance for the eligible

family receiving assistance

17. Date of Birth: Enter the eight-digit code

for date of birth for this adult (or minor child

head-of-household) under Separate State

Programs in the format YYYYMMDD.

18. Social Security Number: Enter the ninedigit Social Security Number for the adult (or

minor child head-of-household) in the format

nnnnnnnnn.

19. Race: Enter the one-digit code for the

race of the State MOE adult (or minor child

head-of-household).

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

20. Gender: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) gender.

1=Male

2=Female

Receives Disability Benefits

The Act specifies five types of disability

benefits. For each type of disability benefits,

enter the one-digit code that indicates

whether or not the adult (or minor child

head-of-household) received the benefit.

21. Receives Federal Disability Insurance

Benefits: Enter the one-digit code that

indicates the adult (or minor child head-ofhousehold) received Federal disability

insurance benefits for the reporting month.

1=Yes, received Federal disability insurance

2=No
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62223

22. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the adult (or minor child headof-household) received benefits based on

Federal disability status for the reporting

month.

1=Yes, received benefits based on Federal

disability status

2=No

23. Receives Aid Under Title XIV–APDT:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XIV for the reporting month.

1=Yes, received aid under Title XIV–APDT

2=No

24. Receives Aid Under Title XVI–AABD:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI–AABD for the reporting

month.

1=Yes, received aid under Title XVI–AABD

2=No

25. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

adult (or minor child head-of-household)

received aid under a State plan approved

under Title XVI–SSI for the reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

26. Marital Status: Enter the one-digit code

for the marital status of the adult (or minor

child head-of-household).

1=Single, never married

2=Married, living together

3=Married, but separated

4=Widowed

5=Divorced

27. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for adults.

Instruction: Enter the two-digit code that

shows the adult’s (or minor child head-ofhousehold’s) relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or,

principal person of each person living in the

household. If a minor child head-ofhousehold, enter code ‘‘01.’’

01=Head of household

02=Spouse

03=Parent

04=Daughter or son

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

28. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the State MOE

family.

Instruction: Enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts:

the highest level of education attained and

the highest degree attained.

29. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

adult (or minor child head-of-household).

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

30. Highest Degree Attained: If the adult (or

minor child head-of-household) has a

degree(s), enter the one-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) highest degree attained.

Otherwise, leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

31. Citizenship/Alienage:

Guidance: As described in TANF–ACF–

PA–97–1, States have the flexibility to: (1)

use State MOE funds to serve ‘‘qualified’’

aliens, including those who enter on or after

August 22, 1996; (2) use Federal TANF funds

to serve ‘‘qualified’’ aliens who arrived prior

to the enactment of the PRWORA on August

22, 1996 [such aliens who arrived after

enactment are barred from receiving Federal

TANF funds for five years from the date of

entry, except for certain aliens such as

refugees and asylees]; (3) use State MOE

funds to serve legal aliens who are not

‘‘qualified’’; and (4) use, under section 411(d)

of PRWORA, State MOE funds to serve aliens

who are not lawfully present in the U.S., but

only through enactment of a State law, after

the date of PRWORA enactment, which

‘‘affirmatively provides’’ for such benefits.

Instruction: Enter the two-digit code that

indicates the adult’s (or minor child head-ofhousehold’s) citizenship/alienage.

01=U.S. citizen, including naturalized

citizens

02=Permanent resident who has worked forty

qualifying quarters; alien who is a

veteran with an honorable discharge

from the U.S. Armed Forces or is on

active duty in the U.S. Armed Forces, or

spouse or unmarried dependent children

of such alien

03=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. five years or less

04=Qualified alien granted political asylum

five or less years ago; qualified alien

granted a withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) five or less years ago.

05=Qualified alien, (including immigrant

accorded permanent resident status

(‘‘green card’’), parolee granted parole for

at least one year under sec. 212(d)(5) of

the INA, and certain battered aliens and

their children who are determined to be

qualified), who arrived in the U.S. prior

to enactment (August 22, 1996) or who

arrived in the U.S. on or after enactment

and has resided in the U.S. more than

five years

06=Qualified alien accorded refugee, Cuban

or Haitian entrant, or Amerasian

immigrant status (INS Form I–94) who

has resided in the U.S. more than five

years

07=Qualified alien granted political asylum

or granted withholding of deportation by

INS (under sec. 243(h) or sec. 241(b)(3)

of the INA) more than five years ago;

08=Qualified alien (other than a refugee,

Cuban or Haitian entrant, Amerasian

immigrant, asylee, or alien whose

deportation has been withheld under

sec. 243(h) or sec. 241(b)(3) of the INA)

who 1arrived in the U.S. on or after

enactment and has resided in the U.S.

less than 5 years.

09=Any alien who is not a qualified alien.

99=Unknown

32. Employment Status: Enter the one-digit

code that indicates the adult’s (or minor

child head-of-household’s) employment

status.

1=Employed

2=Unemployed, looking for work

3=Not in labor force (i.e, unemployed, not

looking for work, includes discouraged

workers))

Amount of Earned Income

For each category of earned income, enter

the dollar amount of the adult’s (or minor

child head-of-household’s) earned income.

