Under the TANF Program or the former AFDC Program, an individual recipient might, on occasion, receive a monthly TANF Assistance or Maintenance Assistance payment that is greater than the amount to which they are entitled. The State IV-A agency should recover the overpayment either by recouping it from the recipient as a reduction in the recipient’s payment in one or more future months or by collecting a cash repayment from the recipient. Federal regulations in the former AFDC Program required States to collect overpayments until the full amount of the overpayment was collected.

Although the AFDC Program was repealed and replaced with the TANF Program, a number of AFDC overpayments remain outstanding, and the requirement to pursue and recover the remaining uncollected AFDC overpayments remains in place.

Where a State is able to recover all or a portion of an outstanding AFDC or TANF overpayment made to the AFDC or TANF recipient, the recovery will be either by recoupment from the recipient’s current TANF grant or by a cash repayment from the recipient. The full amount of these recovered overpayments is to be retained by the State and used for TANF Program costs.

The following procedures are required.

1. The amounts recovered must be credited against the current grant in the fiscal year in which the overpayment was recovered.
2. The amount which is recovered can be

1. (a) for TANF recoveries credited to the State MOE funds and Federal TANF funds in the same proportion as when originally expensed or the same proportion as the final MOE/Federal ratio for the fiscal year in which expensed; (b) for AFDC recoveries credited using the Federal Medical Assistance Percentage (FMAP) rate in effect for the State during Federal fiscal year 1996, as long as the State maintains records to support the distribution, or
2. assumed to be all Federal funds and credited to the TANF grant.

3. State MOE funds credited must be expended for State MOE purposes in the year of recovery or subsequent years. These expenditures must be in addition to the required MOE expenditures for the year in which expensed. The recovered MOE funds CANNOT be used to meet States MOE requirements in the current or any subsequent fiscal year.
4. Recoveries credited to TANF must be used in the year of recovery or subsequent years only for the purposes of providing assistance to TANF eligible families. Recoveries made in the same year as the TANF overpayment expenditure can be used for any activity which meets the TANF purposes.
5. The State is not required to include the amount recovered and expended on its quarterly expenditure report (FORM ACF-196) either for the year of the initial overpayment or the year of the recovery.
6. The State must maintain records of all recovered overpayments including the amounts recovered, the fiscal year and quarter of the recovery and the subsequent expenditure of the recovered funds.

Example: