Questions?
Privacy
Site Index
Contact Us
Home
|
Services
|
Working with ACF
|
Policy/Planning
|
About ACF
|
ACF News
Search
Temporary Assistance for
|
U.S. Department of Health and Human Services Administration for Children and Families Office of Family Assistance Washington, DC 20447 |
No. TANF-ACF-PI-2005-02 | Date: April 19, 2005 |
TO: | State agencies and Tribes administering the
Temporary Assistance for Needy Families (TANF) program under title IV-A
of the Social Security Act, and other interested parties. |
SUBJECT: | Using Federal TANF or State MOE funds to purchase a business. |
REFERENCES: | Section 404(a)(1) of the Social Security Act (Act), section
401 of the Act, Section 409(a)(7) of the Social Security Act, 45 CFR 260.20,
45 CFR 263.2, 45 CFR 263.11(b), 45 CFR 286.35, and 45 CFR 286.195. |
PURPOSE: | This Program Instruction addresses whether States and Tribes
operating an approved Tribal TANF program may use Federal TANF or State
Maintenance of Effort (MOE) funds to purchase a business. |
BACKGROUND: | We have been asked whether program funds may be used to purchase
a business. While the questions have primarily originated from Tribes operating
their own Tribal TANF programs, the answer is equally applicable to States.
This Program Instruction responds to this question. |
POLICY: | States and Tribes may use both Federal TANF funds and State MOE funds in “any manner that is reasonably calculated” to accomplish one or more of the TANF purposes: 1. To provide assistance to needy families so that children may be cared
for in their own homes or in the homes of relatives; We have been asked whether it is reasonable to use program funds to purchase or to start-up/capitalize various types of businesses – e.g., a bowling alley, a fast-food restaurant franchise, a meat-packing plant, a coffee stand, etc. After carefully considering this issue, we concluded that government ownership and operation of a business is not reasonably calculated to accomplish any of the purposes of the TANF program. Therefore, States and Tribes may not use Federal TANF funds or State MOE funds to start or to purchase a business. We recognize that the Tribal TANF regulations at 45 CFR 286.35 permit Tribes to use Federal TANF funds for “assistance in economic development and job creation activities.” Economic development activities that are reasonably calculated to accomplish a purpose of the TANF program are an allowable use of Federal TANF or State MOE funds for both States and Tribes. Whereas TANF purposes may be promoted by business development, it is the activities related to operating the business, rather than the acquisition or purchase of the business itself, that lead to the desirable result. A purchase of a business inherently involves the acquisition of capital, which goes beyond TANF purposes. Economic development grows from the operation of a business, not the purchase of that business. Basically, economic development contributes to a community’s overall viability. There are a number of program activities that could have a lasting impact on a community. Economic development activities that address the capacity of individuals in the community to secure and maintain employment and that bring or increase employment opportunities to an area would be reasonably calculated to accomplish a purpose of the TANF program. Examples of activities a Tribe or State may pursue include: • Paying an allocable portion of the cost of an analysis of the
job skills, services, and strategies needed to attract businesses into
the community or to help local businesses remain or become more competitive
so as to maintain or increase employment opportunities;
In short, States and Tribes have broad discretion to fund a wide variety of activities that are considered reasonably calculated to accomplish a purpose of the TANF program. States and Tribes also have the flexibility to set different eligibility standards for various types of benefits. However, there are a few fundamental points to keep in mind in deciding whether to use Federal TANF funds or State MOE funds to pay for an activity. Clients must be financially needy to receive (a) federally funded assistance,
benefits, or services under purposes 1 and 2; (b) any MOE-funded benefits,
services, or assistance regardless of the TANF purpose served in providing
the benefit; and, (c) any federally funded assistance, regardless of the
TANF purpose served in providing the assistance. “Financially needy”
essentially means that the family has met the quantified income and applicable
resource criteria established by the State or the Tribe to receive the
particular benefit. Federally funded assistance and any MOE-funded benefits,
services or assistance may only be provided to a financially needy family
that consists of, at a minimum, a child living with a relative, or consist
of a pregnant woman. But, under TANF purposes 3 and 4, States may use
segregated Federal TANF funds (but not MOE funds) to help clients who
are not financially needy with different benefits and services, as long
as the activity does not constitute “assistance” as defined
in 45 CFR 260.31(a) or 45 CFR 286.10(a).
|
EFFECTIVE DATE: | Immediately |
INQUIRIES: | Inquiries and comments should be directed to the appropriate
Administration for Children and Families (ACF) Regional Administrator. |
/s/ Andrew Bush |