33. Earned Income Tax Credit (EITC):

Guidance: Earned Income Tax Credit is a

refundable tax credit for families and

dependent children. EITC payments are

received either monthly (as advance payment

through the employer), annually (as a refund

from IRS), or both.

Instruction: Enter the total dollar amount

of the earned income tax credit actually

received, whether received as an advance

payment or a single payment (e.g., tax

refund), by the adult (minor child head-ofhousehold) during the reporting month. If the

State counts the EITC as a resource, report it

here as earned income in the month received.

If the State assumes an advance payment is

applied for and obtained, only report what is

actually received for this item.

34. Wages, Salaries, and Other Earnings

Amount of Unearned Income

35. Unearned Income: Enter the dollar

amount of the adult’s (or minor child headof-household’s) unearned income.

Child Characteristics

This section allows for coding up to ten

children in the State MOE family. A minor

child head-of-household should be coded as

an adult, not as a child. The youngest child

should be coded as the first child in the

family, the second youngest child as the
62224 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

second child, and so on. If the needs of an

unborn child are included in the amount of

assistance provided to the family, code the

unborn child as one of the children. Do this

by entering the Date-of-Birth as ‘‘99999999’’

and leave the other Child Characteristics

fields blank.

If there are more than ten children in the

State MOE family, use the following order to

identify the persons to be coded: (1) children

in the eligible family receiving assistance in

order from youngest to oldest; (2) minor

siblings of child in the eligible family

receiving assistance from youngest to oldest;

and (3) any other children.

36. Family Affiliation:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the one-digit code that

shows the Child’s relation to the eligible

family receiving assistance.

1=Member of the eligible family receiving

assistance

Not in eligible family receiving assistance,

but in the household

2=Parent of minor child in the eligible family

receiving assistance

3=Caretaker relative of minor child in the

eligible family receiving assistance

4=Minor sibling of child in the eligible

family receiving assistance

5=Person whose income is considered in

determining eligibility for and amount of

assistance for the eligible family

receiving assistance

37. Date of Birth: Enter the eight-digit code

for date of birth for this child under the

Separate State Programs in the format

YYYYMMDD.

38. Social Security Number: Enter the ninedigit Social Security Number for the child in

the format nnnnnnnnn.

39. Race: Enter the one-digit code for the

race of the State MOE child.

1=White, not of Hispanic origin

2=Black, not of Hispanic origin

3=Hispanic

4=American Indian or Alaska Native

5=Asian or Pacific Islander

6=Other

9=Unknown

40. Gender: Enter the one-digit code that

indicates the child’s gender.

1=Male

2=Female

Receives Disability Benefits

The Act specifies five types of disability

benefits. Two of these types of disability

benefits are applicable to children. For each

type of disability benefits, enter the one-digit

code that indicates whether or not the child

received the benefit.

41. Receives Benefits Based on Federal

Disability Status: Enter the one-digit code

that indicates the child received benefits

based on Federal disability status for the

reporting month.

1=Yes, received benefits based on Federal

disability status

2=No

42. Receives Aid Under Title XVI–SSI:

Enter the one-digit code that indicates the

child received aid under a State plan

approved under Title XVI–SSI for the

reporting month.

1=Yes, received aid under Title XVI–SSI

2=No

43. Relationship to Head-of-Household:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: Enter the two-digit code that

shows the relationship (including by

marriage) to the head of the household, as

defined by the Food Stamp Program or,

principal person of each person living in the

household.

01=Head of household

02=Spouse

03=Parent

04=Daughter or son

05=Stepdaughter or stepson

06=Grandchild or great grandchild

07=Other related person (brother, niece,

cousin)

08=Foster child

09=Unrelated child

10=Unrelated adult

44. Teen Parent With Child In the Family:

Guidance: A teen parent is a person who

is under 20 years of age and that person’s

child is also a member of the State MOE

family.

Instruction: Enter the one-digit code that

indicates the child’s teen parent status.

1=Yes, a teen parent

2=No

Educational Level

Educational level is divided into two parts;

the highest level of education attained and

the highest degree attained.

45. Highest Level of Education Attained:

Enter the two-digit code to indicate the

highest level of education attained by the

child.

00=No formal education

01–12=Grade level completed in primary/

secondary school including secondary

level vocational school or adult high

school

46. Highest Degree Attained:

Guidance: This data element is used both

for (1) the adult or minor child head-ofhousehold section and (2) the minor child

section. The same coding schemes are used

in both sections. Some of these codes may

not be applicable for children.

Instruction: If the child has a degree(s),

enter the one-digit code that indicates the

child’s highest degree attained. Otherwise,

leave the field blank.

0=No degree

1=High school diploma, GED, or National

External Diploma Program

2=Awarded Associate’s Degree

3=Awarded Bachelor’s Degree

4=Awarded graduate degree (Master’s or

higher)

5=Other credentials (degree, certificate,

diploma, etc.)

