TANF 5th Annual Report to Congress

III. Work Participation Rates
Summary of FY 2001 Work Participation
Use of Work Activities in FY 2001
FY 2001 Work Achievement in SSP-MOE Programs
Work Participation Achievement and Penalty Process
Calculating Compliance
Penalty Process
Status of FY 1997 Work Participation Penalties
Status of FY 1998 Work Participation Penalties
Status of FY 1999 Work Participation Penalties
Status of FY 2000 Work Participation Penalties
Appendices

The Temporary Assistance for Needy Families (TANF) program’s primary activity involves moving families towards work. Congress specified minimum work participation rates for States in the TANF law in order to ensure that State are actively engaging recipient families in work activities. The TANF law establishes separate minimum work participation rate standards each year for all families (overall rate) and for two-parent families receiving TANF. The overall m inimum participation rate for Fiscal Year (FY) 2001 is 45 percent, and for two-parent families it is 90 percent. The TANF law requires that States report family and individual-level data, on either a population or sample basis. Based upon these data, the Department of Health and Human Services (HHS) calculates work participation rates. To ensure fair treatment of States that help families become self-sufficient and exit the welfare rolls, Congress created the caseload reduction credit as part of the TANF law. The credit reduces the minimum participation rate a State must meet. The credit equals the reduction in the State’s average monthly TANF caseload in the prior year compared to its average monthly Aid to Families with Dependent Children (AFDC) caseload in FY 1995, but it excludes reductions due to Federal law or to changes in eligibility criteria.

Summary of FY 2001 Work Participation

The overall national average work participation rate increased slightly to 34.4 percent for FY 2001 from 34.0 percent for FY 2000 (a 1.2 percent increase). In comparison with the first work participation rates reported under TANF, this is a 12.1 percent increase from the 30.7 percent attained in FY 1997, but a 10.2 percent decline since the rate peaked in FY 1999. The two-parent national average participation rate increased to 51.1 percent for FY 2001 from 48.9 percent in FY 2000. This is an increase of 4.5 percent. In comparison to the 44.5 percent attained in FY 1997, this is a 14.8 percent increase, but is a 6.6 percent decline from its peak of 54.7 percent in FY1999. See Figure 1 and Tables 3:1:a-b.

All States, the District of Columbia, and Puerto Rico met their minimum overall work participation rate standard. Two Territories – Guam and the Virgin Islands – did not. Fourteen States exceeded the 45 percent statutory standard without using their caseload reduction credit. This is a decline from the nineteen States that exceeded the 40 per statutory standard in FY 2000. Twenty-eight States had sufficient caseload reduction credits to drop their standard for the overall rate to zero.

Seventeen States (Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Indiana, Maryland, Nebraska, New Jersey, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, and Virginia) and two Territories (Puerto Rico and the Virgin Islands) did not have any two-parent families in the TANF program. Thus, they were not subject to the two-parent work participation requirements. Of the thirty-three States, the District of Columbia, and Guam that have two-parent family programs subject to a work participation rate, thirty States met the FY 2001 two-parent work participation rate standard. Five jurisdictions failed to meet the two-parent work requirements: Arkansas, District of Columbia, Guam, Minnesota, and Mississippi. Two States (Rhode Island and Wyoming) met the two-parent standard without using their caseload reduction credit (although Rhode Island moved some two-parent families to a separate State program). Two States (Illinois and Wyoming) had sufficient caseload reduction credits that their standard for the two-parent rate dropped to zero.

A State-by-State comparison of the FY 2001 work participation rates with the FY 2000 work participation rates shows that the overall work participation rates increased for 28 States and decreased for 24 States. A similar comparison of the overall work participation rates for FY 2000 and FY 1999 shows an increase for 21 States and a decline for 32 States. The FY 2001 two-parent families work participation rate increased for 19 States and decreased for 14 States. Similarly, a comparison of the two-parent work participation rates for FY 2000 and FY 1999 shows an increase for 15 States and a decline for 19 States.

