Memorandum No. TANF-ACF-IM-99-2

Date: August 2, 1999

TO:

State Agencies Administering the Temporary Assistance for Needy Families (TANF) Program and Other Interested Parties

SUBJECT:

Work Participation Rates For FY 1998

BACKGROUND:

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) established mandatory work requirements and minimum annual work participation rate standards for States operating a TANF program. States are subject to these minimum participation rate requirements beginning July 1997 or six months after the State implementation of the TANF program. The Act establishes separate minimum participation rates each year for all families and two- parent families. The minimum work participation rate standards for fiscal year (FY) 1998 are 30 percent for the all families rate and 75 percent for two-parent families rate.

PRWORA provides for a reduction in the minimum work participation rate standards if the State’s average monthly assistance caseload decreased the previous year in comparison to its average monthly caseload in FY 1995. The all families participation rate standard is reduced by the number of percentage points the overall caseload fell. The two-parent participation rate standard is reduced, at State option, by either (1) the number of percentage points the two-parent caseload fell or (2) the number of percentage points the overall caseload fell. However, the law specifies that any caseload reductions resulting from changes in State or Federal eligibility rules are excluded in calculating the credit. Adjustments of FY 1998 minimum participation standards, called the "caseload reduction credit," are based on the caseload changes from FY 1995 (in the State’s title IV-A program under prior law) to FY 1997 (a combination of the State’s title IV-A program under prior law and the State’s TANF program).

The statute also provides States the option to retain approved welfare reform waiver provisions that are inconsistent with the TANF provisions. Such waiver provisions may affect who is required to participate, the required hours of participation and the countable activities. Thus, the participation rate calculation may apply differently for States retaining inconsistent waiver provisions.

Note that in the absence of final TANF rules, the calculation of the participation rates, the application of the caseload credit and the criteria for determining waiver inconsistencies are based on a reasonable interpretation of PRWORA.

CONTENT:

This memorandum transmits the work participation tables for FY 1998. All States were required to report work participation information for some or all of the October 1997 – September 1998 fiscal year and are subject to the work participation standards for FY 1998 based on this information.

The FY 1998 national average all families work participation rate is 35.4% and the FY 1998 national average two-parent families participation rate is 42.3%. Of the 54 jurisdictions subject to the FY 1998 participation rate standards, all States met or exceeded their minimum all families work participation rate. Ten States (Alabama, Florida, Georgia, Hawaii, Maryland, New Jersey, North Dakota, Puerto Rico, South Dakota and the Virgin Islands) did not have any two-parent families in the TANF program and thus were not subject to the two-parent work participation requirements. Of the 44 States that had two-parent families in their TANF program, 29 States met or exceeded their minimum two-parent families work participation rate. All States, except Guam, received a reduction in their minimum participation rates for the all families rate and all States with a two-parent TANF program, except Guam, received reductions in their minimum participation rates for the two-parent families rate as a result of the application of the caseload reduction credit. Twenty-seven States met the all families participation rate standard before application of the caseload reduction credit. Two States met the two-parent participation rate standard before application of the caseload reduction credit. The caseload decline between FY 1995 and FY 1997 for all families was 19.1% and for two-parent families was 21.4%. The minimum work participation rate adjustment for all families ranged from 0.0% to 30.0% and for the two-parent families ranged from 0.0% to 75.0%. In addition, waiver inconsistencies applied in calculating participation rates for 12 States (Delaware, Hawaii, Massachusetts, Missouri, Montana, New Hampshire, Oregon, South Carolina, Tennessee, Texas, Utah, and Vermont).

As shown in the attached all families work participation activity table, an average of about 700,000 adults participated a sufficient number of hours in work activities to count toward meeting the participation rate, even without consideration of activities that qualify through waivers. Over 70% of these adults were engaged in unsubsidized employment. Another 16% were engaged in either work experience or community service, and 12.5% were engaged in job search. (Because some individuals were engaged in multiple activities, the table total is in excess of 100%.)

States have been individually notified of their participation rates for FY 1998. States that failed to meet their minimum work participation rate for either all families or two-parent families are subject to a penalty as required

by section 409(a)(3) of PRWORA. However, States will have an opportunity to file a claim for good cause and/or submit a corrective compliance plan to correct its failure to meet its FY 1998 minimum work participation rate standard(s) before the Secretary will impose a penalty.

This memorandum also transmits statistical tables on TANF recipient characteristics and financial circumstances for FY 1998. We have included a summary and analysis of this information.

ATTACHMENT:

TANF Work Participation Rate Tables For FY 1998 (October 1997-September 1998), TANF Recipient Characteristics and Financial Circumstances for FY 1998

INQUIRIES:

Inquiries should be directed to the appropriate ACF Regional Administrator

/s/
______________________________

Alvin C. Collins
Director
Office of Family Assistance

/s/
______________________________

Howard Rolston
Director
Office of Planning, Research, and Evaluation