Cash and Noncash Benefits for Persons with Limited Income: Eligibility Rules, Recipient and Expenditure Data, FY2000-FY2002
Released: 2003-11-25T00:00:00

Introduction

More than 80 benefit programs provide cash and noncash aid that is directedprimarily to persons with limited income. These benefit programs cost $522.2 billionin FY2002, a record high. This sum was up $45.3 billion (9.5%) from the previouspeak of FY2001, and it equaled 5% of the gross domestic product (GDP). Federalfunds provided 71.5% of the total. Higher medical spending accounted for $32.8billion of the year's net increase, and 54 cents out of every welfare dollar went formedical benefits. Federal welfare outlays represented 18.6% of the federal budget,with 8% attributed to medical assistance. See Table 1 for FY2000-FY2002summary.

After adjustment for price inflation, 2002 welfare spending was up $38.2 billion (7.9%) from that of 2001, the previous peak. Real spending increases (2002 dollars)were dominated by medical assistance (up $29.1 billion). Other increases were:education benefits,$ 4.1 billion; food benefits, $3.3 billion; housing, $2.3 billion; andservices, $1.2 billion. Outlays for cash aid dropped by $1.2 billion; and for jobs andtraining, by $0.5 billion.

Spending for "human capital" programs (ones providing education and employment and training activities) accounted for 7.3% of all welfare dollars(compared with 19.6% for cash assistance).

This report consists of a catalog of 85 need-based programs. (1) For each programthe report provides the funding formula, eligibility requirements, and benefit levels. At the back of the report, summary Table 14 gives expenditure data (federal andstate/local) and recipient data for FY2000-FY2002 by program. Two programs arenew to this series of reports: farmers' market nutrition programs (formerly treatedas a component of the food stamp program) and housing assistance for specialpopulations -- elderly and disabled. Historical tables have been revised to accountfor these additions.

Most of these programs base eligibility on individual, household, or family income, but some use group or area income tests (see Table 7 -- page 16); and afew offer help on the basis of presumed "need." Most provide income "transfers." That is, they transfer income, in the form of cash, goods, or services, to persons whomake no payment and render no service in return. However, in the case of the joband training programs and some educational benefits, recipients must work or studyfor wages, training allowances, stipends, grants, or loans. Further, the TANF blockgrant program requires adults to commence work (defined by the state) after a periodof enrollment, the Food Stamp program imposes work and training requirements,and public housing programs require recipients to engage in "self-sufficiency"activities or to perform community service. Finally, the Earned Income Tax Credit(EITC.) is available only to workers.

This report excludes income maintenance programs that are not income-tested, including social insurance and many veterans' benefits, and all but two tax-transferprograms. Thus, it excludes Social Security cash benefits, unemploymentcompensation, and Medicare. Outlays for the Old-Age, Survivors, and DisabilityInsurance programs (Social Security cash benefit programs) in FY2002 totaled $456billion, financed primarily from payroll tax collections. The report also excludespayments, even though financed with general revenues, that may be regarded as"deferred compensation," such as veterans' housing benefits and medical care forveterans with a service-connected disability.

The report includes two tax-transfer programs, the EITC for low-income workers with children and the child tax credit. The EITC reduces the taxes ofworking families with gross income below specified limits and makes directpayments ("refunds") to those whose income is below the tax threshold or whose taxliability is smaller than their credit. Before the 2001 tax law, the child tax credit wasrefundable only to some taxpayers with three or more children, but it now isrefundable (up to certain limits) for those with earnings above $10,000. This reporttreats the direct payment component of these credits, but not the reduction in taxliability, as a welfare expenditure. Other tax benefits are excluded from the reportbecause they are not refundable (make no direct payments). Further, in most casesthey impose no income test for eligibility. Examples of these other tax benefits arethe deductibility of mortgage interest and property taxes on owner-occupied homes(equivalent to outlays of $63.3 billion and $21.8 billion, respectively, in 2002). These tax transfers increase families' disposable income by reducing their taxliability and are known as "tax expenditures." (The standard deduction and personalexemption in the income tax code also decrease families' taxable income.)

Table 1. Expenditures of Major Need-Tested Benefit Programs,by Form of Benefit and Level of Government,FY2000-FY2002 (millions of current dollars)

Source: Table prepared by the Congressional Research Service (CRS).

Note: Program data on which this table is based are found in summary table ( Table 14 ) at the back of the report.

Trends in Spending

Annual Spending Data

Total expenditures on cash and noncash welfare programs multiplied many times between 1968 and 2002 ( Table 2 ). Even after allowance for price inflation,spending sextupled (rising 523%) over the 34 years, a period when the U.S.population rose by an estimated 43%. (2) Measuredin constant 2002 dollars, (3) theannual rate of growth in spending over the whole period was 5.5%. However, thegrowth pattern was uneven. Real spending almost tripled in the first 10 years,declined in some years (1982, 1996. and 1997), and in the last 5 years rose at anannual rate of 3.9%. Total per capita welfare spending grew in real terms (constantFY2002 dollars) from $416 in FY1968 to a peak above $1,800 in FY2002.

Table 2. Total Expenditures for Need-Based Benefits, FY1968-FY2002 (in millions of dollars)

Source: Table prepared by the Congressional Research Service (CRS). FY1968 and FY1973 data are from: Income Security for Americans: Recommendations of thePublic Welfare Study . Report of the Subcommittee on Fiscal Policy of the JointEconomic Committee. December 5, 1974. Table 4 , p. 28 of Joint EconomicCommittee study, (1968 federal total has been increased by $54 million to correct atypographical error in that table, and the 1973 federal total has been increased by$101 million to include Title X family planning, previously omitted from this reportseries). Data for FY1975-FY1999 are from previous editions of this report (revisedto incorporate public housing capital fund costs, to account for new estimates ofsome program outlays, and to provide historical data for some newly added programs). Data for FY2000-FY2002 are from Table 1 of this report.

Figure 1 shows the course of expenditures for income-tested benefits from FY1975-FY2002. The upper line shows total real spending (federal and state-localspending); the bottom line shows state-local spending alone; the space betweenrepresents federal spending. Throughout this period federal expenditures accountedfor more than 70% of the total. The federal share rose above 76% in 1978-1980, thenbegan a general decline. In the 1993-2002 decade it averaged 71.4%.

Major Welfare Policy Changes (1968-2002). During 1968-1976, Congress liberalized some oldwelfare programs and established new ones. Some of the major expansions follow. Effective in 1969, Congress gave a work incentive bonus to all mothers who receivedAid to Families with Dependent Children (AFDC) checks; the bonus, virtuallyrepealed in late 1981, was the right to a welfare supplement even after their earningsrose above the state standard of need. In 1969, minimum rents for public housingwere abolished (reinstituted, at a lower level, in 1974). By 1970 amendment, theFood Stamp program was converted into a federal income guarantee in participatingcounties. By 1972 amendment, basic educational opportunity grants were adoptedfor all needy college students (extended to "middle - income" students by 1978 lawand renamed Pell grants in 1980). In 1972, effective in 1974, a federal cash incomeguarantee -- Supplemental Security Income (SSI) -- was enacted for the aged,blind, and disabled, and Congress established the Special Supplemental FoodProgram for Women, Infants, and Children (WIC). Effective in 1974, food stampswere extended to all counties, providing a national income guarantee in the form offood stamps. In 1975, a rebatable tax credit was adopted for low-income workerswith children.

In 1981, Congress moved to restrict eligibility for some programs and to lower some benefits. For example, it imposed gross income eligibility limits for AFDC andfood stamps, reduced AFDC and food stamp benefits for families with earnings,raised public housing rents, and reduced subsidies for school lunches. Effective inFY1983, it temporarily reduced the food stamp guarantee. Thereafter, Congressrestored food stamp benefit rules for workers (1985), expanded Medicaid eligibilityfor some needy persons not enrolled in cash welfare, sharply expanded the EITC (andgave it inflation protection) (1986), and required all states to offer AFDC to needytwo-parent families in which the primary earner is unemployed or underemployed(1988). It also established the Job Opportunities and Basic Skills (JOBS) programfor AFDC recipients and expanded federal matching funds for work and training andfor related child care. In 1993 ( P.L. 103-66 ), Congress again expanded the EITC,with the goal of ending poverty for a family of four with a parent who works full timeat the minimum wage (counting food stamps toward the antipoverty goal). At thesame time, it established a small EITC for childless workers.

In 1996, effective July 1, 1997 at the latest, Congress repealed AFDC, JOBS, and Emergency Assistance, replacing them with a fixed annual block grant forTemporary Assistance for Needy Families (TANF), through FY2002. It specifiedthat state TANF programs must condition eligibility on work, impose a lifetime limit(5 years at most) on federally funded basic ongoing aid (traditional cash aid), andachieve prescribed work participation rates for full funding. The 1996 law ( P.L.104-193 ) also ended eligibility for most welfare benefits for non-citizens, added tothe Food Stamp program a stringent work requirement for childless persons aged18-50, and sharply expanded federal funding for child care, consolidating the fundsin the Child Care and Development Block Grant. In 1997, Congress added specialwelfare-to-work grants to TANF (for FY1998 and FY1999 years only), moderatedsome of the rules affecting non-citizens (see later section on Non-Citizen Eligibilityfor Major Federal Benefits ), established a new program of State-Children's HealthInsurance (S-CHIP), and created a child tax credit (made refundable, by the 2001 taxact) for taxpayers with more than $10,000 in annual earnings.

Spending Trends by Level ofGovernment. Tables 3, 4, and 5 present 1968-2002 welfarespending in constant 2002 dollars, by form of benefit; Table 3 displays federaloutlays, Table 4 , corresponding state-local data, and Table 5, total welfarespendingamounts. Measured in constant 2002 dollars, federal spending for income-testedbenefits climbed from $59.4 billion in FY1968 to $373.2 billion in FY2002, anincrease of 529%. State-local welfare spending (constant dollars) rose from $24.5billion to $149 billion over the same period, an increase of 508%. Total welfareoutlays increased from $83.9 billion to $522.2 billion in these years, an increase of523%.

Cash aid was the leading form of federal welfare until 1980, when it was overtaken by medical benefits. Two years later, in 1982, federal welfare spendingdeclined for all forms of aid except subsidized housing, in which case outlaysreflected earlier commitments, and education benefits. However, beginning in 1983,real federal welfare outlays climbed steadily before declining in FY1996 andFY1997. After 1979, state-local outlays rose in all years except 1993 and 1996. Both federal and state-local outlays set successive new record highs inFY1998-FY2002.

Medical Benefits. Since 1979, medical spending has accounted for more than 50 cents out of every welfare dollarspent by state-local governments. In 1989, the share climbed to 60%, and since 1979it has exceeded 70%. Medical assistance has accounted for a much smaller share offederal welfare outlays: about 25% until the mid-80s, above 30% in the 1990s, andan average of 43% in 2000-2002.

Welfare Share of Federal Budget. As a component of the federal budget, welfare spending averaged 13% from1975-1979, dropped to 12% in the 1980s, and since 1994 has equaled or exceeded17% each year. In 2001 it rose above 18%, and in 2002 reached 18.6%.

Refundable Income Tax Credits. The earned income tax credit has become the nation's largest program ofincome-tested cash benefits for families with children. In FY2002, the U.S. Treasurypaid out $27.8 billion in refundable earned income tax credits (chiefly for earnerswith children) and $5.7 billion in child tax credits. The total almost equaled federalSSI payments for the aged, blind and disabled ($33.9 billion) and was five times asmuch as cash assistance from TANF federal dollars ($6.5 billion). (TANFexpenditures for work activities, child care, and other services exceeded TANF cashaid. See Table 14 -- page 227.)

Table 3. Federal Spending for Income-Tested Benefits by Form of Benefit, FY1968-FY2002 (millions of constant FY2002 dollars)

Source : Table prepared by the Congressional Research Service (CRS).

a. Rows may not add to total shown because of rounding.

Table 4. State-Local Spending for Income-Tested Benefits byForm of Benefit, FY1968-FY2002 (millions of constant FY2002 dollars)

Source : Table prepared by the Congressional Research Services (CRS).

a. Rows may not add to total shown because of rounding.

na=not available

Table 5. Total Spending for Income-Tested Benefits by Form of Benefit, FY1968-FY2002 (millions of constant FY2002 dollars)

Source : Table prepared by the Congressional Research Services (CRS).

a. Rows may not add to total shown because of rounding.

Composition of Spending

The dramatic change since 1978 in the composition of total spending forincome-tested benefits is shown in Figure 2 and in Table 6 . In FY1978spending forcash relief and medical aid was about equal. Each accounted for 29% of total welfarespending covered by this report. Thereafter, outlays for medical benefits rapidlyovertook cash aid, topping 50% in FY2000 and reaching 54% in 2002.

Table 6. Outlay Trends by Form of Benefits, FY1978-FY2002 (billions of constant 2002 dollars)

Source : Table prepared by the Congressional Research Service (CRS).

Noncitizen Eligibility for Major Federal Benefits

The eligibility of noncitizens for major federal means-tested benefit programslargely depends on their immigration status and whether they arrived in the UnitedStates, or were enrolled in a benefit program, before enactment of the 1996 welfarelaw ( P.L. 104-193 ) on August 22, 1996. That law sharply restricted welfareeligibility for noncitizens, though it has since been modified. For noncitizensentering after August 22, 1996, many of the restrictions imposed by the 1996 lawremain essentially unchanged. However, for persons who legally resided in theUnited States before enactment of the new law, provisions have been significantlyrevised by 1997, 1998, and 2002 amendments. The most significant recent change(made in the 2002 farm bill, P.L. 107-171 ) opened up food stamp eligibility to alllegal permanent resident (LPR) children, regardless of date of entry or length ofresidence, and to legal permanent residents (LPRs) who meet a 5-year residence test.

Those LPRs who were admitted to the United States as refugees and asylees are treated differently from other LPRs, as follows:

Refugees and asylees . Eligible for SSI benefits, Medicaid, and food stamps for 7 years after arrival, and for 5 years for TANF. After this term, they generally areineligible for SSI, but states may extend federally aided TANF and Medicaid to them.

Legal permanent residents (LPRs)

Who have a work history or military connection. If they have (a) a substantial work history, generally 10 years (40 quarters) of work documentedby Social Security or other employment records, or (b) a military connection (activeduty military personnel, veterans, and their families), LPRs are eligible for majorbenefits;

Who were legally resident as of August 22, 1996. If theyreceived SSI as of August 22, 1996, these LPRs continue to be eligible for SSI. Ifthey are disabled, they are eligible for SSI and, as a result, for food stamps (regardlessof the date of disability). If they were elderly (65+) as of August 22, 1996, they areeligible for food stamps. If they were children (under 18) as of August 22, 1996, theyare eligible for food stamps until they become 18;

Who are qualified SSI recipients. If they meet SSI noncitizeneligibility tests, these LPRs must receive Medicaid; and

Who entered the United States after August 22, 1996. TheseLPRs are barred from TANF, food stamps, and Medicaid for 5 years. Thereafter, thestate may extend federally-aided TANF, food stamps, and Medicaid to them. (Anotable exception is that LPR children are eligible for food stamps no matter whenthey entered the country or how long they have lived here.)

Aid Received by Poor Families With Children

The Census Bureau reports that 7.2 million families (including 5.4 million withchildren) in 2002 had total pre-tax money income -- after counting any cash from thewelfare programs of TANF, Supplemental Security Income (SSI), and GeneralAssistance (GA) -- that was below their poverty threshold. (4) The Bureau found thatthe money income poverty rate among related children in families was 16.3%, thehighest since 1999 (16.6%).

Overall, 34.6 million persons were classified as poor on the basis of 2002 pre-tax money income (compared with 31.1 millions in 2000). Of these persons,66.6% were in households that received means-tested aid from at least one of eightprograms (TANF, SSI, GA, school lunch, food stamps, Medicaid, subsidizedhousing, low-income home energy assistance). By race and ethnicity, the followingpercentages of poor persons were in households that received pre-tax aid from oneor more of the eight programs: non Hispanic whites, 53.5%, blacks, 80%, andpersons of Hispanic origin, 78.6%.

Figure 3 depicts income-tested aid provided to families with children who were poor before receiving any cash aid from TANF, GA, or the EITC. In 2002, thesefamilies totaled 5.7 million (compared with 5.1 million in 2000): 3.4 million witha female householder and 2.3 million with a male householder (chiefly two-parentfamilies). These numbers, based on CRS estimates, include unrelated subfamilies(the Bureau excludes these subfamilies from its "family" counts). As the chartshows, all but 8.9% of the female-headed families and 11.8% of the male-presentfamilies whose pre-tax, pre-welfare money income fell short of the poverty thresholdreceived means-tested aid. For male-present families, the EITC, which goes only topersons with earnings, was the dominant form of aid. In all, 71.7% of male-presentfamilies who were poor before transfers received the EITC (compared with 75.2%in 2000); for 25.4% it was the only aid. Among female-headed families who werepoor before transfers, 53.7% received the EITC (compared with 59.6% in 2000); for11.7% it was the only aid. Various combinations of cash assistance (TANF, GA,EITC) and noncash aid (food stamps, housing subsidies, Medicaid or coverage underthe State Children's Health Insurance Program (S-CHIP), went to 23.5% offemale-headed families and to 10.6% of male-present families. (5)

Income Tests of the Benefit Programs

More than 90% of the programs in this report have an explicit test of income. The others base eligibility on area of residence, enrollment in another welfareprogram, or other factors that presume need. The explicit income tests are of fivekinds: Income ceiling related to (1) one of the federal government's official povertymeasures (federal poverty income guidelines or Census Bureau poverty thresholds);(2) state or area median income; (3) the lower living standard income level of theBureau of Labor Statistics; (4) an absolute dollar standard; (5) level deemed toindicate "need." Table 7 classifies the programs in this report by type of income test. Tables 8-11 present, respectively, Census Bureau poverty thresholds for 2002,federal poverty income guidelines for 2003, income eligibility limits for subsidizedmeals, July 2003-July 2004, and lower living standard income levels, effective inMay 2003.

Table 7. Income Eligibility Tests Used by Benefit Programs

* Short titles and abbreviations are used in this table. See table of contents for full titles.

a. States must extend Medicaid to certain persons whose income is below the federal poverty income guideline (or a multiple of it) but who do not receivecash aid. These persons are pregnant women, children born since September 30, 1983, the aged, the blind, and thedisabled.

b. Need is decided by state, locality, Indian tribe (or Alaskan Native village).

c. Eligible for Medicaid, foster care, and adoption assistance are persons who do not qualify for TANFcash assistance but who would be income-eligiblefor AFDC under the terms of July 16, 1996 (with some modifications allowed) if that program had not been replacedby TANF. Also eligible forMedicaid in most states are persons eligible for SSI.

d. Veterans receiving veterans' pensions or eligible for Medicaid are automatically eligible for free VA medicalcare.

e. If a state's Medicaid limit for children is at or above 200% of the poverty guideline, it may give S-CHIPto children whose family income is within150% of the Medicaid limit (thus, up to 50% above the Medicaid limit).

f. The stated purpose of the Maternal and Child Health (MCH) Services Block Grant law is to enablestates to assure access to quality MCH services tomothers and children, particularly those with low income (or limited availability of health services). The law defineslow income in terms of thefederal poverty income guidelines. This block grant, which took effect in FY1981, includes funding for crippledchildren's services.

g. The law limits free care to those below the federal poverty income guidelines.

h. All residents of the area served are eligible, but fees must be charged the nonpoor.

i. For basic federal SSI payment.

j. States decide need for an optional state supplement to SSI.

k. A blind or disabled child who is eligible for SSI also is eligible for adoption assistance.

l. Households composed wholly of recipients of SSI or GA or of recipients of TANF cash or services automatically meet food stamp assets and incometests but their benefits must be calculated by food stamp rules.

m. Food stamp eligibility is accepted as documentation of eligibility for the free school lunch and free schoolbreakfast programs.

n. States may give automatic eligibility to public assistance recipients.

o. The law requires preference for those with greatest economic or social need.

p. Need is decided by a system known as the federal needs analysis methodology, which is set forth inPart F of Title IV of the Higher Education Act(HEA) as amended.

q. There is no income test. Migratory children are presumed to be needy.

r. For forgiveness of loans made to needy students who fail to complete studies.

s. Need for loans is decided by the educational institution, by use of a needs analysis system approvedby the Secretary of Education "in combinationwith other information" about the student's finances. For all health professional scholarships and for loans tostudents of medicine and osteopathy,federal regulations define the required "exceptional financial need."

t. Regulations require the educational institution to determine that migratory students need the financialassistance provided.

u. Law makes eligible middle school and secondary students who are "economically disadvantaged."

v. Federal income ceiling is 85% of state median for family of same size

w. Under the law, at least 70% of entitlement Child Care Development Block Grant(CCDBG) funds must be used for families receiving TANF, tryingto leave welfare through work, or at risk of becoming eligible for TANF.

x. Applies to families aided with TANF dollars transferred to Title XX (their income cannot exceed 200% of the federal poverty guidelines).

y. Need is decided by agencies administering the benefits.

z. The federal poverty income guideline is used if higher than 70% of the lower living standard incomelevel of the Department of Labor.

aa. The law requires preference for "low-income" persons if funds are limited.

bb. States have the option of setting limits below outer federal ceilings (but cannot set a ceiling below110% of the federal poverty income guideline).

Table 8. Bureau of the Census PovertyThresholds for 2002

Source: U.S. Department of Commerce, Bureau of the Census (Jan. 23, 2003).

Table 9. 2003 Federal Poverty Income Guidelines

Source: Federal Register , v. 68, no. 26, Feb. 7, 2003, pp. 6456-6458.

Table 10. Eligibility Levels for Free and ReducedPrice Meals for the Period of July 1, 2003-June 30, 2004

Source: Federal Register , v. 68, no. 49, Mar. 13, 2003. P. 12030.

Table 11. Lower Living Standard Income Level (LLSIL) for a Family of Foura -- Effective May 30, 2003 (Foruse in programs under the Workforce Investment Act and the

b

Source: Federal Register , v. 68, no. 104, May 30, 2003. PP. 32552-32554.

a. For LLSILs for other family sizes, see Federal Register entry noted above.

b. The LLSIL is used for several purposes under the Workforce Investment Act(WIA). WIA defines "low income individual" for eligibility purposes in termsof the LLSIL or the poverty line. For purposes of state formula allotments, itdefines the terms "disadvantaged adult" or "disadvantaged youth" in terms ofthe LLSIL or the poverty line.

c. To assess whether employment will lead to "self-sufficiency," WIA sets 100% ofthe LLSIL as the minimum pay needed.

d. WIA provides that the terms "low-income" person and "disadvantaged adult" maybe defined as a member of a family that received total family income that, inrelation to family size, does not exceed 70% of the LLSIL. Further, the InternalRevenue Code provides that the term "economically disadvantaged" may bedefined as 70% of the LLSIL for purposes of the Work Opportunity Tax Credit(WOTC).

Medical Aid

1. Medicaid (6)

Note: Effective on July 1, 1997 (earlier in most states), P. L. 104-193 endedAid to Families with Dependent Children (AFDC), a cash assistance program underwhich recipients were automatically eligible for Medicaid. The replacement blockgrant program of Temporary Assistance for Needy Families (TANF) does not entitleall TANF recipients to Medicaid coverage. However, those who meet the income,resource, and categorical eligibility criteria of the former AFDC program, as in effectin their state on July 16, 1996 (and subsequently modified, if applicable), are entitledto Medicaid. The description below summarizes Medicaid as it operated after AFDCwas replaced by TANF.

Funding Formula

The federal government shares in the cost of Medicaid services by means of a variable matching formula. The formula is inversely related to a state's per capitaincome and is adjusted annually. For FY2000-FY2002, the federal matching rate forservices averaged about 57% for the Nation as a whole. The federal share ofadministrative costs generally is 50%, but as high as 100% for certain items. Preliminary data indicate that federal outlays in FY2002 totaled $146.2 billion.

The federal share of a state's medical vendor payments is called the federal medical assistance percentage (FMAP). The FMAP is higher for states with lowerper capita incomes and lower for states with higher per capita incomes. If a state'sper capita income is equal to the national average per capita income, its FMAP wouldbe 55%. The law establishes a minimum FMAP of 50% and a maximum of 83% (7) (though the highest rate in FY2003 was 76.62% for Mississippi). Federal matchingfor the territories is set at 50%, but a dollar ceiling also applies. The statutoryformula for determining the FMAP follows:

FMAP = 100% -- state share (with a minimum of 50%

and a maximum of 83%)

State share = (state per capital income) 2 x 45%

(national per capita income) 2

The percentages are based on the average per capita income of each state and the United States for the three most recent calendar years for which satisfactory dataare available from the Department of Commerce.

The law provides one exception to the FMAP for benefits. Family planning services (instruction in contraceptive methods and family planning supplies) arefederally matched at a 90% rate.

To provide fiscal relief to states, federal matching rates were changed temporarily by the Jobs and Growth Tax Relief Reconciliation Act ( P.L. 108-27 ),which altered the rates for certain expenditures for the last two quarters of FY2003and the first three quarters of FY2004. For these 5 quarters, the federal matching ratefor each state is held harmless for declines from the prior fiscal year, and then isincreased by 2.95 percentage points. A state is eligible for an increase in its FMAPfor any of the specified quarters only if eligibility under Medicaid in effect for thatquarter is no more restrictive than eligibility in effect on September 2, 2003. Program costs totaled $258 billion in FY2002, with $147 billion (57%) from federalfunds.

Eligibility Requirements

The requirements of federal law, coupled with the decisions of individual states in structuring their Medicaid programs, determine who is actually eligible forMedicaid in a given state. Some groups are mandatory, meaning all states must coverthem; others are optional. In general, federal law places limitations on the categoriesof individuals that can be covered and establishes specific eligibility rules for groupswithin those broad categories. Traditionally, Medicaid eligibility was limited to thefollowing categories: low-income families with dependent children (in which oneparent was absent, incapacitated or unemployed), low-income persons withdisabilities, and low-income elderly. In addition, certain individuals with higherincome, especially those facing large costs for medical care, were eligible as"medically needy." Beginning in the 1980s, additional coverage groups were addedto Medicaid for higher income children and pregnant women. Other coverage groupsare identified in statute as needing special protection against the high cost of medicalcare. (8) Over 50 distinct population groups areidentified in federal law. Some aremandatory groups that all states must cover; some are optional eligibility groups.

Contributing to the complexity of the Medicaid program are financial criteria. Medicaid is a means-tested entitlement program. To qualify, applicants' income andresources (9) must be within certain limits, most ofwhich are determined by states,again within federal statutory parameters. States have flexibility in definingcountable income and assets. Consequently, income and resource standards varyconsiderably among states, and different standards apply to different populationgroups within a state. In general, individuals in similar circumstances may beautomatically eligible for coverage in one state, but required to assume a certainportion of their medical expenses before they can obtain coverage in another state,and not eligible at all in a third state.

Families, Pregnant Women, and Children. Medicaid-eligible families, pregnant women, and childrenfall into two basic groups: those meeting AFDC standards as of July 16, 1996, andthose qualifying under a series of targeted Medicaid expansions that began in the1980s.

AFDC-Related Groups. Medicaid eligibility for AFDC-related groups was affected significantly by both the PersonalResponsibility and Work Opportunities Reconciliation Act of 1996 (PRWORA, P.L.104-193 ), which replaced the AFDC cash assistance program with the TemporaryAssistance for Needy Families (TANF) block grant program, and the BalancedBudget Act of 1997 (BBA 97, P.L. 105-33 ).

Mandatory. Members of families that meet the eligibility requirements of the old AFDC programs in effect in their states on July 16, 1996must be covered under Medicaid. States may modify their rules governing incomeand resource standards for such AFDC-related groups. These modifications can bemade by raising income/resource standards up to the percentage increase in theConsumer Price Index (CPI) after July 16, 1996, or by lowering income standards toapplicable levels no lower than those in effect on May 1, 1988, or by usingincome/resource methodologies that are less restrictive than those in effect on July16, 1996.

States must provide Medicaid assistance for recipients of adoption assistance and foster care under Title IV-E of the Social Security Act. Transitional or extendedbenefits are available to families who lose Medicaid eligibility because of increasedhours of employment, increased earnings, loss of a time-limited earned incomedisregard, or increased child or spousal support payments. If the family losesMedicaid eligibility because of increased earnings or hours of employment, Medicaidcoverage is extended for 6 to 12 months. (10) (During the second 6 months, a premiumcan be imposed, the scope of benefits might be limited, or alternate delivery systemsmight be used.) If the family loses Medicaid because of increased child or spousalsupport, coverage is extended for 4 months. Pregnant women and children areexempt from TANF work requirements and retain their Medicaid eligibility.

Optional. States are permitted to cover additional AFDC-related groups. States may provide Medicaid to former foster care recipientsages 18, 19 and 20, and can limit such coverage to those eligible for Title IV-E beforeturning 18. States may also extend Medicaid to children up to age 21 in familieswhose income and resources are within AFDC standards (as of July 16, 1996), butwho do not meet the definition of a dependent child (also known as Ribicoffchildren), and may limit this coverage to reasonable subgroups, such as children intwo-parent families, those in privately subsidized foster care, or those who live incertain institutional settings. (11) Finally, states maydeny Medicaid benefits tononpregnant adults and heads of households who lose TANF benefits because ofrefusal to work.

Poverty-Related (12) Pregnant Women andChildren. Beginning in 1984, Congress gradually extendedMedicaid coverage to groups of pregnant women and children who are defined interms of family income and resources, rather than in terms of their ties to cashwelfare programs.

Mandatory. States must cover pregnant women and children under age 6 with family incomes below 133% of the federal poverty incomeguidelines. (The state may impose a resource standard that is no more restrictive thanthat for SSI, in the case of pregnant women, or AFDC as of July 16, 1996, in the caseof children.) Coverage for pregnant women is limited to services related to thepregnancy or complications of the pregnancy through 60 days postpartum. Childrenreceive full Medicaid coverage.

States are also required to cover all children under age 19 who were born after September 30, 1983, and whose family income is below 100% of the federal povertylevel.

Optional. States may cover pregnant women and infants under age 1 with family incomes up to 185% of the federal poverty level (FPL). Inaddition, through other provisions of Medicaid law, states are permitted to coveradditional pregnant women and children with incomes above applicable federalmandatory minimum levels. Such key provisions include waivers of eligibility rules(through Section 1115), use of more liberal methods for calculating income andresources for some categories of eligibles (through Section 1902(r)(2)), as well asthrough Medicaid expansions under the State Children's Health Insurance Program(SCHIP; program no. 3 in this report). For example, under SCHIP, most states nowcover at least some groups of children under age 19 in families with income at orabove 200% of the federal poverty level.

Finally, states have the option of continuing Medicaid eligibility for current child beneficiaries for up to 12 months without a redetermination of eligibility. States are also allowed to extend Medicaid coverage to pregnant women and childrenunder 19 years of age on the basis of "presumptive" eligibility until formaldeterminations are completed.

Aged and Disabled Persons. In general, Medicaid provides coverage to certain groups of individuals receiving (orqualifying for) cash assistance through the Supplemental Security Income (SSI)program. It also covers the Medicare cost-sharing obligations for certain individuals. In addition, Medicaid covers certain individuals needing institutional care or othertypes of long-term care services.

SSI-Related Groups. The SSI program was established in 1972, replacing previous federal-state cash assistance programsfor the aged, blind, and disabled. Income and resource standards are defined infederal law. For 2003, individuals applying for SSI could not have countablemonthly income in excess of $552, and their countable resources could not exceed$2,000. Similar criteria for couples were $829 in monthly income and $3,000 inresources. However, states have the option of supplementing SSI payments (SSP)for aged persons living independently, and using the resulting higher income levelsas the applicable financial standard for determining Medicaid eligibility.

Mandatory. States are generally required to cover SSI recipients under their Medicaid programs. However, states may use more restrictiveeligibility standards for Medicaid than those for SSI if they were using thosestandards on January 1, 1972 (before the implementation of SSI), as authorized underSection 209(b) of the Social Security Act. There were 11 such Section 209(b) statesin 2001. (13) States using more restrictive incomestandards must allow applicants to"spend down" -- deduct incurred medical expenses from income before determiningeligibility. For example, if an applicant has a monthly income of $600 (not includingany SSI or state supplement payment) and the state's maximum allowable income is$500, the applicant would become eligible for Medicaid after incurring $100 inmedical expenses in that month.

States must continue Medicaid coverage for several defined groups of individuals who lose SSI or SSP eligibility. The "qualified severely impaired" aredisabled persons who return to work and lose SSI eligibility because of earnings, butstill have the condition that originally rendered them disabled and who meet allnondisability criteria for SSI except income. Medicaid must be continued for thesepersons if they need on-going medical assistance to continue working and theirearnings are not sufficient to provide the equivalent of SSI, Medicaid, and attendantcare benefits for which they would qualify in the absence of earnings. States mustalso continue Medicaid coverage for persons who were once eligible for both SSI andSocial Security payments and who lose SSI because of a cost-of-living adjustment(COLA) in their Social Security benefits. Similar Medicaid continuations have beenprovided for certain other persons who lose SSI as a result of eligibility for orincreases in Social Security or veterans' benefits. Finally, states must continueMedicaid for certain SSI-related groups who received benefits in 1973, including"essential persons" (persons who care for a disabled individual).

Optional. States are permitted to provide Medicaid to individuals who are not receiving SSI but are receiving state-only supplementary cashpayments. Effective in August of 1997, under provisions of the Balanced Budget Actof 1997 (BBA 97), states may make Medicaid available to disabled SSI beneficiarieswith incomes up to 250% of the FPL. These individuals may "buy into" Medicaidby paying a premium based on income as determined by the state. The 1999 Ticketto Work legislation ( P.L. 106-170 ) further allows states to cover employed, disabledpersons at higher income and resource levels (i.e., income over 250% of the FPL andresources exceeding $2,000 for an individual or $3,000 for a couple). States mayalso cover financially eligible working individuals whose medical condition hasimproved such that they no longer meet the SSI definition of disability. Suchindividuals may have to buy into Medicaid by paying premiums or other cost-sharingcharges on a sliding fee scale based on income, as established by the state. Finally,states have the option of extending Medicaid to certain additional elderly or disabledpersons. These include individuals eligible for SSI but not receiving it, and elderlyand disabled persons whose income does not exceed 100% of the FPL and whoseresources do not exceed the SSI standard.

Qualified Medicare Beneficiaries and Related Groups. Certain low-income individuals who are aged orhave disabilities as defined under SSI and who are eligible for Medicare are alsoeligible to have some of their Medicare cost-sharing expenses paid for by Medicaid. There are four categories of such persons:

Qualified Medicare Beneficiaries (QMB) . Qualified Medicare beneficiaries are aged or disabled Medicare beneficiaries with incomes no greaterthan 100% of the FPL and assets no greater than $4,000 for an individual and $6,000for a couple. States are required to cover, under their Medicaid programs, the costsof Medicare premiums, deductibles, and coinsurance for Medicare covered benefitsfor such persons. Other Medicaid covered services, such as nursing facility care,prescription drugs and primary and acute care services, are not covered for theseindividuals unless they qualify for Medicaid through other eligibility pathways (e.g.,via SSI, medically needy, or the special income rule for institutionalized personsdescribed below).

Specified Low-Income Medicare Beneficiaries (SLMB) . Specified low-income Medicare beneficiaries meet QMB criteria, except that theirincome is greater than 100% of the FPL but does not exceed 120% of the FPL. Under this Medicaid pathway, states are required to cover only the monthly MedicarePart B premium. Other Medicaid services are not covered for these individualsunless they qualify for Medicaid through other eligibilitypathways.

Qualifying Individuals (QI-1) . The QI-1 eligibility pathway (14) applies to aged and disabled Medicare beneficiaries whose income is between 120%and 135% of the FPL. For these individuals, states are required to pay the monthlyMedicare Part B premium, only until the federal allotment for this purpose isdepleted. (15) These individuals are not otherwiseeligible forMedicaid.

Qualified Disabled and Working Individuals (QDWIs) . Statesare required to pay the Medicare Part A premiums for persons who were previouslyentitled to Medicare on the basis of a disability, who lost their entitlement based onearnings from work, but who continue to have a disabling condition. Such personsmay only qualify if their incomes are below 200% of the FPL, their resources arebelow 200% of the SSI limit ($4,000), and they are not otherwise eligible forMedicaid.

Persons Receiving Institutional or Other Long-Term Care and Related Groups (all optional). States may provide Medicaidto certain otherwise ineligible groups of persons who are in nursing facilities (NFs)or other institutions, or who would require institutional care if they were notreceiving alternative services at home or in the community.

States may establish a special income standard for institutionalized persons, not to exceed 300% of the maximum SSI benefit that would be payable to a person livingat home and with no other resources ($1,656 per month in 2003). In states withouta medically needy program (described below), this "300% rule" is an alternative wayof providing NF coverage to persons with incomes above SSI or State SupplementaryPayment (SSP) levels. (16)

Both the medically needy and those becoming eligible under the "300% rule" must contribute their available income to the costs of their care. Medicaid hasdistinct post-eligibility rules to determine how much of a beneficiary's income mustbe applied to the cost of care before Medicaid makes its payment. Special rules existfor the treatment of income and resources of married couples when one of thespouses requires nursing home care and the other remains in the community. Theserules are referred to as the "spousal impoverishment" protections of Medicaid law,because they are intended to prevent the impoverishment of the spouse remaining inthe community.

A state may obtain a waiver under Section 1915(c) of the Act to provide home and community-based services to a defined group of individuals who wouldotherwise require institutional care. The waiver coverage may include persons whowould be eligible under the "300%" rule if they were in an institution, or thoseeligible through a medically needy program.

A state may also provide Medicaid to several other classes of persons who need the level of care provided by an institution and would be eligible if they were in aninstitution. These include children who are being cared for at home, persons of anyage who are ventilator-dependent, and persons receiving hospice benefits in lieu ofother covered services. States electing these options must cover all persons who arein the class and living in the state.

The Medically Needy. In 2002, 35 states and the District of Columbia provided Medicaid to at least some groups of"medically needy" persons. These are persons who meet the nonfinancial standardsfor inclusion in one of the groups covered by Medicaid, but who do not meet theincome or resource requirements for such coverage. Under medically needyprograms, individuals can spend down to the medically needy standard set by thestate by incurring medical expenses, in the same way that SSI recipients in Section209(b) states may spend down to Medicaid eligibility.

Under medically needy programs, states may set income standards at any level up to 133 and 1/3% of the standard used for the most closely related cash assistanceprogram. For families with children, the maximum applicable medically needyincome standard would be up to one-third more than that which was in effect for asimilar family under the state's former AFDC program. For individuals who havea disability or are elderly, it would be up to one-third more than the SSI incomestandard. States may limit the groups of individuals who receive medically needycoverage. If the state provides any medically needy coverage, however, it mustinclude all children under 18 who would qualify under one of the welfare-relatedgroups, and all pregnant women who would qualify under either a mandatory oroptional group, if their income or resources were lower.

Individuals Qualifying Under Demonstration Waivers. Demonstration waivers available under the authority ofSection 1115 (of the Social Security Act) enable states to experiment with newapproaches for providing health care coverage that promote the objectives of theMedicaid program. Section 1115 allows the Secretary of HHS to waive a number ofMedicaid rules -- including many of the federal rules relating to Medicaid eligibility. The Health Insurance Flexibility and Accountability (HIFA) Initiative, introduced bythe Bush Administration in 2001, is an explicit effort to encourage states to seekSection 1115 waivers to extend Medicaid and SCHIP to the uninsured, with aparticular emphasis on statewide approaches that maximize private health insurancecoverage options and target populations with incomes below 200% of the FPL. Some states have used such waivers to enact broad-based and sometimes statewidehealth reforms although demonstrations under Section 1115 need not be statewide. Some states have extended comprehensive health insurance coverage to low-incomechildren and families who would not otherwise be eligible for Medicaid.