Use of Work Activities in FY 2001

During FY 2001, adults (and minor heads-of-household) who participated in qualified work activities for at least one hour per week in a given month did so for an average of 29.7 hours per week. The 605,497 adults represent 43.2 percent of all adults. Figure 2 shows the percent of total hours of reported participation by work activity. Figure 3 shows the percent of hours of participation for families that are required to participate but are not meeting the requirements. About 56.8 percent of all adults in TANF recorded no hours of participation in the year. About 59.8 percent of participating adults were engaged in unsubsidized employment. This represents a 1.3 percent decline from the 60.6 percent attributed to unsubsidized employment in FY 2000. Another 14.2 percent were engaged in job search, and 14.6 percent were engaged in either work experience or community service activities. About 14.5 percent were involved in education or training that count toward the work rates. (Since adults may be in multiple activities, these figures add up to more than 100 percent.) Of the average monthly number of participating adults, about 382,900 adults participated for a sufficient number of hours so that their families counted in the overall participation rate. This represents a 3.3 percent decline from the over 395,000 average monthly number of adults in FY 2000 that participated for a sufficient number of hours so that their families counted in the overall work participation rate. However, there is an 11.7 percent decline in the average number of families required to participate from 1,260,400 in FY 2000 to 1,112,600 in FY 2001.

FY 2001 Work Achievement in SSP-MOE Programs

There are no statutory work requirements or minimum participation rate standards for families in separate State programs. In fact, reporting on work participation is optional unless the State wants to compete for the High Performance Bonus or receive a caseload reduction credit. Twenty-eight States have established separate State programs. Fifteen States (Alabama, California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Maryland, Nebraska, New Jersey, Rhode Island, Tennessee, Utah, and Virginia) have moved all or part of their two-parent families to separate State programs. For separate State programs, the FY 2001 national average overall work participation rate is 43.4 percent and the FY 2001 national average two-parent families work participation rate is 40.6 percent.

Appendices to this chapter include the State-by-State data we used to calculate work participation rates and other related information.

Work Participation Achievement and Penalty Process
Calculating Compliance

HHS uses the following process for calculating compliance with work participation rates each year.

States submit to HHS their work participation and recipient characteristic data and their caseload reduction and waiver information.
HHS then determines a caseload reduction credit for each State.
HHS also determines and applies the waiver provisions and calculates the final work participation rates, as well as appropriate penalties.

Penalty Process

Each year HHS notifies each State of the participation rate it achieved and whether it is subject to a penalty. A State that fails to meet a participation rate has 60 days to submit a request for a reasonable cause exception or a corrective compliance plan.

To ensure State accountability, HHS has defined a limited number of circumstances under which States may demonstrate reasonable cause. The general factors that a State may use to claim reasonable cause exceptions include: (1) natural disasters and other calamities; (2) Federal guidance that provided incorrect information; and (3) isolated problems of minimal impact. There are also two specific reasonable cause factors for failing to meet the work participation rate: (1) federally recognized good cause domestic violence waivers; and (2) alternative services provided to certain refugees.

The statute requires a reduction in the work participation penalty based on the degree of the State’s noncompliance. The TANF regulations include a formula for calculating such reductions. This formula incorporates the following: (1) a reduction for failing only the two-parent work participation rate (prorating the penalty based on the proportion of two-parent cases in the State); (2) two tests of achievement for any further reduction; and (3) a reduction based on the severity of failure. The formula combines three measures for determining the severity of a State’s failure: (1) the amount by which it failed to meet the rate; (2) the State’s success in engaging families in work; and (3) how many consecutive penalties it had and how many rates it failed to meet. In addition to the required penalty reduction, the Secretary also has the discretion to reduce a work participation rate penalty for certain other reasons.

If a State does not demonstrate that it had reasonable cause, it may enter into a corrective compliance plan that will correct the violation and insure continued compliance with the participation requirements. If a State achieves compliance with work participation rates in the time frame that the plan specifies, then HHS does not impose the penalty.

Status of FY 1997 Work Participation Penalties

HHS issued penalty notices to 18 States and the District of Columbia for failure to meet the two-parent work rate (Alabama, Arizona, California, Iowa, Kansas, Maine, Michigan, Mississippi, Nebraska, Nevada, New Jersey, North Carolina, Ohio, Oklahoma, Texas, Virginia, Washington, and West Virginia).
HHS did not impose the penalty for two States (Alabama and Mississippi) because the penalty amount was less than $500, the threshold below which it costs more to collect the penalty than its value.
Two States (Arizona and California) disputed our participation rate calculation and, upon retransmission, the States’ data showed they met the two-parent rate; therefore they were no longer subject to the penalty.
Five States (Iowa, New Jersey, Oklahoma, Virginia, and West Virginia) accepted the penalty. (New Jersey had initially submitted a corrective compliance plan, but rescinded it and accepted the penalty. Similarly, Virginia submitted a corrective compliance plan, but later accepted the penalty.)
The remaining nine States and the District of Columbia entered into corrective compliance plans. Of these seven (Kansas, Maine, Michigan, Nevada, Ohio, Texas, and Washington) have successfully completed their plans, thus avoiding a penalty; and three (the District of Columbia, Nebraska, and North Carolina) failed to achieve the goal in their plans by the date specified, and we imposed the penalties.