47. Citizenship/Alienage: Enter the twodigit code that indicates the child’s

citizenship/alienage. The coding for this data

element is the same as for item number 26,

on page 583.

48. Cooperation with Child Support: Enter

the one-digit code that indicates this child’s

parent has cooperated with child support for

this child.

1=Yes, child’s parent has cooperated with

child support

2=No, child’s parent has not cooperated with

child support

3=Not applicable

49. Unearned Income: Enter the dollar

amount of the child ’s unearned income.

Appendix G—TANF MOE Data

Report—Section Three—Aggregated

Data Collection for Families Receiving

Assistance Under the Separate State

Programs

Instructions and Definitions

1. State FIPS Code: Enter your two-digit

State code.

2. Calendar Quarter: The four calendar

quarters are as follows:

First quarter ................. January–March.

Second quarter ............ April–June.

Third quarter ................ July–September.

Fourth quarter ............. October–December.

Enter the four-digit year and one-digit

quarter code (in the format YYYYQ) that

identifies the calendar year and quarter for

which the data are being reported (e.g., first

quarter of 1997 is entered as ‘‘19971’’).

Active Cases

For purposes of completing this report,

include all TANF eligible families receiving

assistance under the Separate State programs,

i.e., State MOE families. All counts of

families and recipients should be

unduplicated monthly totals.

3. Total Number of Families: Enter the

number of families receiving assistance

under the Separate State Programs for each

month of the quarter. The total in this item

should equal the sum of the number of twoparent families (in item #4), the number of

one-parent families (in item #5) and the

number of no-parent families (in item #6).

A. First Month:

B. Second Month:

C. Third Month:

4. Total Number of Two-parent Families:

Enter the total number of two-parent families

receiving assistance under the Separate State

Programs for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

5. Total Number of One-Parent Families:

Enter the total number of one-parent families

receiving assistance under the Separate State

Programs for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

6. Total Number of No-Parent Families:

Enter the total number of no-parent families
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62225

receiving assistance under the Separate State

Programs for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

7. Total Number of Recipients: Enter the

total number of recipients receiving

assistance under the Separate State Programs

for each month of the quarter. The total in

this item should equal the sum of the number

of adult recipients (in item #8) and the

number of child recipients (in item #9).

A. First Month:

B. Second Month:

C. Third Month:

8. Total Number of Adult Recipients: Enter

the total number of adult recipients receiving

assistance under the Separate State Programs

for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

9. Total Number of Child Recipients: Enter

the total number of child recipients receiving

assistance under the Separate State Programs

for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

10. Total Number of Non-Custodial Parents

Participating in Work Activities: Enter the

total number of non-custodial parents

participating in work activities under the

Separate State Programs for each month of

the quarter.

A. First Month:

B. Second Month:

C. Third Month:

11. Total Number of Minor Child Heads-ofHousehold: Enter the total number of minor

child head-of-household families receiving

assistance under the Separate State Programs

for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

12. Total Number of Births: Enter the total

number of births for families receiving

assistance under the Separate State Programs

for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

13. Total Number of Out-of-Wedlock

Births: Enter the total number of out-ofwedlock births for families receiving

assistance under the Separate State Programs

for each month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

14. Total Amount of Assistance: Enter the

dollar value of all assistance (cash and noncash) provided to families under the Separate

State Programs for each month of the quarter.

Round the amount of assistance to the

nearest dollar.

A. First Month:

B. Second Month:

C. Third Month:

Closed Cases

15. Total Number of Closed Cases: Enter

the total number of closed cases for each

month of the quarter.

A. First Month:

B. Second Month:

C. Third Month:

Appendix H—Sampling Specifications

1. Sample Methodology

The sample methodology must conform to

principles of probability sampling, i.e., each

family in the population of interest must

have a known, non-zero probability of

selection and computational methods of

estimation must lead to a unique estimate.

The State must construct a sample frame for

each month in the annual sample period and

must select approximately one-twelfth of the

required minimum annual sample size from

each monthly sample frame.

The recommended method of sample

selection is stratified systematic random

sampling.

2. Sample frame requirements for

a. families receiving assistance under the

state TANF Program (i.e., the active TANF

sample) are:

The monthly TANF sample frame must

consist of an unduplicated list of all families

who receive assistance under the State TANF

Program for the reporting month by the end

of the reporting month. Only families with a

minor child who resides with a custodial

parent or other adult relative or a pregnant

woman may receive assistance.

b. families no longer receiving assistance

under the State TANF Program (i.e., the

closed TANF sample) are:

For closed cases, the monthly TANF

sample frame must consist of an

unduplicated list of all families whose

assistance under the State TANF Program

was terminated for the reporting month (do

not include families whose assistance was

temporarily suspended), but received

assistance under the State’s TANF Program

in the prior month. Thus, TANF eligible

families that are transferred to a Separate

State Program are closed cases for the State

TANF Program.

c. families receiving assistance under the

Separate State Programs (i.e., the active

Separate State sample) are:

The monthly Separate State sample frame

must consist of an unduplicated list of all

TANF-eligible families who receive

assistance under the Separate State Programs

for the reporting month by the end of the

reporting month.

d. families no longer receiving assistance

under the Separate State Programs (i.e., the

closed Separate State sample) are:

For closed cases, the monthly Separate

State sample frame must consist of an

unduplicated list of all families who

assistance under the Separate State Programs

was terminated for the reporting month (do

not include families whose assistance was

temporarily suspended), but received

assistance under the Separate State Programs

in the prior month. Thus, State MOE families

that are transferred to a State TANF Program

are closed cases for the Separate State

Programs.