Aliens. Legal immigrants arriving in the United States after August 22, 1996 are ineligible for Medicaid for their first5 years in this country. Coverage of these persons after the 5-year ban is a stateoption. States are required to provide Medicaid to legal immigrants who resided inthe country and were receiving benefits on August 22, 1996 (and who continue tomeet the criteria) and to those residing in the country as of that date who becomedisabled in the future.

States are also required to provide coverage to: (1) refugees for the first 7 years after entry into the United States, (2) asylees for the first 7 years after asylum isgranted, (3) individuals whose deportation is being withheld by the Immigration andNaturalization Service (INS) for the first 7 years after grant of deportationwithholding, (4) lawful permanent aliens after they have been credited with 40quarters of coverage under Social Security, and (5) lawful permanent aliens who arehonorably discharged U.S. military veterans or active duty military personnel, andtheir spouses and unmarried dependent children who otherwise meet the state'sfinancial eligibility criteria.

States are required to provide emergency Medicaid services to all legal and undocumented non-citizens who meet the financial and categorical eligibilityrequirements for Medicaid.

Medicaid Purchase of COBRA Coverage. COBRA (17) provides thatemployees or dependents wholeave an employee health insurance group in a firm with 20 or more employees mustbe offered an opportunity to continue buying insurance through the group for 18 to36 months (depending on the reason for leaving the group). The employer maycharge a premium of no more than 102% of the average plan cost (150% for months19 to 29 for certain disabled persons). Under OBRA 90, state Medicaid programsmay pay the premiums for COBRA continuation coverage when it is cost-effectiveto do so, and the individual otherwise meets the state's eligibility requirements.

Benefits

States are required to offer the following services to most groups of recipients: inpatient and outpatient hospital services; rural health clinic services; laboratory andX-ray services; nursing facility services for those over age 21; home health servicesfor those over age 21 and to those under 21 if entitled to nursing facility care; theearly and periodic screening, diagnostic and treatment program (EPSDT) for thoseunder age 21; family planning services and supplies; federally qualified health centerservices; nurse-midwife, certified family and pediatric nurse-practitioner services;and physicians' services and medical and surgical dental services furnished by adentist. States must also assure transportation of any Medicaid-eligible individualto and from providers of medical care.

Federal law includes two basic coverage requirements for the medically needy. First, if a state provides medically needy coverage to any group, it must provideambulatory services to children under 18 and individuals entitled to institutionalservices, prenatal and delivery services for pregnant women (as well as 60 days ofpostpartum care for those eligible for and receiving pregnancy-related services), andhome health services to individuals entitled to nursing facility services. Second, ifthe state provides medically needy coverage for persons in institutions for mentaldiseases or intermediate care facilities for the mentally retarded (ICFs/MR), it mustoffer to all groups covered in its medically needy program all of the mandatoryservices required for the categorically needy (except services provided by pediatricand family nurse practitioners), or alternatively, any of seven categories of care andservices listed in Medicaid law defining covered benefits.

Finally, states may also choose to provide one or more optional services to categorically and medically needy beneficiaries. These additional services include,for example, prescription drugs, eyeglasses, other dental services, physical therapy,and inpatient psychiatric care for individuals under age 21 or over 65.

States may limit the amount, duration and/or scope of care provided under any mandatory or optional service category (such as limiting the number of days ofcovered hospital care or number of physical therapy visits). Federal law permitsstates to impose nominal cost-sharing charges on some Medicaid beneficiaries andfor some services.

In FY2000, the most recent year for which enrollment data are available, 44.3 million persons were covered by Medicaid. The aged, blind and disabled represented25% of Medicaid enrollment but accounted for 70% of program spending. Non-disabled children and adults, in contrast, comprised 67% of enrollment but only26% of spending. Between FY2000 and FY2002, total federal and state Medicaidspending increased by about 25% from $206.1 billion to $258.2 billion. In FY2002,Medicaid outlays from federal funds totaled $146.2 billion. Total FY2003 Medicaidexpenditures are expected to reach roughly $278 billion, with federal outlaysestimated at $158 billion.

Note: For more information, see CRS Report RS20245, Medicaid: A Fact Sheet , CRS Report RS21071 , Medicaid Expenditures, FY2000 and FY2001 , and 2003 Green Book, Section 15: Other Programs , U.S. House of Representatives,Committee on Ways and Means (forthcoming).

2. Medical Care For Veterans Without Service-Connected Disability

Funding Formula

Medical care from the Department of Veterans Affairs (VA) is funded by the federal government. VA medical services are defined as discretionary in the federalbudget. Appropriations requests are guided by estimates of the expected caseload,and for FY2003, Congress provided $23.9 billion, for an expected caseload of nearly4.9 million "unique" patients. VA is also authorized to use proceeds of the MedicalCare Collections Fund (MCCF) (18) for medical care,an amount estimated to be $1.836billion in FY2003.

In addition to care provided in VA facilities and under contract, the VA provides per diem payments to states for care of eligible veterans in state facilities. The VAalso provides for medical care to certain spouses and children of certainservice-connected disabled and other veterans under the Civilian Health and MedicalProgram (CHAMPVA). The amount of FY2002 appropriations used to provide freecare to veterans who qualified because of having low income and/or low assets isestimated at $8.1 billion. (19)

Eligibility Requirements (20)

Unlike other medical benefit entitlements such as Medicare or Medicaid, eligibility for medical benefits from VA conveys varying degrees of rights. Inprinciple, all veterans are eligible to receive services from VA medical facilities,although the potential total amount of services available to all veterans is contingenton appropriations. Veterans with high-priority rights under VA law are generallyassured a full array of services, and those with lower-priority are provided servicesif space and resources are available. Highest priority for the full range of medicalservices is granted to veterans with severe, service-connected disabilities. Otherveterans have varying degrees of access for the different types of medical services,with distinctions based on the severity of the condition, whether or not it isservice-connected, level of income, and type of medical service provided.

In practice, there is no evidence that any veterans were denied services at any VA facility in FY2002, and no denials are expected during FY2003 (except fornursing home care, which is provided only on a space-available basis, regardless ofpriority status). As a general rule, no veteran is denied medical services uponpresenting a health complaint to qualified personnel at a VA medical facility. Foradministrative purposes, and to best manage the medical needs of individual patients,veterans are encouraged to enroll in regional VA health care plans (enrollment forveterans who do not have a service-connection, whose enrollments are above thethreshold for means-tested services, or who are not already enrolled has beentemporarily halted). There are 23 of these Veterans Integrated Service Networks(VISNs) nationwide.

The largest category of veterans provided free medical care by VA consists of persons who qualify for that care because their assets and income are below certainannually adjusted standards (in 2003: single person, $24,644; with one dependent,$29,576; for each additional dependent, $1,586), with possible additional adjustmentsfor regional differences in medical costs. VA estimates that out of 25 millionveterans, about 7 million would qualify for free care because they meet thelow-income standards. Veterans whose incomes in the previous calendar year wereno higher than the pension of a veteran in need of regular aid and attendance (in2003: single person, $16,169; with one dependent, $19,167; for each additionaldependent, $1,653) are also eligible for free medications; others pay copayments of$7 monthly for prescriptions filled in VA pharmacies, up to a maximum of $840 peryear. A veteran applying for care under the low-income eligibility test is advised thatreported income is subject to verification by matching the amount shown on theapplication with income reported to the Internal Revenue Service (IRS). Onceeligible under the income rules, a veteran remains eligible until determined upon(annual) reevaluation to no longer meet the income standard. VA has estimated thatabout 38% of the applications for medical services are from veterans entitled to freecare because of meeting the income standards. (21)

Benefit Levels

Benefits in VA facilities include inpatient hospital care, nursing home care, domiciliary care, and outpatient care. The VA contracts with other facilities toprovide care to veterans in areas where VA medical facilities are unavailable. VAis the largest provider of inpatient psychiatric services, specializes in treatments forspinal injuries and prosthetics, and conducts or sponsors research in numerousmedical fields, with special emphasis on conditions traceable to a period of militaryservice. The VA offers medical care to the nation's 25 million veterans, although arelatively few (about 15%) of those eligible avail themselves of the services. InFY2002, the VA provided care for 4.7 million persons, through 732 thousandinpatient episodes and 47 million outpatient visits.

During FY2003, the Veterans Health Administration (VHA) operated 172 hospitals, 137 nursing homes, 843 outpatient clinics, 43 domiciliaries, and anextensive pharmaceutical supply apparatus. Veterans' medical care appropriationswere $21.3 billion in FY2002, $23.5 billion in FY2003 and are projected to reach$24.8 billion in FY2004.

3. State Children's Health Insurance Program (SCHIP)

Funding Formula

The Balanced Budget Act of 1997 (BBA 97, P.L. 105-33 ) established the State Children's Health Insurance Program (SCHIP) under Title XXI of the Social SecurityAct. (22) The program offers federal matching fundsfor states and territories to providehealth insurance to targeted low-income children. In the original law, Congressappropriated $39.7 billion in SCHIP federal matching grants for 10 years, FY1998through FY2007. (23) For each year from FY1998through FY2001, total federalfunding available to states and territories was approximately $4.3 billion. For eachof FY2002, FY2003, and FY2004, federal funding equals $3.2 billion. Statematching funds for FY2002 are estimated at $1.6 billion.

Allotment of funds among the states is determined by a formula set in law. This formula is based on a combination of the number of low-income children andlow-income, uninsured children in the state, and includes a cost factor that representsaverage health service industry wages in the state compared to the national average. All states have submitted SCHIP program plans to the Centers for Medicare andMedicaid Services (CMS) (formerly known as the Health Care FinancingAdministration). States have 3 fiscal years in which to draw down a given year'sfunding. Under SCHIP law as enacted in 1997, allotments not spent by the end ofthe applicable 3-year period will be redistributed -- by a method to be determinedby the Secretary of Health and Human Services (HHS) -- to states that have fullyspent their original allotments for that year. Redistributed funds not spent by the endof the fiscal year in which they are reallocated will officially expire. (24)

Like Medicaid, SCHIP is a federal-state matching program. For each dollar of state spending, the federal government makes a matching payment, up to the state'sallotment. The state's share of program spending is equal to 100% minus theenhanced federal medical assistance percentage (the enhanced FMAP). Theenhanced FMAP is equal to the state's Medicaid FMAP (for the regular FMAPformula, see program no. 1 of this report), increased by the number of percentagepoints that is equal to 30% multiplied by the number of percentage points by whichthe FMAP is less than 100%. (25)

There is a limit on spending for SCHIP administrative expenses, which include activities such as data collection and reporting, as well as outreach and education. For federal matching purposes, a 10% cap applies to state administrative expenses. It is imposed on the dollar amount that the state actually draws down from itsallotment to cover benefits under SCHIP, as opposed to 10% of its total allotment fora given year.

Eligibility Requirements

Each state defines the group of targeted low-income children who may enroll in SCHIP. The law allows states to use these factors in determining eligibility:geography, age, income and resources, residency, disability status, access to otherhealth insurance and duration of eligibility for SCHIP. In general, funds cannot beused for children who are eligible for the state's Medicaid program or for childrencovered by a group health plan or other insurance.

Under SCHIP states may cover children in families with incomes that are either: (1) above the state's applicable Medicaid eligibility standard under the rules in effectin the state on March 31, 1997, but less than 200% of the federal poverty guideline, (27) or (2) in states with Medicaid income levels for children already at or above 200%of the poverty line, within 50 percentage points over the state's Medicaid incomeeligibility limit for children. Many states cover at least some groups of children infamilies with income at or above 200% FPL.

In addition, several states have sought approval for special waivers of SCHIP rules to use SCHIP funds to cover new groups, including some categories of adults. Under Section 1115 of the Social Security Act, the Secretary of HHS has broadstatutory authority to conduct research and demonstration projects under sixprograms, including Medicaid and SCHIP. Using waiver authority, the HealthInsurance Flexibility and Accountability (HIFA) Initiative, announced by the BushAdministration in August 2001, encourages states to develop statewide projects thatcoordinate Medicaid and SCHIP with private health insurance coverage and targetsuninsured individuals with income below 200% of the federal poverty level, just asSCHIP does. Later, the Administration indicated that unspent SCHIP funds couldbe used to finance the HIFA initiative. (28) As ofJune 12, 2003, CMS approved 14SCHIP 1115 waivers (6 others were in review). Seven of the 14 approved waiversare SCHIP HIFA demonstrations. (29) Several ofthe approvals allow states to useSCHIP funds to cover new groups of individuals such as pregnant women, parentsof SCHIP and Medicaid-eligible children, and childless adults.

Benefit Levels

States may choose from three options when designing their SCHIP programs. They may expand their existing Medicaid program, (30) create a new "separate state"insurance program, or devise a combination of both approaches. As of July 8, 2003,20 jurisdictions implemented Medicaid expansions (ME), 19 created separate stateprograms (SSP), and the remaining 17 developed a combination approach(COMBO). (31)

States that choose to cover targeted low-income children under Medicaid must provide the full range of mandatory Medicaid benefits, as well as all optional servicesspecified in their state Medicaid plans. In creating a new separate state insuranceprogram, states may choose any of three benefit options: (1) a benchmark benefitpackage, (2) benchmark equivalent coverage, or (3) any other health benefits planthat the Secretary determines will provide appropriate coverage to the targetedpopulation of uninsured children.

A benchmark benefit package is one of the following three plans: (1) the standard Blue Cross/Blue Shield preferred provider option plan offered under theFederal Employees Health Benefits Program (FEHBP), (2) the health coverage thatis offered and generally available to state employees in the state involved, or (3) thehealth coverage that is offered by an HMO with the largest commercial(non-Medicaid) enrollment in the state involved.

Benchmark equivalent coverage is defined as a package of benefits that has the same actuarial value as one of the benchmark benefit packages. A state choosing toprovide benchmark equivalent coverage must cover each of the benefits in the "basicbenefits category." The benefits in the basic benefits category are inpatient andoutpatient hospital services, physicians' surgical and medical services, lab and x-rayservices, and well-baby and well-child care, including age-appropriateimmunizations. Benchmark equivalent coverage must also include at least 75% ofthe actuarial value of coverage under the benchmark plan for each of the benefits inthe "additional service category." These additional services include prescriptiondrugs, mental health services, vision services, and hearing services. States areencouraged to cover other categories of services not listed above. Abortions may notbe covered, except in the case of a pregnancy resulting from rape or incest, or whenan abortion is necessary to save the mother's life.

Title XXI gives states authority to determine the amount, duration and scope of the services covered unless the state chooses to provide a benchmark plan. Benchmark equivalent plans may limit their benefit packages in any way they chooseas long as the entire package is certified to be an actuarial equivalent of thebenchmark plan.

While federal law permits states to impose cost-sharing for some beneficiaries and services, cost-sharing is not permitted for well-baby or well-child care services,and American Indian and Alaskan Native children are exempt from all cost sharing.Apart from these general exceptions, states that choose to cover targeted low-incomechildren under Medicaid must follow the cost-sharing rules of the Medicaid program. Generally, Medicaid does not allow cost sharing for medical services (e.g.,deductibles, co-payments, and co-insurance), and cost sharing associated withprogram participation (e.g., enrollment fees, and premiums) is limited to nominalamounts. If the state implements SCHIP through a separate state program, premiumsor enrollment fees may be imposed, but they are subject to limits.

Under separate state programs, for families with incomes under 150% of the federal poverty line, income-related charges (i.e., enrollment fees, premiums, orsimilar charges tied to the total gross family income) may not exceed the amounts setforth in federal Medicaid regulations. (32) Forchildren whose family income is at orbelow 100% FPL, service-related cost-sharing is limited to nominal amounts asdefined in Medicaid regulations. (33) For childrenwhose family income is between101% and 150% FPL, service-related cost-sharing must meet "adjusted nominalamounts." (34) These adjusted amounts reflect theenrollees' increased ability to pay. Cumulative cost-sharing maximums for each 12-month enrollment period must notexceed 5% of the family's annual income. (35)

For families with income above 150% of the federal poverty line, service-related cost sharing may be imposed in any amount, provided cost-sharing for higher incomechildren is not lower than cost-sharing for lower income children. However, the totalannual aggregate cost-sharing (including premiums, deductibles, co-payments andany other charges) for all targeted low-income children in the family may not exceed5% of total family income for the year. Regardless of the family's cumulativecost-sharing maximum, states must: (1) inform families of these limits; (2) providea mechanism for families to stop paying once the cost-sharing limits have beenreached; and (3) provide reasonable notice of any missed payments prior todisenrollment.

Early in the program, enrollment rates were low, but by FY2002, the pace of enrollment had increased. Estimates from CMS (36) indicated that as of December1998, nearly 1 million children (982,000) were enrolled in SCHIP under 43operational state programs, and by the end of FY1999, nearly 2 million children(1,979,459) were enrolled under 53 operational state programs. (37) Preliminary datashow that total SCHIP enrollment reached 5.3 million children in FY2002. Of thistotal, 1.3 million were targeted low-income children covered under Medicaidexpansions, and 4.0 million children were covered in separate state programs. (38) Preliminary data show that total SCHIP enrollment for adults reached 349,118 inFY2002.

SCHIP spending during the first 4 years of the program, (FY1998-FY2001), was well below federal appropriations, but has increased over time. (39) For FY1998,SCHIP program federal expenditures totaled $122 million; for FY1999, $922million; for FY2000, $1.93 billion, and for FY2001 federal expenditures increasedto $2.62 billion. In FY2002, federal SCHIP expenditures equaled $3.78 billion.

FY2002 is the first fiscal year in which state spending of available SCHIP funds exceeded the SCHIP program appropriations for that year. This trend is likely tocontinue as additional states spend all of their available funds and are eligible forredistributions of unspent funds from earlier annual allotments. However, whilemore states will be eligible for redistributions there will be fewer funds available forredistribution to such states. In the absence of statutory changes to SCHIP financingprovisions, CMS projects shortfalls for some states over the second half of theprogram (FY2003-FY2006). In its March 2003 baseline, CBO projected that totalfederal SCHIP spending will grow to $5.0 billion in FY2007.

Note : For more information about SCHIP, see CRS Report RL30473 , The State Children's Health Insurance Program (SCHIP): A Brief Overview; CRS Report RL30642, The State Children's Health Insurance Program: Eligibility, Enrollment,and Program Funding; and CRS Report RL31977, SCHIP Financing Issues for the108th Congress.

4. General Assistance (Medical Care Component) (40)

Funding Formula

No federal funds are available for this program.

As of mid-1998, medical assistance for recipients of non-federally funded cash aid (generally known as General Assistance (GA)) and for other persons ineligiblefor Medicaid (41) was offered in 32 states, includingthe District of Columbia (D.C.). In 13 jurisdictions, this aid was fully state funded; (42) in seven states, costs generallywere paid by a combination of state and local funds; (43) in seven states, medicalbenefits were wholly paid with local funds. (44) Infive states, even though they werenot in categories usually eligible for federally-funded medical assistance, recipientsof GA cash received Medicaid. (45) This aid wasallowed under waivers from Medicaidlaw, and costs were paid by federal and state funds. In the remaining 19 states,ongoing medical benefits generally were not offered to persons ineligible forfederally-funded aid. (46) Estimated GA medicalpayments (state-only dollars) inFY2002 totaled $5 billion.

Eligibility Requirements

To receive GA medical assistance, a person generally must be deemed needy and live where the program is available. In 1998, most of the 32 states offering thisaid made eligible all recipients of GA cash payments, but several specified thatpersons had to be in medical need and some imposed special medical incomeeligibility requirements. Thus, Ohio offered medical assistance to all GA recipientsand to needy able-bodied persons who would become incapacitated withoutmedication. However, some jurisdictions set more liberal eligibility rules for GAmedical and than for GA cash benefits.

Benefit Levels

Using waivers from federal law, some states in mid-1998 made all GA recipients eligible for Medicaid and its comprehensive services: Delaware (for itsDiamond State Health Plan), Hawaii (for QUEST), and Oregon (for the OregonHealth Plan). D.C. and Massachusetts also offered Medicaid to all GA cashrecipients. Among the other 27 states with medical assistance for recipients of GAcash, benefits generally were less comprehensive than those of Medicaid. Fivestates (47) offered inpatient and outpatient hospitalcare, physician services, andprescription drugs; another six (48) added nursinghome care to the foregoing list ofbenefits. Some restricted GA medical benefits to physician services and prescriptiondrugs, and some offered aid only in emergencies. Maryland's programs of PrimaryCare for the Medically Indigent and Maryland Pharmacy Assistance (for GA disabledadults and others who meet medical income eligibility limits) provided only basicphysician services and a limited list of prescription drugs. The Urban Institute studynoted that most of the states and counties without a medical component in their GAprogram have alternative medical assistance available to at least some GA cashrecipients. Examples include indigent health care programs or charity hospitalsystems.

Data from the Centers for Medicare and Medicaid Services (Office of the Actuary, National Health Statistics Group) indicate that state-local outlays for GAmedical assistance in FY2002 totaled $4,955.8 million, up 5% from FY2001, butdown 10.4% from the FY1992 record high of $5,531.7 million. These data excludepremiums paid by welfare agencies for Medicare and for health maintenanceorganizations (HMOs) and health insurance, which presumably are reimbursed byMedicaid. Composition of FY2002 GA medical spending: hospital care, 37.5%;prescription drugs, 43.4%; payments to medical professionals, 12.4% (physician andclinical services, 10.2%; dentists, 0.9%; and other professionals, 1.2%); nursinghomes, 3.9%; home health care, 0.5%; other care, 2%; and durable medicalequipment, 0.2%.

The composition of GA medical outlays changed over the 1993-2003 decade. Spending on prescription drugs rose from $901 million to $2.2 billion; but outlaysfor hospitals dropped from $3.2 billion to $1.9 billion. The share of expendituresattributed to prescription drugs more than doubled; the hospital share dropped by40%.

5. Indian Health Services

Funding Formula

Indian Health Service (IHS) appropriations are allocated among its 12 service areas through a "historical," or "program continuity" basis, under which each areacan expect to receive its recurring base budget from the previous year, plus anincrease in certain mandatory cost categories. Using a Resource AllocationMethodology (RAM), the Service distributes a small portion of its appropriation toareas and tribes based on documented health deficiencies. Tribes may assume fromthe IHS the administration and operation of health services and programs in theircommunities, and about 52% of IHS funds are used by Indian tribes to deliver IHSservices to their own communities. The Service collects reimbursements from theMedicare and Medicaid programs for services that it provides to members of itseligible population who are also eligible for those programs. In FY2001, IHScollected $484 million in reimbursements, while in FY2002, this number increasedto $514 million. For FY2002, total program appropriations were $2.824 billion, up$135 million from the FY2001 appropriation of $2.689 billion.

Eligibility Requirements (49)

Eligible under Public Health Service regulations are persons of American Indian or Alaskan Native (AI/AN) descent who: (1) are members of a federally recognizedIndian tribe; (2) reside within an IHS Health Service Delivery Area (HSDA); or (3)are the natural minor children (18 years old or younger) of such an eligible memberand reside within an IHS HSDA. The program imposes no income test; any eligibleAI/AN can receive health services. The program serves Indians living on federalreservations, Indian communities in Oklahoma and California, and Indian, Eskimo,and Aleut communities in Alaska. According to the 2000 census, more than 57% ofAI/AN reside in urban areas. Under the Indian Health Care Improvement Act of1976, P.L. 94-437 , as amended, the IHS contracts with 34 urban Indian organizationsto make health services more accessible to 605,000 urban Indians. Combined, allIHS programs serve between 1.6 million AI/AN.

Benefit Levels

The IHS provides hospital, medical, and dental care and environmental health and sanitation services as well as outpatient services and the services of mobileclinics and public health nurses, and preventive care, including immunizations andhealth examinations of special groups, such as school children. All services areprovided free of charge to beneficiaries. If the eligible AI/AN has private insurance,IHS will be reimbursed for the services provided. Benefits are provided through 155service units, 49 IHS hospitals, 5 school health centers, 231 health centers, and over309 smaller health stations and satellite clinics; Alaskan village clinics; contractswith non-federal hospitals, clinics, private physicians and dentists; and contractualarrangements with state and local health organizations.

6. Consolidated Health Centers

Funding Formula

The Health Care Safety Net Amendments of 2002, P.L. 107-251 , amended the Public Health Service Act (PHS Act) to reauthorize the health centers grant programthrough FY2006. The health centers program includes community health centers,migrant health centers, health centers for the homeless, and health centers forresidents of public housing. They are codified under Section 330 of the PHS Act. The program does not have a statutory formula. The grant applicant must assumepart of the project costs, which are determined on a case-by-case basis.

Centers receive grant money to provide primary care services to groups that are determined to be medically underserved. Grants are awarded through the Bureau ofPrimary Health Care of the Health Resources and Services Administration (HRSA)of the U.S. Department of Health and Human Services (HHS). Centers are requiredto seek third-party reimbursement from other sources, such as Medicare andMedicaid. State and local governments may also contribute. Centers may receiveone or more of the following types of grants: (1) planning grants, to plan anddevelop health centers or a comprehensive service delivery network; (2) operatinggrants, to assist with operation costs of a center; and (3) infant mortality grants, toassist in the reduction of infant mortality and morbidity among children less than 3years of age and to develop and coordinate service and referral arrangements betweenhealth centers and other entities for the health management of pregnant women andchildren. FY2002 appropriations were $1.3 billion.

Eligibility Requirements (50)

A health center is an entity that provides health care services to a medically underserved population, or a special medically underserved population comprised ofmigratory and seasonal agricultural workers, the homeless, and residents of publichousing by providing required primary health services and additional health servicesas may be appropriate for particular centers. By regulation, medically underservedareas are designated by the HHS Secretary on the basis of such factors as: (1) ratioof primary care physicians to population, (2) infant mortality rate, (3) percentage ofpopulation aged 65 and over, and (4) percentage of population with family incomebelow the poverty level. Profit-making organizations are not eligible for healthcenter grants.

All residents of an area served by a health center are eligible for its services.

Benefit Levels

Regulations limit free service to families with income at or below the federal poverty income guidelines. The 2003 federal poverty income guideline in the 48contiguous states is $18,400 for a family of four. Nominal fees may be collectedfrom these individuals and families, under certain circumstances. Individuals andfamilies with annual incomes greater than the poverty guideline but below 200% ofit are required to pay for services from a fee schedule adjusted on the basis of thepatient's ability to pay. Full payment is required from those with income thatexceeds twice the poverty level.

The centers provide a range of primary health services on an ambulatory basis, including diagnostic, treatment, preventive, emergency, transportation, andpreventive dental services. They can arrange and pay for hospital and othersupplemental services in certain circumstances if approved by the Secretary.

Funding for the health centers for FY2003 was $1.5 billion (appropriations), and the annual service population was an estimated 9.6 million persons.

Note: For more information, see CRS Report 97-757, Federal Health Centers Program .

7. Maternal and Child Health Services Block Grant (51)

Funding Formula

The Maternal and Child Health (MCH) Services Block Grant supports activities to improve the health status of mothers and children. Most of the funds aredistributed to state governments to pay for services; however, some funds are setaside for use by the federal government to finance special projects of regional andnational significance (SPRANS) and the community integrated service systemsprogram (CISS). State allocations are based on: (1) a state's share of FY1981 levelsof funding for programs that were combined into the block grant when it wasauthorized in 1981; and (2) the number of low-income children in the state. Statesmust contribute $3 for every $4 of federal funds awarded. States are required to useat least 30% of their block grant allocations for preventive and primary care servicesfor children and 30% for services for children with special needs. States may use theremaining 40% for services for either of these groups or for other appropriatematernal and child health services, including preventive and primary care services forpregnant women, mothers, and infants up to age 1. States may use no more than 10%of their allocations for administrative costs.

Federal law requires that 15% of the appropriation for the block grant up to $600 million be set aside for SPRANS activities in categories that include research,training, genetic disease programs and newborn genetic screening, hemophiliaprograms, and maternal and child health improvement, especially infant mortality.

When the appropriation for the block grant exceeds $600 million, the law authorizes that 12.75% of the amount over $600 million be set aside for CISSprojects. Funds from this set-aside are used for initiatives that include casemanagement, projects to increase the participation of obstetricians and pediatriciansin both the block grant program and Medicaid, integrated delivery systems, rural orhospital-based MCH projects, and community-based programs including day care forchildren who usually receive services on an inpatient basis. FY2002 appropriationswere $731 million, and non-federal matching funds were estimated at $548 million.(The FY2003 appropriation declined to $730 million.)

Eligibility Requirements (52)

States determine eligibility criteria for MCH block grant services. The law provides that block grant funds are to be used by the states "to provide and to assuremothers and children (in particular those with low income or with limited availabilityof health services) access to quality maternal and child health services." Low-incomemothers and children are those with family income below 100% of federal povertyguidelines -- $18,400 per year for a family of four in 2003 (higher in Alaska andHawaii).

Benefit Levels

States determine the level of services provided under the block grant. These services may include prenatal care, well-child care, dental care, immunization, familyplanning, and vision and hearing screening services. They may also include inpatientservices for children with special health care needs, screening services for lead-basedpoisoning, and counseling services for parents of sudden infant death syndromevictims.

States are allowed to charge for services; however, they may not charge mothers and children whose family incomes are below federal poverty guidelines. Chargesmust be based on a sliding scale that reflects the income, resources, and family sizefor those with family incomes above poverty.

In FY2002 Title V provided services to 2.2 million pregnant women, 3.7 million infants, almost 1 million children with special health care needs, and 2.2million other women of child-bearing age.

Note: For more information, see CRS Report 97-350, Maternal and Child Health Block Grant .

8. Title X Family Planning Services

Funding Formula

Grants are provided for voluntary family planning services through the family planning program, established by Title X of the Public Health Service Act. There isno requirement that grantees match federal funds at a specified rate, but regulationsspecify that no family planning clinic project may be fully supported by Title Xfunds. Congress has continued to appropriate money for the program even thoughTitle X has not been reauthorized since FY1985. Grants for family planning clinicsare made to states and territorial health departments, hospitals, universities and otherpublic and nonprofit agencies. Appropriations for FY2003 were $273 million.

Eligibility Requirements (53)

The law requires that priority for clinic services go to persons from low-income families. Clinics must provide family planning services to all persons who requestthem, but the priority target group has been women aged 15-44 from low-incomefamilies who are at risk of unplanned pregnancy. Clinics are required to encouragefamily participation.

Clinics must provide services free of charge (except to the extent that Medicaid or other health insurers cover these services) to persons whose incomes do notexceed 100% of the federal poverty income guidelines ($18,400 for a family of fourin the 48 contiguous states in 2003). A sliding payment scale must be offered forthose whose incomes are between 100% and 250% of the poverty guideline.

Benefit Levels

Participating clinics must offer a broad range of family planning methods and services. Required services include natural family planning methods and supplies,counseling services, physical examinations (including testing for cancer and sexuallytransmitted diseases), infertility services, services for adolescents, pregnancy tests,periodic follow-up examinations, referral to and from other social and medicalservice agencies, and ancillary services. The law forbids use of any Title X funds inprograms where abortion is a method of family planning.

In FY2002, approximately 4.8 million persons received family planning services through 4,600 clinic sites supported by 85 service grantees. The clinics administeredmore than 3 million cervical cancer screenings, 2.8 million breast cancer screenings,and 600,000 HIV tests. An estimated one-third of all clients served at Title X clinics,1.6 million per year, are adolescents.

Note: For more information, see CRS Report 98-1048, The Title X Family Planning Program.

9. Medical Assistance to Refugees, Asylees, Other Humanitarian Cases

Funding Formula

The Immigration and Nationality Act (INA) authorizes 100% federally funded medical assistance for needy refugees and asylees during their first 3 years in theUnited States, and other legislation authorizes similar assistance for certain Cubanand Haitian entrants (54) and for certainAmerasians. (55) However, since FY1992,funding has been appropriated to provide medical care only for the first 8 monthsafter entry. These benefits are administered by the Department of Health and HumanService's Office of Refugee Resettlement (ORR). For refugee medical assistance(RMA), ORR expenditures amounted to an estimated $74 million in FY2002. (56)

Eligibility Requirements (57)

A person must (a) have been admitted to the United States as a refugee or asylee under the Immigration and Nationality Act or have been paroled as a refugee orasylee under the Act, (b) be a Cuban or Haitian paroled into the United Statesbetween April 15 and October 20, 1980, and designated a "Cuban/Haitian entrant,"or be a Cuban or Haitian national paroled into the United States after October 10,1980, (c) be a person who has an application for asylum pending or is subject toexclusion or deportation and against whom a final order of deportation has not beenissued, or (d) be a Vietnam-born Amerasian immigrant fathered by a U.S. citizen.

If a needy person in one of the above groups meets the income and assets tests prescribed by his state for Medicaid eligibility but does not otherwise qualify for thatprogram because of its categorical requirements, such as family composition, theperson is eligible for RMA. Under the Personal Responsibility and WorkOpportunity Reconciliation Act of 1996 ( P.L. 104-193 ), as amended by P.L. 105-33 ,these persons are now eligible for 7 years after entry (earlier law gave permanenteligibility). After 7 years their continued participation is at state option, as it is withother legal permanent residents. (58)

Benefit Levels

Medical benefits consist of payments made on behalf of needy refugees to doctors, hospitals, and pharmacists. Federal law requires state Medicaid programsto offer certain basic services, but authorizes states to determine the scope of servicesand reimbursement rates, except for hospital care.

Cash Aid

10. Supplemental Security Income (SSI)

Funding Formula

Since its January 1974 beginning, Supplemental Security Income (SSI) has provided a minimum income floor, financed by U.S. general revenue andadministered by the Social Security Administration (SSA), to persons eligible underfederal rules. Some states chose to provide additional payments to SSI recipients attheir own expense. In addition, a "grandfather" clause requires states to providesupplements to a small number of persons, previously enrolled in the pre-SSIprograms of federal-state cash aid for needy aged persons and blind or disabledadults, whose income otherwise would fall below what it was in December 1973. (59)

If a state chooses to have the federal government administer its supplements, it must agree to provide supplements for all federal SSI recipients of the same class andpay an administration fee to SSA for the service. (60) If states administer their ownsupplements, they are generally free to design their own supplementary programs andmay adopt more restrictive eligibility rules than those of SSI. As of January 2003,the federal government administered supplements for 15 jurisdictions.

Total SSI outlays in FY2002 were $38.5 billion, with $33.9 billion (87% of the total) from federal funds. The federal share of maximum SSI benefits ranged from50% in Alaska to 100% in the seven jurisdictions where no recipient received asupplement (Arkansas, Georgia, Kansas, Mississippi, Tennessee, West Virginia, andthe Northern Mariana Islands).

Eligibility Requirements (61)

Title XVI of the Social Security Act entitles to SSI payments persons who are (1) aged 65 and over, blind or disabled (adults and children of any age); (2) whosecounted income and resources fall within limits set by law and regulations, and (3)who live in one of the 50 states, the District of Columbia, or the Northern MarianaIslands. Also eligible is a child who lives overseas with a parent who is on militaryassignment, provided the child received SSI before the parent reported for overseasduty.

To be eligible for SSI on grounds of disability, an adult must be unable to engage in any "substantial gainful activity" (62) because of a medically determinedphysical or mental impairment expected to result in death or that has lasted, or canbe expected to last, for at least 12 months. Under terms of the 1996 welfare reformlaw ( P.L. 104-193 ) a child under age 18 may qualify as disabled if he or she has animpairment that results in "marked and severe" functional limitations. Previously achild could qualify if his impairment were of "comparable severity" to that of aneligible adult.

In addition, to qualify for SSI a person must be (1) a citizen of the United States or (2) if not a citizen, (a) an immigrant who was enrolled in SSI on August 22, 1996or who entered the United States by that date and subsequently became disabled; (b)a refugee or asylee who has been in the country or granted asylum, respectively, forfewer than 7 years, (c) a person who has worked long enough to be insured for SocialSecurity, usually 10 years (work test gives credit to work by spouse or parent of analien child); or (d) a veteran or active duty member of the armed forces (spouses orunmarried dependent children of veterans/military personnel also qualify).

For basic federal benefits, countable income limits in 2003 are $582 monthly per individual and $829 per couple. These income ceilings equal maximum federalbenefits of the program (see below for benefit details and for rules about whatincome is disregarded). For states with supplementary SSI benefits, countableincome limits are higher, ranging in 2002 up to $907 monthly per individual (livingindependently) in Alaska.

Since 1989, the countable resource limit has been $2,000 per individual and $3,000 per couple. Excluded assets include a home; the first $2,000 in equity valueof household goods and personal effects; the full value of an auto if needed foremployment or medical treatment, or if modified for use by a handicapped person,otherwise, the first $4,500 in market value of the auto; and a life insurance policy notexceeding $1,500 in cash surrender value and burial plots and funds, subject to alimit.

P.L. 98-21 requires the Social Security Administration (SSA), when notifying Social Security beneficiaries aged 64 about their approaching eligibility for Medicare,to inform them also about SSI.

Benefit Levels

The Social Security Act establishes benefit levels and requires that whenever Social Security benefits are increased because of an automatic cost-of-livingadjustment (COLA), SSI benefits be increased at the same time and by the samepercentage.

SSI basic monthly guarantees: (63)

From 1975 through 1982, COLAs were paid each July. In passing the Social Security Amendments of 1983, Congress accepted President Reagan's proposal todelay the 1983 COLA for 6 months, to January 1984, and thereafter to adjust benefitseach January. At the same time it voted an increase of $20 monthly in SSI benefits($30 per couple), payable in July 1983.

States that supplement SSI benefits are required to "pass through" to recipients an increase in the federal basic benefit. (64) However, when Congress deferred the 1983COLA and instead enacted the $20 benefit increase (about 7%), it required states topass through only about half this amount (the 3.5% increase that the regular COLAwould have yielded). As of January 2002, state supplements for aged persons livingindependently were offered in 25 states and ranged from $1.70 in Oregon to $362 inAlaska.

To assure some gain from work, SSI disregards a portion of recipients' earnings; namely, $65 per month, plus 50% of the balance. (65) Because of this rule, aged SSIrecipients without Social Security benefits or other unearned income who workremain eligible for a declining SSI payment until gross earnings equal double theirbasic benefit plus $85 monthly. (66) In a state thatdoes not supplement the basic federalbenefit, the gross income limit in 2003 for an aged SSI recipient with only wageincome is $1,189 monthly in earnings. The gross income limit is higher in states thatsupplement the federal benefit.

In all but 11 states, (67) SSI recipients automatically are eligible for Medicaid. Inthe 11 states with more restrictive eligibility rules, states must deduct medicalexpenses of SSI recipients in determining their countable income.

Disabled SSI recipients whose counted monthly earnings exceed the $800 "substantial gainful activity" test that determines disability status are eligible forspecial cash benefits (calculated as though they still had disability status), as long astheir gross earnings are below the regular SSI ceiling ($1,189 in 2003 in a statewithout supplementation). The special cash benefit preserves Medicaid eligibility forthe disabled worker. (68) In 1996 ( P.L. 104-121 ),Congress ended SSI (and SocialSecurity Disability Insurance) benefits for persons disabled because of their addictionto drugs or alcohol.

In December 2002, federally administered SSI benefits went to 6,787,867 persons, (69) including 914,821 children. Benefitsaveraged $322 to aged recipients,$439 to the blind, $418 to the disabled (and $488 for children). About 36% of theNation's SSI recipients of federally administered payments also receive SocialSecurity, and 4.1% have earnings (December 2002 data). As of that date, SSI checkswere supplementary to Social Security benefits for 58% of aged SSI recipients, 34%of blind recipients, and 30% of disabled recipients. In December 2001, income wasearned by about 2% of aged recipients and by 7% and 5%, respectively, of blind anddisabled recipients. Social Security benefits of dual recipients averaged $414. Earnings of SSI recipients averaged $318 monthly. (70)

FY2002 SSI expenditures totaled $38.5 billion (federal funds, $33.9 billion; state funds, $4.7 billion). Federal SSI spending represented 1.7% of all federaloutlays.

