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TO:State Agencies administering the Temporary Assistance for Needy Families (TANF) Program under Title IV-A of the Social Security Act, as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), and Other Interested Parties.

SUBJECT: Revised TANF Maintenance of Effort (MOE) Levels for States.

REFERENCES: TANF-ACF-PI-96-2, 034Maintenance of Effort Requirements,034 dated December 6, 1996, and section 409(a)(7) of Title IV-A of the Social Security Act.

PURPOSE: This program instruction informs States of TANF MOE levels which have been revised subsequent to the issuance of TANF-ACF-PI-96-2.

BACKGROUND: We notified States of their TANF MOE levels in December 1996. However, subsequent to that issuance, the Administration for Children and Families (ACF) determined that a change in its method for calculating the Mandatory Child Care Fund allocations under section 418 of Title IV-A, as amended, was necessary. This was explained to Child Care Lead Agency directors in a letter dated August 6, 1997.

Section 409(a)(7) requires that the TANF MOE levels be based on the State share of FY 1994 expenditures for the AFDC, Emergency Assistance, JOBS, and the former child care programs under title IV-A. Thus, in our review of the At-Risk child care (ARCC) expenditures for purposes of recalculating the Mandatory Child Care Fund allocations, we determined that the State share of ARCC expenditures for FY 1994 that was used in determining TANF MOE levels also had to be revised for some States.

It should be noted that the change in the TANF MOE levels are solely related to changes in the State share of ARCC expenditures for FY 1994, not expenditures for AFDC/JOBS and Transitional child care.

Attachment A contains an explanation of the changes in TANF MOE levels for all fiscal years. It also contains a separate discussion regarding the FY 1997 TANF MOE levels.

INQUIRIES: Inquiries should be directed to the appropriate ACF Regional Administrator.

/s/

Norman L. Thompson
Director
Office of Program Support

Attachments A-F

Attachment A

Revision of TANF MOE Levels¹

As explained in the August 6, 1997 letter², Mandatory Child Care Fund allocations (which are based on the Federal share of expenditures) were recalculated because: (1) ACF determined that its practice of using reported expenditures that exceeded amounts to which a State was entitled in Federal reimbursement-for the ARCC program was not a correct interpretation of the statute and (2) ACF determined that other incorrect data for the ARCC program had been used.

The August 1997 letter contained, as attachments, data for the Federal share of all child care expenditures for FYs 1992 through 1995 for finalizing the Mandatory Fund allocations. The letter also contained the data for the State share of all child care expenditures for FYs 1994 and 1995 for finalizing the Matching Child Care MOE levels³. States were asked to review this data for correctness.

_________________________
¹The maintenance of effort level for the Contingency Fund at section 403(b) of the statute is unaffected by these changes. A technical amendment in the Balanced Budget Act of 1997 (Public Law 105-33) deleted child care expenditures from the historical expenditures which are used in calculating the Contingency Fund MOE level.

²If you would like a copy of this letter, please contact your ACF Regional office.

³The Matching Child Care MOE level is 100 percent of the State share of expenditures for AFDC/JOBS, Transitional and ARCC child care programs for FY 1994 or FY 1995, whichever is greater. This differs from the TANF MOE level which is 80 percent (or 75 percent if a State meets its participation rate requirement) of FY 1994 State share of expenditures for AFDC, Emergency Assistance, JOBS, and AFDC/JOBS, Transitional and ARCC child care programs.

Here's an explanation of how the TANF MOE levels were revised. We incorporated the revised State share of ARCC expenditures for FY 1994 into the TANF MOE calculations. Attachment B contains the revised total expenditures for FY 1994 that were used in making the revised TANF MOE level calculations and the TANF MOE levels at 75 and 80 percent. Attachment C contains a comparison of the total expenditures between the original and revised calculations and a comparison of the original and revised TANF MOE levels at 75 and 80 percent. Decreases can be generally attributed to our use of the State share of ARCC expenditures that were limited to a State's maximum grant. In the original TANF MOE level calculations, the ARCC State share of expenditures for FY 1994 exceeded the maximum grant. Thus, in using the lesser amount, i.e., the maximum grant instead of the reported amount, the MOE level was reduced.