3. Sample Size Requirement

a. for families receiving assistance under a

State TANF Program are:

The minimum required annual sample size

for families receiving assistance is 3000

families, of which 600 families must be

newly, approved applicants. Of the 2400

families that have received ongoing

assistance approximately 25% (600 families)

must be two-parent TANF families. We

established the minimum required sample

sizes to provide reasonably precise estimates

(e.g., a precision of about plus or minus 2

percentage points at a 95% confidence level)

for such proportions as the work

participation rates for all families and for

two-parent families, as well as for

demographic and case characteristics of

newly, approved TANF families and all

TANF families.

b. for families no longer receiving

assistance under a State TANF Program are:

The minimum required annual sample size

for the sample of families no longer receiving

assistance (i.e., closed cases) is 800 families.

c. for families receiving assistance under a

Separate State Programs are:

The minimum required annual sample size

for families receiving assistance under the

Separate State Programs is 3000 families, of

which 600 families must be newly, approved

applicants. Of the 2400 families that have

received ongoing assistance approximately

25% (600 families) must be two-parent

TANF-eligible families. We established the

minimum required sample sizes to provide

reasonably precise estimates (e.g., a precision

of about plus or minus 2 percentage points

at a 95% confidence level) for such

proportions as the work participation rates

for all families and for two-parent families,

as well as for demographic and case

characteristics of State MOE families.

d. for families no longer receiving

assistance under a Separate State Programs

are:

The minimum required annual sample size

for the sample of families no longer receiving

assistance (i.e., closed cases) under the

Separate State Programs is 800 families.

4. What must States submit to ACF?

Each State that opts to sample its caseloads

must submit the following:

a. Each State must submit for approval its

annual sampling plan or any changes to its

currently approved sampling plan at least

sixty (60) calendar days before the start of the

annual period. If the State’s sampling plan is

unchanged from the previous year, the State

is not required to resubmit the sampling

plan. The sampling plan must satisfy the

requirements for plan approval as specified

in Section 1300 of the TANF Sampling and

Statistical Methods Manual and includes the

following:

i. Documentation of methods for

constructing and maintaining the sample

frame(s), including assessment of frame

completeness and any potential problems

associated with using the sample frame(s);

ii. Documentation of methods for selecting

the sample cases from the sample frame(s);

and

iii. Documentation of methods for

estimating case characteristics and their
62226 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

sampling errors, including the computation

of weights, where appropriate.

b. Each State must submit the estimated

average monthly caseload for the annual

sample period and the computed sample

interval (if applicable) to the ACF Regional

Administrator thirty (30) calendar days

before the beginning of the annual sample

period, i.e., by September 1 for the October

sample selection. States must submit the

monthly list of selected sample cases

(including reserve pool cases, if applicable)

within 10 days of the date of selection

specified in the State sampling plan.

c. Each State must submit the total number

of families receiving assistance under the

State TANF Program by stratum for each

month in the annual sample period, the total

number of families no longer receiving

assistance under the State TANF Program (if

stratified, by stratum) for each month in the

annual sample period, the total number of

families receiving assistance under the

Separate State Programs by stratum for each

month in the annual sample period, and the

total number of families no longer receiving

assistance under the Separate State Programs

(if stratified, by stratum) for each month in

the annual sample period. This data is

required for weighting the sample results in

order to produce estimates for the entire

caseload.

Appendix I—Statutory Reference Table for Appendix A

Data elements Justification

1. State FIPS Code .................................................................................. Implicit in administering data collection system.

2. County FIPS Code ............................................................................... 411(a)(1)(A)(i).

3. Tribal Code ........................................................................................... Implicit in administering data collection system.

4. Reporting Month ................................................................................... Implicit in administering data collection system.

5. Stratum ................................................................................................. Implicit in administering data collection system.

Family Level Data—Items 6–44.

6. Case Number ....................................................................................... Implicit in administering data collection system.

7. ZIP Code .............................................................................................. Needed for geographic coding (and rural/urban analyses) and is readily

available.

8. Funding Stream .................................................................................... 411(a)(1)(A)(xii): Use in calculation of participation rate.

9. Disposition ............................................................................................ Implicit in administering data collection system.

10. New Applicant ..................................................................................... 411(b), requires the Secretary to report to Congress on families applying for TANF assistance. This element identifies applicants that are

newly, approved families receiving assistance.

11. Number of Family Members ............................................................... 411(a)(1)(A)(iv).

12. Type of Family for Work Participation ................................................ 411(a)(1)(A)(xii): Use in calculation of participation rate.