Note: See also CRS Report 94-486 , Supplemental Security Income (SSI): A Fact Sheet .

11. Earned Income Tax Credit (EITC) (71)

Funding Formula

This benefit is 100% federally funded and is provided through the tax system. FY2002 outlays (tax year 2001) totaled $27.8 billion. (Another $4.5 billion in creditswas used to offset taxes and is not included in this report.)

Eligibility Requirements

Unlike most tax credits, the EITC is a "refundable" credit. A person need not owe or pay any income tax to receive the EITC. However, an eligible worker mustapply for the credit by filing an income tax return at the end of the tax year. A personmay receive advance payment of the credit by filing an earned income eligibilitycertificate with his or her employer. (72) To beeligible for the EITC, married couplesgenerally must file a joint income tax return. The EITC is a percentage of theperson's earnings, based on the number of children, up to a maximum earned incomeamount. Beginning at the phase-out income level, the EITC is reduced by thephase-out percentage for every dollar of earnings (or adjusted gross income [AGI],whichever is greater) above the phase-out income level. Persons with earnings abovethe level at which the EITC is reduced to $0 are not eligible for the EITC.

The Earned Income Tax Credit (EITC) is available to a parent (or parents) withearnings and a qualifying child. A qualifying child must be: (1) a son, daughter,grandson, granddaughter, stepson, stepdaughter or foster child of the tax filer; (2) beless than age 19 (24 if a full-time student); and reside with the tax filer for more thanone-half of the tax year (all year if a foster child). The tax filer does not have to meeta financial support test for the child and the child does not need to be claimed by thetax filer as a dependent to qualify for the earned income credit. The tax filer must bea U.S. citizen or resident alien and live in the United States for more than one-halfof the tax year, unless the tax filer is in the U.S. military and on duty overseas.

The EITC also is available to workers ages 25 through 64 who have no eligible children and whose AGI is less than $11,060 ($12,060 for married couples) in taxyear 2002. (73)

In 1995, Congress established a limit on investment income for EITC eligibility. (74) The 1996 welfare reform lawchanged filing procedures to make it lesslikely that undocumented workers could gain access to the EITC by requiring boththe tax filer and qualifying children to have social security numbers. In 1996 and1997, Congress broadened the definition of income used to phase out the EITC forfiling units above the phase-out income threshold. (75)

In response to an Internal Revenue Service (IRS) study indicating a high incidence of unwarranted claims from tax filers, Congress enacted provisions againstfraud in the Taxpayer Relief Act of 1997 ( P.L. 105-34 ). A tax filer found to haveclaimed the credit fraudulently is barred from claiming the EITC for 10 years; onewho claimed the credit by reckless or intentional disregard of EITC rules is barredfor 2 years. The law also imposes a $100 penalty on paid preparers who fail to fulfill"due diligence requirements" (as specified by IRS) in filing EITC claims.

Benefit Levels

The EITC was enacted in 1975 as a temporary measure to return a portion of the employment taxes paid by lower income workers with children. The EITC becamepermanent in 1978, with a maximum benefit of $500 and no adjustment for familysize. In the 1990s, Congress increased the credit, provided expansion of the creditbased on family size and extended the credit to childless workers.

The Economic Growth and Tax Relief Reconciliation Act of 2001 ( P.L. 107-16 ), contained changes to the EITC with respect to married tax filers filingjointly. The law increased the beginning and ending of the EITC phase-out range formarried couples filing jointly by $1,000 in taxable years beginning in 2002-2004; by$2,000 in taxable years 2005-2007; and by $3,000 in years after 2007 (adjustedannually for inflation after 2008). The law also simplified the definition andcalculation of the credit: tax filers no longer must include nontaxable income fromemployment (for example, excludable dependent care or education assistancebenefits) and may use adjusted gross income (AGI - a prominent line on all taxreturns) rather than modified adjusted gross income (which required a number ofadditions and subtractions to AGI).

EITC Treatment by Other Means TestedPrograms. Before 1996, the federal rules for treatment of theEITC in determining eligibility for means-tested programs varied by program andchanged several times. The Omnibus Reconciliation Act of 1990 (OBRA 1990, P.L.101-508 ) provided that EITC payments were not to be counted as income by the Aidto Families with Dependent Children (AFDC), Supplemental Security Income (SSI),Medicaid, Food Stamps, and certain low-income housing programs. The 1996welfare reform law ( P.L. 104-193 ), by repealing AFDC, ended federal rules for thetreatment of the EITC by the family welfare program; thus, states now may treat theEITC in any way they wish in their Temporary Assistance to Needy Families (TANF)programs. However, P.L. 105-34 disallowed TANF recipients engaged in workexperience or community service ("workfare") the EITC for TANF earnings to theextent the payments are subsidized.

EITC Benefit Levels. The followingtable shows the parameters for the EITC for tax years 2001 through 2003.

Table 12. EITC Parameters for Tax Years 2001-2003

Note: For more information about EITC, see CRS Report RL31768(pdf) , The Earned Income Tax Credit (EITC): An Overview .

12. Temporary Assistance for Needy Families (TANF)

Note: This entry describes use of TANF block grant funds for cash aid. Federal plusstate expenditures in FY2002 for TANF cash aid (76) were estimated at $10.4 billion(excluding administrative costs). For TANF child care, TANF work programs andactivities, and TANF services, see separate entries in this report.

Funding Formula

Federal Funding. The 1996 welfare reform law ( P.L. 104-193 ) repealed Aid to Families with Dependent Children(AFDC), Emergency Assistance (EA), and the Job Opportunities and the Basic Skills(JOBS) training program, and combined recent federal funding levels for the threeprograms into a block grant ($16.5 billion preappropriated annually through FY2002)for Temporary Assistance for Needy Families (TANF). (77) The law entitles each stateto an annual family assistance grant roughly equal to peak funding received for therepealed programs in FY1992-FY1995. It also entitles the territories to TANF grants,and it permits Indian tribes, defined to include Native Alaskan Organizations, tooperate their own tribal family assistance plans with a block grant (78) deducted fromtheir state's TANF grant.

Added to the basic federal block grant for qualifying states are other funds of five kinds: supplemental grants for 17 states with low TANF grants per poor person,compared with the national average, and/or high population growth ($800 million,FY1998-FY2001); (79) bonuses for up to five stateswith the greatest decline innon-marital birth ratios and a decline in abortion rates ($400 million,FY1999-FY2002); bonuses for states with "high performance" in meeting programgoals ($1 billion, FY1999-FY2003); matching grants (at the Medicaid matching rate)from a contingency fund for states with high unemployment and/or increased foodstamp caseloads ($1.96 billion, FY1997-FY2001); and Welfare-to-Work (WtW)grants (most of which required 33.3% state matching funds) for efforts, including jobcreation, to move into jobs long-term welfare recipients with barriers to employment($3 billion for FY1998-FY1999). (80) For adescription of the separate WtW program,which is administered by the Labor Department, see program no. 78 -- page 213. TANF law also established a $1.7 billion revolving loan fund for state use in TANFoperations.

State-local Funding. To avoid penalties, states must spend a specified amount of their own funds on TANF-eligiblefamilies. (81) The required "maintenance-of-effort"(MOE) level is from 75% to 80%of the state's "historic" expenditures, defined as the state share of FY1994expenditures on AFDC, EA, JOBS, and AFDC-related child care. Nationally, the75% MOE level equals $10.4 billion annually; if a state fails to meet workparticipation minimums, the MOE level rises to 80%. Expenditures of state funds inseparate state programs (or in TANF programs that segregate state funds from federalfunds) are countable toward the general TANF MOE rule. However, for thecontingency fund (82) , a higher state spendingrequirement is imposed (100% of thehistoric level), and spending in separate state programs cannot be counted toward thisMOE.

In FY2002, TANF outlays for cash assistance were estimated at $10.419 billion, with $4.848 billion (47%) from federal funds. Total administrative costs forthe TANF block grant (including those for child care services, work activities, andother services) were $2.6 billion, with $1.6 billion (62%) from federal funds.

Eligibility Requirements (83)

Basic Eligibility. TANF permits a state to give ongoing basic cash aid (84) to anyneedy family that includes (a) a minorchild who lives with his/her parent or other caretaker relative; or (b) a pregnantwoman. As under AFDC, states decide who is "needy." Unlike AFDC, TANFallows states to aid needy children with an able-bodied and employed second parentin the home. More than 30 states have expanded eligibility by adopting one of moreof these policies: treating needy two-parent families on the same basis as one-parentfamilies, liberalizing treatment of earnings as a work incentive, and increasing assetlimits. Most states also aid pregnant women, but many require them to be in the lasttrimester of pregnancy, as AFDC did. Many state policy choices tend to restrict thecaseload. They include benefit cutoff time limits shorter than the limit in federal law,tough sanctions, welfare avoidance (diversion) payments, and family caps (reducedor zero benefits for new babies born to TANF mothers). Some of these changes,expansive and restrictive, were first adopted by states under waivers from AFDC law.

Ineligible Persons. Federal law makes ineligible for TANF-funded basic ongoing cash aid unwed mothers under 18(and their children) unless they live in an adult-supervised arrangement and, if theyare high school dropouts, attend school once their youngest child is 12 weeks old. Also ineligible: persons convicted of a drug-related felony for an offense occurringafter August 22, 1996 (date of enactment of TANF) unless the state exempts itselfby state law; aliens who enter the country after August 22, 1996 (barred from TANFfor 5 years after entry) and persons who fraudulently misrepresented residence toobtain TANF, food stamps, SSI, or Medicaid in more than one state. TANF may notbe paid to a person who fails to assign child support or spousal support rights to thestate. Except for limited "hardship" exemptions, (85) federal TANF funds may not beused for basic ongoing aid to a family that includes an adult who has received 60months of TANF "assistance" (86) while an adult,a minor household head, or a minormarried to a household head (benefit cutoff time limit). Seventeen jurisdictions haveadopted time limits shorter than the federal 60-month limit, and three others reducebenefits (by deducting the parent's share of the grant) before 60 months are reached. Twenty-five jurisdictions impose the federal time limit. Four continue aid (forchildren only) beyond 60 months, funding benefits with state dollars (California,District of Columbia, Rhode Island, and Washington). Five states continue fullfamily benefits with their own funds (Maine, Maryland, Michigan, New York --generally in noncash form -- and Vermont). (87) According to HHS calculations,767,241 TANF families (out of 1,825,239 families who had accrued fewer than 5years of TANF assistance in FY2002) were exempt from the time limit: 88%because they were child-only units; 6.4% because their programs were state-funded,5% because of approved welfare waivers, and 0.5% because they were in Indiancountry. In their TANF plans, more than half of the states said they would make"diversion" payments, usually one-time payments for immediate needs, in lieu ofongoing TANF aid.

Work/conduct Requirements. States must require a parent or caretaker who receives federally funded TANF basicongoing aid to engage in work, as defined by the state, after a maximum of 24months of ongoing basic aid (work trigger limit); 25 out of the 54 TANF jurisdictionswith TANF have chosen a shorter work trigger limit. Adopting a work firstphilosophy, many states require immediate work, and some identify job search as theimmediate work activity. To enforce the work requirement, the law sets fiscalpenalties for states that fail to achieve minimum participation rates. (88) For thispurpose, only specified work activities are countable. (89) Furthermore, to be countedas a participant, a TANF recipient must work for a minimum average number ofhours weekly. The work week is 20 hours for single adults with a child under 6 yearsold (almost half of all TANF adults) and 30 hours for single adults with an olderchild, effective in FY2000. A longer work week is imposed on two-parent families. States may exempt single parents caring for a child under age 1 from workrequirements (and disregard them in calculating work participation rates). Accordingto the fifth annual TANF report, 23 states exempt these parents, but 19 states requirea care-giving parent to work before the child is one, and four grant no exemptions.

The law imposes several sanctions for non-compliance with TANF rules. It requires states to sanction TANF recipients for refusal to engage in required work bydiscontinuing aid or by reducing aid to the family "pro rata" with respect to theperiod of work refusal. According to state plans, the penalty for a first work violationin 19 jurisdictions is loss of 100% of benefits until compliance or after a minimumpenalty period (this count includes two states that end benefits for quitting a job). For repeat offenses, penalties are increased; ultimately, under some circumstances 38states end family benefits (seven for life). The law requires TANF recipients toassign child support and spousal support rights to the state; if a recipient does notcooperate in efforts to establish paternity or to establish or enforce a support order,the state must reduce the family's benefit by at least 25%. If a TANF family'sbenefits are reduced because of failure to perform a required action, the state may notgive the family an offsetting increase in food stamps, and it may reinforce the cashpenalty by cutting food stamp benefits by up to 25%. (90) The law also allows states toreduce the family's benefit for failure to comply with a signed individualresponsibility plan. (91) Illustrative recipientobligations include school attendance,immunization of children, attendance at parenting or money management classes, andneeded substance abuse treatment. On the other hand, states that adopt a provisionknown as the Family Violence Option (FVO) are permitted under certain conditionsto waive federal TANF rules regarding work, time limits and child supportcooperation for victims of domestic violence. In FY2002, all but 10 TANFjurisdictions had adopted the FVO.

Income and Resource Limits. Under TANF, states have freedom to set income and resource limits. As of January2003, all but seven states had raised countable asset limits for cash recipients abovethe AFDC ceiling of $1,000 per family (about half doubled the limit); more than halfthe states now exclude one vehicle from countable assets; some permit restrictedsavings accounts; and one (Ohio) has eliminated asset limits altogether.

Benefit Levels

Cash Assistance. States determine amounts paid to families with no countable income and whether to disregard anyearnings as a work incentive and any assets as a savings incentive, (and if so, howmuch). Almost all jurisdictions have liberalized treatment of earnings to bolsterwork (two states, Connecticut and Virginia, disregard all recipient earnings below thefederal poverty guideline). One state (West Virginia) pays a $100 monthly bonus tomarried couples. At least three states (California, Hawaii, and Massachusetts) haveestablished a lower maximum benefit schedule for persons required to work than forthose exempt from work. More than 20 states pay a reduced benefit, or zero benefit,on behalf of a new baby born to a TANF mother (family cap).

A CRS telephone survey found that maximum benefits for a three-person TANF family in January 2003 ranged from $170 in Mississippi to $709 in Vermont and$923 in Alaska. In half the states, TANF maximum benefits for three persons wereunchanged from those for AFDC in July 1996, just before passage of TANF. Thismeans that their real value, after adjustment for price inflation, was down almost15.7%. However, four states increased benefits in real value (Louisiana, up 10%;Maryland, 9%; Mississippi, 22%, and West Virginia, 55%).

Wisconsin has made the most drastic change. Its TANF program, known as W-2 (for Wisconsin Works) no longer bases benefits on family size; it pays flatbenefits and conditions them on hours of required activity. For those in a communityservice job (CSJ), it pays $673 monthly (about 75% of full-time monthly minimumwages) plus food stamps, for 30 hours of weekly work (plus up to 10 hours ineducation and training). For those unable to participate in a CSJ, it pays $628monthly. (92) For each missed hour, it reducesbenefits by $5.15, the minimum wagerate. The Wisconsin program also seeks to create jobs for TANF recipients byoffering employers a $300 maximum wage subsidy monthly, and it establishes childcare plans and health care plans that all low-income families may join for a fee.

Related Programs. Although the 1996 law ended AFDC, it retained AFDC eligibility limits for use in Medicaid andin the programs of foster care and adoption assistance. It requires states to provideMedicaid coverage and benefits to children and family members who would beeligible for AFDC cash aid (under terms of July 16, 1996) if that program stillexisted. For this purpose, states may increase AFDC income and resource standardsby the percentage rise in the consumer price index since enactment of TANF; theyalso may adopt more liberal methods of determining income and resources. The lawrequires 12 months of medical assistance to those who lose TANF eligibility becauseof earnings that lift counted income above the July 16, 1996 AFDC eligibility limit. The law also makes foster care and adoption assistance matching funds available forchildren who would be eligible for AFDC cash aid (under terms of July 16, 1996) ifthat program still were in effect.

Other Benefits. Benefits other than basic ongoing assistance are known as "nonassistance." They are not subject toTANF's time limits or work requirements, but they must promote one or more of thegoals of TANF. States define who is eligible and may set different income limits fordifferent services. See entries on TANF child care, TANF work activities, andTANF services.

Note: For more detail, see CRS Report RL30695, Welfare Reform: State Programs of Temporary Assistance for Needy Families, CRS Report 96-720, TANFBlock Grant Program: Current Provisions Compared with AFDC, and Section 7 ofWays and Means Committee Print 108-6, the 2003 Green Book: TemporaryAssistance for Needy Families (TANF) , available on the Committee's web site at http://waysandmeans.house.gov/media/pdf/greenbook2003/Section7.pdf

13. Foster Care (93)

Funding Formula

Title IV-E of the Social Security Act provides federal matching funds to states for maintenance payments for the care of certain low-income children placed inlicensed foster care homes, private child care institutions (non-profit or for-profit),or public child care institutions that house no more than 25 persons. The matchingrate for a state is that state's Medicaid matching rate (see program no. 1 -- page 29). The FY2003 federal matching rate ranged from 50% to 76.62%. For certainadministrative costs of the program and expenses related to child placement, thefederal government offers 50% matching funds. States receive 75% federal matchingfor certain training expenses. FY2002 outlays were $8.6 billion, with $4.5 billion(52%) from federal funds.

Eligibility Requirements (94)

For a state to be eligible to claim federal foster care payments on behalf of a child, the child's removal from the home must be the result of a judicialdetermination that reasonable efforts have been made to enable the child to remainhome and that continuation in the home would be contrary to the child's welfare. States also may claim federal payments for children placed into foster care under avoluntary placement agreement between the child welfare agency and the child'sparents, if certain judicial findings are made within 180 days of the child'splacement. In addition, a child must meet the eligibility standards of the repealedAFDC program, as it existed in his state on July 16, 1996. (95) Finally, the child mustbe placed in a licensed home or institution.

Benefit Levels

States determine payments to foster parents and institutions, and children are automatically eligible for Medicaid. P.L. 96-272 requires that states make reasonableefforts to prevent the need to place children in foster care, and to reunify childrenwith their families when possible. ( P.L. 105-89 , enacted in 1997, allows certainexceptions to this requirement.) Each child in foster care must have a written caseplan, and states must hold administrative and judicial reviews of each child's caseaccording to a prescribed schedule.

In FY2002, administrative costs (including training and data collection expenses) were estimated to represent 54% of total federal spending for foster care. According to the most recent data collected from states by the Child Welfare Leagueof America, maintenance payments vary widely among states, ranging in FY2000from $216 monthly for a 2-year-old child in Missouri to $760 for a 16-year-old inConnecticut. Nationwide average monthly maintenance payments in FY2000 were$389 for a child age 2, $406 for a child age 9, and $465 for a child age 16.

(Note: A related program, now known as the Chafee Foster Care Independence Program, was created in 1986 ( P.L. 99-272 ) and expanded in 1999 ( P.L. 106-169 )and 2001 ( P.L. 107-133 ). As most recently amended, Section 477 of the SocialSecurity Act authorizes grants to states to assist foster children who are likely to "ageout" of foster care without returning to their original homes or being placed foradoption, and former foster children, with their transition to independent living. Thelaw also authorizes a separate grant to states to provide education and trainingvouchers to these youth. These programs are not means-tested, although it isassumed that the majority of beneficiaries are low-income. Expenditures for theseprograms are not included in this report.)

14. Child Tax Credit

Funding Formula

This benefit is 100% federally funded and is provided through the tax system. FY 2002 outlays (tax year 2001) totaled $5.1 billion. (Another $22.5 billion wasused to offset taxes and is not included in this report.)

Eligibility Requirements

To be eligible for the credit, taxpayers must have a child under age 17 at the close of the calendar year in which their tax year begins. The taxpayer must be ableto claim a dependent exemption for the child, and the child must be their son,daughter, grandson, granddaughter, stepson, stepdaughter, or an eligible foster child.The credit is phased out at higher income levels.

Benefit Levels

The Taxpayer Relief Act of 1997 ( P.L. 105-34 ) created a child credit of $400 in 1998, increasing to $500 for 1999 and thereafter. The Economic Growth and TaxRelief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16 ) increased the credit limitto $600 in tax years 2001 through 2004, to $700 in tax years 2005 through 2008,$800 in tax year 2009, and $1,000 in tax year 2010. The increases will expire in taxyear 2011 with the credit reverting to the prior law level of $500. The Jobs andGrowth Tax Relief Reconciliation Act of 2003 ( P.L. 108-27 ) raised the maximumcredit to $1,000 per child for tax years 2003 through 2004.

The credit is refundable for up to 10% of the taxpayer's earned income in excess of $10,000 for calendar years 2001-2004, indexed for inflation beginning in 2002(resulting in $10,500 for tax year 2003). Beginning in 2005, the credit is refundablefor up to 15% of the taxpayer's earned income above $10,000 (indexed). Beforepassage of EGTRRA, the child credit was refundable in two ways: (1) as asupplemental credit in coordination with the Earned Income Tax Credit (EITC) (thecredit was part of the child credit calculations, and had no separate form orcalculation requirements for taxpayers); and (2) as an additional credit for taxpayerswith three or more children, limited to the amount by which their social security taxesexceeded their earned income tax credit. (96)

The credit is phased out at the rate of $50 for each $1,000 (or fraction thereof) by which modified adjusted gross income (AGI) exceeds certain thresholds: forsingles and heads of households, $75,000; for married couples filing jointly,$110,000; and for married couples filing separately, $55,000.

Treatment by Other Means-Tested Programs. EGTRRA specified that the refundable portion of thechild credit does not constitute income and shall not be treated as a resource forpurposes of determining eligibility or the amount or nature of benefits under anyfederal program or any state or local program financed with federal funds.

15. General Assistance (Nonmedical Care Component) (97)

Funding Formula

No federal funds are provided for General Assistance (GA). GA is a general name for state and local programs that help some of the low-income persons who donot qualify for federally aided cash payments from Temporary Assistance for NeedyFamilies (TANF) or Supplemental Security Income (SSI). (98) GA is the most commonterm, but several other names are used. (99)

As of mid-1998, 25 states, including the District of Columbia (D.C.), operated statewide GA cash programs with uniform eligibility rules and, usually, uniformbenefit schedules. Of these programs, 20 were funded 100% by the state, (100) and fiverequired counties or localities to share costs with the state. (101) Nine states hadstatewide programs with county variations; in these states, all counties/localities wererequired to operate and fully fund GA programs. (102) One state (Nebraska) had auniform statewide program for the disabled and a statewide program with countyvariation for others. In addition, under state supervision, and with state/localfunding, most Virginia counties and many Wisconsin counties offered GA. In sixstates, with county funding only, some counties offered GA. (103) Finally, 10 states (104) had no program.

Eligibility Requirements

To receive GA, a person must be judged in financial need and must live where the program is available. Further, in most states, one must be disabled, elderly, orotherwise deemed unemployable. In mid-1998, 18 states (including New York andCalifornia, the two most populous states) allowed GA for needy able-bodied adults,but 13 restricted this aid to persons with children, and most conditioned it on meetingwork requirements. Many states provided GA to disabled or elderly persons who hadapplied for SSI and were awaiting determination of SSI eligibility (states arereimbursed by the Social Security Administration for interim payments made topersons found eligible). Some aided persons with a temporary disability that did notqualify them for SSI. A few offered GA to persons enrolled in a drug or alcoholabuse treatment program. Some states made eligible "unattached" children, those notliving with a relative and hence ineligible for TANF.

Eleven of the statewide programs imposed no categorical eligibility limits; they (or some of their counties or localities) offered aid to any person needy under theirstandards who did not qualify for federally funded aid: Alaska; California (LosAngeles County); Idaho (Ada County); Indiana (Center Township of MarionCounty); Iowa (Polk County); Maine; Nebraska; Nevada (Clark County); NewHampshire (City of Manchester); New York; and South Dakota (Minnehaha County).

Income and asset limits for GA eligibility vary. In Florida (Dade County), Kentucky (Jefferson County), and New Hampshire (City of Manchester), onlypersons with zero income were eligible, but Hawaii, the most generous state, set themonthly income limit at $1,239 for an individual. Several states set the countableasset limit at zero, but most adopted limits between $1,000 and $2,000.

Most GA programs also impose citizenship and residency tests for eligibility. The 1996 welfare law ( P.L. 104-193 ) prohibits state and local benefits for illegal aliens unless the state expressly authorizes them by law, and it permits states toexclude most legal aliens (105) from GA. Inmid-1998, some GA programs deniedeligibility (for 5 years or permanently) to legal immigrants arriving after August 22,1996, when the welfare law was enacted. Some of the GA programs open tonon-citizens require immigrants to apply for citizenship as a condition of eligibility. GA programs typically require current residence in the state, county, or municipality;and seven require a minimum residence period, ranging from 15 days to 9 months.

Since 1992, coverage of many GA programs has been reduced. Montana abolished the state-run program that had operated in 12 of its counties; Wisconsinreplaced its state-required county-based program with a block grant for an optionalprogram. Connecticut, Hawaii, Minnesota, Ohio, and Pennsylvania ended benefitsfor able-bodied employable persons without children (and Pennsylvania, for familiesas well). D.C. ended GA benefits for SSI applicants. Six states tightened eligibilitycriteria for persons with disabilities. The total number of statewide programs withtime limits rose to nine, but two states (Hawaii and Michigan) removed time limitsfor persons with a disability. Since the 1996 passage of TANF, which can be usedfor cash aid to pregnant women at any stage of pregnancy, several states have ceasedusing GA funds for this group.

Benefit Levels

Mid-1998 Data. GA benefit levels vary greatly among states and often within them. In mid-1998, maximum GAcash benefits reported by states with uniform statewide programs ranged from $80monthly for a single person in Missouri to $339 in Massachusetts and $645 for adisabled person in Nebraska (these amounts were unchanged from mid-1996). Maximum benefits averaged $248 monthly.

About three-fourths of the states with statewide GA programs provide aid in the form of cash (except in special circumstances). Nine of these states or some of theircounties provide only vendor payments or vouchers: Idaho (Ada County); Indiana,(Center Township of Marion County); Iowa (Polk County), Kentucky (JeffersonCounty); Maine; Nebraska (non-disabled program); New Hampshire (City ofManchester); South Dakota (Minnehaha County), and Vermont.

In general, ongoing assistance was provided in mid-1998, to at least some categories of recipients, by most of the 33 states with statewide programs. However,these states imposed time limits: Arizona, and Maryland, 12 months out of 36;California (Los Angeles County) 12-month limit for employable persons; Colorado,12-month lifetime limit for persons disabled by substance abuse; New Jersey,60-month lifetime limit (with extension possible); New York, 24-month lifetimelimit for cash aid (no limit for noncash aid); Pennsylvania, 9-month lifetime limit forpersons in substance abuse treatment and victims of domestic violence; Utah, 7months out of an 18-month period (for persons in program called Working TowardEmployment; and Vermont, 36-month lifetime limit, for persons in drug treatment.

Recent State Data. In March 2003, enrollment in the Massachusetts program of Emergency Aid to the Elderly,Disabled, and Children (EAEDC) was up 5% from the previous year; and benefitsaveraged $324 (down $7 from 2002). In August the state announced plans to cutbenefits by 11.5% because of a budget shortfall. In April 2003, enrollment in theMichigan state-funded program of Emergency Relief was up 77% from theyear-earlier level (914 families, compared with 515); and benefits averaged $377. Maryland issued $2 million in vouchers in April 2003 under its TransitionalEmergency Medical and Housing Assistance program (TEMHA) on behalf of about14,709 persons (up 15% from a year earlier); benefits averaged $135 per person. New York spent $68 million in April 2003 for "safety net" assistance, some of whichwas in noncash form, to 283,958 persons in 159,865 cases, including familiestransferred out of TANF after reaching that program's 5-year time limit. Paymentsaveraged $425 per case. California paid a total of $22.3 million in general relief inMarch 2003 to 95,177 cases, almost all of which held only one person. Benefitsaveraged $234 per case ($335 for family cases).

Census Data. The U.S. Census Bureau reports that direct cash assistance by states and localities for noncategoricalaid totaled $2.968 billion in FY2000 and $2.956 billion in FY2001. The preliminaryestimate for FY2002, based on data from states that accounted for one-third of theFY2000 census-reported total, is $3.251 billion. Most GA programs offer medicalassistance as well as cash. For medical aid provided under state-local GA programs,see program no. 4 -- page 48.

16. Pensions for Needy Veterans, their Dependents, and Survivors

Funding Formula

The federal government provides 100% funding for veterans' and survivors' pensions. Total federal outlays for these pensions reached $3.164 billion duringFY2002.

Eligibility Requirements (106)

Eligibility for a veteran's pension requires a discharge (other than dishonorable) from active service of 90 days or more, at least one of which must have been servedduring a period defined in law as a period of war. The veteran must be disabled forreasons neither traceable to military service nor to willful misconduct. The survivor pension is provided to surviving spouses and children of wartime veterans who diedof nonservice-connected causes, subject to income limitations. There is no disabilityrequirement for eligible survivors.

Benefits

After considering other sources of income, including Social Security, retirement, annuity payments, and income of a dependent spouse or child, the Department ofVeterans Affairs (VA) pays monthly amounts to qualified veterans to bring their totalincomes to specified levels ( maximum benefits ), shown below. These levels areincreased (by $2,197 in 2003) for veterans with service in World War I or earlier inrecognition of their lack of home loan and education benefits made available toveterans of later wars. Countable income can be reduced for unreimbursed medicalexpenses, as well as some educational expenses incurred by veterans or theirdependents. Pensions are not payable to veterans with substantial assets (when it is"reasonable" that they use some of their net worth for their own maintenance).

Pensions awarded before 1979 were paid under one of two programs, referred to as Old Law and Prior Law , both of which were governed by complex rulesregarding countable income and exclusions. Since January 1, 1979, applicationshave been processed under the Improved Law program, which provides higherbenefits but has eliminated most exclusions, offsetting countable incomedollar-for-dollar. The Improved Law program accounts for 98% of pension costs andabout 88% of beneficiaries.

17. Adoption Assistance (107)

Funding Formula

Title IV-E of the Social Security Act provides federal matching funds to states for payments to parents adopting certain low-income children with "special needs." The matching rate for a given state is that state's Medicaid matching rate (seeprogram no. 1). The FY2003 federal matching rate ranged from 50% to 76.62%. Foradministrative expenses and certain training expenses, the federal matching rates are50% and 75%, respectively. The 1986 tax reform legislation ( P.L. 99-514 ) amendedthe adoption assistance program by authorizing 50% federal matching forreimbursement of certain non-recurring adoption expenses up to $2,000, such asadoption and attorney fees and court costs. FY2002 outlays were $2.5 billion ($1.3billion from federal funds).

Eligibility Requirements (108)

A child must be eligible for SSI (see program no. 10) or meet the eligibility standards of the repealed AFDC program, as it existed in his state on July 16, 1996, (109) must be legally free for adoption, and must have "special needs," as determined bythe state, that prevent adoption without assistance payments. Such special needs mayinclude mental or physical handicap, age, ethnic background, or membership in asibling group. (In addition, parents who adopt children with special needs who arenot AFDC or SSI eligible are entitled to assistance under the matching program fornon-recurring adoption expenses.)

Benefit Levels

The state adoption assistance agency, by agreement with the adoptive parents, decides the amount of the adoption payment; however, the payment cannot exceedwhat would have been paid to maintain the child in a foster family home. Childrenreceiving federally subsidized adoption assistance are automatically eligible forMedicaid. Benefits can continue until the child reaches age 18 or, in cases where thechild is mentally or physically handicapped, age 21.

18. Dependency and Indemnity Compensation (DIC) and Death Compensation for Parents of Veterans (110)

Funding Formula

The federal government provides 100% funding for dependency and indemnity compensation, and for death compensation. Federal outlays in FY2002 wereestimated at $84 million for 7,463 parents.

Eligibility Requirements (111)

Under Title 38 of the United States Code, Section 1315, parents of veterans who died from a service-connected cause are eligible for Dependency and IndemnityCompensation (DIC) if their counted income is below limits in federal law andregulations. Countable annual income limits in 2003 are $11,024 for one parentalone and for each of two parents not living together; $14,817 for two parents livingtogether, or for a remarried parent living with his spouse. Chief exclusions fromcountable income are cash welfare payments and 100% of retirement income,including Social Security.

Recipients of death compensation benefits are required to meet the net worth rules applicable to veterans' pensioners. (See program no. 15.) There are no networth rules for the DIC program.

Benefit Levels

The Veterans' and Survivors' Pension Improvement Act of 1978 ( P.L. 95-588 ) established DIC rates for parents effective January 1, 1979, and required thatthereafter, whenever Social Security benefits were increased by an automaticcost-of-living adjustment (COLA), DIC rates must be adjusted by the samepercentage and at the same time.

The maximum benefit for a sole surviving, unremarried parent in 2003 is $464 monthly. The maximum for each parent when both survive but do not live togetheris $334 per month. The maximum payment to individual surviving parents, who liveeither with the other parent, or with the spouse of the deceased veteran is $314monthly. The minimum monthly payment is $5.00. Parents in need of "aid andattendance" receive an additional monthly allowance of $250 in 2003.

19. General Assistance to Indians

Note: This entry describes the program of General Assistance (GA) to Indiansoperated by the Bureau of Indian Affairs (BIA). However, tribes may design theirown GA programs, changing eligibility rules and benefit levels, provided they payany net cost increase, use any savings for tribal needs, and receive BIA approval oftheir plan. (112) Tribes may administer theirredesigned plan themselves or request BIAto do so.

Funding Formula

The Snyder Act provides 100% federal funding for General Assistance (GA) to Indians, which is administered by the Bureau of Indian Affairs (BIA). Federalobligations in FY2002 were $66.5 million.

Eligibility Requirements (113)

Eligible are needy Indians who are members of a tribe that is recognized by the U.S. government and Alaskan Natives with at least one-fourth degree Native blood(or who are regarded as Natives by the Native village). Federally recognized tribesare located in 34 states, of which 24 have BIA programs of GA.

Persons must be deemed needy on the basis of standards established under the state's TANF program. They must apply for aid from other governmental or tribalprograms for which they are eligible, and they may not receive TANF orSupplemental Security Income (SSI). They must reside in the tribe's service area andwhere non-federally funded aid from a state or local government unit (114) is notavailable to them. Able-bodied adults must actively seek work, make satisfactoryprogress in an Individual Self-sufficiency Plan (ISP), jointly developed and signedby the recipient and the social services worker, and accept available local andseasonal employment unless they are enrolled at least half-time in a specifiedprogram of study, caring full-time for a preschool child, or would have a minimumcommuting time of one hour each way.

Certain sums of earned income are disregarded in determining benefits: federal, state, and local taxes; Social Security taxes; health insurance payments; work-relatedexpenses, including reasonable transportation costs; child care costs (unless the otherparent in the home is able-bodied and not working); and the cost of special clothing,tools, and equipment directly related to the person's employment. Also deductedfrom countable income is an allowance for shelter costs; namely, 25% of the TANFstandard unless a smaller amount is designated for shelter in the state TANFstandard.

Disregarded as income or resources is the first $2,000 in liquid resources annually available to the household and any home produce from garden, livestock,and poultry used by the family. Specific laws exempt certain other income. (115)

Eligibility for GA must be reviewed periodically, every 3 months for persons not exempt from seeking work and every 6 months for all participants.

BIA expects the GA caseload in FY2003 and FY2004 to decline from the FY2002 level of 45,000 persons. (116) (Becauseof the relatively high levels ofunemployment on Indian reservations, it is thought that many Indians enrolled inTANF will remain eligible for that program beyond 5 years, and hence will beineligible for GA. The TANF time limit does not apply to any month of aid duringwhich the recipient lived in Indian country (117) or in an Alaska native village where atleast 50% of adults were unemployed, according to the most reliable available data.

Benefit Levels

General Assistance to Indians provides cash payments and work experience and training, and the regulations state that the program goal is to increase self-sufficiency. BIA GA payments are made on the basis of state need standards under the TANFprogram unless the state "ratably reduces" actual payments. In those cases, theBureau must reduce GA payments by the same percentage. This means that actualmaximum payments in the GA program are the same as in the state TANF program. For a family of three persons, maximum monthly TANF benefits ranged in January2003 from $170 in Mississippi to $923 in Alaska. If the state TANF program has noassistance standard for one adult, the Bureau standard for one adult is the greater of(a) the difference between the standard for one child and that for a two-personhousehold with an adult member or (b) one-half the standard for a household of twopersons.

A GA recipient who participates in the tribe's Tribal Work Experience Program(TWEP) receives an extra monthly payment ($115 in FY2002 and 2003). Thisprogram provides work experience and job skills training. TWEP programs can beincorporated within self-determination contracts, self-governance annual fundingagreements and programs coordinated under P.L. 102-477 , which allows forintegration of federally-funded employment and training programs.

20. Cash Assistance to Refugees, Asylees, Other Humanitarian Cases

Funding Formula

The Immigration and Nationality Act authorizes 100% federally funded cash assistance for needy refugees and asylees during their first 3 years in the UnitedStates, and other legislation authorizes similar assistance for certain Cuban andHaitian entrants (118) and for certainAmerasians. (119) However, since FY1992,fundinghas been appropriated to provide cash assistance only for the first 8 months afterentry. These benefits are administered by the Department of Health and HumanService's Office of Refugee Resettlement (ORR). For refugee cash assistance(RCA), ORR expenditures were an estimated $41 million in FY2002.

Eligibility Requirements (120)

A person must (a) have been admitted to the United States as a refugee or asylee under the Immigration and Nationality Act or have been paroled as a refugee orasylee under the Act, (b) be a Cuban or Haitian paroled into the United Statesbetween April 15 and October 20, 1980, and designated a "Cuban/Haitian entrant,"or be a Cuban or Haitian national paroled into the United States after October 10,1980, (c) be a person who has an application for asylum pending or is subject toexclusion or deportation and against whom a final order of deportation has not beenissued, or (d) be a Vietnam-born Amerasian immigrant fathered by a U.S. citizen.

Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ), as amended by P.L. 105-33 , refugees, asylees,and others in the above groups are eligible for Temporary Assistance for NeedyFamilies (TANF) for 5 years after entry, provided they meet the income and assettests prescribed by their state for TANF. Those who meet the state's financialeligibility tests but who are not categorically eligible for TANF or the federalprogram of Supplemental Security Income (SSI) qualify for RCA. (For example, asingle refugee or a childless couple could receive RCA if deemed needy by stateTANF standards.) At the end of the 5-year period, their continued participation is atstate option, as it is with legal permanent residents. The law requires employableRCA applicants and recipients to accept "appropriate" job offers and to register foremployment to receive cash assistance.

Under PRWORA, refugees who qualify for SSI are eligible for 7 years afterentry (before the 1996 welfare law, there was no time limit on eligibility). (121) At theend of the 7-year period, they become ineligible until they naturalize or meet thework requirement. However, if they were here and receiving SSI by August 22,1996, the enactment date of PRWORA, they remain eligible. If they were here by theenactment date and subsequently become disabled, they are eligible also for SSI.

Benefit Levels

RCA payment levels are based on the state's TANF payment to a family unit of the same size. For example, an able-bodied couple below age 65 would receive anRCA benefit equal to that of a two-person (parent and child) TANF family. Seeprogram no. 12 for description of TANF benefit levels. (Benefit levels for personswho qualify for TANF and SSI are the levels established for those programs.)