For several other States, TANF MOE levels were increased because, as explained in August 1997 letter, the original data for the ARCC program for FY 1994 didn't include 034end-of-year034 adjustments in the database used to generate the data for calculating the MOE levels. 034End-of-year034 adjustments represent increasing claims generally, and decreasing claims, in some cases. The increase in State TANF MOE levels were generally due to increasing claims for FY 1994 that resulted from 034endof-year034 adjustments made for FY 1994. In more limited instances, TANF MOE levels were increased as a result of our correction of the database following review of State submitted ACF-231 financial reports for the ARCC program for FY 1994. All ARCC data that were used in the TANF MOE calculations were data which had to be submitted as of April 28, 1995.

Attachment D contains a revised set of data for the FY 1994 State share of expenditures for AFDC, Emergency Assistance, the JOBS program, and the AFDC/JOBS, Transitional and At-Risk Child Care programs. These were used in calculating the revised TANF MOE levels. The only difference between these data and the data which ACF made available to States in January for verifying original TANF MOE levels occurs in the ARCC program.

FY 1997 TANF MOE Levels

In letters to TANF program directors dated January 7, 1997, we explained to States that for FY 1997 only, TANF MOE levels would be prorated. We determined that prorated TANF MOE levels were necessary because States implemented the TANF programs at different times in FY 1997. Thus, States were informed that 034qualified state expenditures made on and after the date the State begins operation of the TANF program034 would count towards meeting the prorated TANF MOE requirement.

Attachment E contains each State's prorated FY 1997 TANF MOE level. For States that implemented TANF on October 1, 1996 or before, the TANF MOE level has not been adjusted, i.e., it is the same amount listed in Attachment B. For other States, we determined the TANF MOE levels by first determining the number of days in FY 1997 a State operated the TANF program. (See Attachment F for TANF implementation dates.) That number was multiplied by the TANF MOE level in Attachment B then divided by 365 (the number of days in FY 1997.)

Section 409(a)(7) also requires a reduction to a State's TANF MOE level in a fiscal year in which a State's State Family Assistance Grant (SFAG) is reduced because a Tribe within the State has received a Tribal Family Assistance Grant (TFAG). Thus, for Wisconsin and Oregon, States in which Tribes operated a Tribal Family Assistance program in FY 1997, their TANF MOE levels were reduced by the same percentage that their SFAG was reduced in order to determine the Tribe's TFAG.

FY 1998 TANF MOE levels will also be reduced if a State's SFAG is reduced to fund TFAGs in the fiscal year. ACF will notify States of the appropriate reduction.

Finally, States that implemented TANF in FY 1996 should note that the TANF MOE requirement does not apply for FY 1996. This program instruction supersedes TANF-ACF-PI-97-7, dated October 8, 1997.

Attachment B

¹/ The State share of expenditures for AFDC benefits, administration, EA, lV-A child care and JOBS in FY 1994.
State expenditures may be revised to account for expenditures made by States on behalf of Tribes.

³/ States must maintain a level of effort at 80% of FY 1994 expenditures if they do not meet participation rate requirements

10/31/97

Attachment C

1/ The State share of expenditures for AFDC benefits, administration, EA, IV-A child care and JOBS in FY 1994. State expenditures may be revised to account for expenditures made by States on behalf of Tribes.

2/ States must maintain a level of effort at 75% of FY 1994 expenditures if they meet participation rate requirements.

3/ States must maintain a level of effort at 80% of FY 1994 expenditures if they do not meet participation rate requirements

31-Oct-97

Attachment D-1

Oct 31, 1997

Attachment D-2

Oct 31, 1997

Attachment D-3

Oct 31, 1997

Attachment D-4

Oct 31, 1997

Attachment E

Oct 31, 1997

Attachment F

Oct 31, 1997

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