13. Receives Subsidized Housing ............................................................ 411(a)(1)(A)(ix).

14. Receives Medical Assistance ............................................................. 411(a)(1)(A)(ix).

15. Receives Food Stamps ...................................................................... 411(a)(1)(A)(ix).

16. Amount of Food Stamp Assistance .................................................... 411(a)(1)(A)(ix).

17. Receives Subsidized Child Care ........................................................ 411(a)(1)(A)(ix).

18. Amount of Subsidized Child Care ...................................................... 411(a)(1)(A)(ix).

19. Amount of Child Care Disregard ........................................................ The CCDF sample will not capture children whose child care is funded

by TANF. The data element is collected here because it is required

under CCDF and this is the most cost-effective way to capture TANF

Child Care information. (See Sec. 658K(a)(2)(C)).

20. Amount of Child Support .................................................................... 411(a)(1)(A)(xiv): Break-out of unearned income.

21. Amount of the Families’ Cash Resources .......................................... 411(b), requires the Secretary to report to Congress on financial circumstances of families receiving TANF assistance.

Amount of Assistance Received and Number of Months the Family Received Assistance by Type under the State TANF Program—Items 22–31

are types of assistance.

22. Cash and Cash Equivalents ............................................................... 411(a)(1)(A) (x) & (xiii).

23. Educational ......................................................................................... 411(a)(1)(A) (x) & (xiii).

24. Employment Services ......................................................................... 411(a)(1)(A) (x) & (xiii).

25. Work Subsidies ................................................................................... 411(a)(1)(A) (x) & (xiii).

26. TANF Child Care ................................................................................ 411(a)(1)(A) (x) & (xiii).

27. Transportation ..................................................................................... 411(a)(1)(A) (x) & (xiii).

28. Other Supportive Services and Special Needs, Including Assistance

with Meeting Home Heating and Air Conditioning Costs.

411(a)(1)(A) (x) & (xiii).

29. Transitional Services .......................................................................... 411(a)(1)(A) (x) & (xiii).

30. Contributions to Individual Development Accounts ............................ 411(a)(1)(A) (x) & (xiii).

31. Other ................................................................................................... 411(a)(1)(A) (x) & (xiii).

Reason for and Amount of Reduction in Assistance—Items 32–42 are the reasons for reduction in assistance

32. Work Requirements Sanction ............................................................. 411(a)(1)(A)(xiii).

33. Family Sanction for an Adult with No High School Diploma or

Equivalent.

411(a)(1)(A)(xiii).

34. Sanction for Teen Parent Not Attending School ................................ 411(a)(1)(A)(xiii).

35. Non-Cooperation with Child Support .................................................. 411(a)(1)(A)(xiii).

36. Failure to Comply with an Individual Responsibility Plan .................. 411(a)(1)(A)(xiii).

37. Other Sanction .................................................................................... 411(a)(1)(A)(xiii).

38. Recoupment of Prior Overpayment .................................................... 411(a)(1)(A)(xiii).

39. Family Cap ......................................................................................... 411(a)(1)(A)(xiii).

40. Reduction Based on Family Moving into State From Another State 411(a)(1)(A)(xiii).

41. Reduction Based on Length of Receipt of Assistance ...................... 411(a)(1)(A)(xiii).
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62227

Data elements Justification

42. Other, Non-sanction ........................................................................... 411(a)(1)(A)(xiii).

43. Waiver Evaluation Research Group ................................................... 411(a)(1)(A)(xii): Use to calculate the participation rate for States with

an ongoing waiver evaluation for impact analysis purposes.

44. Is the TANF Family Exempt from the Federal Time Limit ................. 409 (a)(9).

Adult Characteristics—Items 45–88.

45. Family Affiliation ................................................................................. 411(a)(1)(A)(iv) and 411(b): Needed to identify persons in eligible family receiving assistance and other individuals living in the household.

46. Noncustodial Parent Indicator ............................................................ 411(a)(4): Report on Non-custodial Parents requires the number of

non-custodial Parents. To provide assistance to non-custodial parents under the State TANF Program, States must include them in

the family. Data could be collected under the element Relationship to

Head-of-Household. Element was broken out to make the coding

cleaner and easier for States to report.

47. Date of Birth ....................................................................................... 411(a)(1)(A)(iii): Age—Date of birth gives the same information but is a

constant.

48. Social Security Number ...................................................................... This information is also readily available. States use Social Security

Numbers to carry out the requirements of IEVS (see sections

409(a)(4) and 1137 of the Act). We need this information also for research on the circumstances of children and families as required in

section 413(g) of the Act (i.e., to track individual members of the

TANF family).

49. Race ................................................................................................... 411(a)(1)(A)(vii).

50. Gender ................................................................................................ Data could be collected under the element Relationship to Head-ofHousehold (e.g., husband, wife, daughter, son, etc.). Element was

broken out to make the coding cleaner and easier for States to report. Used the Secretary’s Report to the Congress.

Receives Federal Disability Benefits—Items 51–55.

51. Receives Federal Disability Insurance Benefits ................................. 411(a)(1)(A)(ii) as revised by P.L. 105–33.