Food Aid

21. Food Stamps

Funding Formula

The Food Stamp Act generally provides 100% federal funding for food stamp benefits. (122) Federal funds also pay for (1)federal administrative costs, (2) 50% ofstate and local administrative expenses (123) and(3) the majority of costs associatedwith employment and training programs for food stamp recipients. (124) "States" -- the50 states, the District of Columbia, Guam, and the Virgin Islands -- are responsiblefor the remainder of food stamp expenses. In Puerto Rico, American Samoa, and theNorthern Marianas, federal funds, authorized under the Food Stamp Act, provide annual grants, in lieu of food stamps, to fund nutrition assistance benefits andassociated administrative costs. The grants for Puerto Rico and American Samoa areset by law and indexed for inflation. In FY2003, they totaled $1.4 billion ($1.395billion for Puerto Rico and $5.6 million for American Samoa). The grant for theNorthern Marianas is an annually negotiated amount based on identified needs in theCommonwealth ($7.1 million in FY2003). (125)

Eligibility Requirements (126)

The Food Stamp program imposes four major tests for eligibility: income limits, liquid asset limitations, employment-related requirements, and limits on theeligibility of noncitizens. In addition, households composed entirely of recipients ofcash aid or services under state Temporary Assistance for Needy Families (TANF)programs, the Supplemental Security Income (SSI) program, or state/local GeneralAssistance (GA) programs are, in many cases, automatically eligible for food stamps.

Automatic food stamp eligibility may continue for up to 5 months after a householdleaves a TANF program.

Income. Households not automatically eligible because of receiving TANF, SSI, or GA must have counted(net) monthly income below the federal poverty income guidelines, which areadjusted annually to reflect inflation measured by the Consumer Price Index (CPI). More importantly, households without an elderly or disabled member (127) must alsohave basic (gross) monthly income below 130% of the poverty guidelines in orderto qualify. Changes in these income limits take effect each October.

Basic (gross) monthly income includes all cash income of the household, except for: certain "vendor" payments made to third parties (rather than directly to thehousehold); unanticipated, irregularly received income up to $30 a quarter; loans(deferred payment education loans are treated as student aid, see below); incomereceived for the care of someone outside the household; nonrecurring lump-sumpayments such as income tax refunds (these are counted as liquid assets); paymentsof federal earned income tax credits (these are not counted as either income or -- for12 months -- as assets); federal energy assistance; reimbursements for certainout-of-pocket expenses; income earned by children who are in school; the cost ofproducing self-employment income; education assistance under Title IV of theHigher Education Act (e.g., Pell grants, student loans); other student aid to the extentearmarked or used for tuition, fees, and education-related expenses; certain paymentsunder the Workforce Investment Act (WIA); income set aside by disabled SSIrecipients under an approved "plan to achieve self-sufficiency"; and some other typesof income required to be disregarded by other federal laws. In addition, states may,within certain limits, exclude income they disregard when judging TANF orMedicaid eligibility.

Counted (net) monthly income subtracts from basic (gross) income the following "deductions": (1) a "standard" monthly deduction; (128) (2) 20% of anyearned income; (3) expenses for the care of a dependent (up to $200 per dependentper month for those under age 2 or $175 for other dependents); (4) out-of-pocketmedical expenses of elderly or disabled household members, to the extent theyexceed $35 per month; (5) shelter expenses, to the extent they exceed 50% of theincome remaining after all other potential deductions and excluded expenses havebeen subtracted (up to an annually indexed ceiling standing at $378 a month inFY2003); (129) and (6) amounts paid as legallyobligated child support payments.

The following tables set out the monthly net and gross income limits in the 48 contiguous states, the District of Columbia, the Virgin Islands, and Guam -- for theperiod October 1, 2003 through September 30, 2004. (130)

Assets. An eligible household's liquid assets may not exceed $2,000 or $3,000 if the household includes an elderlyor disabled member. This asset test excludes the value of a residence, businessassets, household belongings, and certain other resources, such as Earned Income TaxCredits paid as a lump sum. The extent to which the value of a vehicle owned by anapplicant household is counted as an asset varies by state, often conforming to thestate's rule for its TANF program. Under the most stringent rule, the fair marketvalue of any vehicle above $4,650 is counted; however, the majority of states eitherdisregard the value of at least one vehicle or apply a more liberal threshold. The foodstamp asset test does not apply to automatically eligible TANF, SSI, and GAhouseholds; states also may, within certain limits, disregard assets that they do notcount in their TANF or Medicaid programs.

Employment-Related Requirements. In order to maintain eligibility, certain nonworkingable-bodied adult household members must register for employment, accept asuitable job if offered one, fulfill any work, job search, or training requirementsestablished by administering welfare agencies, provide the welfare agency withsufficient information to allow a determination with respect to their job availability,and not voluntarily quit a job without good cause or reduce work effort below 30hours a week. Exempt from these requirements are: persons caring for dependents(disabled or under age 6); those already subject to another program's workrequirement; those working at least 30 hours a week or earning the minimum-wageequivalent; the limited number of postsecondary students who are otherwise eligible;residents of drug addiction and alcoholic treatment programs; the disabled; and thoseunder 16 or age 60 or older (those between ages 16 and 18 are also exempt if they arenot the head of a household or if they are attending school or a training program). Ifthe household head fails to fulfill any of these requirements, the state may disqualifythe entire household for up to 180 days. Individual disqualification periods differaccording to whether the violation is the first, second, or third; minimum periodsrange from 1 to 6 months and may be increased by the welfare agency, in some casesto permanent disqualification.

In addition to the above work-related requirements, special rules apply to some persons without dependents. Many able-bodied adults (between 18 and 50) withoutdependents are ineligible for food stamps if, during the previous 36 months, theyreceived food stamps for 3 months while not working at least 20 hours a week orparticipating in an approved work/training activity (including "workfare," work inexchange for benefits). Those disqualified under this rule are able to re-enter theFood Stamp program if, during a 30-day period, they work 80 hours or more orparticipate in a work/training activity. If they then become unemployed or leavework/training, they are eligible for an additional 3-month period on food stampswithout working at least 20 hours a week or enrolling in a work/training activity. Butthey are allowed only one of these added 3-month periods in any 36 months -- fora potential total of 6 months on food stamps in any 36 months without half-time workor enrollment in a work/training effort. [ Note: At state request, the special rule forable-bodied adults without dependents can be waived for areas with very highunemployment (over 10%) or lack of available jobs. Moreover, states themselveshave authority to exempt up to 15% of those subject to the rule.]

States must operate work and training programs under which recipients not exempt by law or by state policy must fulfill employment requirements (which caninclude workfare, training, job search, education, or other activities) as establishedby the welfare agency. These programs are described separately in this report (seeprogram no. 79).

Other Limitations. Categorical eligibility restrictions include: (1) a ban on eligibility for many noncitizens; (131) (2) aban on eligibility for households containing striking members, unless eligible priorto the strike; (3) a ban on eligibility for most nonworking postsecondary studentswithout families; (4) a ban on eligibility for persons living in institutional settings,except for those in special small group homes for the disabled, persons living in drugaddiction or alcoholic treatment programs, persons in temporary shelters for batteredwomen and children, and those in homeless shelters; (5) a state-option ban oneligibility for those who have violated another welfare program's rules and beendisqualified, (6) limits on participation by boarders; (7) a requirement that SocialSecurity numbers be provided for all household members; (8) denial of eligibilitywhere assets have been transferred to gain eligibility; (9) denial of eligibility wherethere has been intentional violation of program rules or failure to cooperate inproviding information needed to judge eligibility and benefits; and (10) a ban oneligibility for SSI recipients in California. (132)

Benefit Levels

The Food Stamp Act specifies that a household's maximum monthly food stamp allotment be the cost of a nutritionally adequate low-cost diet, as determined by theU.S. Department of Agriculture's Thrifty Food Plan, adjusted each October forchanges in food prices. A participating household's actual monthly allotment isdetermined by subtracting, from the maximum allotment for its size, an amount equalto 30% of its counted monthly income (after all applicable deductions, see above),on the assumption that the household can afford to spend that amount of its ownincome on food. Minimum benefits for households of one and two persons arelegislatively set at $10 per month; minimum benefits for other household sizes varybut generally are somewhat higher. Maximum monthly allotments in FY2004 areshown in the following table.

Table 13. Maximum Monthly Food Stamp Allotments (October 2003 through September 2004)

a. Maximum allotment levels in rural AK are 27% to 55% higher than the urban AK allotments noted here. The allotment levels noted here are those in effect as ofOct. 1, 2003. However, under legislation pending as of Oct. 28, 2003, they arescheduled to increase slightly: to $169, $309, $443, $563, $669, $803, $887,$1,014, and +$127.

b. The allotment levels noted here are those in effect as of Oct. 1, 2003. However,under legislation pending as of Oct. 28, 2003, they are scheduled to increaseslightly: to $212, $389, $557, $707, $840, $1,008, $1,114, $1,273, and +$159.

Food stamp benefits are issued through electronic benefit transfer (EBT) cards. These cards are used like "debit cards" to access food stamp recipients' individualfood stamp accounts when purchasing food items at approved stores. Food stampbenefits can be used only to buy food items; however, EBT cards often include accessto cash benefit programs (in which case, the card can be used to access cash).

22. School Lunch Program (Free and Reduced-Price Components)

Funding Formula

The Richard B. Russell National School Lunch Act provides a guaranteed federal subsidy for each free or reduced-price lunch served to needy children inschools and residential child care institutions (RCCIs) choosing to participate in theSchool Lunch program. The cash subsidy for free and reduced-price lunches consistsof two parts: a basic payment authorized under Section 4 of the Act for every lunchserved, without regard to the family income of the participant, and an additionalspecial assistance payment authorized under Section 11 of the Act only for lunchesserved free or at reduced price to lower-income children. Additionally, the federalgovernment provides commodity assistance for each meal served. The level offederal cash subsidies and the value of federal commodity aid are legislatively set andannually indexed. State and local government funds and children's payments alsohelp finance lunches served in participating schools and RCCIs. No charge may bemade for a free lunch, but a charge of up to 40 cents may be imposed for a reduced-price lunch. Schools may set whatever charge they wish for lunches served tochildren who do not qualify for free or reduced price lunches, or who do not applyfor them, so long as this charge does not result in a profit.

The law requires that states contribute to their lunch programs revenues equal to at least 30% of the total Section 4 federal funding provided in the 1980-1981school year (about $200 million a year). However, no matching funds are requiredfor the extra federal subsidy provided for free and reduced-price lunches, underSection 11 of the Act.

Eligibility Requirements (133)

All children are eligible to receive at least a partially subsidized lunch in participating schools and RCCIs, although subsidies are higher for meals served freeor at a reduced price. All public schools, private nonprofit schools, and RCCIs areeligible to participate and receive federal subsidies if they serve meals that meetnutrition requirements set by the U.S. Department of Agriculture based on theDietary Guidelines for Americans, offer free and reduced-price meals to lowerincome children, and agree not to make a profit on their meal program.

Children whose current annual family income is at or below 130% of the annually indexed federal poverty income guidelines are eligible for a free lunch;those children whose family income is more than 130%, but not more than 185% ofthe guidelines, are eligible for a reduced-price lunch. Annual income limits for afamily of four for the 2002-2003 school year in the 48 contiguous states, the Districtof Columbia, Puerto Rico, Guam, and the Virgin Islands were: for free lunches,$23,530; for reduced-price lunches, $33,485. (134) In addition, most children fromfamilies receiving public assistance (e.g., cash welfare, food stamps) can be certifiedfor free school lunches based on their public assistance enrollment.

Benefit Levels

Benefits are provided to local "school food authorities" through state education agencies. Federal cash subsidies are provided to participating schools and RCCIs foreach lunch served. The law establishes specific reimbursement (subsidy) rates foreach type of lunch served (free, reduced-price, "full-price") and mandates that theybe adjusted each July for inflation. Cash reimbursement rates for the 2002-2003school year were: (135) (1) $2.14 for each freelunch, (2) $1.74 for each reduced-pricelunch, and (3) 20 cents for each full-price lunch.

In addition to the cash assistance noted above, the federal government provides commodity assistance for all meals served in participating schools and residentialchild care institutions. This assistance rate is adjusted annually each July forinflation, and, for the 2002-2003 school year, it was a minimum of 15.25 cents permeal served (e.g., the total cash and commodity subsidy rate for free lunches wasapproximately $2.29).

Schools and RCCIs in the School Lunch program also may expand their programs to cover snacks (and, in some cases, suppers) served to children throughage 18 in after-school programs . Federal subsidies are paid at the free snack/supperrate offered to child care providers if the snack/supper is served free to children inlower-income areas. In other cases, federal subsidies vary by the child's familyincome. (See program no. 24, the Child and Adult Care Food Program, for thevarious federal subsidy rates for snacks/suppers and additional authority for schoolsand public and private nonprofit organizations to receive subsidies for snacks/suppersserved in after-school programs.)

In FY2002, more than 90% of schools and RCCIs received school lunch program subsidies -- some 93,000 schools, plus nearly 6,000 RCCIs. Average dailyparticipation was 28 million children; 13.3 million received free lunches, 2.6 millionate reduced-price lunches, and lunches for 12 million students were subsidized at theminimum full-price rate (for which no income test is required). While childrenreceiving free or reduced-price lunches made up 57% of those participating, subsidiesfor their lunches accounted for over 90% of federal spending on the school lunchprogram.

Note: For more information, see: CRS Report RL31577, Child Nutrition and WIC Programs: Background and Funding .

23. Special Supplemental Nutrition Program for Women, Infants, and Children (The WIC Program)

Funding Formula

The Child Nutrition Act provides 100% federal funding through grants to states for food costs and nutrition services and administration (NSA); money also isprovided for to support breast-feeding initiatives and the development of localagencies' administrative infrastructure, small farmers' market nutrition programs (seeProgram 31), and research and evaluations. State allocations are based on a formulathat reflects food and NSA caseload costs, inflation, and "need" as evidenced bypoverty indices -- although small amounts are set aside for infrastructuredevelopment and other special initiatives. Except for a small matching amount forstates choosing to operate a farmers' market nutrition program, no state or localmatching funding is required.

Eligibility Requirements (136)

Section 17 of the Child Nutrition Act makes eligible for WIC benefits lower-income mothers, infants, and children judged to be at "nutritional risk." Theseinclude infants (up to age 1), children up to 5 years old, pregnant women,non-nursing mothers up to 6 months after childbirth, and nursing mothers up to 1year after childbirth. A competent professional authority on the staff of aparticipating local public or private nonprofit health clinic or welfare agency thatoperates a WIC program must certify that the recipient is at nutritional risk througha medical or nutritional assessment guided by federal standards.

In addition to meeting the nutritional risk criterion, WIC enrollees must have annual family income below state-established limits, and public assistance recipientsmay be judged automatically income eligible. Income limits may not exceed thosefor reduced-price meals under school meal programs -- 185% of the federal povertyincome guidelines (as annually adjusted) -- $27,787 (137) for a three-person family forJuly 2002 through June 2003. States can set lower income limits, but these must notbe lower than 100% of the poverty guidelines.

Unlike most other nutrition assistance programs, the ability of the WIC program to serve all those who apply and are judged eligible is largely limited by the annualamount of federal funding made available, and not all eligible applicants areguaranteed benefits. (138) State healthdepartments or comparable agencies determinewhich local health or welfare agencies are eligible for program participation orexpansion in order of greatest need based on economic and health statistics, andavailable funding. And a priority system seeks to ensure that individuals at thegreatest risk are served first. The program is estimated to serve at least 80% of theeligible population. In FY2002, average monthly participation was just under 7.5million women, infants, and children.

Benefit Levels

Beneficiaries receive selected supplemental foods, as called for in federal regulations, either in the form of food or, most commonly, as vouchers/checks validfor specific prescribed food items in stores. (139) Federal regulations includerequirements about the types and quantities of food to be made available and abouttailoring food packages to meet the varying nutritional needs of the infants, children,and pregnant and postpartum women participating in the program. However, stateWIC agencies have some leeway in designing specific food packages and specifyingfoods that may be bought with WIC vouchers. In FY2002, the national averagemonthly federal cost of food in a WIC food package was $35 (after an offset forrebates by infant formula companies).

The law also requires that participants receive breast-feeding support, nutrition education, and a nutritional risk evaluation (in order to qualify). Monthly NSA costsfor these services averaged $13 a recipient in FY2002.

In addition to the regular WIC program, a majority of states have chosen to operate a farmers' market nutrition program that offers WIC applicants and recipientsspecial vouchers that can be used to buy fresh foods at participating farmers' markets(See program 31).

Note: For more details, see CRS Report RL31577, Child Nutrition and WIC Programs: Background and Funding .

24. Child and Adult Care Food Program (Lower-Income Components) (140)

Funding Formula

The Richard B. Russell National School Lunch Act provides 100% federal funding for this program in the form of legislatively set (and annually indexed) cashsubsidies for all meals and snacks served in participating child and adult day carecenters and family and group day care homes for children. Subsidies are varied byparticipants' family income (in day care centers), or (in the case of family day carehomes) whether the provider has a lower-income or located in a lower-income area. Payments to sponsors of day care homes (based on the number of homes sponsored)and some federal commodity assistance also are provided, as are administrativepayments to day care center sponsors. There is no requirement for matching fundsfrom non-federal sources.

Eligibility Requirements (141)

Licensed (or otherwise approved) public and private nonresidential nonprofit child care, adult care, and Head Start centers, some schools operating after-schoolprograms, and family and group day care homes are eligible for federal subsidies formeals, snacks, and (in some cases) suppers they serve meeting federal nutritionrequirements. For-profit child care institutions also are eligible, but their eligibilityis limited based on the degree to which they serve "lower-income" children (asmeasured by the centers' receipt of government child care subsidies or by the familyincome of children served). Participation by centers and homes is voluntary.

All children and elderly clients in participating programs operated in child and adult care centers receive federally subsidized meals and snacks, although subsidiesare higher for meals served free or at a reduced price to lower-income individuals. As with the School Lunch and School Breakfast programs: free meals/snacks areavailable to those whose household income is not above 130% of the federal povertyincome guidelines ($23,530 for a family of four during the period July 2002-June2003); those whose household income is above 130%, but not above 185% of thepoverty guidelines ($33,485 for a family of four) (142) are eligible for reduced-pricemeals/snacks. Income eligibility guidelines are adjusted annually. Meals and snacksfor individuals from households with income above these limits (or who do not applyfor free or reduced-price meals/snacks) also are subsidized, but the subsidies aremuch smaller. Unlike the school meal programs, while federal cash subsidies paidto centers differ according to family income, there is no requirement that "free" or"reduced-price" meals/snacks be served. Centers may adjust their fees to account forfederal subsidies or charge (or not charge) separately for meals to account for thesubsidies, but the program itself does not regulate the fees they charge.

All children in participating family day care homes receive federally subsidized meals/snacks. However, the subsidies are generally not differentiated by the child'sfamily income.

Benefit Levels (143)

Federal subsidies are provided for up to two meals and one snack per day per recipient (or three meals a day in homeless/emergency shelters). Participating centers receive cash subsidies for meals that are the same as those provided forlunches or breakfasts under the School Lunch and School Breakfast programs. Forthe period July 2002 through June 2003, these amounts were: (a) for lunches andsuppers, $2.14 each for free meals, $1.74 for reduced-price meals, and 20 cents for"full-price" meals; (b) for breakfasts, $1.17 for free meals, 87 cents for reduced-pricemeals, and 22 cents for full-price meals. Cash subsidies for snacks were set at 58cents for free snacks, 29 cents for reduced-price snacks, and 5 cents for full-pricesnacks. Finally, centers may receive the federal commodity assistance (about 15cents a meal) and are allowed to retain some of their federal subsidies foradministrative costs. All subsidy rates are annually indexed.

The federal subsidy structure for family day care homes is different. Day care homes receive subsidies that generally do not differ by the family income ofindividual recipients. Instead, there are two distinct annually indexed subsidy rates. "Tier I" homes (those located in lower-income areas or operated by lower-incomeproviders) receive higher cash subsidies; for July 2002 through June 2003, alllunches/suppers were subsidized at $1.80, all breakfasts were subsidized at 98 cents,and all snacks were subsidized at 53 cents. "Tier II" homes (those not located inlower-income areas or without lower-income providers) receive lower subsidies; forJuly 2002 through June 2003, all lunches/suppers were subsidized at $1.09, allbreakfasts at 37 cents, and all snacks at 14 cents. Organizations sponsoring homesreceive monthly payments for their administrative/oversight costs, which vary by thenumber of homes sponsored; and Tier II homes may seek higher Tier I rates forindividual low-income children if the proper documentation is provided.

In addition to the regular Child and Adult Care Food Program (CACFP), the law allows public and private nonprofit organizations (including child care centers andschools) operating after-school programs to receive federal CACFP subsidies forsnacks served free in their programs to children (through age 18) in lower-incomeareas -- at the free snack rate noted above. In some cases, subsidies also are offered for suppers in after-school programs.

In FY2002, 42,000 child care centers and some 2,000 adult care centers with an average daily attendance of 1.8 million persons participated, and some 165,000 daycare homes received subsidies for just under 1 million children in attendance.

Note: For more information, see CRS Report RL31577, Child Nutrition and WIC Programs: Background and Funding .

25. School Breakfast Program (Free and Reduced-Price Components)

Funding Formula

The Child Nutrition Act provides a guaranteed federal subsidy for each free or reduced-price breakfast served needy children in schools and residential child careinstitutions (RCCIs) that choose to participate. A small subsidy also is provided for"full-price" breakfasts to non-needy children. Certain schools, designated as "severeneed" schools, receive subsidies that exceed regular subsidies. (144) State and localgovernment funds, as well as children's meal payments, also help finance the cost ofbreakfast programs, although there is no formal matching requirement. No chargemay be made for a free breakfast, but up to 30 cents may be charged for areduced-price breakfast.

Eligibility Requirements (145)

As with the School Lunch program, all children are eligible to receive at least a partially subsidized breakfast in participating schools and institutions, althoughsubsidies are higher for meals served free or at a reduced price. All public schools,private nonprofit schools, and RCCIs are eligible to participate and receive federalsubsidies if they serve meals that meet nutrition requirements set by the U.S.Department of Agriculture based on the Dietary Guidelines for Americans, offer freeand reduced-price meals to lower-income children, and agree not to make a profit ontheir meal program.

Children whose current annual family income is at or below 130% of the federal poverty income guidelines are eligible for a free breakfast; those children whosefamily income is more than 130%, but not more than 185%, of the guidelines areeligible for a reduced-price breakfast. Annual income limits for a family of four forthe 2002-2003 school year were: for free breakfasts, $23,530; for reduced-pricebreakfasts, up to $33,485. (146) Income eligibilityguidelines are annually adjusted forinflation. In addition, most children from families receiving public assistance (e.g.,cash welfare, food stamps) can be certified eligible for free breakfasts based on theirpublic assistance enrollment.

Benefit Levels

As with the School Lunch program, benefits are provided to local "school food authorities" through state education agencies. The law provides a guaranteed federalcash reimbursement (subsidy) to participating schools and RCCIs for each breakfastserved. It establishes specific reimbursement rates for each type of breakfast served(free, reduced-price, "full-price") and mandates that they be adjusted each July forinflation. Regular cash reimbursement rates for the 2002-2003 school year were: (147) (1) $1.17 for each free breakfast, (2) 87 cents for each reduced-price breakfast, and(3) 22 cents for each full-price breakfast.

In FY2002, 76% of schools in the School Lunch program (and virtually all RCCIs in the program) also operated breakfast programs. Some 71,000 schools androughly 6,000 child care institutions were in the program, with an average dailyparticipation of 8.1 million children -- 6 million received free breakfasts, 700,000ate reduced-price meals, and 1.4 million were subsidized at the full-price rate.

Note: For more information, see CRS Report RL31577, Child Nutrition and WIC Programs: Background and Funding .

26. Nutrition Program for the Elderly

Funding Formula

Nutrition services for the elderly under Title III of the Older Americans Act are supported by grants to states and territories from the U.S. Department of Health andHuman Services, Administration on Aging (HHS/AoA). The nutrition servicesprogram includes three components: congregate nutrition services; home-deliverednutrition services; and commodities or cash-in-lieu of commodities.

The Act specifies that the federal share of a state's allotment for congregate and home-delivered meal services may cover up to 85% of the cost of developing and/oroperating local projects. The non-federal matching share can be paid in cash orin-kind contributions. Federal funds are allotted to the states on the basis of theirshare of the U.S. total population aged 60 and over, except that the minimum stateallotment is 0.5% of the U.S. appropriation for the year. (Minimums are smaller forGuam, the Virgin Islands, American Samoa, and the Northern Mariana Islands.)

States also receive funds from HHS (148) for commodities, or cash in lieu ofcommodities, to supplement Title III grant funds for congregate and home-deliveredmeals. These funds are allocated to states on a formula that is based on a state'sshare of meals served by all states under auspices of the Title III program for thepreceding fiscal year.

FY2003 appropriations for the nutrition program totaled $714 million.

Eligibility Requirements (149)

The Older Americans Act makes eligible persons aged at least 60 and their spouses. In addition, congregate meals may be provided to persons with disabilitiesunder age 60, who reside in housing facilities occupied primarily by the elderly wherecongregate nutrition services are provided, or who reside with and accompany olderpersons to meals. Eligible for home-delivered meals are persons who are homeboundby reason of illness or disability, or who are otherwise isolated. The law requires thatpreference be given to those with the "greatest" (1) economic need and (2) socialneed. The law defines group one to be persons whose income is at or below thepoverty guideline issued by HHS (the guideline issued in February 2003 was $8,980for a "family unit" of one person) and group two to be persons whose need forservices is caused by noneconomic factors (150) that restrict their ability to performnormal daily tasks or that threaten their capacity for independent living.

The law requires that congregate meal services be located as close as possible to where most eligible older persons live, preferably within walking distance. Meanstests are prohibited.

Benefit Levels

The law requires providers to offer at least one meal daily, 5 or more days per week. If the nutrition project serves one meal a day, each meal is to assure aminimum of one-third of the daily recommended dietary allowances (RDAs)established by the Food and Nutrition Board of the National Academy ofSciences-National Research Council. If the project serves more than one meal daily,nutritional requirements are higher (two-thirds of RDA for two meals, 100% forthree). Nutrition services funds also may be used to provide support services suchas outreach and nutrition education.

The law requires that providers give participants an opportunity to contribute toward the cost of the meal. Service providers may establish suggested contributionschedules; but each participant is to decide for him/herself what, if anything, he/sheis able to pay. A service provider may not deny any older person nutrition servicesfor failure to contribute to the cost of the service. The law requires that voluntarycontributions be used to expand services for which the contributions were made.

Note: For more information about nutrition services for the elderly, see CRS Report RL31336 , Older Americans Act: Programs and Funding , and CRS Report RS21202 , Older Americans Act Nutrition Program .

27. The Emergency Food Assistance Program (TEFAP) (151)

Funding Formula

The Emergency Food Assistance Program (TEFAP) provides federally donated food commodities to states for distribution to emergency feeding organizations(EFOs), including soup kitchens and food banks, serving the homeless and otherneedy persons. Cash grants also are provided to help states and local EFOs with theadministrative costs of storing, transporting, handling, and distributing thecommodities.

Commodities are allocated under a poverty-unemployment allotment formula: 60% of them are distributed based on a state's share of all persons with incomesbelow the poverty level, and 40% based on its share of all unemployed persons. Administrative funding is distributed to states in the same proportion as their shareof commodities. To cover local EFO costs, states must distribute to localities at least40% of the administrative funding which they receive. Further, they are required tomatch (in cash, or in-kind) funds that they do not pass along to local agencies.

In FY2002, the value of federally donated commodities distributed under TEFAP was $306 million, and federal support for distribution and administrativecosts was $55 million -- for a total of $361 million.

Eligibility Requirements (152)

State agencies administering TEFAP are responsible for selecting the emergency feeding organizations that will distribute food. There are no federal criteria foragency selection except that the feeding organization must serve needy persons andhave the capacity to store and handle commodities. Emergency feeding organizationsinclude food banks and pantries, soup kitchens, hunger centers, temporary shelters,community action agencies, churches, and other nonprofit agencies offering foodassistance to the indigent and needy. By law, those eligible to receive commoditypackages must be "needy," but states set the criteria for individual eligibility forbenefits under federal regulations that require each state agency to establish uniformcriteria for determining household eligibility. The criteria must includeincome-based standards that enable each agency to ensure that TEFAP commoditiesgo only to households that are in need of food assistance because of inadequateincome.

Benefit Levels

The commodities donated for this program are bought by the U.S. Department of Agriculture (USDA) with appropriated funds, purchased to reduce agriculturalsurpluses, or drawn from excess holdings of the Commodity Credit Corporationwhen available. In recent years, appropriated funds have been used to acquirebetween one-third and one-half of the commodities distributed under TEFAP; theremainder were provided from surplus purchases and Commodity Credit Corporationstocks. Benefits consist of commodities provided to states for food banks, pantries,and other feeding agencies that distribute them to individuals for at-homeconsumption, or to soup kitchens and homeless shelters and central feeding centersserving meals to the poor. Commodities are packaged in sizes appropriate forprogram use: small package sizes for at-home consumption, and larger, institutionalsizes for meal service operations. Traditionally, most commodities have gone forat-home consumption. In FY2002, USDA provided roughly three dozen types offood items such as canned and fresh fruits and vegetables and juices, beans, cannedmeats, raisins, nuts, pasta, peanut butter, dairy products, and rice. Food package sizeand value generally are the same for all recipients; there is no variation by income orfamily size. By law, TEFAP benefits may not be treated as income or resources ofa recipient for any purpose.

28. Summer Food Service Program

Funding Formula

The Richard B. Russell National School Lunch Act offers federal funding in the form of legislatively set, annually indexed subsidies for all meals and snacks servedunder summer programs for children, as well as administrative payments to programsponsors. No matching funds are required from non-federal sources.

Eligibility Requirements (153)

There are no individual income tests for participation. Eligibility for benefits normally is tied to the location of the summer program. In general, eligible programsmust operate in areas where at least 50% of the children are from families withincomes that meet the eligibility criteria for free or reduced-price school lunches (thatis, with income at or below 185% of the annually updated federal poverty incomeguidelines: $33,485 (154) for a four-person familyin the summer of 2003). Sponsorsalso may receive federal support if at least 50% of children "enrolled" in the programmeet the above-noted income eligibility test (regardless of where they are located). Sponsorship is available to all public or private nonprofit school food authorities,local municipal or county governments, residential nonprofit summer camps, mostprivate nonprofit organizations, and colleges and universities participating in theNational Youth Sports program.

Benefit Levels

The law provides federal cash subsidies to sponsors for the cost of obtaining, preparing, and serving food. They are undifferentiated by recipient child's familyincome and may be supplemented with a small amount of federally providedcommodity assistance. The summer 2003 subsidy rates were: $2.35 for each lunchor supper, $1.35 for each breakfast, and 55 cents for each snack. Sponsoringagencies also receive funds for approved administrative costs, based on the numberof meals/snacks served and the type of sponsor (sponsors located in rural areas andthose who prepare meals on site receive higher payments). The number of subsidizedmeals/snacks served is limited to two per day.

In the summer of 2002, some 3,500 summer program sponsors operating 30,000 sites provided subsidized meals/snacks to 1.9 million children in the peak month ofJuly.

Note: For more information, see CRS Report RL31577, Child Nutrition and WIC Programs: Background and Funding .

29. Commodity Supplemental Food Program (CSFP)

Funding Formula

The Commodity Supplemental Food Program (CSFP) operates in 112 project areas in 28 states, the District of Columbia, and two Indian tribal areas; these projectsoften offer other services to program participants. The CSFP provides U.S.Department of Agriculture commodities and funds for administrative and distributioncosts to local agencies offering food packages to low-income mothers, infants, youngchildren, and elderly persons. Appropriations for the program finance purchase offood products to be used in monthly packages distributed to participants, as well asexpenses associated with this distribution (typically, about 20% of total funding); inaddition, projects can receive "bonus" commodities provided without appropriatedfunds from Agriculture Department stocks. Funding and commodities are distributedaccording to the caseload, or "slots" allocated to each project. These allocations arebased on previous participation levels of the projects. However, "expansion" fundingfor new slots or new state projects is available if added appropriations are provided. FY2002 funding (obligations) was approximately $104 million.

Eligibility Requirements (155)

Eligible are pregnant women, breast-feeding women, postpartum women, infants, and children up to age 6 who (a) qualify for food, health, or welfare benefitsunder a governmental program for low-income persons, (b) are determined to be atnutritional risk (if the state agency has adopted this requirement), and (c) live withinthe service area (if the state agency has adopted such a residency rule). In general,women, infants, and children must live in households with income below 185% ofthe federal poverty income guidelines (e.g., about $28,200 for a three-person familyin FY2004). More important, CSFP projects may serve elderly persons in theirservice areas whose income does not exceed 130% of the federal poverty guideline(a ceiling of about $11,700 for a single person in FY2004. The elderly make up over75% of recipients. Persons may not participate in the CSFP and the SpecialSupplemental Nutrition Program for Women, Infants, and Children (the WICprogram) at the same time; however they may participate in other nutrition programsfor the elderly.

Benefit Levels

Participants receive food commodities from local agencies. Agriculture Department guidelines establish food packages for each category of participant. Commodities in the food packages include items such as infant formula, cereals,canned and nonfat dry milk, canned meats and stews, canned poultry and fish, eggmix, fruit and vegetable juices, potatoes, canned vegetables and fruits, peanut butter,pasta, and dry beans.

In FY2002, a total of 427,000 individuals (75,000 mothers, infants, and children and 352,000 elderly persons) received commodity food packages valued at $16-$20a month.

30. Food Distribution Program on Indian Reservations (FDPIR)

Funding Formula

The Food Distribution Program on Indian Reservations (FDPIR) is an "entitlement" program -- operated and funded under the aegis of the Food Stamp Act -- providing food packages in lieu of Food Stamp benefits. Under FDPIR, the U.S.Department of Agriculture (USDA) acquires the food commodities to be included inthe program's monthly food packages either by direct purchase (with appropriatedfunds designated for Indian food assistance) or, to a lesser degree, through itsagriculture support programs. The food acquired by the USDA is given to the 94Indian Tribal Organizations (ITOs) and six state agencies operating FDPIR projectsfor distribution to eligible households -- based on the projects' number of recipients. In addition, the federal government pays at least 75% of administrative anddistribution costs of the projects. FY2002 federal spending on this program(commodity purchases and support for administrative/distribution costs) totaled $74million.

Eligibility Requirements (156)

The FDPIR allows ITOs or state welfare agencies to operate food distribution programs in lieu of the Food Stamp program. Recipients must reside on or near aparticipating reservation, or, in the case of Oklahoma, reside within a stipulatedservice area. Eligible households not residing on a reservation must include a NativeAmerican household member. Households must meet financial needs tests:households in which all members are included in a public assistance or SSI grant arefinancially eligible for FDPIR; for non-assistance households, the income ceilinggenerally is the income standard of the food stamp program, increased by the amountof that program's standard deduction. Except for the area of residence/NativeAmerican householder requirements, eligibility rules are similar to those for the FoodStamp program. Grantee agencies are responsible for certifying recipient eligibility,providing nutrition education, transporting and storing commodities, and distributingthem to recipient households. Both food stamps and the FDPIR may be available inthe same area, as long as no individual household participates in both programsconcurrently. In FY2002, the FDPIR operated on 243 reservations (as well as anumber of designated service areas in Oklahoma), with average monthly participationof 110,000 persons.

Benefit Levels

Benefits consist of monthly food packages that meet federal guidelines for nutritional adequacy. Commodities contained in the monthly food packages consistof a variety of items, including canned meats, fish, fruits, and vegetables, fruit andvegetable juices, cereals, rice, pasta, cornmeal, cheese, butter, nonfat dry milk, flour,vegetable oil, peanut butter and peanuts, corn syrup, and (in most projects) freshfruits and vegetables. In FY2002, foods valued at about $36 per person per monthwere provided under the FDPIR.

31. Farmers' Market Nutrition Programs

Funding Formula

Federal funding is provided to states (typically through state agriculture agencies that operate programs in cooperation with state health or social services departments)for two farmers' market nutrition programs: (1) a program for participants in (orthose on a waiting list for) the Special Supplemental Nutrition Program for Women,Infants, and Children (the WIC Farmers' Market Nutrition program ) and (2) a SeniorFarmers' Market Nutrition program . Money for the WIC Farmers' Market Nutritionprogram is provided as a set-aside from the annual appropriation for the SpecialSupplemental Nutrition Program for Women, Infants, and Children (the WICprogram) -- e.g., $25 million in FY2002. Funds for the Senior Farmers' MarketNutrition program are made available through a mandatory directive to spend $15million a year (plus any additional amounts that Congress may provide throughannual appropriations).

State grants are allocated, at the U.S. Department of Agriculture's discretion, based on the needs described in their state plans, the availability of new federalfunds, and states' past use of funds, but not all states participate in these programs. In FY2003, 36 states, the District of Columbia, Guam, and Puerto Rico -- along withfive Indian Tribal Organizations -- participated in the WIC Farmers' MarketNutrition program. This program requires that states' contribute at least 30% of thetotal cost of the program (although Indian Tribal Organizations may contribute amatch of as little as 10%). In FY2003, 35 states, the District of Columbia, PuertoRico, and three Indian Tribal Organizations participated in the Senior Farmers'Market Nutrition program. This program requires no state match. Expansion of bothprograms (both to new participants and new states) depends on the availability ofadditional federal funding.

Eligibility Requirements (157)

Organized farmers' markets (and, in some cases, roadside farm produce stands or special community-supported nutrition projects) approved by administering stateagencies (normally state agriculture departments) are eligible to participate in the twofarmers' market nutrition programs. In FY2002, a total of just over 3,000 marketsparticipated. For the WIC Farmers' Market Nutrition program, WIC recipients (seeprogram no. 23), or those approved but waiting for WIC benefits are eligible inparticipating jurisdictions. Under the Senior Farmers' Market Nutrition program,lower-income elderly persons -- generally defined as those at least 60 years of agewho have household income of less than 185% of the federal poverty incomeguidelines -- are eligible for benefits. However, administering agencies may acceptproof of participation in a means-tested benefit program like food stamps or theSupplemental Security Income (SSI) program when determining individuals'eligibility.

Benefit Levels

Benefits under the two farmers' market programs are issued as coupons or vouchers usable only at participating markets. Vouchers/coupons may be redeemedfor fresh, unprepared fruits, vegetables, and herbs. Vouchers/coupons issued underthe WIC Farmers' Market Nutrition program may not have a value of more than $20per year per recipient (although participating states may increase this value usingnon-federal funds). Vouchers/coupons issued under the Senior Farmers' MarketNutrition program are not limited in value by law, although budgetary constraintstypically require that they be limited to amounts similar to those under the WICFarmers' Market Nutrition program. Nutrition education activities arranged by WICprogram operators also may be provided at farmers' market sites.

32. Special Milk Program (Free Segment)

Funding Formula

The Child Nutrition Act provides 100% federal funding -- legislatively set, annually indexed subsidies -- to cover the cost of free half-pints of milk served tolow-income children by schools and residential child care institutions (RCCIs)choosing to participate in this program. Federal subsidies also are available forhalf-pints of milk served to non-needy children. In FY2002, approximately 5% ofthe half-pints of milk subsidized under this program were served free to low-incomechildren. No matching funds are required from non-federal sources.

Eligibility Requirements (158)

All children in participating schools and RCCIs are eligible to receive subsidized milk under this program. Participating schools and RCCIs must have apolicy of lowering any prices charged for milk they serve to maximum extentpossible and using their federal payments to reduce the selling price of milk tochildren. In addition, individual schools and RCCIs may choose to offer free milkto low-income children. The program operates primarily in those schools andinstitutions that do not participate in the school lunch or school breakfast programs. (159) Each half-pint served is federally subsidized at a different rate, depending on whetherit is served free or not -- but provision of free milk is not required, and most childrenare charged.