52. Receives Benefits Based on Federal Disability Status ...................... 411(a)(1)(A)(ii) as revised by P.L. 105–33.

53. Receives Aid Under Title XIV–APDT ................................................. 411(a)(1)(A)(ii) as revised by P.L. 105–33.

54. Receives Aid Under Title XVI–AABD ................................................. 411(a)(1)(A)(ii) as revised by P.L. 105–33.

55. Receives Aid Under Title XVI–SSI ..................................................... 411(a)(1)(A)(ii) as revised by P.L. 105–33.

56. Marital Status ...................................................................................... 411(a)(1)(A)(vi).

57. Relationship to Head-of-Household ................................................... 411(a)(1)(A)(iv) as revised by P.L. 105–33.

58. Teen Parent with Child in the Family ................................................. 411(a)(1)(A)(xvii) as revised by P.L. 105–33.

Adult Educational Level—Items 59 and 60.

59. Highest Level of Education Attained .................................................. 411(a)(1)(A)(vii).

60. Highest Degree Attained .................................................................... 411(a)(1)(A)(vii).

61. Citizenship/Alienage ........................................................................... 411(a)(1)(A)(xv): We have updated our prior coding of citizenship status to reflect the complexity of TANF; also 409(a)(1).

62. Number of Months Countable toward Federal Time Limit in Own

State (Tribe).

409(a)(9).

63. Number of Months Countable toward Federal Time Limit in Other

States or Tribes.

409(a)(9).

64. Number of Countable Months Remaining Under State’s Time Limit 409(a)(9).

65. Is Current Month Exempt from the State’s Time Limit ...................... 409(a)(9).

66. Employment Status ............................................................................ 411(a)(1)(A)(v).

67. Work Participation Status ................................................................... 411(a)(1)(A)(xii): Needed to calculate the work participation rate.

Adult Work Participation Activities—Items 68–81 are the work participation activities and are needed to calculate the work participation rate.

68. Unsubsidized Employment ................................................................. 411(a)(1)(A)(xi)(III).

69. Subsidized Private Sector Employment ............................................. 411(a)(1)(A)(xi)(II).

70. Subsidized Public Sector Employment .............................................. 411(a)(1)(A)(xi)(IV).

71. Work Experience ................................................................................ 411(a)(1)(A)(xi)(IV).

72. On-the-job Training ............................................................................. 411(a)(1)(A)(xi)(VI).

73. Job Search and Job Readiness Assistance ...................................... 411(a)(1)(A)(xi)(V).

74. Community Service Programs ............................................................ 411(a)(1)(A)(xi)(IV).

75. Vocational Educational Training ......................................................... 411(a)(1)(A)(xi)(VII).

76. Job Skills Training Directly Related to Employment .......................... 411(a)(1)(A)(xi)(VI).

77. Education Directly Related to Employment for Individuals with no

High School Diploma or Certificate of High School Equivalency.

411(a)(1)(A)(xi)(I).

78. Satisfactory School Attendance for Individuals with no High School

Diploma or Certificate of High School Equivalency.

411(a)(1)(A)(xi)(I).

79. Providing Child Care Services to an Individual who is Participating

in a Community Service Program.

411(a)(1)(A)(xi).

80. Additional Work Activities Permitted Under Waiver ........................... 411(a)(1)(A)(xii): Use to calculate work participation rate, when approved 1115 waiver permits other work activities.
62228 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Data elements Justification

81. Other Work Activities .......................................................................... Related to 411(a)(1)(A)(xii) and 409(a)(3).

82. Required Hours of Work Under Waiver ............................................. 411(a)(1)(A)(xii): Use to calculate the Work participation rate, when approved 1115 waiver permits a different number of hours of work participation to count as engaged in work.

Adult Earned Income—Items 83 and 84 break out earned income.

83. Earned Income Tax Credit (EITC) ..................................................... 411(a)(1)(A)(v).

84. Wages, Salaries, and Other Earnings ................................................ 411(a)(1)(A)(v).

Adult Unearned Income—Items 85 and 88 break out Unearned income.

85. Amount of Social Security .................................................................. 411(a)(1)(A)(xiv).

86. Amount of SSI .................................................................................... 411(a)(1)(A)(xiv).

87. Amount of Worker’s Compensation ................................................... 411(a)(1)(A)(xiv).

88. Amount of Other Unearned Income ................................................... 411(a)(1)(A)(xiv).

Child Characteristics—Items 89–109.

89. Family Affiliation ................................................................................. 411(a)(1)(A)(iv) and 411(b): Needed to identify persons in eligible family receiving assistance and other individuals living in the household.

90. Date of Birth ....................................................................................... 411(a)(1)(A)(iii): Age—Date of birth gives the same information but is a

constant.

91. Social Security Number ...................................................................... This information is also readily available. States use Social Security

Numbers to carry out the requirements of IEVS (see sections

409(a)(4) and 1137 of the Act). We need this information also for research on the circumstances of children and families as required in

section 413(g) of the Act (i.e., to track individual members of the

TANF family).

92. Race ................................................................................................... 411(a)(1)(A)(viii).

93. Gender ................................................................................................ Data could be collected under the element Relationship to Head-ofHousehold (e.g., husband, wife, daughter, son, etc.). Element was

broken out to make the coding cleaner and easier for States to report. Used the Secretary’s Report to the Congress.

Receives Federal Disability Benefits

94. Receives Benefits Based on Federal Disability Status ...................... 411(a)(1)(A)(ii) as revised by P.L. 105–33.

95. Receives Aid Under Title XVI–SSI ..................................................... 411(a)(1)(A)(ii) as revised by P.L. 105–33.

96. Relationship to Head-of-household .................................................... 411(a)(1)(A)(iv) as revised by P.L. 105–33.

97. Teen Parent with Child in the Family ................................................. 411(a)(1)(A)(xvii) as revised by P.L. 105–33.

Child Educational Level—Items 101 and 102.

98. Highest Level of Education Attained .................................................. 411(a)(1)(A)(viii).

99. Highest Degree Attained .................................................................... 411(a)(1)(A)(viii).

100. Citizenship/Alienage ......................................................................... 411(a)(1)(A)(xv): We have updated our prior coding of citizenship status to reflect TANF; also 409(a)(1).

101. Cooperation with Child Support ....................................................... 409(a)(5).

Child Unearned Income—Items 105 and 106.

102. Amount of SSI .................................................................................. 411(a)(1)(A)(xiv).

103. Amount of Other Unearned Income ................................................. 411(a)(1)(A)(xiv)—rather than breaking out unearned income into its

parts, we ask for an indicator that the recipient has certain types of

unearned income.

Child Care Reporting Section—Items 107–109.

104. Type of Child Care ........................................................................... The CCDF sample will not capture children whose child care is funded

by TANF. The data element is collected here because it is required

under CCDF and this is the most cost-effective way to capture TANF

Child Care information. See Sec. 658K(a)(2)(C).

105. Total Monthly Cost of Child Care ..................................................... The CCDF sample will not capture children whose child care is funded

by TANF. The data element is collected here because it is required

under CCDF and this is the most cost-effective way to capture TANF

Child Care information. (See Sec. 658K(a)(2)(C)). The Total Amount

of the Child Care Subsidy (required by 411(a)) may be derived from

this item and the total Monthly cost of child Care.

106. Total Monthly Hours of Child Care Provided During the Reporting

Month.

The CCDF sample will not capture children whose child care is funded

by TANF. The data element is collected here because it is required

under CCDF and this is the most cost-effective way to capture TANF

Child Care information. See Sec. 658K(a)(2)(C).
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62229

Appendix J—Statutory Reference Table for Appendix B

Data elements Justification

1. State FIPS Code .................................................................................. Implicit in administering data collection system.

2. County FIPS Code ............................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

3. Tribal Code ........................................................................................... Implicit in administering data collection system.

4. Reporting Month ................................................................................... Implicit in administering data collection system.

5. Stratum ................................................................................................. Implicit in administering data collection system.

Family Level Data—Items 6–16.

6. Case Number ....................................................................................... Implicit in administering data collection system.

7. ZIP Code .............................................................................................. Needed for geographic coding (and rural/urban analyses) and is readily

available.

8. Disposition ............................................................................................ Implicit in administering data collection system.

9. Reason for Closure .............................................................................. 411(a)(1)(A)(xvi).

10. Number of Family Members ............................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

11. Receives Subsidized Housing ............................................................ 411 (b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

12. Receives Medical Assistance ............................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

13. Receives Food Stamps ...................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

14. Amount of Food Stamp Assistance .................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

15. Receives Subsidized Child Care ........................................................ 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

16. Amount of Subsidized Child Care ...................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

Adult Characteristics—Items 17–39.

17. Family Affiliation ................................................................................. Needed to identify persons in State-defined family and other individuals

living in the household.

18. Date of Birth ....................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

19. Social Security Number ...................................................................... This information is also readily available. States use Social Security

Numbers to carry out the requirements of IEVS (see sections

409(a)(4) and 1137 of the Act). We need this information also for research on the circumstances of children and families as required in

section 413(g) of the Act (i.e., to track individual members of the

TANF family).

20. Race ................................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

21. Gender ................................................................................................ Data could be collected under the element Relationship to Head-ofHousehold (e.g., husband, wife, daughter, son, etc.). Element was

broken out to make the coding cleaner and easier for States to report. Used the Secretary’s Report to the Congress.

Receives Federal Disability Benefits—Items 22–26.

22. Receives Federal Disability Insurance Benefits ................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

23. Receives Benefits Based on Federal Disability Status ...................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

24. Receives Aid Under Title XIV–APDT ................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

25. Receives Aid Under Title XVI–AABD ................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

26. Receives Aid Under Title XVI–SSI ..................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

27. Marital Status ...................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

28. Relationship to Head-of-Household ................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

29. Teen Parent with Child in the Family ................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

Adult Educational Level—Items 30 and 31.