To qualify for free milk (if offered), a child must meet the income eligibility standards for a free meal under the School Lunch or Breakfast programs. That is, thechild's family's income must not exceed 130% of the federal poverty incomeguidelines (e.g., $23,530 (160) for a family of fourin the 2002-2003 school year). Non-needy children and needy children in schools/RCCIs that do not offer free milkpay an amount determined by the school or RCCI.

Benefit Levels

For the 2002-2003 school year, half-pints were subsidized at 13.5 cents each (if there was a charge to the child) or the net cost to the school/RCCI, typically 1.5-2.5cents higher (if the milk was served free).

In FY2002, 112 million subsidized half-pints (5% free) were served to roughly 500,000 children through over 8,000 schools and RCCIs.

Note: For more information, see CRS Report RL31577, Child Nutrition andWIC Programs: Background and Funding .

Housing Aid

33. Section 8 Low-Income Housing Assistance

Funding Formula

This program is funded 100% by the federal government. Outlays were $18.5 billion in FY2002.

Eligibility Requirements (161)

The Section 8 rental assistance program was authorized by the Housing and Community Development Act of 1974 ( P.L. 93-383 ). The program has twocomponents; section 8 project-based rental assistance and section 8 Housing ChoiceVouchers. The project-based rental assistance component is a set of rent subsidiesattached to housing units owned by private landlords. The vouchers are portablesubsidies that eligible households take to private landlords and use to subsidize theirhousing costs. Currently, HUD is not entering into any new contracts under theproject-based rental assistance component of Section 8 and when the existingcontracts expire, the households are given vouchers.

Low-income families and single persons (162) are eligible for both forms ofsubsidies. Low-income, for the purpose of this program, is defined as income at orbelow 80% of the local area median income, adjusted for family size. Althoughlow-income households are eligible for Section 8 housing subsidies, extremelylow-income households, defined as households with incomes at or below 30% of thelocal area median income, are targeted for assistance. (163) Forty percent of availableproject-based rental assistance subsidies and 75% of vouchers must be targeted toextremely low income households. In the project-based rental assistance program,project owners maintain waiting lists and can give priority to working families. Inthe voucher program, quasi-governmental local Public Housing Authorities (PHAs)maintain waiting lists for Section 8 vouchers and can develop a set of localpreferences that can be used to prioritize the list.

In determining the annual countable income of a family, various deductions are made from gross income. (164) The chief onesare $480 per dependent, $400 for anelderly family, excess medical costs for an elderly family, and costs of child care andhandicapped assistance. (165) For families withnet family assets above $5,000, federalregulations include in "income" used to decide eligibility and required rent thegreater of (a) actual income from all net family assets, or (b) a percentage of theirvalue, based on the current passbook savings rate. (166) Net family assets are definedas net cash value (after costs of disposal) of real property, savings, stocks, bonds, andother forms of investment. Not included are such "necessary items" as furniture andautomobiles. (167) In 1990, the NationalAffordable Housing Act ( P.L. 101-625 )increased the deductions from gross income for Section 8 housing and publichousing, but made the changes subject to approval in an appropriations measure. Through FY2003 no appropriation bill had provided for the larger deductions, andold deductions still applied. Section 8 recipients must recertify their incomesannually. Eligibility and rental charges are based on countable family incomeexpected in the 12 months following the date of determination.

Benefit Levels

Benefit levels for project-based rental assistance and vouchers are calculated using different formulas.

Families who receive Section 8 project-based rental assistance pay towards rent the highest of (a) 30% of counted income, (b) 10% of gross income, or (c) aminimum rent of up to $50 monthly set by the PHA. (168) Exemptions to the minimumrent levels can be made for a variety of hardship circumstances. The federalgovernment then pays the difference between contract rent and the rent paid by thetenant. The contract rent charged by the owner of Section 8 housing must be withinlimits established by a HUD survey of fair market rents (FMRs) for standard units ineach metropolitan area or non-metropolitan county of the Nation. P.L. 98-181 revoked authority to contract for additional Section 8 project-based rental assistanceunits. In FY2002, the federal government had $4 billion in budget authority for747,093 project-based rental assistance units. The average subsidy paid per unit was$5,388.

Families who receive Section 8 Housing Choice Vouchers pay towards rent an amount between 30% and 40% of their adjusted income. The federal governmentpays a Housing Assistance Payment (HAP) based on the difference between apredetermined maximum payment, called a payment standard, and 30% of thehousehold's income. A payment standard is calculated by the PHA as an amountbetween 90% and 110% of FMR, or the rent charged for the unit, whichever is less. In FY2002, HUD had $11.5 billion in budget authority for vouchers, which was usedto support 1.96 million vouchers, at an average per household subsidy of $5,891.

Note: For more information about Section 8 rental assistance, see CRS Report RL31930, The Housing Choice Voucher Program: Background, Funding, and Issuesin the 108th Congress .

34. Low-Rent Public Housing

Funding Formula

This program is funded 100% by the federal government. However, an indirect local contribution results from the difference between full local property taxes andpayments in lieu of taxes that are made by local housing authorities. FY2002 federaloutlays for public housing were $8.2 billion (including operating subsidies andcapital grants). (169)

Eligibility Requirements (170)

Public housing is publicly-owned housing for low-income families that is managed by local, quasi-governmental, public housing authorities (PHA). Thefederal government subsidizes the operating and capital costs of maintaining thesebuildings through regular subsidies, as well as competitive subsidies paid to PHAs. The competitive subsidies include the HOPE VI Revitalization of Distressed PublicHousing Grants, which can be used to demolish and/or revitalize troubled publichousing developments and the Public Housing Drug Elimination Program (PHDEP),which can be used to promote safety in public housing. The public housing programwas authorized by the U.S. Housing Act of 1937 (93-383), as amended.

Households (171) are eligible to live in public housing if they are low-income,which is defined as having income at or below 80% of the local area median income,adjusted for family size. Although low-income families are eligible for publichousing, since 1998, at least 40% of all public housing units must be occupied byextremely low-income families, defined as families with income at or below 30% ofarea median income. (172) However, PHAs aredirected not to concentrate extremelypoor families in public housing, rather to encourage an income mix.

In determining the annual countable income of a family, various deductions are made from gross income. (173) The chief onesare: $480 per dependent, $400 for anelderly family, excess medical costs for an elderly family, and costs of child care andhandicapped assistance. (174) For families withnet family assets above $5,000, federalregulations include as "income": (a) actual income from all net family assets, or (b)a percentage of their value, based on the current passbook savings rate. (175) Net familyassets are defined as net cash value (after costs of disposal) of real property, savings,stocks, bonds, and other forms of investment. Not included are such "necessaryitems" as furniture and automobiles. (176) Eligibility and rental charges are based oncountable family income expected in the 12 months following admission orrecertification. Income is recertified annually.

In order to maintain eligibility to live in public housing, certain residents are required to participate in an economic self-sufficiency program or contribute 8 hoursper month of community service. This requirement was established by the QualityHousing and Work Responsibility Act of 1998 (QHWRA) ( P.L. 105-276 ). It wassuspended during FY2002, but was reinstated as of August 1, 2003. Exempt fromthis rule are persons who are engaged in an educational program or work-relatedactivity, have a disability which would prohibit them from complying with therequirement or are 62 years of age or older. Those who do not comply with therequirement could lose the right to renew their lease.

Benefit Levels

Households who live in public housing pay towards rent the highest of (a) 30% of counted income, (b) 10% of gross income, or (c) a minimum rent of up to $50monthly set by the PHA. (177) Exemptions to theminimum rent levels can be made fora variety of hardship circumstances. Under P.L. 105-276 , tenants are permitted tochoose (annually) between paying either a flat rent or an income-based rent. Thisprovision is intended to encourage families to seek employment and higher earnings. Also, if a family's income does increase as a result of work, the increase is not to beused to determine the family's portion of rental payment for 1 year. After 1 year, therental increase is phased in.

The amount of subsidy paid by the federal government on behalf of the residentsof public housing is based on the difference between the cost of operating andmaintaining a public housing project and the amount collected in tenant rent.

FY2002 federal outlays for public housing (including capital grants, operating subsidies, PHDEP, Hope VI, and the public housing loan fund), (178) averaged about$6,795 per unit. (179)

35. Rural Housing Loans (Section 502)

Funding Formula

This program is funded 100% by the federal government. Factors used to allocate loan funds: state shares of rural occupied substandard units, ruralpopulation, rural population in places of fewer than 2,500 persons, and low-incomeand very-low-income rural households. Federal obligations for direct and guaranteedloans totaled $3.5 billion in FY2002.

Eligibility Requirements (180)

The law permits loans for owners or potential owners of a farm, or owners of a home or nonfarm tract in a rural area, who are without decent, safe, and sanitaryhousing and unable to obtain credit elsewhere on reasonable terms. Both very-low-and low-income families are eligible for Section 502 loans and interest credits. (181) The 1983 Housing and Urban-Rural Recovery Act (Titles I through V of P.L. 99-181 )requires that at least 40% of units nationwide and 30% of the units in each statefinanced under this program be occupied by very-low-income families or persons.

The law defines low-income and very-low-income families as those whose incomes do not exceed limits established for these families in public housing andSection 8 housing (adjusted for family size, these limits are 80% and 50% of the areamedian, respectively). (182)

The Housing and Community Development Act of 1987 ( P.L. 100-242 ) (183) directed the Farmers Home Administration (FmHA), since replaced by the RuralHousing Service (RHS), (184) to carry out a 3-yeardemonstration program under whichmoderate income borrowers (with income at or below the area median) might obtainguaranteed loans under Section 502 for the purchase of single-family homes. Theprogram was made permanent by the Cranston-Gonzalez National AffordableHousing Act ( P.L. 101-625 ).

Other eligibility requirements are set by RHS. Families must have sufficient income to make mortgage payments and to pay premiums, taxes, maintenance, andother necessary living expenses.

The 1983 Act required FmHA to define adjusted annual income in accordance with criteria used by the Department of Housing and Urban Development (HUD) forSection 8 housing and public housing. Accordingly, the chief deductions fromcountable income are $480 per year per dependent, $400 for an elderly family, excessmedical costs for an elderly family, and costs of child care and handicappedassistance. (185) RHS regulations exclude someitems by definition. (186) They alsorequire that income from net family assets be counted in calculating income foreligibility and loan repayment purposes and define net family assets to include theequity value of real property other than the dwelling or site, savings, stocks, bonds,and other forms of investment. Items not counted as assets include necessary itemsof personal property, assets that are part of the business, trade, or farming operations,or irrevocable trust funds. (187)

Benefit Levels

Residents of rural areas may qualify for direct loans from RHS to purchase or repair homes. The homes must be "modest" in size, design, and cost, and regulationsspecify that a new house for six persons should not exceed 1,248 square feet. Section502 direct loans generally have a term of 33 years, but the term may be extended to38 years for borrowers with incomes below 60% of the area median. Depending onthe borrower's income, the interest rate may be subsidized to as low as 1%. In agiven fiscal year, at least 40% of the funding must be made available tovery-low-income borrowers (those with income of 50% or less of the area median). The Housing and Community Development Act of 1992 permits guaranteed loans toborrowers whose income does not exceed 115% of the area median.

In FY2002, direct loans from RHS totaled $1.080 billion and provided housing for 14,727 low-income families. Private lenders made about $2.419 billion inguaranteed loans to 28,364 low- to moderate-income families.

36. Home Investment Partnerships Program (HOME)

Funding Formula

Federal funds pay 25% of costs of new construction, rehabilitation or tenant-based assistance under the Home Investment Partnerships program, which wasestablished in late 1990 by P.L. 101-625 . (188) A participating jurisdiction (local or stategovernment) pays the remaining share; it may use bond or debt financing to cover nomore than 25% of its overall matching fund requirement. However, if a jurisdictionis found in "fiscal distress," its funding share is reduced or eliminated. To receive HOME funds, a jurisdiction must submit a consolidated plan identifying its housingneeds and strategies. The formula for allocating HOME funds among states and unitsof local government (metropolitan cities, urban counties, or consortia) has six factors,three of which are poverty-related measures. Federal obligations for FY2002 totaled$1.8 billion; state/local contributions totaled $704 million.

Eligibility Requirements (189)

To be eligible for help from this "affordable housing" block grant program, families or individuals must meet an income test. For rental housing andtenant-based rental assistance, at least 90% of recipient families must have annualincomes that do not exceed 60% of the median family income for the area (adjustedfor family size); (190) the remaining 10% offamilies may have incomes up to 80% ofthe area median. For homebuyers, the income limit is 80% of the area median.

In determining the annual countable income of a family, various deductions are made from gross income. (191) The chief onesare: $480 per dependent, $400 for anelderly family, excess medical costs for an elderly family, and costs of child care andhandicapped assistance. (192) For families withnet family assets above $5,000, federalregulations include in "income" used to decide eligibility and required rent thegreater of (a) actual income from all net family assets, or (b) a percentage of theirvalue, based on the current passbook savings rate. (193) Net family assets are definedas net cash value (after costs of disposal) of real property, savings, stocks, bonds, andother forms of investment. Not included are such "necessary items" as furniture andautomobiles. (194)

Benefit Levels

The goal of HOME is to increase the supply of affordable housing, especially of rental housing, for very low-income and low-income Americans (amendments in1992 added elder cottage housing opportunity (ECHO) units to the program). Themaximum rental subsidy payable under HOME is the difference between the rentstandard established for the unit and 30% of the family's monthly adjusted income,as defined for the Section 8 and public housing programs. Rents paid by most of theextremely low-income families generally exceed 30% of income unless they receiveadditional tenant-based rental assistance.

Over the course of the program, as of September 30, 2002, about $6.3 billion in HOME funds and $19.2 billion in other public (and some private) funds hadassisted 687,274 housing units and provided tenant-based assistance to 83,939families. In the projects completed through the end of FY2002, 97% of the tenantsreceiving rental assistance, 81.5% of the tenants in assisted rental housing, 68.8% ofthe residents of repaired homes, and 29.4% of the assisted homebuyers, had incomesof 50% or less of the area median income.

37. Housing For Special Populations (Elderly and Disabled)

Note: This program was inadvertently omitted from previous editions of this report. Program outlays for FY1996 through FY2002 (195) have been added to historical tablesin this edition.

Funding Formula

This program is funded 100% by the federal government. Outlays were $895 million in FY2002.

Eligibility Requirements (196)

The Department of Housing and Urban Development's (HUD) Housing for Special Populations program is actually two programs: Section 202 SupportiveHousing for the Elderly and Section 811 Supportive Housing for the Disabled. (197) Both programs provide capital advances to finance the construction, rehabilitationor acquisition of structures that will serve as supportive housing for low-incomeelderly and/or disabled households. The capital advance is interest-free and can beforgiven as long as the property remains available for very low-income elderly ordisabled households for at least 40 years. The capital advances are paired with rentalassistance, similar to Section 8 rental assistance. Each year, up to 25% of Section811 funds provided by Congress are used to provide Section 8 Housing ChoiceVouchers to persons with disabilities to allow them to search for units in the privatemarket.

Both programs (198) restrict eligibility to households with income at or below 50%of the local area median income, adjusted for family size. (199) In determining theannual countable income of a family, various deductions are made from grossincome. (200) The chief ones are: $480 perdependent, $400 for an elderly family,excess medical costs for an elderly family, and costs of child care and handicappedassistance. (201) For families with net familyassets above $5,000, federal regulationsinclude in "income" used to decide eligibility and required rent the greater of (a)actual income from all net family assets, or (b) a percentage of their value, based onthe current passbook savings rate. (202) Netfamily assets are defined as net cash value(after costs of disposal) of real property, savings, stocks, bonds, and other forms ofinvestment. Not included are such "necessary items" as furniture and automobiles. (203)

Like in most HUD housing assistance programs, residents of Section 202 and Section 811 properties must recertify their incomes annually. Eligibility and rentalcharges are based on countable family income expected in the 12 months followingthe date of determination.

In addition to income requirements, Section 202 and Section 811 are restricted to households who are elderly or disabled. In order to live in a Section 202 property,a household must have at least one member who is at least age 62 at the time ofinitial occupancy. In order to live in a Section 811 property, a household must haveat least one member who has a disability, such as a physical or developmentaldisability, or a chronic mental illness.

Benefit Levels

Households who live in a Section 202 or Section 811 property pay towards rent the higher of (a) 30% of counted income or (b) 10% of gross income. (204) Minimumrents can be set as high as $50, however, exemptions to the minimum rent levels canbe made for a variety of hardship circumstances. The benefit level paid by thefederal government to the landlord is equal to the difference between the contract rentfor the unit and the amount of rent paid by the tenant. The contract rent must bewithin limits established by a HUD survey of fair market rents for standard units ineach metropolitan area or non-metropolitan area of the Nation.

In FY2002, the federal government spent $672 million for the Section 202 program and $223 million for the Section 811 program. In 2002, these programssupported 62,694 Section 202 units and 18,649 Section 811 units.

38. Rural Rental Assistance Payments (Section 521)

Funding Formula

This program is funded 100% by the federal government. Factors used to allocate funds: state shares of rural population, rural housing units lacking plumbingand/or overcrowded, and poor persons living in rural areas. Federal obligations forthis program totaled $705 million in FY2002.

Eligibility Requirements (205)

Since 1974 the Farmers Home Administration (FmHA) and its successor, the Rural Housing Service (RHS) (206) have beenauthorized to make rental assistancepayments to owners of RHS-financed rural rental housing (Section 515) and farmlabor housing (Sections 514 and 516) to enable them to reduce rents charged toeligible tenants. Eligible tenants must have adjusted family income that does notexceed the very-low-income limit established for the area by the Department ofHousing and Urban Development (HUD) -- 50% of the area median, adjusted forfamily size. (207) Owners must agree to operatethe property on a limited profit ornonprofit basis. The term of the rental assistance agreement is 20 years for newconstruction projects and 5 years for existing projects. Agreements may be renewedfor up to 5 years. An eligible owner who does not participate in the program may bepetitioned to participate by 20% or more of the tenants eligible for rental assistance.

Benefit Levels

The rental assistance payments, which are made directly to the housing owners, make up the difference between the tenants' payments and the RHS-approved rentfor the units. Originally, tenants in the program paid no more than 25% of theirincome in rent. (208) Amendments in the 1983Housing Act provide that rent paymentsof eligible families are to equal the highest of (1) 30% of monthly adjusted familyincome, (2) 10% of monthly income, or (3) for welfare recipients, the portion of afamily's welfare payment, if any, that is designated for housing costs. (209)

In FY2002, this program provided assistance to about 44,298 families (in rental assistance renewal contracts and aid for newly constructed units).

39. Section 236 Interest Reduction Payments

Funding Formula

This program is funded 100% by the federal government. Outlays in FY2002 totaled $579 million.

Eligibility Requirements (210)

Authorized by the Housing and Community Development Act of 1974 ( P.L. 93-383 ), the Section 236 Interest Reduction Payments (IRP) program providesmortgage subsidies to owners of multifamily properties who agree to keep theproperty available to low-income families for a specified number of years. Section236 subsidized units often also receive some form of rent subsidy, such as Section8 rental assistance.

Households are eligible to live in Section 236 properties as long as their incomes are not in excess of 80% of the area median income. The program is opento families and to single persons without regard to age, except in units alsosubsidized by Section 8, where Section 8 regulations apply.

Until December 2, 1979, the law excluded from "income" for the purposes of determining eligibility and subsidy levels 5% of gross incomes, all earnings of minorchildren living at home, plus $300 for each child. For tenants admitted afterDecember 21, 1979, P.L. 96-153 provided that income should be defined inaccordance with procedures and deductions permissible under the Section 8 program.

That program excludes some items (including earnings of children, lump-sumpayments, and payments for foster care) from "income" by definition. It also deducts some items from income. The chief ones are $480 per dependent, $400 foran elderly family, excess medical costs for an elderly family, and costs of child careand handicapped assistance. (211) Incomerecertification is required annually. Eligibility and subsidy amounts are based on anticipated income in the year ahead,but a shorter accounting period is permitted by regulations.

Benefit Levels

A basic monthly rental charge is established for each unit on the basis of the costs of operating the project with the debt service requirements of a mortgagebearing a 1% interest rate. The Department of Housing and Urban Development(HUD) makes payments to a mortgagee to reduce the effective interest rate to theproject to 1%. A fair market rental charge is established for each unit based on costsof operation with the debt service requirements of a mortgage at the full market rate. The law provides that the tenant family shall pay the basic rent or an amount equalto 30% of "adjusted gross income," (212) (countable housing income, as defined above),whichever is greater, but not more than the market rent. However, 20% of tenantswho cannot afford the basic rent are to be provided additional help to lower theirrental payment to 30% of income. (213) Further,elderly and handicapped familiespaying more than 50% of their income for rent can receive Section 8 assistance. (214)

In FY2002, benefits averaged $1,833 per dwelling unit, $153 monthly. These subsidies were paid on behalf on families in 315,976 units. (215)

40. Housing Opportunities for People with AIDS Program (HOPWA) (216)

Funding Formula

This program is 100% federally funded. Ninety percent of appropriated funds are distributed by formula, (217) and 10% bycompetitive awards. Three-fourths offormula grants are made to cities (for metropolitan statistical areas with a populationof more than 500,000 and more than 1,500 AIDS cases) and to eligible states (withmore than 1,500 AIDS cases in areas outside of MSAs eligible for HOPWA grantsthrough a city). Remaining formula funds are allocated among cities (in metropolitanstatistical areas with a population greater than 500,000 and more than 1,500 AIDScases) that had a higher than average per capita incidence of AIDS during the yearprevious to the appropriation year. (218) Theminimum formula grant is $200,000. Thenumber of jurisdictions that qualify for a formula allocation has been growing, from97 in 1999 to a projected 114 in 2004. Competitive awards are made for projectsproposed by states and local governments for areas not included in formulaallocations. Competitive grants also are available for projects of nationalsignificance proposed by nonprofit entities. HOPWA outlays for FY2002 were $314million.

Eligibility Requirements

The AIDS Housing Opportunity Act (enacted as part of P.L. 101-625 ) makes eligible low-income persons with AIDS or related diseases, including HIV infection,and their families. The law defines low-income to mean a person or family whoseincome does not exceed 80% of the local area median income, adjusted for familysize. (219) However, the law authorizes theSecretary of Housing and UrbanDevelopment (HUD) to alter the income ceiling for an area if this is found necessarybecause of prevailing levels of construction costs or unusually high or low familyincomes. The program offers information about housing to all persons with AIDSregardless of income.

According to a 2002 survey of providers, more than half of households served by HOPWA have extremely low incomes, below 30% of the area median. (220)

Benefit Levels

HOPWA funds may be used for numerous benefits and services, including housing information services; acquisition, rehabilitation, conversion, lease, and repairof facilities to provide housing and services; new construction (for single roomoccupancy (SRO) dwellings and community residences only); project- ortenant-based rental assistance, including assistance for shared housing arrangements;short-term rent, mortgage, and utility payments to prevent homelessness; supportiveservices such as health and mental health services, drug and alcohol abuse treatmentand counseling, day care, nutritional services, intensive care when required, aid ingaining access to other public benefits; operating costs; and technical assistance inestablishing and operating a community residence.

HUD data show that in FY2002, 68,000 households received housing assistance through HOPWA. HUD has projected that in FY2003, 73,000 households willreceive assistance through HOPWA.

Note: For more details about HOPWA, see CRS Report RS20704, Housing Opportunities for People with AIDS (HOPWA) .

41. Rural Rental Housing Loans (Section 515)

Funding Formula

This program is funded 100% by the federal government. Factors used to allocate funds state shares of: rural population, rural housing units lacking plumbingand/or overcrowded, and poor persons living in rural areas. Federal obligations forthis program totaled $114 million in FY2002. (221)

Eligibility Requirements (222)

The law permits loans for rural rental and cooperative housing units to be occupied by families with "very low" or "moderate" income, or by handicapped ordisabled persons or those aged at least 62. The law requires that at least 40% ofSection 515 units nationwide and 30% of units in each state be occupied by"very-low-income" families or persons. Moreover, the Housing and CommunityDevelopment Act of 1987 restricts occupancy of Section 515 housing units, ifconstructed with help of low-income housing tax credits, to families whose incomesare within the limits established for the tax credits. (223) However, this restriction doesnot apply if the Rural Housing Service (RHS) (224) finds that units have been vacant forat least 6 months and that their continued vacancy threatens the project's financialviability.

The law (225) defines "low-income" and "very-low-income" families as thosewhose incomes do not exceed limits established by the Department of Housing andUrban Development (HUD) for such families in public housing and Section 8housing (that is, up to 80% or 50% of area median income, respectively, adjusted forfamily size). (226)

Federal regulations issued October 1, 1985, provide that the moderate-incomelimits are $5,500 above the low-income ceilings (unless the moderate income limitin use before October 1, 1985, was higher, in which case it is continued).

Sponsors can be nonprofit, profit oriented, or "limited profit," must be unable to obtain credit elsewhere on reasonable terms that would enable them to rent theunits for amounts within the payment ability of eligible tenants, and must havesufficient initial capital to make loan payments and meet costs. Applicants mustconduct market surveys to determine the number of eligible occupants in the areawho are willing and financially able to occupy the housing at the proposed rentlevels.

Benefit Levels

Nonprofit sponsors and state and local public agencies are eligible for loans up to 100% of the appraised value or development cost, whichever is less. Purchaseloans for buildings less than 1 year old are limited to 80% of the appraised value. Loan amounts and terms can be determined by RHS.

In FY2002, Section 515 loans financed housing for about 7,284 families.

42. Rural Housing Repair Loans and Grants (Section 504)

Funding Formula

This program is funded 100% by the federal government. Two factors are used to allocate loan funds: state shares of rural occupied units and very-low income ruralhouseholds. For grants, a third factor is added: rural population aged at least 62.Federal obligations for this program totaled $57.8 million in FY2002.

Eligibility Requirements (227)

The law permits repair loans at a very low interest rate for "very-low-income" owners of a farm or rural home who cannot obtain credit on reasonable termselsewhere. The program uses the very-low-income limits established by theDepartment of Housing and Urban Development (HUD) for the area. (228) Income ofborrowers must be insufficient to qualify for a Section 502 loan, but adequate,including any "welfare-type" payments, to repay a Section 504 loan, as determinedby the Rural Housing Service (RHS). The law (229) provides that farm housingprograms are to use the income definition of the Section 8 (and public housing)programs (See program no. 33). Grants are made to elderly homeowners at least age62 (230) whose annual income prevents any loanrepayment.

Benefit Levels

Loans are limited to $20,000 and have a 20-year term at a 1% interest rate. (231) Owners who are at least age 62 may qualify for grants of up to $7,500. Dependingon repair costs and the homeowner's income, the owner may be eligible for a grantfor the full cost of repairs or for some combination of a loan and a grant, not toexceed $20,000. In FY2002, $31.8 million in loans repaired 55,615 homes. A totalof about $30.6 million in grants was used for the repair of 6,170 homes owned by theelderly.

43. Farm Labor Housing Loans (Section 514) and Grants (Section 516)

Funding Formula

This program is fully funded by the federal government. The funds for the programs are not allocated to the states. The funds are kept in reserve at the RHSnational office and are available as determined administratively. Federal obligationsfor these loans and grants totaled $61.7 million in FY2002.

Eligibility Requirements (232)

Individual farm owners, associations of farmers, local broad-based nonprofit organizations, federally recognized Indian tribes, and agencies or politicalsubdivisions of local or state governments may be eligible for loans at a very lowinterest rate from the Rural Housing Service (RHS), (233) successor to the FarmersHome Administration (FmHA), to provide low-rent housing and related facilities fordomestic farm labor. Applicants must show that the farming operations have ademonstrated need for farm labor housing, must agree to operate the property on anonprofit basis, and must be unable to obtain credit on terms that would enable themto provide housing to farm workers at rental rates that would be affordable to theworkers. Except for state and local public agencies or political subdivisions,applicants must be unable to provide the housing from their own resources andunable to obtain the credit from other sources on terms and conditions that they couldreasonably be expected to fulfill. The RHS state director may make exceptions to the"credit elsewhere" test when (1) there is a need in the area for housing for migrant farm workers and the applicant will provide such housing, and (2) there is no stateor local body or nonprofit organization that, within a reasonable period of time, iswilling and able to provide the housing.

Applicants must have sufficient initial operating capital to pay the initial operating expenses. It must be demonstrated that, after the loan is made, income willbe sufficient to pay operating expenses, make capital improvements, make paymentson the loan, and accumulate reserves.

Nonprofit organizations, Indian tribes, and local or state agencies or subdivisions may qualify for Section 516 grants to provide low-rent housing for farmlabor if there is a "pressing need" in the area for the housing and there is reasonabledoubt that it can be provided without the grant. Applicants must contribute at least10% of the total development costs from their own resources or from other sources,including Section 514 loans.

The Housing and Community Development Act of 1987 redefined "domestic farm labor" to include persons (and the family of such persons) who receive asubstantial portion of their income from the production or handling of agricultural oraquacultural products. (234) They must be U.S.citizens or legally admitted forpermanent residence in the United States. The term includes retired or disabledpersons who were domestic farm labor at the time of retiring or becoming disabled. In selecting occupants for vacant farm labor housing, RHS is directed to use thefollowing order of priority: (1) active farm laborers, (2) retired or disabled farmlaborers who were active at the time of retiring or becoming disabled, and (3) otherretired or disabled farm laborers.

Benefit Levels

Farm labor housing loans and grants to qualified applicants may be used to buy, build, or improve housing and related facilities for farm workers and to purchase andimprove the land upon which the housing will be located. The funds may be used toinstall streets, water supply and waste disposal systems, parking areas, anddriveways, as well as to buy and install appliances such as ranges, refrigerators,washing machines, and dryers. Related facilities may include the maintenanceworkshop, recreation center, small infirmary, laundry room, day care center, andoffice and living quarters for the resident manager.

Section 514 loans are available at 1% interest for up to 33 years. Section 516 grants may not exceed the lesser of (1) 90% of the total development cost of theproject, or (2) the difference between the development costs and the sum of (a) theamount available from the applicant's own resources and (b) the maximum loan theapplicant can repay given the maximum rent that is affordable to the target tenants.

In FY2002, $47.3 million in loans and $14.5 million in grants financed the development of 1,870 housing units for farm workers and their families.

44. Section 101 Rent Supplements

Funding Formula

This program is funded 100% by the federal government. Outlays totaled $54 million in FY2002.

Eligibility Requirements (235)

Section 101 of the Housing and Urban Development Act of 1965 (P.L. 89-117), as amended, authorized the Department of Housing and Urban Development (HUD)to pay rent supplements on behalf of low income tenants who lived inprivately-owned housing or housing developed under HUD's Section 236 program. Income eligibility for new (236) recipients of rentsupplements is based on eligibility forSection 8 rental assistance and is therefore limited to low income families, definedas families whose incomes are 80% or less of the area median income, adjusted forfamily size. (237) Included in the definition ofincome are earnings from total assetsgreater than $5,000. Income recertification is required annually. Preference foravailable rent supplements is given to households who live in substandard housing,are involuntarily displaced, or are paying more than 50% of income for rent.

Before 1979, families were eligible if they were: aged 62 or over or handicapped; displaced by governmental action or natural disaster; occupants ofsubstandard housing; or military personnel serving on active duty, or their spouses.

Benefit Levels

The rent supplements paid by HUD under this program are set as the difference between 30% of a tenant's adjusted gross income (as defined above) or 30% of themarket rent, whichever is higher, minus a basic rent. The basic rent is established by HUD and is designed to cover the total housing costs for each unit.

In FY2002, 18,600 units received subsidies, which averaged about $2,900 (238) perunit. No new commitments have been entered into under this program since 1973. Current spending under the program is only for the 18,600 contracts that have not yetexpired.

45. Rural Housing Self-Help Technical Assistance Grants (Section 523) and Rural Housing Site Loans (Sections 523 and 524)

Funding Formula

These programs are funded 100% by the federal government. The funds for the programs are not allocated to the states. The funds are kept in reserve at the RHSnational office and are available as determined administratively. Federal obligationsfor these grants and loans totaled $27 million in FY2002.

Eligibility Requirements (239)

States, political subdivisions, public nonprofit corporations (including Indian tribes and tribal corporations), and private nonprofit corporations (240) may receiveTechnical Assistance (TA) grants from the Rural Housing Service (RHS), successorto the Farmers Home Administration (FmHA). (241) The TA grants are used to pay allor part of the cost of developing, administering, and coordinating programs oftechnical and supervisory assistance to families that are building their homes by themutual self-help method. This is the method whereby families, organized in groupsof 6 or 10 families, use their own labor to reduce construction costs. Each family isexpected to contribute labor on group member's houses to accomplish 65% of thetasks specified by RHS. (242)

Applicants must demonstrate that (1) there is a need for self-help housing in the area, (2) the applicant has or can hire qualified people to carry out its responsibilitiesunder the program, and (3) funds for the proposed TA project are not available fromother sources.

The program is limited to very-low-income and low-income rural families, defined as those with income below 50% and 80% of the area median, respectively,adjusted for family size. (243)

The TA funds may not be used to hire construction workers or to buy real estate or building materials. Private or public nonprofit corporations, however, may beeligible for 2-year site loans under Section 523 or Section 524. Private nonprofitorganizations must have a membership of at least 10 community leaders. The siteloans may be used to buy and develop rural land, which then is subdivided intobuilding sites and sold on a nonprofit basis to low- and moderate-income families. Generally, a loan will not be made unless it will result in at least 10 sites. The sitesneed not be contiguous.

Sites financed through Section 523 may be sold only to families who are building homes by the mutual self-help method. Section 524 site loans place norestrictions on construction methods. Houses built on either kind of subsidized siteusually are financed through the Section 502 rural housing loan program (seeprogram no. 35).

Benefit Levels

The RHS state director may approve TA grants of up to $200,000 to eligible organizations. The state director must have written consent from the RHS nationaloffice for larger grants. Applicants must demonstrate that the self-help method willresult in net savings per house of at least $500.

The TA grants may be used for hiring personnel (director, coordinator, construction supervisor, and secretary-bookkeeper), paying office and administrativeexpenses, buying and maintaining specialty and power tools (participating familiesare expected to have their own basic hand tools), and paying for technical andconsultant services that are not readily available without cost to the participatingfamilies.

Section 523 site loans are made at an interest rate of 3%, but the rate on Section 524 site loans is the Treasury cost of funds. The loans may be used to buy anddevelop sites. Funds may be used to construct access roads and utility lines, providewater and waste disposal facilities if such facilities cannot reasonably be provided ona community basis with other financing, and to provide landscaping, sidewalks,parking areas, and driveways. Common areas such as playgrounds and "tot lots" maybe funded if they are legally required as a condition of subdivision approval.

In FY2002, organizations received $26.5 million in mutual and self-help housing grants, and $0.5 million in site development loans. No self-help site loanswere made in FY2002. The count of families receiving assistance is reported underthe Section 502 program.

46. Indian Housing Improvement Grants

Funding Formula

This program is funded 100% by the federal government. Federal obligations for this program totaled $19.6 million in FY2002.

Eligibility Requirements (244)

Applicants must meet the following requirements: (1) they must be members of a federally recognized American Indian Tribe or Alaska Native Village (2) theymust live in an approved tribal service area, (3) their annual income may not exceed125% of the poverty income guidelines of the Department of Health and HumanServices, (245) (4) their present housing must besubstandard, (5) they must meet theownership requirements for the assistance needed, (6) they must have no otherresource for housing assistance, (7) they have not received assistance after October1, 1986, for repairs and renovation, replacement of housing, or down paymentassistance, and (8) they did not acquire their present housing through participationin a federal housing program that includes the assistance referred to in item seven.Priority is given to families on the basis of four factors: annual household incomeas a percent of the federal poverty income guidelines; the age of elderly occupants;whether the property is occupied by disabled individuals and the percent of thedisability; and the number of unmarried dependent children.

Benefit Levels

The Housing Improvement Program (HIP) is operated by the Bureau of Indian Affairs (BIA) of the Department of the Interior. In general, the program isadministered through a servicing housing office operated by a Tribe or by the BIA.

HIP grants are made in one of three categories. Category A grants are used to make interim repairs to properties that are to be made safe, more sanitary, and livableuntil standard housing is available. The condition of the housing must be such thatit is not cost effective to renovate the property. These grants are limited to $2,500per housing unit.

Category B grants are made to qualified applicants who occupy housing that can economically be placed in standard condition. Grants are limited to $35,000 for anyone dwelling and the grants may be made to homeowners or renters. Occupants ofrental housing must have an undivided leasehold (the applicants are the only lessees)and the leasehold must last at least 25 years from the date that assistance is received. All applicants must sign a written agreement stating that the grant will be voided ifthe house is sold within 5 years of completion of repairs, and that the applicants willrepay BIA the full cost of repairs that were made.

Category C grants are made to applicants who (1) own or lease homes which can not be brought to applicable building code standards for $35,000 or less, or (2) whoown or lease land that is suitable for housing and the land has adequate ingress andegress rights. The grants are used to provide modest replacement housing. Applicants who lease houses or land must have an undivided leasehold and theleasehold must last at least 25 years from the date that assistance is received. If thehome is sold within 10 years, the full amount of the grant must be repaid. For eachyear after the 10th year, the grantee may retain 10% of the original grant amount andrefund the remainder if the home is sold. If the home is sold after 20 years, the grantdoes not have to be repaid.

In FY2002, HIP grants assisted 572 families by providing for the renovation of 389 homes, and the construction of 183 homes.

47. Section 235 Homeownership Assistance for Low-Income Families (246)

Note: P.L. 100-242 (Section 401(d)(1)) terminated authority to make additionalSection 235 commitments, effective October 1, 1989.

Funding Formula

This program is funded 100% by the federal government. Federal outlays for this program totaled $11 million in FY2002.

Eligibility Requirements (247)

The Section 235 program, created by the National Housing Act (P.L. 90-448), provides monthly mortgage assistance to lower-income homeowners.

Families (two or more related persons) and singles who are elderly (at least 62 years old) or handicapped; and whose adjusted annual incomes do not exceed 95%of the median family income for the area, adjusted for family size, are eligible forSection 235 assistance. The HUD regulations exclude from "income" for thepurposes of determining eligibility and subsidy levels 5% of gross income, allearnings of minor children living at home, plus $300 for each such child. (248) Alsoexcluded is unusual income or property income that does not occur regularly or otherincome of a temporary nature.

To qualify for this program, housing units must be new or substantially rehabilitated single-family units that were under construction or rehabilitated on orafter October 17, 1975, condominium units that have never been occupied, or familyunits (in existing condominium projects) that are purchased by a displaced family.

Benefit Levels

The Section 235 program provides aid, in the form of monthly payments to the mortgagee on behalf of the assisted home buyer, to reduce interest costs on aninsured market rate home mortgage to as low as 4%. The borrower must be able topay toward his mortgage payments at least 20% (249) of his or her "adjusted grossincome" (countable housing income, as defined above). Mortgage amounts forcommitments made after July 13, 1981, are limited to $40,000 for single-family andcondominium units with three bedrooms or less, and $47,500 for units with four ormore bedrooms. These limits may be raised by as much as $7,500 in high cost areas,and additionally, by 10% for a dwelling to be occupied by a physically handicappedperson, if the larger mortgage is needed to make the dwelling accessible and usableto him.

Any assistance payment made pursuant to a commitment issued on or after May 27, 1981, is subject to recapture upon (1) disposition of the subsidized property, (2)a 90-day cessation of payments on its mortgage, or (3) its rental for longer than 1year. The law provides that the amount recaptured shall be equal to the assistanceactually received or at least 50% of the net appreciation in the value of the property,whichever is less. (250)

Benefits averaged about $828 per dwelling unit in FY2002, about $69 monthly. (251) Approximately 13,000 dwellingunits received assistance in FY2002.

48. Rural Housing Preservation Grants (Section 533)

Funding Formula

This program is funded 100% by the federal government. Grantees are encouraged, however, to leverage the grants with funds from local, state, or othersources. Factors used to allocate funds: state shares of rural population, ruraloccupied substandard units, and rural poor families. Federal obligations for thisprogram totaled $8.6 million in FY2002.

Eligibility Requirements (252)

States, local governments, nonprofit corporations, and Indian tribes, bands, or nations may be eligible to receive grants to operate programs that finance the repairand rehabilitation of single-family housing owned and occupied by families with"low" income (not above 80% of the area median, adjusted for family size) or"very-low" income (not above 50% of the area median). The program uses the dollarlimits established by the Department of Housing and Urban Development (HUD) forthe area. (253) Grant applicants must have a staffor governing body with either (1)proven ability to perform responsibly in the field of low-income rural housingdevelopment, repair, and rehabilitation; or (2) management or administrativeexperience that indicates the ability to operate a program offering funds for housingrepair and rehabilitation.

The homes must be located in rural areas and must need housing preservation assistance. Assisted families must meet the income restrictions and must haveoccupied the property for at least 1 year. Occupants of leased homes may be eligiblefor assistance if (1) the unexpired portion of the lease extends for 5 years or more,and (2) the lease permits the occupant to make modifications to the structure andprecludes the owner from increasing the rent because of the modifications.

Benefit Levels

The Rural Housing Service (RHS), (254) successor to the Farmers HomeAdministration (FmHA), is authorized to provide grants to eligible public and privateorganizations. The grantees may in turn provide homeowners with direct loans,grants, or interest rate reductions on loans from private lenders to finance the repairor rehabilitation of their homes. Many housing preservation activities are authorized: (1) installation and/or repair of sanitary water and waste disposal systems to meetlocal health department requirements; (2) installation of energy conservationmaterials, such as insulation and storm windows and doors; (3) repair or replacementof the heating system; (4) repair of the electrical wiring system; (5) repair ofstructural supports and foundations; (6) repair or replacement of the roof; (7) repairof deteriorated siding, porches, or stoops; (8) alteration of the interior to providegreater accessibility for any handicapped member of the family, and (9) additions tothe property that are necessary to alleviate overcrowding or to remove health hazardsto the occupants. Repairs to manufactured homes or mobile homes are authorizedif (1) the recipient owns the home and site and has occupied the home on that site forat least 1 year, and (2) the home is on a permanent foundation or will be put on apermanent foundation with the funds to be received through the program. Up to 25%of the funding to a dwelling may be used for improvements that neither contributeto the health, safety, or well-being of the occupants; or materially contribute to thelong-term preservation of the unit. These improvements may include painting,paneling, carpeting, air conditioning, landscaping, and improving closets or kitchencabinets.

The Section 533 program was authorized in 1983, and regulations for the program were published in 1986. (255) The RHSis authorized to make Section 533grants also for rehabilitation of rental and cooperative housing. Regulations toimplement these grants were issued in spring 1993, (256) even though Congress haddirected this action much earlier. (257) Fundingfor this part of the Section 533 programbecame available in FY1994.

In FY2002, rural housing preservation grants financed home repairs for 2,133 families.

49. Homeownership and Opportunity for People Everywhere (HOPE) Programs

Funding Formula

The Homeownership and Opportunity for People Everywhere programs (HOPE 1, 2, and 3) were established in 1990 (258) to helplow-income, first-time homebuyerspurchase housing owned by federal, state, and local governments. Grants wereawarded through FY1996 on a competitive basis to nonprofit organizations, residentmanagement corporations, cooperative associations, public housing authorities, orother bodies who, in turn, carry out the economic development and homeownershipgoals. Regulations required recipients of HOPE 3 implementation grants tocontribute $1 in matching money for each $4 in federal funds awarded (for amountsgranted before April 11, 1994, the required match was higher, 33%). While there hasbeen no new funding of HOPE 1, 2, and 3 programs since FY1996 and no new grantsare being made, some money already committed and in the pipeline continues to bespent. According to figures from the Office of Management and Budget, federaloutlays from current balances were $25 million in FY2000, $21 million in FY2001and $3 million in FY2002. HOPE grantees have included Habitat for Humanity,Catholic Charities, Volunteers of America, and the Enterprise Foundation.

Eligibility Requirements (259)

In general, to be eligible to purchase an available home in HOPE 1, 2, or 3, a person or family must be a tenant of an eligible property, a resident of other HUDassisted housing, or have an income that does not exceed 80% of the median incomefor the area, adjusted for family size.

Benefit Levels

HOPE 1 authorizes funds to develop tenant management at public and Indian housing projects, for project-related jobs, and for the eventual sale of the renovatedunits to tenants and other qualifying households. HOPE 2 authorizes grants for thesale of multifamily properties that are insured by the Department of Housing andUrban Development (HUD) or are owned by the government, and for funds for smallbusiness startups and other economic development activities. HOPE 3 providesfunds for the purchase of single-family homes held or insured by federal, state, orlocal governments. Many of the HOPE 3 properties sold were homes held by theResolution Trust Corporation, dating to the "Savings & Loan crisis."

Purchasers were expected to buy fully renovated units at significant discountsfrom appraised values. There has been almost no information available on programactivity in the last few years on HOPE 1, 2, or 3.

Over the years, a variety of HUD programs have sold public housing units to tenants and other low income households. Including HOPE 1, HUD has approvedthe sale of more than 4,700 public housing units since 1993. However, moving fromthe planning stage to actual sale of units can take as many as 10 years. In manycases, grantees are devoting a portion of the grant to support resident organizations,counseling, and training of residents, and other neighborhood economic developmentactivities.

HOPE 1 Implementation Grants of $82.4 million were made for 30 grants during FY1992 and FY1994. In a FY2000 HUD status report, information wasavailable on only about one-third of the applicants approved. Of grantees receiving$8.2 million, approximately $4.6 million remained unspent. A number of projectsare in the process of being shut down, with grants being terminated, and money beingreturned. For example, in FY1994, a grant of $1.67 million was made to the housingauthority of Hartford, Connecticut. A grant was approved for the sale of 60 units. HUD says that its field office proposed to terminate the grant as of June 30, 2000 forfailure to execute. A total of $278,000 has been spent, but no information isavailable on whether any units have been sold. An example is from the housingauthority in Kern County, California. An implementation grant of $4.5 million wasmade in FY1994 for the sale of 168 units of public housing. As of FY2000, therewas a remaining balance of $1.9 million, although no information is available on howmany units may have been sold. It appears from previous reports that at least 261HOPE 1 grants totaling $113 million have been made, but again, no aggregateinformation is available on how many units have been sold.

Under HOPE 2, grants of about $75 million were made through FY1996. No further information has been made available from HUD.

As of July 1997, the cumulative amount of HOPE 3 implementation grants was $210 million for 258 grantees. As of August 1995, 2,298 homes had been acquiredunder HOPE 3 and 1,234 transferred to new buyers. (260)

Under the Clinton Administration, there was a move away from the sale of multifamily units, with a shifting emphasis to the sale of both publicly and privatelyowned, scattered-site, single-family homes. In the last few years there has been aphasing down of specialized programs like HOPE 1, 2, and 3. This reflects a policyof "empowering local communities" by giving them the flexibility to developinnovative strategies to meet their local housing and community development needs. For example, currently, HUD's Federal Housing Administration (FHA) sellsHUD-owned single-family homes to approved non-profits at discounts under its"Direct Sales" program. These homes are usually resold to low- andmoderate-income homebuyers in coordinated efforts with local governments andother federal programs to stabilize and revitalize certain neighborhoods. Other HUDowned homes are sold at 50% discounts under FHA's Officer Next Door andTeacher Next Door programs. For detailed information about government-assistedhome buying, see HUD's homebuyer site at [http//www.hud.gov/buyhome.html].

Educational Assistance

50. Federal Pell Grants

Funding Formula

Federal Pell Grants, the largest source of federal student grant assistance administered by the Department of Education (ED), are 100% federally funded. These grants are authorized by Title IV-A of the Higher Education Act. Appropriations for the 2001-2002 school year were $11.4 billion.

Eligibility Requirements (261)

Pell Grants, originally called "Basic Educational Opportunity Grants," are available to undergraduate students enrolled in an eligible institution ofpostsecondary education who meet a needs test, the elements of which are prescribedin the Higher Education Act (Part F of Title IV). Grantees must meet general studentaid eligibility requirements including maintaining satisfactory progress in their courseof study, not be in default on a federally assisted student loan, not owe a refund ona Pell Grant or Supplemental Educational Opportunity Grant, and register for theSelective Service, if so required.

The federal need analysis methodology takes into account the income and assets of the student and his or her family, and determines the amount that a student andhis/her family might reasonably be expected to contribute toward total costs forpostsecondary education (the expected family contribution or EFC). For a dependent (262) student, the expectedfamily contribution is based on the student's andhis or her parents' income and assets. For an independent (263) student, the expectedcontribution is based on the income and assets of the student, if single, and studentand spouse, if married. Included as income are welfare benefits, including TANFpayments, child support, the earned income tax credit, untaxed Social Securitybenefits, and some other untaxed income and benefits.

On May 30, 2003, the Department of Education announced updates to the need analysis tables for the 2004-2005 award year. (264) The announcement providedinflation-adjusted updates to four tables used in calculating the expected familycontribution: the income protection allowance, the adjusted net worth of a businessor farm, the education savings and asset protection allowance, and the assessmentschedules and rates. The Department publishes an annual booklet explaining theExpected Family Contribution (EFC) formula. (265)

In FY1999, more than 90% of Pell Grant recipients considered to be dependent students had total parental income below $40,000. Among independent studentgrantees, more than 90% had total income below $30,000. (266)

Benefit Levels

Pell Grant awards to students are the lesser of: (1) a statutorily established maximum award ($4,050 for FY2003), minus the expected family contribution (seeexplanation under Eligibility Requirements ); or (2) the cost of attendance minus theexpected family contribution.

For the academic year 2001-2002, an estimated 4.8 million students received Pell Grants averaging $2,411.

The Higher Education Act forbids AFDC (or its successor, TANF), food stamps, and any other governmental program that receives federal funds from taking Pellgrants (or other student aid provided under the act) into account when determiningeligibility for benefits, or the amount of benefits.

Note: For more information, see CRS Report RL31668 , Federal Pell Grant Program of the Higher Education Act: Background and Reauthorization and CRSReport IB10097, The Higher Education Act: Reauthorization Status and Issues . Also see the Federal Student Aid Handbook at http://www.ifap.ed.gov/IFAPWebApp/currentSFAHandbooksPag.jsp .

51. Head Start (267)

Funding Formula

Head Start funds are allocated among states by formula (268) but awarded directlyto local Head Start agencies. Federal assistance for a Head Start program is limitedto 80% of program costs, but the law permits a larger share if the Secretary of HHSdetermines this to be necessary for Head Start's purposes. Federal regulations permita higher federal share for a Head Start agency that is located in a relatively poorcounty (269) or one that has been "involved" ina major disaster if the Secretary findsthat the agency is "unable" to pay a 20% share despite a "reasonable effort" to do so. Also, if a Head Start agency received more than an 80% federal share for any budgetperiod within FY1973 or FY1974, it is entitled by regulation to continue to receivethe larger share. The non-federal share may be paid in cash or in kind. It may bepaid by the Head Start agency or by another party. A Head Start agency is a localpublic or private nonprofit or for profit organization designated to operate a HeadStart program. FY2003 appropriations for Head Start were $6.7 billion.

Eligibility Requirements (270)

Head Start is targeted by law to low-income families, but the law gives authority to HHS for determining eligibility criteria. The regulations require that at least 90%of the children in each Head Start program be from "low-income" families, (271) definedas families with incomes below the "official poverty line," and including childrenfrom families receiving public assistance and children in foster care. In addition, atleast 10% of total Head Start enrollment opportunities in each program must be madeavailable for handicapped children In 2003, federal poverty income guidelines were$15,260 for a family of three and $18,400 for a family of four for the 48 contiguousstates and the District of Columbia. Head Start does not have asset rules restrictingeligibility.

The law allows certain small, remote communities to establish their own eligibility criteria as long as at least half of the families are eligible under the incomeguidelines. To qualify for this authority, communities must have a population nogreater than 1,000, be medically underserved, and lack other preschool programs ormedical services within a reasonable distance.

Benefit Levels

Head Start provides comprehensive services to preschool children. Services include educational, dental, medical, nutritional, and social services to children andtheir families. Head Start agencies are forbidden by law from charging fees, althoughfamilies who want to pay for services may voluntarily do so.

Note: For further information about Head Start, see CRS Report RL30952 , Head Start Issues in the 108th Congress.

52. Subsidized Federal Stafford and Stafford/Ford Loans

Funding Formula

Subsidized Federal Stafford loans are provided to students by the Federal Family Education Loan (FFEL) program and the Ford Federal Direct Student Loan(DL) program. (272) Capital for FFEL Staffordloans is provided by banks and otherprivate lenders. Capital for Stafford/Ford loans is provided directly by the federalgovernment. In the FFEL program the federal government pays the student's interestduring certain periods, and provides interest subsidies to lenders, and federalreinsurance against borrower default, death, disability, and bankruptcy. In the Forddirect loan program, the government forgoes student interest payments during certainperiods. These subsidized loan programs are authorized by Title IV of the HigherEducation Act of 1965, as amended. Estimated net obligations for FY2002 were $7.5billion.

Eligibility Requirements (273)

FFEL and DL subsidized loans are available to undergraduate, graduate, or professional students enrolled on at least a half-time basis at a participating college,university, or vocational/technical school. While eligibility is not restricted toindividuals with limited income (almost a fifth of loan recipients have incomes over$50,000), applicants must satisfy a test of need.

Institutions use the methodology described in Part F of Title IV as the need analysis system to calculate an expected family contribution for educational expenses(known as the EFC). The formulas in Part F use information about the student andhis or her family's income and assets to determine the amount the student and familycan reasonably be expected to contribute. This amount is subtracted from thestudent's cost of attendance to determine the amount of a subsidized loan for whichthe student is eligible. On May 30, 2003, the Department of Education announcedupdates to the need analysis tables for the 2004-2005 award year. (274) Theannouncement provided inflation-adjusted updates to four tables used in calculatingthe expected family contribution: the income protection allowance, the adjusted networth of a business or farm, the education savings and asset protection allowance,and the assessment schedules and rates. The Department publishes an annual bookletexplaining the Expected Family Contribution (EFC) formula. (275) Undergraduatestudents must receive a determination of whether they are eligible for a Pell Grantbefore applying for a subsidized loan. This rule is to assure that eligible studentsreceive grant aid before incurring loan debt.

Benefit Levels

A borrower's interest rate for FFEL Stafford and Stafford/Ford loans varies annually during repayment. The variable rate is calculated based upon the bondequivalent rate of the 91-day Treasury bill plus a premium which differs dependingon whether the borrower is in-school or in repayment. For loans made from July 1,1998, through June 30, 2006, the borrower interest rate is based on the 91-dayTreasury bill plus 1.7% for those in school, and the 91-day Treasury bill plus 2.3%for those in repayment. In the FFEL program, the lender is required to pay the 3%origination fee to the federal government; the lender can choose whether or not topass the entire fee on to the borrower, within certain limitations. In the DL program,borrowers pay a 3% origination fee to the federal government.

Undergraduates may borrow $2,625 for their first year of study, $3,500 for their second year, and $5,500 per year for the next 3 years of study; for graduate andprofessional school students, the limit is $10,500 per year for up to 5 years of school. The aggregate loan limit for undergraduate, graduate and professional study is$65,500.

In FY2002, subsidized FFEL Stafford and DL Stafford/Ford loan disbursements totaled over $30.1 billion. The main components of FFEL annual federal expenditures are the in-school, grace period and deferment interest payments tolenders on behalf of borrowers of subsidized loans, special allowance payments tolenders, and reimbursements to guaranty agencies for losses due to borrower defaults;guaranty agencies also receive allowances from the federal government foradministrative expenses. In the DL program, the main components of annual federalcosts are the foregone interest payments for subsidized loans while students are inschool, during the grace period and deferments; defaults; and administrative costs ofcontracts for loan origination, servicing and collections, and fees to schools whoperform origination functions themselves. In both programs, there are also certainannual revenues that offset some of these costs, including fees that students orparents pay when borrowing, and collections on defaulted loans. In FFEL, otheroffsets include fees that are assessed on lenders/loan holders, and guaranty agencies. Net federal obligations for FY2002 were an estimated $4.9 billion.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues ; CRS Report RL30655, Federal StudentLoans: Terms and Conditions for Borrowers ; and CRS Report, RL30656, TheAdministration of Federal Student Loan Programs: Background and Provisions .

53. Federal Work-Study Program (276)

Funding Formula

The Higher Education Act of 1965, as amended, authorizes federal funding to partially finance part-time employment for undergraduate, graduate, and professionalstudents in eligible institutions of post-secondary education who need earnings toattend. Students may work on-campus or off-campus for a public or privatenonprofit or a private for-profit organization. Since October 1, 1993, institutionshave been required to use at least 5% of their allocation of Federal Work Study(FWS) funds for community service jobs; effective in FY2000, this rose to 7%. (277) Federal grants to institutions fund 50% to 75% of the student's wages; the remainingpercentage is paid by the post-secondary institution or other employer. Funds areallocated to institutions first on the basis of their FY1985 award and then inproportion to aggregate need. (278) FY2002appropriations were $1 billion.

Eligibility Requirements (279)

The law authorizes federally subsidized wages for students who are enrolled in a post-secondary program, including proprietary institutions, who demonstratefinancial need, as determined by the statutory need analysis system set forth in PartF of Title IV of the Higher Education Act. This system calculates an expected familycontribution. (280) Five percent of an institution'sFWS funds must be used for studentswho are enrolled on a less than full-time basis if the total financial need of thesestudents exceeds 5% of the need of all students attending the institution.

Benefit Levels

A student's earnings under the FWS program (282) are limited to his or her need,and the rate of compensation must at least equal the minimum wage. Theinstitution's share of compensation may be provided to the student through tuitionpayments, room and board, or books.

During the academic year 2002-2003, an estimated 1,073,000 students received FWS-supported earnings averaging $1,252.

The Higher Education Act forbids AFDC (or its successor, TANF), food stamps, and any other governmental program that receives federal funds from taking studentaid provided under the Act into account when determining eligibility for benefits, orthe amount of benefits.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues and CRS Report RL31618 , Campus-BasedStudent Financial Aid Programs Under the Higher Education Act .

54. Federal TRIO Programs (283)

Note: The federal TRIO programs consist of six programs authorized by TitleIV of the Higher Education Act of 1965, as amended: Upward Bound, StudentSupport Services, Talent Search, Educational Opportunity Centers, Ronald E.McNair Postbaccalaureate Achievement, and Staff Development. The first threewere the original "TRIO" programs. The Staff Development activities provideshort-term training for TRIO program staff; they are not described below. FY2002appropriations were $827 million.

Funding Formula

These are categorical grant programs. They are 100% federally funded. In addition, institutions conducting Student Support Services programs must provideassurances that each participating student will be offered aid sufficient to meet hisor her financial need for college attendance.

Eligibility Requirements

Eligibility requirements differ slightly from program to program and are described below. At the outset it should be noted how the term "low-income" appliesin these programs. The authorizing statute for the TRIO programs defines alow-income individual as one whose family's taxable income in the preceding yeardid not exceed 150% of the "poverty level" as determined under Bureau of theCensus criteria. For the school year 2002-2003, the taxable income limits for three-and four-person families were $22,890 and $27,600, respectively (higher in Alaskaand Hawaii). (284) The program descriptionsbelow are drawn from the authorizingstatute and program regulations.

Upward Bound. (285) Not fewer thantwo-thirds of the participants in any project must be low-income, potential firstgeneration college goers. The remaining one-third must be either low-income or potential first generation college goers. All participants must need academic supportin order to successfully pursue an education beyond high school. With certainexceptions, participants must have completed grade 8 but not entered grade 12, andbe 13 to 19 years of age. For veterans there is no age limit.

Student Support Services. (286) Notfewer than two-thirds of program beneficiaries must be either disabled, orlow-income first generation college goers. The remaining participants must bedisabled, or low-income, or first generation college goers. All participants must needacademic support in order to successfully pursue a post-secondary educationprogram.

Talent Search. (287) Not fewer thantwo-thirds of program beneficiaries must be low-income, potential first generationcollege goers. The program requires that all participants must have completed thefifth grade or be at least 11 years of age, but generally not older than 27. (Forveterans there is no age limit.)

Educational Opportunity Centers. (288) Not fewer thantwo-thirds of the beneficiaries served byeach center must be low-income, potential first generation college goers. In general,participants must be at least 19 years of age.

Ronald E. McNair Postbaccalaureate Achievement. (289) This program wasauthorized in 1986 to assiststudents in gaining admission to graduate programs. At least two-thirds of theparticipants must be low-income, first generation college students. The remainingparticipants must be from groups underrepresented in graduate education.

Benefit Levels

Upward Bound and Student Support Services provide such services as: instruction in reading, writing, study skills, mathematics, and other subjects necessaryfor education beyond high school; personal counseling; academic counseling;tutoring; exposure to cultural events and academic programs; and activitiesacquainting students with career options.

Among its services, Talent Search provides participants with information on the availability of student financial aid, personal and career counseling, and tutoring. The program's projects encourage qualified students or dropouts to complete highschool and to undertake post-secondary education.

Educational Opportunity Centers provide services, such as information on financial and academic assistance available for post-secondary study, assistance toparticipants in filling out college applications and financial aid request forms, andtutoring and counseling.

McNair Postbaccalaureate Achievement provides services such as summer internships, tutoring, counseling, and research opportunities.

In FY2002, an estimated 865,434 participants were served in the TRIO programs, as follows:

Upward Bound -- 56,324;

Student Support Services -- 198,046;

Talent Search -- 389,454;

Educational Opportunity Centers -- 217,836;and

Ronald McNair Achievement Program --3,774

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues and CRS Report RL31622 , TRIO and GEARUP Programs: Status and Issues .

55. Supplemental Educational Opportunity Grants

Funding Formula

This program allocates funds to eligible institutions of post-secondary education for grants to needy undergraduates. The non-federal share must come from theinstitution's own resources. Funds are allocated to institutions first on the basis oftheir FY1985 award and then in proportion to aggregate need. FY2002appropriations were $760 million.

Eligibility Requirements (290)

The Higher Education Act of 1965, as amended, authorizes supplemental educational opportunity grants (291) forpost-secondary undergraduate students with thegreatest financial need as determined by the need analysis system set forth in Part Fof Title IV of the Higher Education Act. (292) Institutions' financial aid administratorshave, however, substantial flexibility in determining the size of individual studentawards. The first priority is for Pell Grant recipients with exceptional need. Aninstitution's supplemental educational opportunity grant funds may be used for lessthan full-time students.

Benefit Levels

The law sets minimum and maximum awards at $100 and $4,000, respectively. An estimated 1,189,000 students received average grants of $772 under the programduring the 2002-2003 academic year.

The Higher Education Act forbids AFDC (or its successor, TANF), food stamps, and any other governmental program that receives federal funds from taking studentaid provided under the act into account when determining eligibility for benefits, orthe amount of benefits.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues and CRS Report RL31618 , Campus-BasedStudent Financial Aid Programs Under the Higher Education Act .

56. Title 1 Migrant Education Program

Funding Formula

The Department of Education makes annual formula grants, under Title I, Part C of the Elementary and Secondary Education Act (ESEA), as amended, to stateeducational agencies for programs designed to meet the special needs of migratorychildren of migratory agricultural workers or fishermen. Through FY2002, fundswere allocated among states on the basis of annual counts of eligible children and apercentage of average per pupil expenditures. (294) Under P.L. 107-110 , from FY 2003forward, states are to receive the same amount as in FY2002, (295) plus a share of anyadditional appropriations (allocated on the basis of the previous formula, withupdated child counts). Most programs are administered by local school districts,which receive subgrants from the state educational agencies, though some are run byother public or private nonprofit agencies. Discretionary grants and contracts are alsoavailable to state educational agencies to improve program coordination within andamong states. As of 1995, record transfer is the sole responsibility of the states. FY2002 appropriations were $395 million.

Eligibility Requirements (296)

Eligible students are migratory children whose parents or guardians are migratory agricultural workers or fishers and who have moved within 3 years fromone school district to another to enable a member of their immediate family to obtaintemporary or seasonal employment in agricultural or fishing activities.

Children who are 3 through 21 years of age are eligible to participate, though only younger children may receive day care services. There is no income test, butmigratory children are presumed to need special educational and other services.

Benefit Levels

Title 1 migrant education programs commonly provide regular academicinstruction, remedial or compensatory instruction, bilingual and multiculturalinstruction, vocational and career education, testing, guidance and counseling, andmedical and dental screening. Preference is given to students at risk of not meetingstate academic standards or who moved during the school year. In school year1999-2000, an estimated 818,159 children were eligible. In FY2002, migranteducation programs served about 738,000 students, according to the Office ofMigrant Education.

Note: For more information, see CRS Report RL31325 , The Federal Migrant Education Program as Amended by the No Child Left Behind Act of 2001 .

57. Perkins Loans

Funding Formula

The Perkins Loan program, authorized by Title IV of the Higher Education Act (HE) of 1965, as amended, provides federal assistance to institutions of highereducation to operate a revolving fund providing low-interest loans to students. Federal funds provide new capital contributions, and pay for the cancellation ofcertain loans authorized in the law. Since academic year 1994-1995 participatinginstitutions have been required to provide a 25% annual match to the federal capitalcontribution (previously, their match rate was 15%). FY2002 appropriations were$166 million.

Eligibility Requirements (297)

The law authorizes low-interest, long-term loans for (1) undergraduate, graduate, or professional students, (298) (2) whoare "in need" of the amount of the loanto pursue a course of study, and (3) who maintain good academic standing. The needanalysis system set forth in Part F of Title IV the HE is used in calculating anexpected family contribution under the Perkins Loan program. On May 30, 2003, theDepartment of Education announced updates to the need analysis tables for the2004-2005 award year. (299) The Departmentpublishes an annual booklet explaining theExpected Family Contribution (EFC) formula. (300)

Benefit Levels

Effective October 1, 1981, the law authorized loans at a 5% interest rate. Loans are to be repaid over a 10-year period beginning 9 months after the end of study thatis on at least a half-time basis. No interest is charged until repayment of the principalbegins, unless the payment is deferred, as permitted under certain conditions. Inaddition, all or a portion of the loans may be canceled for those who enter specificteaching jobs, law enforcement, or military service. Annual loan limits are $4,000for undergraduate students and $6,000 for graduate or professional students. Theaggregate limits are $20,000 for undergraduate students (who have completed 2 yearsof study, but who have not completed their baccalaureate degree) and $40,000 forgraduate and professional students; and $8,000 for any other students study. Anestimated 707,000 students borrowed loans averaging $1,790 under the program inthe 2002-2003 school year.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues and RL31618, Campus-Based StudentFinancial Aid Programs Under the Higher Education Act .

58. Leveraging Educational Assistance Partnerships (LEAP)

Note: This program was known as the State Student Incentive Grant (SSIG)program until October 1, 1998, when it was revised and renamed by P.L. 105-244 .

Funding Formula

Under Leveraging Educational Assistance Partnerships, states receive federal formula grants, which are matched with equal state funds to provide for theestablishment of state student aid programs for needy post-secondary students. Aftereach state's program grant is combined with the required non-federal matching funds,resulting "state aid" awards are made either directly to students or indirectly throughparticipating institutions. The law provides that no state shall receive less from thefederal government than it received in FY1979. Funds not used by one state may bereallotted to others in proportion to their higher education enrollments. Stateallocations are based on their share of the total number of eligible students in allstates as determined by the U.S. Secretary of Education. States are permitted to use20% of funds for community service work learning jobs for eligible students. The1998 law, which reauthorized the program and renamed it as LEAP, also authorizeda new program of "Special Leveraging Education Assistance Partnerships." (301) FY2000 appropriations were $67 million.

Eligibility Requirements (302)

To be eligible for a LEAP grant, post-secondary students must be enrolled in or accepted for enrollment in an institution of post-secondary education, must meetcitizen/resident requirements, must demonstrate substantial financial need asdetermined in accordance with criteria of his/her state and approved by the Secretaryof Education, must maintain satisfactory academic progress, and must not default ona student loan or owe a refund for student assistance. At state discretion, part-timestudents may also be eligible. All public or private nonprofit institutions of highereducation as well as post-secondary vocational institutions are eligible to participateunless prohibited by state constitution or state statute.

Benefit Levels

Maximum grants are $5,000 for full-time students and may be used, among other purposes, for work-study jobs provided through campus-based "communityservice work learning study programs." (303) (Theregulations also call these work-studyjobs "community service-learning" jobs.) In academic year 2002-2003,approximately 171,000 students received average grants of $1,000.

The Higher Education Act forbids AFDC (or its successor, TANF), food stamps, and any other governmental program that receives federal funds from taking studentaid provided under the act into account when determining eligibility for benefits, orthe amount of benefits.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues and CRS Report RS21183, LeveragingEducational Assistance Partnership Program (LEAP): An Overview .

59. Health Professions Student Loans and Scholarships

Funding Formula

The law provides 90% federal funding for student loans and 100% for scholarships. Eligible schools must contribute to the loan fund a minimum shareequal to one-ninth of the federal sum The federal government's share of the loanfund (its capital contribution) now is financed by loan repayments from participatingschools -- not by appropriations. Appropriations for scholarships (and some loanrepayments) in FY2002 were $57.8 million.

Eligibility Requirements (304)

Loans. (305) The Health Professions Student Loan Program(HPSL) provides long-term, low-interest rate loans to full-time, financially needystudents to pursue a degree in an accredited public or nonprofit school of medicine,dentistry, optometry, pharmacy, podiatric medicine, or veterinary medicine. TheLoans for Disadvantaged Students Program (LDS) provides long-term, low-interestrate loans to full-time, financially needy students from disadvantaged backgroundsto pursue a degree in allopathic medicine, osteopathic medicine, dentistry, optometry,podiatric medicine, pharmacy or veterinary medicine. To be eligible for LDS funds,a participating school must carry out a program for recruiting and retaining studentsfrom disadvantaged backgrounds, including racial and ethnic minorities and mustoperate a program to recruit and retain minority faculty. Students at accredited publicand nonprofit private schools of nursing are eligible for loans from the NursingStudent Loan (N.L.) program. The school selects qualified loan applicants, makesreasonable determinations of need, and determines the amount of student loans.

These loan programs no longer receive appropriations. Funds that are returned to the Government by participating schools are re-awarded to schools that show aneed for additional funds. Any school that receives returned funds is required todeposit the school's share of one-ninth of the amount received into the loan fund foradditional loans to students.

Scholarships. P.L. 105-392 , the Health Professions Partnerships Training Act of 1998, enacted on November 13, 1998, reauthorized andconsolidated the health professions education and training programs under the PublicHealth Service Act through FY2002. The Act repealed authority for then existingscholarship programs, namely: (1) Scholarships for Students of ExceptionalFinancial Need (EFN); (2) Financial Assistance for Disadvantaged HealthProfessions Students (FADHPS); and (3) Scholarships for Health ProfessionsStudents from Disadvantaged Backgrounds (SHPDB). It established a new programof Scholarships for Disadvantaged Students (SDS). (306) However, the law providesfunding as part of the new SDS program for recipients of EFN and FADHPS whocontinue to be enrolled after academic year 1998-1999.

The SDS program makes grants to the following accredited public or private nonprofit schools for scholarship assistance: allopathic medicine, nursing,osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, veterinarymedicine, chiropractic, allied health, or schools offering graduate programs in publichealth, behavioral and mental health or physician assistants. At least 16% of SDSfunds must be made available to schools that will provide scholarships only fornurses, and schools must give preference to former EFN and FADHPS recipients.Schools are required to agree that, in providing scholarships under SDS, preferencewill be given to students from disadvantaged backgrounds for whom the costs ofattending the school would constitute a severe financial hardship. The Secretary maynot make a grant to a school unless the school is carrying out a program for recruitingand retaining students from disadvantaged backgrounds, including racial and ethnicminorities.

Loan Repayments. Two programs provide loan repayments, funded by appropriations: (1) the Disadvantaged HealthProfessions Faculty Loan Repayment and Fellowship Program (Faculty LoanRepayment Program/FLRP); and (2) the Nursing Education Loan Repayment forRegistered Nurses Entering Employment at Eligible Health Facilities Program(Nursing Education Loan Repayment Program/NELRP). (307)

Eligible for FLRP are persons who (1) have a degree in medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, veterinary medicine,nursing, graduate public health, allied health or graduate behavioral and mentalhealth; (2) are enrolled in an approved graduate training program in one of the healthprofessions listed previously; or (3) are enrolled as full-time students in accreditedinstitutions described above and in the final course of study or program leading to adegree.

Eligible for NELRP are persons who (1) have received a degree in nursing; (2) have unpaid qualifying loans; (3) are a U.S. citizen, national or permanent legalresident; (4) are employed full-time at an eligible health facility; (5) have a currentunrestricted license in the State in which they intend to practice; and (6) sign acontract to work full-time as a registered or advanced practice nurse for 2 or 3 yearsat an eligible health facility.

Benefit Levels

Loans. Health Profession Student Loans and Loans for Disadvantaged Students may be made in amounts that do notexceed the cost of attendance, including tuition, other reasonable educationalexpenses, and reasonable living expenses. Loans have a 5% interest rate and mustbe repaid over a period ranging between 10 years and 25 years, at the discretion ofthe institution. Excluded from the time period for repayment are certain periods of:active duty performed by the borrower as a member of a uniformed service; serviceas a Peace Corps volunteer; and periods of advanced professional training, includinginternships and residencies.

The Secretary may, subject to the availability of funds, repay all or part of an individual's HPSL loan if the Secretary determines that the individual: (1) failed tocomplete the health professions studies leading to the individual's first professionaldegree; (2) is in exceptionally needy circumstances; (3) is from a low-income family(with income below the poverty guideline) or a disadvantaged family; and (4) has notresumed or cannot reasonably be expected to resume the course of study within 2years of ending them.

Nursing Student loans have a maximum limit of $2,500 for an academic year, $4,000 for each of the final 2 years, or the amount of the student's financial need,whichever is less. The aggregate of the loans for all years is limited to $13,000 forany student. Preference for these loans is given to licensed practical nurses, topersons with exceptional financial need, and to persons who enter as first-yearstudents. Loans are repayable over a 10-year period, excluding periods for serviceand study similar to those listed above. A school is authorized to extend therepayment period for up to an additional 10 years for certain borrowers who failedto make consecutive payments.

Loan Repayments. The program of Faculty Loan Repayment repays loans at a rate of up to $20,000 per year forpersons who have agreed to serve for at least 2 years as faculty members at aneligible school. The program of Nursing Education Loan Repayments provides forrepayment of 30% of unpaid principal and interest for each qualified loan after thefirst year of service, 30% of the principal and interest after the second year of service,and 25% of the principal and interest after the third year of service. Appropriationsin FY2002 were $1.3 million for FLRP and $10.3 million for NELRP.

Scholarships. Scholarships are awarded for tuition expenses, other reasonable educational expenses, and reasonableliving expenses incurred while attending school for the year. In awarding grants toeligible health professions and nursing schools, the Secretary must give priority toeligible entities based on the proportion of graduating students going into primarycare, the proportion of under-represented minority students, and the proportion ofgraduates working in medically underserved communities. Scholarshipappropriations in FY2002 totaled about $46 million.

60. Fellowships for Graduate and Professional Study

Funding Formula

The Higher Education Act of 1965 (HE), as amended, authorizes three need-based fellowship programs: Javits Fellowships, Title VII-A, Subpart 1;Graduate Assistance in Areas of National Need (GAANN), Title VII-A, Subpart 2;and the Thurgood Marshall Legal Educational Opportunity Program, Title VII-A,Subpart 2. (308) From FY1997 through FY2000,the Javits Fellowships were fundedunder GAANN, then reverted back to separate funding in FY2001. (309) Beginning inFY2000 funding for Javits Fellowships was specifically dictated in appropriationslanguage to provide funds a year in advance of the academic year in which thefellowships would be used. (310) Institutions mustmatch 25% of the federal GAANNfellowship grant. FY2002 appropriations were $46 million.

Eligibility Requirements

Javits Fellowships. Title VII-A, Subpart 1, HE, authorizes the Javits Fellowships (311) in the arts, humanities, and socialsciences. Title VII-A, Subpart 1 fellowship stipends are based on financial need, andrecipients are selected by panels appointed by the Javits Program Fellowship Board. Students who are entering graduate school for the first time or who, at the time ofapplication, have not completed their first year of study are eligible to apply for aJavits Fellowship. Applicants must be accepted at or attending a post-secondaryinstitution in one of the selected fields of study. Twenty percent of the fellowshipsare awarded in the social sciences, 20% in the arts, and 60% in the humanities. (312) Fellowships are awarded for a period of up to 4 years. Recipients are selectedthrough a national competition based on "demonstrated achievement, financial need,and exceptional promise." (313) The program islimited to U.S. citizens and nationals,permanent residents, and citizens of the Freely Associated States (Republic of theMarshall Islands, Republic of Palau, and the Federated States of Micronesia).

GAANN Fellowships. Title VII-A, Subpart 2, HE, authorizes a program of Graduate Assistance in Areas ofNational Need (GAANN). (314) Individualgraduate students are eligible to receive afellowship from an assisted department if they demonstrate financial need, accordingto criteria determined by their higher education institutions, and have excellentacademic records. The Secretary of Education designates areas of graduate study inwhich there are national needs. The Secretary makes grants to academic departmentsproviding courses of study leading to a graduate degree in one of these areas. Inaddition, institutions must assure that they will seek talented students frombackgrounds traditionally under-represented in these fields of graduate study. ForGAANN awards for academic year 2003-04, the Secretary has designated thefollowing areas of national need: biology, chemistry, computer and informationsciences, engineering, geological and related sciences, mathematics, and physics. (315)

Thurgood Marshall Fellowships. Title VII-A, Subpart 3, HE authorizes the Thurgood Marshall Legal EducationalOpportunity Program to assist minority, low-income or disadvantaged collegegraduates to prepare for and complete law school. The Title VII-A, Subpart 3,program is administered by the Council on Legal Education Opportunity (CLEO)through a single grant award by the Secretary of Education for a period of not lessthan 5 years. (316) CLEO, a nonprofit project ofthe American Bar Association Fund forJustice and Education, began assisting disadvantaged students in 1968. (317)

Benefit Levels

Javits Fellowships. Each Javits Fellowship consists of an institutional payment covering tuition and fees and astudent stipend for living expenses. The amount of the stipend is based on either thestudent's financial need or the level of support provided by the National ScienceFoundation's Graduate Research Fellowship program, whichever is less. In FY2002,57 new fellowship awards were made.

GAANN Fellowships. The GAANN fellowships are provided under 3-year grants to academic programs. Grantsfor a fiscal year are for not less than $100,000 and not more than $750,000. Studentsmay receive the fellowships for up to 5 years of study. Students receive a stipend tocover living expenses, while an institutional payment covers the fellow's tuition,fees, and other expenses. The amount of the student stipend is based on either thestudent's financial need or the level of support provided by National ScienceFoundation's Graduate Research Fellowship program, whichever is less. Theinstitutional 25% match of the federal grant can be used for additional fellowshipsand to meet other costs not covered by the institutional payment. In FY2002, no newfellowship awards were made, but in FY2001, 86 new awards were made.