30. Highest Level of Education Attained .................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.
62230 Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules

Data elements Justification

31. Highest Degree ................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

32. Citizenship/Alienage ........................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A)

and 409(a)(1), for families receiving assistance.

33. Number of Months Countable toward Federal Time Limit in Own

State (Tribe).

411(b): Use to construct comparable statistics based on 409(a)(9), for

families receiving assistance.

34. Number of Months Countable toward Federal Time Limit in Other

States or Tribes.

411(b): Use to construct comparable statistics based on 409(a)(9), for

families receiving assistance.

35. Number of Countable Months Remaining Under State’s Time Limit 411(b): Use to construct comparable statistics based on 409(a)(9), for

families receiving assistance.

36. Employment Status ............................................................................ 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

Adult Earned Income—Items 37 and 38 break out earned income

37. Earned Income Tax Credit (EITC) ..................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

38. Wages, Salaries, and Other Earnings ................................................ 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

39. Unearned Income ............................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

Child Characteristics—Items 40–52.

40. Family Affiliation ................................................................................. Needed to identify persons in State-defined family and other individuals

living in the household.

41. Date of Birth ....................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

42. Social Security Number ...................................................................... This information is also readily available. States use Social Security

Numbers to carry out the requirements of IEVS (see sections

409(a)(4) and 1137 of the Act). We need this information also for research on the circumstances of children and families as required in

section 413(g) of the Act (i.e., to track individual members of the

TANF family).

43. Race ................................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

44. Gender ................................................................................................ Data could be collected under the element Relationship to Head-ofHousehold (e.g., husband, wife, daughter, son, etc.). Element was

broken out to make the coding cleaner and easier for States to report. Used the Secretary’s Report to the Congress.

Receives Federal Disability Benefits—Items 45–49.

45. Receives Benefits Based on Federal Disability Status ...................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

46. Receives Aid Under Title XVI–SSI ..................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

47. Relationship to Head-of-Household ................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

48. Teen Parent with Child in the Family ................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

49. Highest Level of Education Attained .................................................. 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

Child Educational Level—Items 52 and 53.

50. Highest Degree ................................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

51. Citizenship/Alienage ........................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A)

and 409(a)(1), for families receiving assistance.

52. Cooperation with Child Support ......................................................... 411(b): Use to construct comparable statistics based on 409(a)(5), for

families receiving assistance.

53. Unearned Income ............................................................................... 411(b): Use to construct comparable statistics based on 411(a)(1)(A),

for families receiving assistance.

Appendix K—Statutory Reference Table for Appendix C

Data elements Statutory basis

1. State FIPS Code .................................................................................. Implicit in administering data collection system.

2. Tribal Code ........................................................................................... Implicit in administering data collection system.

3. Calendar Quarter .................................................................................. Implicit in administering data collection system.

4. Total Number of Applications ............................................................... 411(b): Use in Report to Congress.
Federal Register / Vol. 62, No. 224 / Thursday, November 20, 1997 / Proposed Rules 62231

Data elements Statutory basis

5. Total Number of Approved Applications .............................................. 411(a): Implicit in use of samples. Needed to weight sample data report for the newly, approved applicants portion of the sample.

411(b): Use in Report to Congress.

6. Total Number of Denied Applications .................................................. 411(b): Use in Report to Congress.

7. Total Amount of Assistance ................................................................. 411(a)(6) as revised by P.L. 105–33.

8. Total Number of Families ..................................................................... 411(a)(6) as revised by P.L. 105–33.

407(b)(3): Use in calculation of caseload reduction for adjusting the

participation rate standard.

411(a): Implicit in use of samples to weight State data to national totals.

9. Total Number of Recipients .................................................................. 411(a)(6) as revised by P.L. 105–33.

10. Total Number of Adult Recipients ...................................................... 411(a)(6) as revised by P.L. 105–33.

11. Total Number of Child Recipients ...................................................... 411(a)(6) as revised by P.L. 105–33.

12. Total Number of Two-Parent Families ............................................... 411(a)(6) as revised by P.L. 105–33.

407(b)(3): Use in calculation of caseload reduction for adjusting the

participation rate standard.

13. Total Number of One-Parent Families ............................................... 411(a)(6) as revised by P.L. 105–33.

14. Total Number of No-Parent Families ................................................. 411(a)(6) as revised by P.L. 105–33.

15. Total Number of Non-custodial Parents Participating in Work Activities.411(a)(4).

16. Total Number of Minor Child Heads-of-Household ............................ Used to test the reliability and representativeness of the sample.

411(b): Use in Report to Congress.

17. Total Number of Births ....................................................................... 413(e): Needed to calculate the Annual Ranking of States related to

Out-of-Wedlock Births.

18. Total Number of Out-of-Wedlock Births ............................................. 413(e): Needed to calculate the Annual Ranking of States related to

Out-of-Wedlock Births.

19. Total Number of Closed Cases .......................................................... 411(a): Implicit in use of samples. Needed to weight sample data report for families no longer receiving assistance.

[FR Doc. 97–30195 Filed 11–17–97; 8:45 am]

BILLING CODE 4184–01–P