Thurgood Marshall Fellowships. The Thurgood Marshall Fellows receive counseling for study at accredited lawschools, preparation on selecting and applying to a law school, and financialassistance. A number of services are available to Thurgood Marshall Fellows formeeting the competition of law school and to improve the student's retention andsuccess in law school including: a 6-week pre-law summer institute for at lawschools throughout the country; pre-law mentoring programs with law school faculty,bar association members and judges; tutoring, academic counseling, midyearseminars, and preparation for bar examinations. Thurgood Marshall Fellows mayalso be paid a stipend for participation in summer institutes and midyear seminars. In FY2002, the single grant awarded to CLEO provided support services for anestimated 350-450 Thurgood Marshall fellows.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues and CRS Report RS21436(pdf) , GraduateFellowship Programs Under Title VII of the Higher Education Act (HE):Background and Reauthorization .

61. Migrant High School Equivalency Program (HEP)

Funding Formula

The Department of Education makes discretionary grants to colleges and universities and other public or private nonprofit agencies cooperating with suchschools to help migrant students obtain a high school equivalency certificate. (318) Mostgrants are for a 5-year period. FY2002 appropriations were $23 million.

Eligibility Requirement (319)

To be served, students or their parents must have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork; alternatively, they mustbe eligible to participate (or must have participated within the last 2 years) in theTitle 1 Migrant Education program (see program no. 56) or the WorkforceInvestment Act program for migrant and seasonal farmworkers. They must be atleast 16 years of age (or beyond the age of compulsory school attendance in the statein which they reside), not enrolled in school, and not have a high school diploma orits equivalent. (320)

Benefit Levels

HEP projects typically provide instruction in reading, writing, mathematics, and other subjects tested by equivalency examinations; career-oriented work-studycourses; tutoring; and personal and academic counseling. In addition, they providefinancial assistance, housing, and various support services. In the 2002-2003 schoolyear, HEP served about 8,600 students at 23 institutions. Average federalcontribution per student was approximately $2,674.

62. College Assistance Migrant Program (CAMP)

Funding Formula

The Department of Education makes discretionary grants to colleges and universities and other public or private nonprofit agencies cooperating with suchschools to help migrant students complete their first year in college. (321) Most grantsare for a 5-year period. FY2002 appropriations were $15 million.

Eligibility Requirements (322)

To be served, students or their parents must have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork; alternatively, they mustbe eligible to participate in the Title 1 Migrant Education program or the WIAprogram for migrant and seasonal farmworkers. Students must be admitted to orenrolled as first year students at a participating college or university. (323)

Benefit Levels

CAMP projects typically provide tuition and stipends for room and board and personal expenses; they also provide academic and personal counseling, tutoring inbasic skills and other subject areas, and various support services. In the 2002-2003school year, CAMP served about 2,500 students at twelve institutions. Averagefederal contribution per student was approximately $6,500.

Note: For more information, see CRS Report IB10097, The Higher Education Act: Reauthorization Status and Issues .

63. Close Up Fellowships

Note: This program, formerly called Ellender Fellowships ( Title X, Part G of theElementary and Secondary Education Act of 1965) has been funded even thoughrecent federal budgets have requested no appropriation for it. (324) Close Up Fellowshipsnow are authorized by Title I, Part E, of the Elementary and Secondary Education Act(ESEA), as amended by the No Child Left Behind Act ( P.L. 107-10 ). This entrysummarizes Ellender Fellowships and Close Up Fellowships rules under both laws.

Funding Formula and Eligibility Requirements

Ellender Fellowships. This program provided fellowships to economically disadvantaged students, secondaryschool teachers, economically disadvantaged older Americans, and recent immigrantsto spend 1 week in Washington, D.C. attending seminars on government and currentevents and meeting with leaders of the Federal Government. "Older American" wasdefined as an individual at least 55 years old. Economic disadvantage was notdefined in the law, and the program had no regulations. The Close Up Foundation (325) administered the program.

Close Up Fellowships. The Close Up Foundation continues to administer the program by providing federal funding forfellowships to middle and secondary school economically disadvantaged students,their teachers, and recent immigrants to spend one week in Washington, D.C.attending seminars on government and current events and meeting with leaders of theFederal Government.

Appropriations for FY2002 Close Up Fellowships were $1.5 million.

Benefit Levels

Fellowships cover the costs of room, board, tuition, administration, and insurance for a week-long series of meetings, tours, and seminars about public affairsin Washington, D.C., sponsored by the Close Up Foundation. Students and theirteachers meet with officials from the three branches of the federal government anddiscuss pending issues. In the 2002-2003 school year, 1,334 students, 1,246 teachers,and 250 new American immigrants received fellowships, at an overall average costof $1,231 for students and $1,331 for teachers (federal share of $694 for students and$352 for teachers) and $1,450 for new American immigrants (federal share of $540).

Services

64. Child Care and Development Block Grant

Funding Formula

The Omnibus Budget Reconciliation Act of 1990 ( P.L. 101-508 ) created the Child Care and Development Block Grant (CCDBG), which provides 100% federallypaid discretionary funds to states and other entities. (326) CCDBG also receivesentitlement funds, some of which require state matching funds (see below). Federaloutlays in FY2002 -- from discretionary funds, entitlement funds, and amountstransferred to CCDBG from the block grant for Temporary Assistance for NeedyFamilies (TANF) -- totaled $6.4 billion.

Discretionary Funds. Of discretionary CCDBG funds, one-half of 1% is reserved for allotment to theterritories, and 1% to 2% ( determined by the Secretary of Health and HumanServices) is reserved for payments to Indian tribes and tribal organizations. Remaining discretionary funds are allocated among states, based on each state'sproportion of all children under age 5, its proportion of all children who receive freeor reduced price school lunches, and its per capita income relative to that of theNation. Through FY1995, states were required to reserve 25% of their allocation toimprove child care quality and to increase availability of early childhooddevelopment programs and before- and after-school services. Effective in FY1996,states could spend no more than 5% of their allotments for administrative costs, andno less than 4% on efforts to improve the quality and availability of child care.

Entitlement Funds. Before October 1, 1997, states also received federal funds for child care services on behalfof current, former, and potential recipients of Aid to Families with DependentChildren (AFDC). For these funds states had to provide matching funds. The 1996welfare reform law repealed the AFDC-related child care programs and replacedthem with entitlement funding to states for child care services. The law appropriated$13.9 billion in entitlement child care funding for 6 years, FY1997-FY2002, withannual amounts of $2.1 billion for FY1998, $2.2 billion for FY1999, $2.4 billion forFY2000, and $2.6 billion and $2.7 billion for FY2001 and FY2002, respectively. Funding for FY2003 was extended on a quarterly basis at the FY2002 rate of $2.717billion annually. These amounts are provided under Title IV-A of the Social SecurityAct (the part governing TANF), but states are required to transfer them to the sameagency that administers the CCDBG and to spend them in accordance with CCDBGrules. The combined discretionary and entitlement funding streams are referred toby HHS and federal regulations as the Child Care and Development Fund (CCDF).

Of entitlement child care funding, between 1% and 2% is reserved for payments to Indian tribes and tribal organizations. The rest is provided to states in twocomponents. First, each state receives a fixed amount each year, equal to themaximum annual amount received by the state under the repealed AFDC child careprograms in FY1994, FY1995, or in FY1992-FY1994, on average. This amount isestimated to equal $1.2 billion each year; no state match is required to receive thesefunds. Second, remaining entitlement funds are allocated to states according to eachstate's share of children under age 13. States must achieve maintenance-of-effortspending targets to qualify for these funds; they also must provide matching fundsfor them, at the Medicaid match rate, which varies among states and is relatedinversely to state per capita income (see program no. 1). As with discretionaryCCDBG funding, states may spend no more than 5% of their entitlement funds foradministrative costs, and no less than 4% on activities to improve the quality andavailability of child care. Note: States are authorized to transfer to the CCDBG upto 30% of their TANF block grants, which total $16.5 billion annually ( P.L. 105-33 ).

Eligibility Requirements (327)

To be eligible for subsidized child care, a child must (1) be less than 13 years old (or, at option of the grantee, under 18, (328) if disabled or under court supervision),and (2) live with at least one parent who is working or attending a job training oreducational program (unless the child is receiving protective services or in need ofthem). In addition, the income of the child's family cannot exceed 85% of the statemedian for a family of the same size (before FY1996, the income ceiling was 75%of the state median). The law requires that states give priority to children in verylow-income families and to those with special needs. According to statute, statesmust spend 70% of entitlement funds on welfare recipients working towardself-sufficiency or families at risk of welfare dependency. However, because allfamilies with income below 85% of the state median can be classified as "at risk,"the 70% targeting rule (for welfare and at-risk families) does not necessarily meanthat welfare families must be served. In theory, all funds may be used forlow-income, non-welfare, working families. However, state plans indicate that manystates guarantee child care to welfare families.

Benefit Levels

For subsidized child care services, states must establish a sliding fee schedule that requires cost sharing unless the family's income is below the poverty level. Parents must be given the option to obtain care from a provider who is paid directlyby the state, through a grant or contract, or through certificates that are payable forchild care from an eligible provider of the parents' choice. Child care services mayinclude center-based care, group home care, family care, and "in-home" care.

Note: See also CRS Report RL30785 , The Child Care and Development Block Grant: Background and Funding and CRS Report RL31817 , Child Care Issues inthe 108th Congress .

65. TANF Services

Funding Formula

See TANF block grant entry (program no. 12).

In FY2002, expenditures for TANF-funded services (other than child care, shown separately in this report) were estimated at $6.1 billion, $4.4 billion (72%)from federal funds and $1.7 billion from state-local funds. This excludes TANFfunds transferred by states to the Social Services Block grant.

Eligibility Requirements (329)

TANF law permits states to use block grant funds to provide services to recipient families and to various groups of other "needy" families, so long as theservices can be expected to lead toward ending the dependence of needy parents ongovernment benefits or enabling needy families to care for children at home, two of the program's goals. States decide what income limits to set for specific services,and they may tailor services to the circumstances of individual families. States alsomay provide services to non-needy families if they are directed at the goals ofpreventing and reducing out-of-wedlock pregnancies or encouraging the formationand maintenance of two-parent families. In their TANF plans, most states said theyprovide support services to recipient families plus three categories of needy familiesnot enrolled in cash aid: former cash recipient families, families at risk of becomingeligible for cash aid, and unemployed or underemployed non-custodial parents. Generally income limits range from 150% to 250% of federal poverty guidelines (in2003, from $22,890 to $38,150 for a family of three). However, some states havehigher flat annual income limits for some services. For example, Colorado sets anouter limit of $75,000 for any TANF-funded service.

Benefit Levels

Transportation subsidies, parental skill building services, home energy aid, housing aid, rehabilitation services (mental health/substance abuse counseling andtreatment), and domestic violence counseling are examples of benefits/servicesprovided (other than child care, the most frequently mentioned service). Examplesof TANF-funded services that impose no income test include teen pregnancyprevention programs, responsible parenthood counseling, abstinence programs, andfamily planning services. A broad category of TANF expenditures is for servicesauthorized under pre-TANF law (such as services for children in the juvenile justicesystem and certain child welfare and foster care services).

Note: For more information, see CRS Report RL30695, Welfare Reform: State Programs of Temporary Assistance for Needy Families .

66. Social Services Block Grant (Title XX)

Funding Formula

The Social Security Act (Title XX) provides 100% federal funding (330) to statesfor social services up to a maximum ceiling level ($1.7 billion in FY2001-2003,lowered from $2.38 billion in FY2000). Funds are distributed among states on thebasis of population. The FY2000 appropriation of $1.775 billion was below the$2.38 billion ceiling, and appropriations in FY2001 and FY2002 dropped to $1.725billion and $1.7 billion respectively. Funding for FY2003 was maintained at $1.7billion. Note : In FY1997-FY2003 states had authority to transfer to the socialservices block grant (SSBG) up to 10% of their TANF block grants, which total$16.5 billion annually ( P.L. 105-33 ). (331) Transfers of TANF funds to SSBG totaled$1.1 billion in FY1998, $1.3 billion in FY1999, $1.1 billion in FY2000, $920 millionin FY2001, and $1 billion (or 6% of the TANF grant) in FY2002. The authorizedtransfer amount was scheduled to decline to 4.25% on October 1, 2001 under P.L.105-178 , but more recent legislation maintained the 10% transfer limit for FY2002and 2003.

Eligibility Requirements (332)

States are free to establish their own eligibility criteria for Title XX social services. They decide what groups to serve and what fees, if any, to charge.

Benefit Levels

State expenditure reports submitted to HHS provide national data on how states spent SSBG funds in FY2001. The reporting form includes a list of 29 eligibleservice categories in which funds may be spent. The list includes categories such aschild care, home-delivered meals for the elderly, foster care, housing services, andfamily planning services. In FY2001, for the country as a whole, the servicesreceiving the greatest percentage of spending were: child protective services(11.8%), foster care services for children (10.1%), special services for the disabled(8.3%), and child day care (7.6%). For FY2000 the corresponding shares were10.8%, 10.7%, 7.8%, and 5.9%, respectively.

Note: For more details about SSBG, see CRS Report 94-953 , Social ServicesBlock Grants (Title XX of the Social Security Act) .

67. TANF Child Care

Funding Formula

See TANF block grant entry (program no. 12).

In FY2002, expenditures for TANF child care were estimated at $2.3 billion, $1.6 billion (68%) from federal funds and $0.750 billion from state-local funds. Thisexcludes TANF funds transferred to the Child Care and Development Block Grant(CCDBG) -- program no. 64. It also excludes TANF state maintenance-of-effortexpenditures that could also count toward state spending required to qualify forentitlement matching funds under the CCDBG. (333)

Eligibility Requirements (334)

TANF-funded child care consists of care for children in TANF families, former TANF families, and other low-income families. The law permits states to use blockgrant funds to provide child care to recipient families and to various groups of"needy" families not enrolled in the cash program, so long as the child care can beexpected to lead toward ending the dependence of needy parents on governmentbenefits by promoting work or job preparation, one of the program's goals. Statesdecide what income limits to set for TANF-funded child care (i.e., how "needy" theparents must be).

In their TANF plans, most states said they provide free or subsidized child care to three groups of needy families: recipient families who needed it to work, study, orundergo training, former cash recipient families (for a transition period), and families"at risk" of becoming income-eligible for cash aid. Generally income limits forfamilies not enrolled in the cash program range from 150% to 250% of federalpoverty guidelines (in 2003, from $22,890 to $38,150 for a family of three).However, some states use a relative standard (a percentage of state median income)as the income test for families not in the cash program. For instance, Connecticut'sinitial income limit is 50% of the state's median income, adjusted for family size;eligibility ends when income reaches 75% of the median. Wisconsin providessubsidized child care for all needy Wisconsin families: for initial eligibility, 185%of the federal poverty guideline, for continued eligibility, 200%. Massachusettsprovides child care to those with income below 85% of the state median income. Illinois sets the income limit at 200% of the poverty guideline

Many states set the usual age cutoff for TANF-funded care at 13 years, thegeneral limit of the Child Care and Development Block Grant (CCDBG), but theTANF plan of California promises child care only for children under age 10 (older,if funds are available).

TANF repealed a requirement that states "guarantee" child care needed to enable welfare parents to work or study. However, TANF provides that singleparents who receive TANF assistance cannot be punished for refusal to performrequired work if they are unable to obtain needed care for a child under age 6 for aspecified reason.

Benefit Levels

States decide what charges, if any, to impose for TANF child care and for how long to offer "transitional" child care to families who have left the cash welfare rolls. They also decide whether to provide care directly or to issue vouchers for care.Connecticut limits child care subsidies to $325 per child monthly ($425 for a childwith special needs). A few states reimburse families for child care expenses byadding the amount to the cash benefit (i.e., by disregarding income used for childcare costs when calculating benefits). Some states use the same free or co-pay rulesas those adopted by the state for the CCDBG; state TANF plans indicate that Illinois,Michigan, and South Carolina do so.

68. Homeless Assistance Grants

Funding Formula

Under a consolidated budget account for Homeless Assistance Grants, (335) theDepartment of Housing and Urban Development (HUD) provides funding for four programs aiding the homeless that are authorized under the Stewart B. McKinneyHomeless Assistance Act ( P.L. 100-77 ). They are the Emergency Shelter Grantsprogram, Section 8 Moderate Rehabilitation Assistance for Single-Room Occupancy(SRO) Dwellings, the Shelter Plus Care program, and the Supportive Housingprogram.

Federal funding for the Emergency Shelter Grants program is provided through formula grants to states, cities, and counties in accordance with the distributionformula used for Community Development Block Grants (CDBG). Money for theother programs is awarded through competitive grants to states, local governments,nonprofit organizations, and public housing authorities.

Grantees must match federal dollars (except in the case of the SRO program). Under the Emergency Shelter Grants program, a one-for-one match is required(although the first $100,000 granted to a state need not be matched); under theShelter Plus Care program, grantees must match federal funds provided for shelterwith equal money for services; and under the Supportive Housing program,dollar-for-dollar cash matching is required for grants involving acquisition,rehabilitation, or new construction of housing units. HUD homeless assistance fundsalso are used for "Supportive Services Only" projects that are linked to housingprovided by other organizations. The 2002 Appropriations Act required a 25% matchfor all HUD-funded services. Outlays for the Homeless Assistance Grants programin 2002 were $1 billion.

Eligibility Requirements

Under a "continuum of care" strategy developed by HUD, grantees generally must develop and maintain (or participate in) consolidated plans for the integrationof programs and services for the homeless, including the four programs noted above. Grantees under the Emergency Shelter Grants program (governmental entities)receive their grants by formula. In the other programs, grantees (both governmentaland nongovernmental agencies) must compete for HUD approval of their grantproposal. Individual eligibility for assistance from any Homeless Assistance Grantproject generally depends on decisions made by the local sponsor. However, someprograms restrict beneficiary eligibility to specific categories. The Shelter Plus Careprogram is limited to homeless persons with very low incomes (336) who havedisabilities, chronic substance abuse problems, or AIDS and related diseases. TheSRO program is limited to single homeless persons. Permanent housing under theSupportive Housing program is available only to the disabled.

Benefit Levels

Homeless Assistance grantees can use funding for a range of activities on behalf of homeless persons. Under the Emergency Shelter Grants program, activitiesinclude renovation, major rehabilitation, or conversion of buildings for use asemergency shelters or transitional housing for the homeless, essential social services,operating costs of facilities for the homeless, and initiatives to prevent homelessness. Supportive Housing program money may be used to assist homeless persons intransition to independent living through provision of transitional housing, follow-upservices, permanent housing (as well as services) for those with disabilities,supportive services to those in housing supported by other programs, "alternative"housing for the long-term homeless, and "safe havens" for homeless individuals. TheShelter Plus Care and SRO programs provide rental assistance.

Note: For more details about homeless assistance grants, along with other targeted homelessness programs sponsored by the federal government, see CRS Report RL30442 , Homelessness: Recent Statistics and Targeted Federal Programs .

69. Community Services Block Grant (337)

Funding Formula

The Community Services Block Grant Act (CSBG) (338) authorizes 100% federallyfunded block grants to states for community-based antipoverty activities. Stateallocations are based on the percentage of funds received in the state in FY1981 fromthe former Community Services Administration (CSA) under Section 221 of theEconomic Opportunity Act. Of total appropriations, half of 1% is reserved forallotment to the territories, and the Secretary of Health and Human Services alsomust reserve 1.5% for training, technical assistance, planning, evaluation and datacollection. For FY2003, $650 million was appropriated for the block grant, plus$89.4 million for several smaller related activities, such as community economicdevelopment, job opportunities for low-income individuals (JOLI), grants for ruralcommunity facilities, the national youth sports program, community food andnutrition activities and individual development accounts. (339)

Eligibility Requirements (340)

In general, beneficiaries of programs funded by CSBG must have incomes no higher than the federal poverty income guidelines. For FY2003, the guidelines were$18,400 for a family of four and $8,980 for a single person in the 48 contiguousstates. (341) Amendments enacted in 1984 allowstates to increase eligibility criteria to125% of the poverty guidelines "whenever the state determines that it serves theobjectives of the block grant." The program has no rules regarding assets.

Benefit Levels

Programs funded by the Community Services Block Grant operate a wide variety of antipoverty activities, including local program coordination, nutrition,emergency services, and employment services. CSBG grantees also receive fundsfrom many other sources (such as Head Start, weatherization assistance, low-incomehome energy assistance, emergency food and shelter programs, employment andtraining, and legal services) to operate antipoverty programs,

Note: For more details about the Community Services Block Grant, see CRS Report RS20124, Community Services Block Grants: Background and Funding .

70. Legal Services (LSC)

Funding Formula

The law provides 100% federal funding. Funds are allocated among local legal services programs on the basis of state shares of the poverty population. The FY2003appropriation was $338.8 million, (342) up $9.5million from the FY2002 sum. Theincrease was to provide supplemental funding for states that were scheduled toreceive a cut in FY2003 funding because of use of data from the 2000 Census, whichshowed a shift in state poverty populations.

Eligibility Requirements (343)

The Legal Services Corporation Act of 1974 (344) provides financial aid toprograms that offer legal services in noncriminal proceedings to low-income persons. The law makes eligible "any person financially unable to afford legal assistance" andsays the Corporation should take into account not only income, but liquid assets, (345) fixed debts, cost of living, and other factors in determining an individual's capacityto pay for a lawyer. The law requires the Corporation to set national maximumincome limits and to establish guidelines that will insure preference for those leastable to afford an attorney. Regulations of the Corporation have established themaximum income limit for eligibility at 125% of the federal poverty incomeguidelines. Thus, the income limit was $23,000 for a family of four, and $11,225 fora single individual in calendar year 2003 in the 48 contiguous states, the District ofColumbia, and the outlying areas. Higher limits apply in Alaska and Hawaii. Regulations permit exceptions to the income limit in specified circumstances. Forexample, the regulations permit legal services on behalf of a person whose incomefalls between 125% and 150% of the poverty line if the purpose is to obtain benefitsfrom a "governmental program for the poor," or if warranted by certain factors suchas the individual's current income prospects, medical expenses, fixed debts andobligations, child care and other work-related expenses, expenses associated with ageor infirmity, and other factors related to financial inability to afford legal assistance.

Benefit Levels

Beneficiaries receive legal aid in noncriminal proceedings. Most cases concern these areas of law: family, employment, consumer, housing, civil rights, publicbenefit programs such as cash welfare, Social Security, Supplemental SecurityIncome (SSI), workers' compensation, unemployment compensation, Medicare, andMedicaid. The Legal Services Corporation's stated goal is to provide "minimumaccess to legal services for all poor persons," defined as the equivalent of twoattorneys for every 10,000 poor persons; however, that goal was achieved only once,in FY1980. Corporation grantees are not allowed to give legal aid in criminalproceedings nor in most civil cases that are fee-generating in nature, such as accidentdamage suits. Additional restrictions include prohibitions against lobbying activities,class action lawsuits, litigation related to abortion, and representation of prisoners.

On February 28, 2001, the U.S. Supreme Court invalidated a restriction that Congress had imposed on LSC in every annual appropriations act since 1996. Thiswas a prohibition against LSC funding of any organization that represented clientsin an effort to amend or otherwise challenge existing welfare law. By a 5-4 vote, theCourt found that this restriction violated the First Amendment (freedom of speech). The Court held that restricting LSC attorneys in advising their clients and inpresenting arguments and analyses to the courts distorted the legal system by alteringthe attorneys' traditional role ( Legal Services Corporation v. Velazquez , 121 S.Ct.1043 [2001]).

Note: For more details about this program, see CRS Report 95-178, Legal Services Corporation: Basic Facts and Current Status .

71. Social Services for Refugees, Asylees, Other Humanitarian Cases

Funding Formula

The Immigration and Nationality Act as amended by the Refugee Act of 1980 ( P.L. 96-212 ) authorizes 100% federally funded social services to assist refugees andasylees become self-sufficient. Other legislation authorizes similar assistance forcertain Cuban and Haitians entrants (346) and forcertain Amerasians. (347) The refugee,asylee and entrant social services funds are distributed among the states underformulas that usually take into account each state's proportion of persons in eligiblegroups who entered the United States within the previous 36 months. Social servicesfor these groups have been authorized through FY1999. The Department of Healthand Human Service's Office of Refugee Resettlement (ORR) administers thisprogram. For social services, ORR expenditures amounted to $144 million inFY2000, $144 million (348) in FY2001, and $159million in FY2002.

Eligibility Requirements (349)

A person must (a) have been admitted to the United States as a refugee or asylee under the Immigration and Nationality Act or have been paroled as a refugee orasylee under the Act, (b) be a Cuban or Haitian paroled into the United Statesbetween April 15 and October 20, 1980, and designated a "Cuban/Haitian entrant,"or be a Cuban or Haitian national paroled into the United States after October 10,1980, (c) be a person who has an application for asylum pending or is subject toexclusion or deportation and against whom a final order of deportation has not beenissued, or (d) be a Vietnam-born Amerasian immigrant fathered by a U.S. citizen.

Any person mentioned above generally is eligible for social services financed by refugee program funds, but some activities so funded may have eligibilitylimitations such as age. The above groups also may benefit from services financedunder the Social Security Act (Title XX), but generally would have to meet thestate's Title XX eligibility requirements. Exceptions to Title XX rules can be madeso that refugees, asylees and entrants can receive certain particular services such aslanguage training, vocational training, and employment counseling.

Benefit Levels

States determine what social services are offered. All social services funded by the refugee program are considered refugee social services rather than Title XXsocial services even if they also qualify under Title XX rules.

72. Emergency Food and Shelter Program

Funding Formula

Congress has established by statute a National Board of charitable and religious organizations to coordinate and monitor the Emergency Food and Shelter program (350) (the EFS program) under the authority and direction of the Federal EmergencyManagement Agency (FEMA). (351) The NationalBoard awards EFS funds to localboards for allocation to direct service providers. To qualify for funds, a localjurisdiction must have a relatively high rate of unemployment for the most current12-month period with available data and a high poverty rate (as measured by the mostrecent census). The National Board allocates funds to local jurisdictions on the basisof their share of the total number of unemployed persons in all qualifying areas.

The National Board also uses a portion of EFS appropriations for state set-aside programs, which allow state boards to select jurisdictions for funding using a formulaestablished by the state boards. These funds are intended to enable state boards totarget pockets of homelessness or poverty in areas not qualifying under the regularnational formula. Examples include areas that suffer sudden economic changes suchas plant closings, areas with high levels of unemployment or poverty that do not meetthe minimum level of unemployment, or jurisdictions that have documentedmeasures of need that are not adequately reflected in unemployment and povertydata. Federal EFS outlays for FY2002 were $143 million.

Eligibility Requirements (352)

Public and private organizations that provide shelter and food to the homeless and hungry receive federal funds under this program. Providers include food banks,soup kitchens, shelters, and other organizations serving the homeless. The programis designed to purchase food and shelter to supplement and expand current availableresources to target special economic, not disaster-related, emergencies. Theeligibility of direct service providers to receive EFS funds is determined by each localboard. EFS-funded assistance is available for any individual or family whom thelocal board determines to be in need.

Benefit Levels

The EFS program provides food and feeding related expenses (such as transport of the food and food preparation and serving equipment), mass shelter, other shelter(such as hotels and motels), rent/mortgage and /or utility assistance for 1 month onlyto avert homelessness, and limited repairs to feeding and sheltering facilities.

Note: For further general information and individual county grant information, see the EFS program homepage at http://www.efsp.unitedway.org .

Job and Training Programs

73. TANF Work Activities

Funding Formula

See TANF block grant entry (program no. 12).

In FY2002, expenditures for TANF work programs and activities were reported at $2.7 billion, $2.1 billion (78%) from federal funds and $ 0.6 billion fromstate-local funds. (This excludes funding for the separate Welfare-to-Work grantprogram administered by the Department of Labor -- program no.78 in this report.)

Eligibility Requirements (353)

To enforce a focus on work, TANF law allows parents and other caretakers of TANF children a maximum of 24 months of benefits without "work," as defined bythe state. It also requires states to achieve minimum rates of participation by TANFfamilies in federally recognized work activities. (354) States may use TANF block grantfunds to provide work programs and activities for recipient families and variousgroups of "needy" families not enrolled in the cash program, so long as the servicescan be expected to lead toward ending the dependence of needy parents ongovernment benefits by promoting job preparation and work, one of the program'sgoals. States decide eligibility limits, and they may tailor activities to the needs ofindividual families. If they offer work activities to noncustodial parents of TANFchildren, they may choose whether or not to include them in calculating workparticipation rates of two-parent families.

Benefit Levels

TANF reporting forms require states to break down TANF expenditures on work-related activities into three categories: work subsidies, education and training,and other work activities/expenses. The FY2002 composition of spending fromFY2002 TANF grants: Education and training, 14.8%; work subsidies, 2.7%, (355) andother work activities/expenses, 82.5%. Nineteen states reported making outlays forwork subsidies and 34, for education and training. In a guidance for use of TANFfunds ( Helping Families Achieve Self-Sufficiency), HHS lists numerous ways tosupport work activities, including job search and placement, job skills training, workexperience, job retention services and counseling, and specialized training forsupervisors.

Note: For more information, see CRS Report RL30767, Welfare Reform: Work Activities and Sanctions in State TANF Programs .

74. Job Corps

Funding Formula

The Job Corps is 100% federally funded. The Job Corps is authorized by Title I, Subtitle C of the Workforce Investment Act (WIA). (356) FY2002 Job Corpsappropriations were $1.5 billion.

Eligibility Requirements (358)

Those eligible for the Job Corps are "low-income" youths aged 16-24 (only 20% of enrolles may be older than 21) who have one or more of the followingcharacteristics: deficient in basic reading, writing, or computing skills; a schooldropout; homeless, a runaway, or a foster child for whom state or local governmentpayments are made; a parent; in need of additional education, vocational training, orintensive counseling and or help to accomplish regular schoolwork or to secure andhold employment.

WIA defines a low-income person as one who (a) receives cash welfare or is a member of a family that receives cash welfare, (b) receives food stamps or is amember of family that was eligible to receive food stamps in the previous 6 months;(c) had family income (359) for the preceding 6months no higher than the federal povertyguideline (a limit in 2003 throughout the 48 contiguous states and the District ofColumbia (360) of $ 18,400 for a family of fourpersons and $8,980 for a single person)or no higher than 70% of the lower living standard income level (LLSIL) (a ceilingthat ranged, effective on May 30, 2003, for a four-person family from $18,270 innon-metropolitan areas of the South to $22,230 in metropolitan areas of the Northeast -- and higher in Alaska, Hawaii and Guam); (d) is homeless, as defined in theStewart McKinney Homeless Assistance Act; (e) is a foster child on behalf of whomstate or local government payments are made; or (f) is a disabled person whose ownincome meets the program limit, but whose family income exceeds it.

The Job Corps has no asset rules.

Benefit Levels

Job Corps enrollees are served primarily in residential centers where they receive basic education, vocational skills training, counseling, work experience, andhealth services. Enrollees receive personal allowances while participating in theprogram and readjustment allowances upon successful completion of the program. Job Corps centers are required to provide child day care, to the extent practicable, ator near the centers.

WIA forbids needs-tested programs to take its allowances, earnings, and payments into account in determining eligibility for benefits and their amount. (361)

Enrollees may remain in the Corps for up to 2 years; the average stay is about 7 months.

Note: For further information about Job Corps see CRS Report 97-536 , Job Training Under the Workforce Investment Act: An overview ; and CRS Report RS20244 , The Workforce Investment Act: Training Programs under Title I at AGlance , CRS Report RS21484 : Workforce Investment Act of 1998 (WIA):Reauthorization of Title I Job Training Programs . For further information about JobCorps under JTPA see CRS Report 94-862, The Job Training Partnership Act: ACompendium of Programs .

75. Youth Activities

Funding Formula

This program is 100% federally funded. Youth Activities are authorized under Subtitle B, Chapter 4 of the Workforce Investment Act (WIA). (362) Funds are allocatedto states on the basis of a three-part formula: state shares of the national distributionof "substantial" unemployment (unemployment rate of at least 6.5%), "excess"unemployment (rate above 4.5%) and the population of "disadvantaged" youth(family income below the federal poverty guideline or 70% of the lower livingstandard income level). (363) FY2002appropriations were $1 billion.

Eligibility Requirements (364)

Those eligible for WIA youth activities are "low-income" youths aged 14 through 21 who have one or more of the following characteristics: deficient in basicliterary skills; a school dropout; homeless, a runaway, or a foster child; pregnant ora parent; or a youth offender, in need of additional assistance to complete aneducational program or to secure and hold employment.

WIA defines a low-income person as one who (a) receives cash welfare or is a member of a family that receives cash welfare, (b) receives food stamps or is amember of family who was eligible to receive food stamps in the previous 6 months;(c) had family income (365) for the preceding 6months no higher than the federal povertyguideline (a limit in 2003 throughout the 48 contiguous states and the District ofColumbia (366) of $ 18,400 for a family of fourpersons and $8,980 for a single person)or no higher than 70% of the lower living standard income level (LLSIL) (a ceilingthat ranged, effective on May 30, 2003, for a four-person family from $18,270 innon-metropolitan areas of the South to $22,230 in metropolitan areas of the Northeast-- and higher in Alaska, Hawaii and Guam); (d) is homeless, as defined in theStewart McKinney Homeless Assistance Act; (e) is a foster child on behalf of whomstate or local government payments are made; or (f) is a disabled person whose ownincome meets the program limit, but whose family income exceeds it.

The program has no asset rules.

Benefit Levels

WIA Program of Youth Activities. Local youth programs must include the following 10 services: tutoring, study skillstraining, and instruction leading to secondary school completion; alternativesecondary school offerings; summer employment opportunities directly linked toacademic and occupational learning; paid and unpaid work experience, includinginternships and job "shadowing," occupational skill training; leadership developmentopportunities, including community service and peer-centered activities; supportiveservices; adult mentoring for at least 12 months; followup services for at least 12months, and comprehensive guidance and counseling, including drug and alcoholabuse counseling. At least 30% of local allotments must be used to provide activitiesto out-of-school youth. Local boards may determine how much of available youthfunds to use for summer and for year-round activities, and local programs havediscretion to decide what specific services to provide to a participant.

Note: CRS Report RS20244 , The Workforce Investment Act: Training Programs under Title I at A Glance , and CRS Report RS21484 : Workforce Investment Act of1998 (WIA): Reauthorization of Title I Job Training Programs .

76. Adult Activities

Funding Formula

This program is 100% federally funded. Adult Activities are authorized under Subtitle B, Chapter 5 of the Workforce Investment Act. (367) Funds are allocated tostates on the basis of a three-part formula: state shares of the national distribution of"substantial" unemployment (unemployment rate of at least 6.5%), "excess"unemployment (rate above 4.5%) and the "disadvantaged" adult population (familyincome below the federal poverty guideline or 70% of the lower living standardincome level). (368) FY2002 appropriations were$950 million.

Eligibility Requirements (369)

Those eligible for adult activities are persons at least 18 years old. Any individual may receive "core" services (for example, job search assistance). Forintensive services, such as individual career planning, and for job training, a personmust need the services in order to become employed or to obtain or retain a job thatallows for self-sufficiency. If funds are limited, priority must go to recipients of cashwelfare and other low-income persons.

The program has no asset rules.

Benefit Levels

The law requires that most services for adults be provided through One Stop Career Centers. It authorizes three levels of services: "core" services, "intensive"services, and training services. Available to all job seekers are core services, whichinclude outreach, job search and placement assistance, and labor market information. "Intensive" services are available only to persons who have received at least one coreservice and need further services to obtain or retain a job. Intensive services includemore comprehensive assessments, development of individual employment plans, andcounseling and career planning. Training services linked to job opportunities in thecommunity are available for persons who cannot find a job through intensiveservices. Both occupational training and training in basic skills may be offered. Topromote individual choice, participants use an "individual training account" to selecta program from a qualified training provider. The law also authorizes supportiveservices, such as child care and transportation aid, to enable a person to participate.

WIA forbids needs-tested programs to take its allowances, earnings, and payments into account in determining eligibility for benefits and their amount. (370) However, an exception applies to food stamp recipients, aged 19 or older, who areenrolled in on the-job-training. Food stamp rules treat the earnings of on-the-jobtrainees as earned income.

Note: For more information see CRS Report RL30929(pdf) , Job Training: Characteristics of Workforce Training Participants . For more historical informationabout the adult and youth training programs under JTPA, see CRS Report 94-862, The Job Training Partnership Act: A Compendium of Programs . For moreinformation about the programs under WIA see CRS Report 97-536 , Job TrainingUnder the Workforce Investment Act: An Overview, CRS Report RS20244 , TheWorkforce Investment Act: Training Programs under Title I at A Glance .

77. Senior Community Service Employment Program (SCSEP)

Funding Formula

The law provides 90% federal funding (up to 100% in disaster or economically depressed areas) for this program. The non-federal share can be cash or in kind. Thestate allocation formula has three elements: a hold harmless factor (the 2000 levelof funding); a state's relative share of persons aged 55 years and older; and a state'srelative per capita income. For FY2003, $442 million was appropriated.

Eligibility Requirements (371)

Title V of the Older Americans Act makes eligible for the Senior Community Service Employment Program (SCSEP), persons aged at least 55 with low incomes. The Act defines low income as not exceeding 125% of the poverty guidelinesestablished by the Department of Health and Human Services (HHS). Departmentof Labor (DOL) regulations provide eligibility for a person who is a resident of thestate and a member of a family that either (a) received countable income in theprevious 6 months on an annualized basis, or actual income during the preceding 12months, whichever is most beneficial to the applicant, that is not higher than 125%of the HHS poverty guidelines or (b) receives regular cash welfare payments. The2003 income eligibility ceilings were $11,225 for an individual and $15,150 for atwo-person family (higher in Alaska and Hawaii). There is no asset test.

Regulations give first priority to persons with the greatest economic need, second priority to persons aged 60 years or older, and third priority to eligible personsseeking reenrollment within a year of leaving the program because of no fault of theirown, or illness. Regulations forbid an upper age limit, and they require annualrecertification of income.

The DOL instructions (372) require SCSEP project sponsors to disregard variouskinds of income of applicants and recipients, including welfare payments, disabilitypayments, one-quarter of Social Security benefits, unemployment benefits,employment and training benefits, trade adjustment benefits, capital gains, the first$3,000 in dividend and interest income, certain veterans' benefits, one-time unearnedincome payments or unearned income payments of fixed duration. In addition, $500of otherwise includable income is not counted as annual family income forreenrollees who were previously dropped from the program because of illness ormovement to unsubsidized employment. However, support received from absentfamily members, such as adult children supporting their aged parents, is included indeciding eligibility.

Benefit Levels

Participants are placed in part-time community service jobs, for which their wages are subsidized by the federal government; when possible, project sponsors areencouraged to place enrollees in unsubsidized jobs. Upon placement in a job,enrollees receive no less than the highest of: the federal minimum wage, the state orlocal minimum wage, or the prevailing wage paid by the same employer for similarpublic occupations. Hours of unsubsidized work per enrollee are limited to 1,300 inany 12-month period. In 2002, wages under the program averaged $5.35-$5.40 perhour.

Note: For more information, see CRS Report 95-917, Older Americans Act: Programs and Funding and CRS Report RL30055(pdf) , Older Americans Act: 106thCongress Legislation .

78. Welfare-to-Work Grants

Note: No part of the original TANF block grant was earmarked for workprograms, but in 1997, Congress added a 2-year $3 billion program ofwelfare-to-work (WtW) grants to help states meet TANF work requirements.

Funding Formula

The Balanced Budget Act of 1997 ( P.L. 105-33 ) created a $3 billion welfare-to-work (WtW) grant program for 2 years, FY1998 and FY1999. AlthoughWtW is a component of TANF (Section 403(a)(5) of the Social Security Act), it isadministered by the Department of Labor (DOL). After set-asides, (373) 75% of WtWfunds were designated for matching formula grants (66.7% federal matching rate)and 25% for competitive grants. Formula grants were allocated by DOL to states onthe basis of their shares of the national adult TANF population and the povertypopulation. States were required to distribute 85% of the formula grants to localworkforce investment areas. (374) DOL awardeda total of $2 billion in formula grants(to 48 states in 1998 and 45 in FY1999) and $712 in competitive grants to localitiesand nonprofit organizations. The original law gave WtW grantees 3 years from thedate of an award in which to spend WtW funds, but Congress extended the deadline2 years, allowing WtW expenditures to continue through FY2004 (ConsolidatedAppropriations for 2001, P.L. 106-554 ).

Eligibility Requirements (376)

WtW funds are focused on hard-to-employ TANF recipients. As first enacted, 70% of funds had to be used for the benefit of TANF recipients (and TANFnon-custodial parents) with at least two specified barriers to work who themselves(or whose minor children) were long-term recipients (30 months of AFDC/TANFbenefits) or were within 12 months of reaching the TANF 5-year time limit or ashorter state time limit. The target groups had to have at least two of these threework impediments: lack a high school diploma and have low skills in reading ormathematics, require substance abuse treatment for employment, and/or have a poorwork history. WtW eligibility was liberalized by P.L. 106-554 . Grantees now (377) may

use WtW funds (and state matching funds) on behalf of four new groups: long-termTANF recipients without specified work barriers, former foster care youths 18 to 24years old, TANF recipients who are determined by criteria of the local privateindustry council to have significant barriers to self-sufficiency, and non-TANFcustodial parents with income below the poverty line. However, at least 70% ofWtW funds must be spent on long-term TANF recipients and/or noncustodial parentswithout specified work barriers.

The 1999 law also set special rules for noncustodial parents. To be eligible for WtW, noncustodial parents must be unemployed, underemployed, or havingdifficulty paying child support and they must comply with an oral or written personalresponsibility contract. They also must meet one of these conditions: their minorchild (or the child's custodial parent) must be a long-time TANF recipient or within12 months of reaching a TANF time limit, the child must be a recipient ofincome-tested aid (TANF, food stamps, SSI, Medicaid or S-CHIP), or the child musthave left TANF within the last 12 months.

Benefit Levels

Activities that may receive WtW funds are: the conduct and administration of community service or work experience programs; job creation through wagesubsidies, on-the-job training, contracts with providers of readiness, placement, andpost-employment services, job vouchers for placement, readiness, andpost-employment services, job retention or support services if these services are nototherwise available; and, added by P.L. 106-113 , up to 6 months of vocationaleducational or job training (effective July 1, 2000). The law specifies that a workactivity paid with WtW funds may not violate an existing contract for services or acollective bargaining agreement and that a WtW worker cannot fill a vacancyresulting from cutting the hours of a job below full time. In FY2002, WtW spendingtotaled $413 million ($342 million from formula grants and $71 million fromcompetitive grants). As of September 30, 2002, unspent WtW funds totaled about$416 million -- $293 million in formula grants and $123 million in competitivegrants.

Note: For more detail, see CRS Report RS20134, Welfare Reform: Brief Summary of the Welfare-to-Work Grant Program .

79. Food Stamp Employment and Training Program (378)

Funding Formula (379)

The Food Stamp Act provides for annual grants to state agencies administering the Food Stamp program to conduct employment and training activities for foodstamp recipients. These grants, which are automatically reserved from annual foodstamp appropriations, are set at $90 million a year. They are not limited by fiscalyear, and unspent amounts can be carried over and accumulated for use in a futureyear or reallocated to states that have spent their allocation of funds. In addition,states may receive a portion of an additional $20 million a year if they agree to serveall recipients who are able-bodied adults without dependents (ABAWDS). Employment and training grants generally are allocated among states on the basis oftheir proportion of persons to which food stamp work rules apply, with specialemphasis on the estimated number of able-bodied adults without dependents(ABAWDs) in each state's food stamp caseload as a proportion of the national total. (380)

In addition to the above-noted unmatched federal grants for operating their employment and training programs, the federal government pays states 50% of (1)any additional operating costs and (2) any participant support costs (e.g., child care,transportation); in FY2002, these payments exceeded $110 million.

Eligibility Requirements (381)

As detailed in the description of the Food Stamp program (program no. 21), certain nonworking able-bodied adult recipients must register for employment, accepta suitable job if offered one, and fulfill any work, job search, or training requirements(participate in employment and training programs) established by administering stateagencies. (382) Major exemptions from thisrequirement incorporated in food stamp lawinclude persons caring for dependents (disabled or under age 6) and those alreadysubject to another program's work requirement. In addition, states may choose notto require participation of otherwise covered individual recipients. NonworkingABAWDs, on the other hand, must participate in an employment or training activityunder conditions noted in the description of the Food Stamp program -- unless theyreside in an area for which the state agency has obtained a waiver because of veryhigh unemployment levels or the lack of available jobs or they have been individuallyexempted by the state agency under its authority to exempt up to 15% of thosepotentially subject to ABAWD work/training rules. (383) In FY2002, states reportedsome 2.3 million new work registrants (i.e., persons potentially subject to requiredparticipation in employment and training programs); approximately 1.2 million(including about 450,000 ABAWDs) were subject to employment and trainingrequirements.

Benefits

State agencies have a great deal of flexibility in the types of employment and training activities they can require of food stamp recipients. These include: jobsearches and training for job searches, educational activities to improve basic skillsand employability (e.g., literacy training, high school equivalency preparation),vocational training, workfare or work experience programs. Almost two-thirds ofemployment/training program participants are typically assigned to job search or jobsearch training, and another 30% are placed in workfare/work experience "slots." Fewer than 5% participate in educational or vocational training activities.

80. Foster Grandparents

Funding Formula

The Domestic Volunteer Service Act of 1973, as amended ( P.L. 103-82 ) provides 90% federal funding for developing and/or operating a foster grandparentsproject (up to 100% in special situations). The local project may provide itsmatching share in kind or cash. Appropriated for FY2002 was $107 million.

Eligibility Requirements (384)

The law makes eligible as foster grandparents persons at least 60 years old who are no longer in the regular workforce. Individuals must have an annual income,after deducting allowable medical expenses, that does not exceed 125% of the federalpoverty guideline (or 135% of the poverty line in the case of volunteers living inareas determined by the Corporation for National and Community Service to have a higher cost of living). (385) For 2003, the 125%of poverty limit was $11,225 for a singleperson and $15,150 for a two-person family in the 48 contiguous states (higher inAlaska and Hawaii). Allowable medical expenses are annual out-of-pocket medicalexpenses for health insurance premiums, health care services, and medications thatwere not and will not be paid by Medicare, Medicaid, other insurance or other thirdparty payor, and which do not exceed 15% of the applicable income guideline. Onceenrolled, a person remains eligible so long as his countable income does not exceed150% of the poverty guideline (or, in high cost areas, 162%). The program has noasset rules.

Benefit Levels

The law requires low-income volunteers to be provided with a stipend plus transportation and meal costs. The stipend is set at $2.65 per hour. Stipends aretax-free and cannot be treated as wages or compensation for the purposes of anypublic benefit program. Volunteers also receive annual physical examinations andaccident and personal liability insurance. Foster grandparents provide services tochildren with exceptional or special needs.

Note: For more information about the Foster Grandparent program, see CRS Report RL30186(pdf) , Community Service: A Description of AmeriCorps, FosterGrandparents, and Other Federally Funded Programs , and CRS Report RS20419, VISTA and the Senior Volunteer Service Corps: Description and Funding Levels .

81. Senior Companions

Funding Formula

The Domestic Volunteer Service Act of 1973, as amended ( P.L. 103-82 ), provides 90% federal funding for developing and/or operating a senior companionproject (up to 100% in special situations). The local project may provide itsmatching share in kind or cash. Appropriated for FY2002 was $44.4 million.

Eligibility Requirements (386)

The law authorizes support for senior companions persons at least 60 years old who are no longer in the regular workforce. Individuals must have an annual income,after deducting allowable medical expenses, that does not exceed 125% of the federalpoverty guideline (or 135% of the poverty line in the case of volunteers living inareas determined by the Corporation for National and Community Service to have a"higher" cost of living). (387) For 2003, the 125%of poverty limit was $11,225 for asingle person and $15,150 for a two-person family in the 48 contiguous states (higherin Alaska and Hawaii). Allowable medical expenses are annual out-of-pocketmedical expenses for health insurance premiums, health care services, andmedications that were not and will not be paid by Medicare, Medicaid, otherinsurance or other third party payor, and which do not exceed 15% of the applicableincome guideline. Once enrolled, a person remains eligible so long as his countableincome does not exceed 150% of the poverty guideline (or, in higher cost areas,162%).

Benefit Levels

The law requires low-income volunteers to be provided with a stipend plus transportation and meal costs. The stipend is set at $2.65 per hour. Stipends aretax-free and cannot be treated as wages or compensation for the purposes of anypublic benefit program. Volunteers also receive annual physical examinations andaccident and personal liability insurance. Senior companions provide supportiveservices to vulnerable, frail adults who are homebound and who usually live alone.

Note: For more information about the Senior Companion program, see CRS Report RL30186(pdf) , Community Service: A Description of AmeriCorps, FosterGrandparents, and Other Federally Funded Programs , and CRS Report RS20419, VISTA and the Senior Volunteer Service Corps: Description and Funding Levels .

82. Targeted Assistance to Refugees, Asylees, Other Humanitarian Cases

Funding Formula

Subject to available appropriations, the Immigration and Nationality Act authorizes 100% federally funded targeted assistance (primarily foremployability-related services) for refugees and asylees. Other legislation authorizessimilar assistance for certain Cuban and Haitians entrants (388) and for certainAmerasians. (389) The Department of Health andHuman Service's Office of RefugeeResettlement (ORR), which administers the program, awards grants to designatedstate agencies on behalf of counties with high concentrations of refugees, asylees orother eligible groups. States must allocate at least 95% of funds to counties. Forrefugee targeted assistance, ORR benefit expenditures amounted to $49.5 million inFY2002.

Eligibility Requirements (390)

A person must (a) have been admitted to the United States as a refugee or asylee under the Immigration and Nationality Act or have been paroled as a refugee orasylee under the Act, (b) be a Cuban or Haitian paroled into the United Statesbetween April 15 and October 20, 1980, and designated a "Cuban/Haitian entrant,"or be a Cuban or Haitian national paroled into the United States after October 10,1980, (c) be a person who has an application for asylum pending or is subject toexclusion or deportation and against whom a final order of deportation has not beenissued, or (d) be a Vietnam-born Amerasian immigrant fathered by a U.S. citizen.

In allocating targeted assistance funds, states must give priority to the following groups, in order: (a) cash assistance recipients, particularly long-term recipients; (b)unemployed individuals who are not cash recipients; (c) employed individuals whoneed services to retain jobs or become economially independent.

Benefit Levels

Counties develop their own plans for targeted assistance, which must be approved by the state. Targeted assistance funds must be used primarily foremployability services designed to enable beneficiaries to obtain jobs within a year. They may not be used for long-term training programs lasting more than a year or for educational programs that are not intended to lead to employment within a year.

83. Native Employment Works Program

Funding Formula

The 1996 welfare law ( P.L. 104-193 ), which abolished the Job Opportunities and Basic Skills (JOBS) training program, established the Native EmploymentWorks (NEW) Program (391) to continue tribalwork and training grants that existedunder JOBS. Administered by HHS, the NEW program is 100% federally funded. The law appropriated $7.6 million annually for FY1997-FY2002. This equals thesum received by Indian tribes and Alaska native organizations to operate their ownJOBS programs in FY1994. (Funding was extended through March 30, 2004, by aseries of laws.) In the year ending June 30, 2001 (program year 2000-2001) aboutone-third of the78 tribal grantees transferred their NEW funding to demonstrationprojects administered by the Bureau of Indian Affairs under P.L. 102-477 (IndianEmployment, Training, and Related Services Demonstration Act).

Eligibility Requirements (392)

The NEW program is not subject to federal definitions of TANF work activities, TANF work requirements, or to old JOBS rules. Indian tribes design their own NEWprograms, define who will be eligible, decide what benefits and services to provide,and specify the population and geographic area to be served. Target groups generallyinclude TANF recipients, non-custodial parents, recipients of General Assistance(GA) from the Bureau of Indian Affairs (BIA), and unemployed parents. Of NEWparticipants in program year 2000-2001, about 70% also were enrolled in TANF and6% in BIA general assistance. (In early 2003, 38 tribal TANF plans were inoperations, covering about 27,000 families in 15 states.) (393) Also, as noted in the entryon General Assistance to Indians (program no.18 in this report), some tribes operateTribal Work Experience Programs (TWEP), which pay a monthly $115 supplementto GA cash benefits.

Benefit Levels

In program year 2000-2001, about 23% of the reported total of 5,615 NEW participants received child care; 35%, transportation assistance; 17%, counseling;16% other supportive/job retention services (such as equipment, tools and uniforms)and 4%, medical services. Major program activities included job search (40% ofclients); classroom training (5%); work experience (26%); on-the job training (3%);and other tribal work activity (12%). (394) A totalof 1,565 NEW participants, including616 TANF recipients, began unsubsidized jobs during the year. According to theFifth annual TANF report, many tribes with NEW programs co-located training,employment, and social services, often in "one-stop" centers. Some granteesestablished information/resource centers and learning centers, which provided avariety of job preparation services and worked closely with local colleges.

Energy Assistance

84. Low-Income Home Energy Assistance (LIHEAP)

Funding Formula

The Low-Income Home Energy Assistance Act (Title XXVI of P.L. 97-35 , as amended) provides 100% federal funding for the Low-Income Home EnergyAssistance Program (LIHEAP). (395) throughannual block grants to states, the Districtof Columbia, more than 100 eligible Indian tribes, two commonwealths, and fourterritories. (396) The Department of Health andHuman Services (HHS) distributesannual federal appropriations using an allocation formula established in law.

P.L. 103-252 , which reauthorized the program through FY1999, authorized a special fund of $600 million annually for emergencies (contingency funding). P.L.105-285 reauthorized LIHEAP at $2 billion annually for FY2002-FY2004. This lawalso expanded the criteria for LIHEAP contingency funding and added a sectionconcerning natural disasters. In FY2002, 29 states received contingency fundstotaling $100 million. Federal outlays for LIHEAP totaled $1.8 billion in FY2000,$1.9 billion in FY2001, and $1.8 billion in FY2002.

Eligibility Requirements (397)

States and other grantees design and administer their own programs under general federal guidelines. These guidelines set maximum and minimum incomeeligibility standards, and allow jurisdictions operating the LIHEAP to makecategorically eligible most households receiving Temporary Assistance for NeedyFamilies (TANF), Supplemental Security Income (SSI), Food Stamps, veterans'pension, or compensation benefits. (398) Incomeeligibility standards vary, but they may

not be above 150% of the federal poverty income guidelines (a 2003 limit of $27,600for a family of four in the 48 contiguous states), or 60% of the jurisdiction's medianincome (adjusted for family size). In addition, they may not be below 110% of thefederal poverty income guidelines. The law requires that benefits and outreachactivities be targeted to those with the greatest home energy needs (as well as costs)particularly households with young children, frail elderly, and disabled individuals. (399) Eligibility for LIHEAP benefits is typically determined on a "household" basis, andgrantees may establish eligibility standards in addition to income. A household canbe an individual, or group of individuals who are living together as one economicunit for whom residential energy is customarily purchased in common or who makeundesignated rent payments for energy.

Benefit Levels

Grantees operating the LIHEAP decide benefit levels and the manner in which payments are made. However, to the extent permitted by efficient administration,jurisdictions are required to provide the highest benefits to households with lowestincomes and highest energy costs in relation to their income. They also must setaside a "reasonable" portion of their allotment for energy-related emergencies (basingthe set-aside on past experience). LIHEAP funds may be used to help pay residentialheating or cooling costs, purchase/install low-cost weatherization materials, andassist households facing energy-related emergencies.

Operating jurisdictions can use a maximum of 15% of their LIHEAP allotment for weatherization activities (or 25% if a federal waiver is granted). LIHEAPobligations for weatherization totaled $159 million in FY2000 and $234 million inFY2001, exceeding outlays for the weatherization program of the Department ofEnergy (program no. 85).

Benefits most commonly take the form of cash payments to households, vendor "lines of credit," vouchers, and tax credits. In FY2000, some 3.9 million householdsare estimated to have received home heating benefits (and, in 17 states, coolingassistance was given to 318,438 households). In FY2002, heating benefits went to anestimated 4.7 million households. The program includes a Residential EnergyAssistance Challenge (REACH) grant program, established by 1994 law, to increaseefficiency of energy usage by low-income households.

Grantees may use up to 10% of their LIHEAP allotments for administrative expenses and may carryover up to 10% of 1 year's funds for use in the next year.

Note: For more information, see CRS Report RL31865 , The Low-Income Home Energy Assistance Program (LIHEAP): Program and Funding Issues.

85. Weatherization Assistance

Funding Formula

The Energy Conservation and Production Act of 1976 ( P.L. 94-385 ), as amended, provides 100% federal funding for weatherization assistance tolow-income persons through grants administered by the Department of Energy(DOE). (400) Administrative costs may not exceed10% of grant funds. Weatherizationfunds are allocated among the states on the basis of factors that include: number ofheating degree days and cooling degree days, number of low-income owner-occupiedand renter-occupied dwellings, percentage of total residential energy used for spaceheating and space cooling. Although states are not required to provide matchingfunds, (401) state and local funds often supplementfederal amounts. Appropriationstotaled $230.0 million in FY2002.

Eligibility Requirements (402)

States and other grantees design and administer their own programs under general federal guidelines. The law makes eligible all "low-income" households andoffers alternate definitions of this term. States are permitted to give DOEweatherization assistance to households whose (a) combined income falls at or below125% of the federal poverty income guidelines, a ceiling equal in the 48 contiguousstates to $23,000 for a family of four in 2003 (at state option, the ceiling can be liftedto 150% of the poverty guideline, if the state has adopted that income limit forLIHEAP) and (b) families with a member who received cash welfare paymentsduring the previous 12 months from TANF, SSI, or state assistance programs.

Benefit Levels

Legislation allows a maximum average expenditure, adjusted annually for price inflation ($2,614 in FY2003), per dwelling unit for weatherization materials, labor,and related matters (such as transportation of materials and workers; maintenance,operation and insurance of vehicles; maintenance of tools and equipment; purchaseor lease of tools, equipment and vehicles; employment of on-site supervisors; andstorage of weatherization materials). DOE reports that it weatherized more than97,000 homes in FY2001 and 5.2 million over the 27-year history of the program. The Low-Income Home Energy Assistance Program (LIHEAP) usually spends morefunds on weatherization assistance than the DOE program. For information aboutLIHEAP weatherization assistance, see program no. 84.

Note: For more information, see CRS Report RS20373, The Department ofEnergy's Weatherization Assistance Program and CRS Issue Brief IB10020, EnergyEfficiency: Budget, Oil Conservation, and Electricity Conservation Issues. For DOEsummary, see http://www.eere.energy.gov/buildings/weatherization/about.html .

Table 14. Need-Based Benefits: Expenditures andEnrollment Data, by Programs and Form of Benefits FY2000-FY2002

Data in this table are based on program reports and budget documents, including departmental justifications of appropriations estimates. Details of sources areavailable upon request.

Note: Programs are listed in descending order of total FY2002 expenditures. Except for sums below $100 million, figures shown are rounded to the nearest million. Totals reflect rounding of sums below $100 million to the nearest million. N.A =means "not available." N.P.= means no program. To conserve space, names of someprograms have been shortened in the table.

MEDICAL BENEFITS

a. Funded program costs.

b. Includes these sums for administration: 2000, $5,892 million; 2001, $6,555 million; 2002, $6,601 million.

c. Includes these sums for administration: 2000, $4,685 million; 2001, $5,325 million; 2002, $5,330 million.

d. Unduplicated annual number of persons ever enrolled during the year, regardless of whether they receiveda service funded by the program.

e. Appropriations.

f. Includes these sums for administration: 2000, $23 million; 2001, $24 million; 2002, $25 million.

g. VA makes grants to states to help finance construction of some states' veterans' homes and pay perdiem expenses for some veterans in state homes,but state and local expenditures are not known.

h. Data include these sums for administrative costs: 2000, $116.5 million; 2001, $ 191 million; 2002,$251 million. Federal benefit expenditures arefrom state claims for federal matching dollars, submitted to HHS on Form 21C (as of 11/30/02), and may includeMedicaid administrative costs atan enhanced federal matching rate.

i. Actual state and local share of administrative costs for FY2000-FY2002 are not available.

j. Number ever enrolled during the year.

k. Data from the Centers for Medicare and Medicaid Services, Office of the Actuary, National Health StatisticsGroup.

l. Annual count.

m. Minimum match required by law for block grant amount (75% of Federal sum) and SPRANS grants(50% of Federal sum). States may spend more,but data are not available.

n. Includes these estimated sums for administration: 2000, $23 million; 2001, $20 million; 2002, $21million. Refugee cash and medical administrativeexpenditures actually are combined. Estimates are based on the 1998-1999 proportion of benefit dollars in eachprogram.

o. Because of a high degree of overlap (and in some cases, a mixture of monthly and annual numbers), recipienttotals are not shown.

CASH BENEFITS

*Some other programs provide aid in the form of cash intended for specific goods or services. Examples are the Low-Income Home Energy AssistanceProgram and educational loan and grant programs.

a. In FY2000, 13 monthly payments of SSI were made, and in FY2001, 11 monthly payments. Expenditure data in this table have been adjusted to a12-payment basis for each year.

b. Includes these sums for administration: 2000, $2,321 million; 2001, $2,397 million; 2002, $ 2,522 million. Excludes these amounts for beneficiaryservices: 2000, $54 million; 2001, $44 million; 2002 $ 54 million.

c. Includes these estimated sums (calendar year) for state administration of state SSI supplements: $71million; $72 million; $ 68 million (estimatesequal 8% of state-administered benefits).

d. Data include recipients of non-federally administered payments (state-administered SSI supplementsonly, data as of December of each year): 2000,83,483; 2001, 87,059; 2002, 151,989. In 2002, Texas began reporting on state-administered supplements, whichincreased estimated numbers abovethose of previous years.

e. Data for 2000 and 2001 are from U.S. Treasury, Internal Revenue Service, and refer to the calendaryear (tax year ) to which the EITC applied. Benefitsexclude tax expenditures (reductions in tax owed), which totaled $4,492 million in 2000 and $ 4,376 million in 2001 Data for 2002 are estimates from the FY2004 Budget of the United States, Analytical Perspectives, and exclude tax expenditures of $4,450million.

f. Estimated annual number of tax units (chiefly families). 2001 number is preliminary.

g. Includes basic cash assistance, refundable tax credits, short-term nonrecurring benefits (example,diversion payments), and contributions to individualdevelopment accounts. Excludes transfers to CCDBG and SSBG. Excludes spending for TANF child care, TANFwork activities, and TANF services (reported separately under those programs). Excludes separate Welfare-to-Work grants administered by the LaborDepartment. However, includesadministrative costs for all TANF-funded benefits and services.

h. Includes these sums for overall TANF administrative costs (for all benefits and services): 2000, $1,506million; 2001, $1,598 million; 2002, $1,633million.

i. Includes these sums for overall TANF administrative costs (all benefits and services): 2000, $889million; 2001, $1,042 million; 2002, $983 million.

j. Number of recipients. Number of families: 2000, 2.265 million; 2001, 2.116 million; 2002, 2.064. Number of children: 2000, 4.385 million; 2001,4.055 million; 2002, 3.839 million.

k. Foster care benefit expenditures do not include child support payments collected on behalf of fostercare children, which are used to reimburse stateand federal costs for foster care maintenance payments. For FY2000, child support payments received on behalfof foster care children totaled $45million; for each of FYs 2001 and 2002, $49 million.

l. Includes these sums for administration, data collection, training, and demonstration (waiver) costs: 2000, $2,376 million; 2001, $2,473 million; 2002,$2,641 million. Note: before FY2000, states were not asked to separately classify demonstrationspending, which may be used for either benefitsor administration. Waiver expenditures included in the foregoing sums were: 2000, $136 million; 2001, $148million; 2002, $191 million.

m. Includes these estimated sums for administration, data collection, training, and demonstration (waiver)costs: 2000, $2,224 million; 2001, $ 2,311million; 2002, $2,474 million. Waiver costs included in the preceding totals were: 2000, $131 million; 2001, $142million; 2002, $186 million.

n. Data for 2000 and 2001 are from U.S. Treasury, Internal Revenue Service, and refer to the calendaryear (tax year ) to which the child tax creditapplied. Benefits exclude tax expenditures (reductions in tax owed), which totaled $19.7 billion in 2000 and $ 22.5billion in 2001. Data for 2002are estimates from the FY2004 Budget of the United States, Analytical Perspectives, and exclude tax expendituresof $22.2 billion.

o. Spending data relate to state fiscal years. 2000 and 2001 spending data are based on reports from theU.S. Census Bureau (state and local governmentexpenditures for noncategorical cash assistance payments). 2002 amount is an estimate, based on data obtainedfrom 4 states that accounted for 33%of the 2000 Census-reported total. Data from these states indicated that GA cash expenditures rose about 10% from2000 to 2002.

p. Annual count.

q. Includes these sums for administration, data collection, training, and demonstration (waiver) costs: 2000, $286 million; 2001, $299 million; 2002,$305 million. Waiver spending included in foregoing totals: 2000, $90,000; 2001, $240,000; 2002, $1 million.

r. Includes these estimated sums for administration, data collection, training, and demonstration (waiver)costs: 2000, $255 million; 2001, $ 271 million;2002, $277 million. Waiver spending included in foregoing totals: 2000, $90,000; 2001, $235,000; 2002, $729,000.

s. Obligations.

t. Estimates. Includes these estimated sums for administration: 2000, $12 million; 2001, $11 million;2002, $12 million. Refugee cash and medicaladministrative expenditures actually are combined. Estimates are based on the 1998-1999 proportion of benefitdollars in each program.

u. Recipient totals are not shown because data include monthly and annual numbers.

FOOD BENEFITS

*See also program no. 72, Emergency Food and Shelter.

a. Federal expenditures represent obligations unless otherwise marked.

b. Food stamp data include spending for (1) state-financed benefits for non-citizens, to the extent that theyare funded through transfers to the federalgovernment (2) Puerto Rico's nutrition assistance program (over $1.2 billion yearly), and (3) nutrition assistancegrants to American Samoa andthe Northern Marianas totaling about $10 million yearly. State-local expenditure estimates are for administrationand do not include amountstransferred to the federal government to finance benefits for non-citizens ($35 million in 2000, $34 million in 2001,and $78 million in 2002), oramounts spent directly by states for benefits to non-citizens.

c. Excludes sums spent for food stamp work/training, reported under that program (no. 79 ). Includesthese sums for food stamp administration: 2000,$1,935 million; 2001, $2,102 million; 2002, $2,264 million. Includes amounts for state-financed benefits fornon-citizens.

d. Includes persons receiving nutrition assistance in Puerto Rico: 2000, 1.1 million; 2001, 1.1 million; 2002,1 million.

e. Estimated cash and commodity assistance for free and reduced price lunches and after-school snacks. Includes federal funds for state administrativeexpenses for school lunch and other child nutrition programs. These administrative funds totaled: 2000, $120 million; 2001, $127 million; 2002,$ 132 million. Excludes cash assistance for "full-price"meals (44% of total lunches served), which have no incometest.

f. Not reported since 1980, when federal funds provided about half the total cost of the lunch program,and children's meal payments, plus state/localrevenues, the other half. A 1994 Agriculture Department survey indicates that 40% of the total operating costs ofschool meal programs come fromchildren's meal payments and state/local government sources. The minimum state matching requirement totals justover $200 million annually.

g. Estimated average daily number of children receiving free and reduced-price meals in these programs.

h. Includes these federal payments for state-local administration, nutrition services, infrastructure grants,and technical services: 2000, $1,108 million;2001, $1,150 million; $2002, $1,208 million. "Administrative" expenses include costs of providing nutritional riskassessments, nutrition education,and other services such as breast feeding support services. All figures have been adjusted for year-to-year carryovers of unspent funds.

I. None required. Contributions unknown.

J. Federal spending for state administrative costs included under program no. 21 (school lunch). See footnotee.

k. Estimates of funds (including the value of commodity assistance) for meals/snacks served to childrenand adults with family income not exceeding185% of the poverty income guideline. Includes administrative payments for day care home sponsors and auditexpenses: 2000, $136 million; 2001,$138 million; 2002, $138 million.

l. Estimates of children from families who meet an income test (185% of the poverty income guideline)are based on the number of meals/snackssubsidized at the higher rate paid for meals served to such children. However, a 1999 Agriculture Departmentsurvey indicates that the figurespresented here may overstate the number of lower-income children served by approximately 200,000.

m. The law prohibits an income test, but requires preference for those with greatest economic or social need.

n. Sums represent (1) appropriations of Administration on Aging (AoA) before transfer of funds amongsupportive service and nutrition service categoriesplus (2) USDA obligations of funds for the elderly commodity program. For FY2002, AoA appropriations were$566.5 million, and USDAcommodity obligations were $ 176.5 million.

o. The non-federal share for congregate and home-delivered nutrition is an estimate based on a 15%match requirements for these funds. No match isrequired for the nutrition services incentive component of the program.

p. Annual unduplicated number. 2002 is an estimate.

q. Sums represent the value of commodities plus appropriations for state and local administrative anddistribution costs and the value of "bonus"commodities provided without appropriation. Includes commodities for soup kitchens and food bank programs.

r. States must match, in cash or in-kind, administrative grants that they do not pass along to local agencies. Amounts, if any, are not known.

s. Includes payments to summer program sponsors for administrative costs and health inspectionpayments to states: 2000, $30 million; 2001, $30 million;2002, $ 30 million.

t. July participation.

u. Includes amounts obligated for administration and distribution costs): 2000, $20 million; 2001, $23million; 2002, $23 million. Not adjusted forinter-year transfer of funds. Because of carry overs of funds and commodity inventories among fiscal years, actualexpenditures are higher than thenew obligation amounts shown here. Does not include the value of "bonus" commodities provided withoutappropriation, estimated at $1 to $5million annually.

v. Sums represent the value of purchased commodities plus administrative grants. Administrative costs: 2000, $21 million; 2001, $23 million; 2002,$ 23 million. Not adjusted for inter-year transfers of commodities. Does not include the value of "bonus"commodities provided without anappropriation: estimated at $5 to $10 million annually. Because of carry overs of funds and commodity inventoriesamong fiscal years, actualexpenditures are higher than the new obligation amounts shown here.

w. Indian tribal organizations and state agencies operating the program must contribute up to 25% ofadministrative and distribution costs, but the amountof their contributions (estimated at $5 to $10 million annually) are not known.

x. All spending is shown as benefit expenditures. No information is available on the breakout betweenbenefit and administrative spending, althoughadministrative expenses generally may not exceed 17% of a state's grant.

y. Although a 30% state match is required under the WIC component of the farmers' market nutritionprogram, no information is available on the actualamount spent.

z. Average number of half-pints of free milk served daily to children whose family income does notexceed 130% of the poverty income guidelines. Excludes federally subsidized milk served without regard to child's family income.

aa. Recipients are not totaled because of a high degree of overlap (and/or in some cases, a mixture of monthlyand annual numbers).

HOUSING BENEFITS

*See also program no. 72, Emergency Food and Shelter, and program no. 68, Homeless Assistance Grants.

a. Units eligible for payment at end of fiscal year.

b. Outlay data include operating subsidies, capital grants, and HUD-administered Indian housing. Outlayand housing unit data exclude the Indian HousingBlock Grant.

c. Localities accept payments in lieu of property taxes that are lower than normal taxes (usually equal to10% of shelter rent). No estimate is availableof the value of this benefit.

d. Obligations.

e. State-local governments may use up to 10% of federal HOME funds for administrative costs.

f. Consists of housing units provided, constructed, or rehabilitated by HOME funds, plus tenant-basedrental assistance. Housing units: 2000, 78,968;2001, 69,712; 2002, 73,804. Families receiving tenant-based rental assistance: 2000, 6,899; 2001, 11,756; 2002,10,239.

g. Units assisted under this program also are counted under the Section 515 program (rural rental housing loans)or Section 514 program (farm laborhousing loans).

h. Amounts shown are appropriations.

i. Beginning in FY2001, includes rehabilitation loans.

j. Amount of rural housing repair loans and grants (Section 504) obligated: 2000, $27.4 million in loansand $30.4 million in grants; 2001, $ 30.3 and$31.1 million, respectively; 2002, $31.8 and $30.6 million, respectively.

k. Number of rural housing units repaired with loans and grants (Section 504): 2000, 4,321 units repairedwith loans and 5,442 with grants; 2001, 5,431and 6,331, respectively; 2002, 5,615 and 6,170, respectively. Note: Some units may receiveboth a loan and a grant.

l. Amount of farm labor housing loans (Section 514) and grants (Section 516) obligated: 2000, $25.9million in loans and $19.3 million in grants; 2001,$32.1 and $9.1 million, respectively; 2002, $47.3 and $14.5 million, respectively.

m. Amounts shown are self-help technical assistance grants (Section 523) and site loan obligations(Sections 523 and 524). Grants: 2000, $30.4 million; 2001, $17.6 million; 2002, $26.5 million. Site loan obligations (Section 523): 2000, $1.2 million; 2001, $4 million;2002, $0.0 million. Site loanobligations (Section 524):2000, $0.6 million; 2001, $3.7 million; 2002, $0.5 million.

n. These programs provide for the development of building sites. Houses constructed on these ssites generallyare financed (and counted) under theSection 502 program.

o. Numbers represent new and repaired or renovated houses, as follows: 2000, 238 new and 310 repairedor renovated houses; 2001, 138 new and 225repaired or renovated houses; 2002, 201 new and 327 repaired or renovated houses.

p. Columns are not totaled because they are a mixture of numbers: dwelling units, loans, and grants. Further,some units are assisted by more than oneprogram.

EDUCATION BENEFITS

a. Federal expenditure data represent appropriations and, unless otherwise indicated, are based upon appropriations for the program in the school yearending in the fiscal year named. For forward-funded programs, for example, "FY2002 expenditures" are totalFY2001 appropriations for the program(which generally were available for obligation from July 1, 2001 through Sept. 30, 2002). For current-fundedprograms, FY2002 expenditures areFY2002 appropriations, which generally were available for obligation throughout FY2002.

b. The number of recipients is based upon counts or estimates of participants in the school year endingin the fiscal year named. For example, FY2002recipients are students who participated in (or received benefits from) programs during the 2001-2002 school year,or during the summer of 2002.

c. Federal appropriations include funds for local administration. Note: Although HeadStart is classified in this report as an education program, itprovides many other services. It is administered by HHS rather than ED.

d. Estimate. Based on requirement that non-federal funds equal 20% of total program costs (equivalent to 25%of federal sums).

e. Dollars are for the program in the fiscal year named. They are net program obligations for subsidizedStafford and Stafford/Ford loans. Data forFY2000 are negative: -$1.7 billion for FFEL loans and -$0.6 million for Ford loans. Combined data for FY2001are positive: $4.3 billion for FFELand -$0.7 billion for Ford loans. FY2002 data are positive: $3.4 billion for FFEL loans and $4.1 billion for Fordloans. Recipient data representnumber of subsidized Stafford and Stafford/Ford loans made in the fiscal year.

f. This program also receives non-governmental funds.

g. Recipient data exclude TRIO staff who receive training.

h. Federal funds for these migrant education programs may be supplemented by states, local schooldistricts, or public or nonprofit agencies. However,data are unavailable on this support, which is voluntary.

i. Estimates. Based on requirement that non-federal funds at least equal the federal sum.

J. Data here apply only to scholarships and loans funded with appropriations. Revolving funds (from loanrepayments) fund Health Professions StudentLoans and Loans for Disadvantaged Students.

k. Recipients 2000, 17,679 persons received scholarships and 588, loans; 2001, 13,477 and 35, respectively;2002, 11,377 and 37, respectively.

l. The program of graduate assistance in subject areas of national need requires institutions to provide matchingfunds equal to 25% of the federal grant.

m. Data refer to persons receiving new awards each year; they exclude persons with continuing fellowships.

n. School year 2002-2003 recipients: 1,223 students, 1,246 teachers, and 250 new Americans.

SERVICES

a. Includes expenditures made from funds transferred to CCDBG from TANF.

b. Average monthly number of children served.

c. Includes services provided solely under terms of pre-TANF law, supportive services, pregnancyprevention and family formation activities, andunclassified "other" expenditures.

d. Includes these sums for transportation and other supportive services for non-employed persons (classifiedas "non-assistance"): 2001, $524 million;2002, $339 million

e. Includes these sums for transportation and other supportive services for non-employed persons(classified as "non-assistance"): 2001, $133 million;2002, $245 million.

f. Includes transfers from TANF: 2000, $ 1,079 million; 2001, $920 million; 2002, $1,043 million. Excluded are transfers from LIHEAP and theCommunity Services Block Grant (and reported under those programs).

g. Not total TANF maintenance-of-effort (MOE) child care spending. To avoid double counting, reportedhere is only the amount by which TANF MOEspending exceeds CCDBG MOE spending. 2002 sum is estimated.

h. Appropriations

i. None required. Contributions unknown.

j. Includes administrative costs: 2000, $16 million; 2001, $20 million; 2002, $ 19 million.

k. Recipient count represents total number of cases closed during the fiscal year.

l. Law places these limits on administrative spending: local recipient organizations, 2% of their funds;National board, 1%; state set-aside committees,0.5%. Note: Shelters, not individuals, are fund recipients.

m. Includes these sums for administrative costs: FY2000, $2.6 million; FY2001, $3.3 million, and FY2002,$3.4 million.

JOBS AND TRAINING

a. Data are appropriations unless otherwise marked.

b. Expenditures.

c. Effective July 1, 2000, includes funds for summer employment opportunities for youth (previously a separateprogram).

d. The law permits no more than 13.5% of federal funds to be used for administrative costs (butauthorizes the Secretary of Labor to increase this to 15%under certain conditions).

e. Estimate, based on general requirement that non-federal funds equal at least one-ninth of federal funds(10% of total). State-local spending representscash and in-kind amounts and may include some private sums.

f. FY2000, $404 million in formula grants and $164 million in competitive grants; 2001, $427 millionin formula grants and $164 million in competitivegrants; 2002, $ $329 million in formula grants and $ 18.3 million in competitive grants.

g. Matching funds for formula grants

h. FY2000, 141.7 thousand formula grant participants and 56.8 thousand competitive grant participants;FY2001, 170.4 thousand and 36.1 thousandparticipants, respectively; and FY2002, 107.6 thousand and 10 thousand, respectively.

i. Spending for administering and operating employment and training activities for food stamp recipientsand for support costs like child care andtransportation. Funding provided (obligated) substantially exceeds expenditure amounts shown in this table. Ineditions of this report issued before2001, funding for the employment and training programs for food stamp recipients was included in figures shownfor administration of the food stampprogram, typically $150 -- $200 million annually in federal funds and $50-$100 million in state funds.

j. Table shows non-federal funding (cash and in-kind amounts from state-local governments and someprivate sources), as reported in annual BudgetJustifications of the Corporation for National and Community Service. These amounts exceed the requiredminimum non-federal "matching" share(10% of the total, one-ninth of the federal amount).

k. Annual number.

ENERGY AID

a. Recipient numbers are households served during the year with heating and winter crisis aid. Outlay data include weatherization aid. Expendituresare from regular LIHEAP appropriations plus contingency funds. In addition, some states may have access to oilprice overcharge funds (under theEmergency Petroleum Allocation Act of 1975). Those funds are limited, as most cases have been settled. InFY2000, 2 states obligated about $3million of oil overcharge funds.

b. Of these funds, $400 million was released in the final weeks of FY2000, making them effectively availablefor FY2001.

c. Unofficial estimate provided by the National Energy Assistance Directors' Association (NEADO), based ona survey of the states.

d. By law, no more than 10% of federal funds may be used for administration.

e. Total may include some duplication, as some households may receive aid from both programs.