Status of FY 1998 Work Participation Penalties

HHS issued penalty notices to 13 States and the District of Columbia for failure to meet the two-parent work rate (Alaska, Arkansas, Delaware, Minnesota, Nebraska, New Mexico, North Carolina, Pennsylvania, Rhode Island, Texas, Virginia, Washington, and West Virginia); to Territories in two cases for failure to meet the overall work rate (Puerto Rico, and the Virgin Islands); and to Guam for failure to meet both rates.
One Territory (Puerto Rico) disputed our participation rate calculation, and upon retransmission, its data showed it met the participation rate; therefore, it was no longer subject to the penalty.
One State (Virginia) retroactively moved its two-parent caseload to a separate State program and was, therefore, not subject to a TANF participation rate or penalty for that caseload.
One State (West Virginia) and one Territory (the Virgin Islands) accepted the penalty.
One Territory (Guam) did not submit an acceptable corrective compliance plan, and HHS imposed the penalty.
Eleven States and the District of Columbia entered into corrective compliance plans. Of these:

Six States (Minnesota, Nebraska, Pennsylvania, Rhode Island, Texas, and Washington) have successfully completed their plans, thus avoiding a penalty;
Four States (Arkansas, Delaware, New Mexico, and North Carolina) and the District of Columbia failed to achieve the goal in their plans by the dates they specified, and HHS has or is imposing the penalties; and
The remaining State (Alaska) has not reached the end date specified in its plan.

HHS reduced the penalties for one State (Alaska) and one Territory (Guam) under our discretionary authority. Section 409(a)(3)(C) of the TANF law gives the Secretary the discretion to reduce a work participation rate penalty if "the noncompliance is due to circumstances that caused the State to become a needy State (as defined in section 403(b)(6)) during the fiscal year or if the noncompliance is due to extraordinary circumstances such as a natural disaster or regional recession." The statute further requires the Secretary to provide a written report to Congress to justify such a reduction due to extraordinary circumstances. The following explanation fulfills that requirement.

In the case of Alaska, the State met the definition of needy State for one month in the fiscal year; it also documented the effects of a natural disaster on its ability to meet the participation rate. We combined the effects of these two circumstances in calculating the reduced penalty.
In the case of Guam, the Territory documented the effects of a natural disaster on its ability to meet the participation rate. We calculated a reduced penalty by the number of quarters of the fiscal year that the Territory was subject to the effects of the natural disaster.

Status of FY 1999 Work Participation Penalties

HHS issued penalty notices to eight States and the District of Columbia for failure to meet the two-parent work rate (Alaska, Arkansas, Colorado, Minnesota, Nebraska, New Mexico, North Carolina, and West Virginia) and to two Territories, one for failure to meet the overall work rate (the Virgin Islands) and the other (Guam) for failure to meet both rates.

Two States (North Carolina and West Virginia) accepted the penalty.
Seven States (Alaska, Arkansas, Colorado, the District of Columbia, Minnesota, Nebraska, and New Mexico) and two Territories (Guam and the Virgin Islands) entered into corrective compliance plans. Of these:

One State (Colorado) has successfully completed its plans, thus avoiding a penalty; and
The remaining six States have not reached the end dates specified in their plans.

Status of FY 2000 Work Participation Penalties

HHS issued penalty notices to seven States for failure to meet the two-parent work rate (Alaska, Arkansas, Minnesota, Mississippi, New Mexico, North Carolina, and Wisconsin) and to two Territories, one for failure to meet the overall work rate (the Virgin Islands) and the other (Guam) for failure to meet both rates.

One State (Wisconsin) disputed the caseload reduction credit calculation. Upon transmission of new two-parent caseload reduction credit data it received a high enough credit that it no longer failed its participation rate; therefore it was no longer subject to the penalty.
One Territory (Guam) accepted the penalty.
Four States (Alaska, Arkansas, Minnesota, and New Mexico) and one Territory (Virgin Islands) entered into corrective compliance plans. None has reached the end date specified in its plan.
The remaining two States (Mississippi and North Carolina) are still within the time frame permitted for submitting corrective compliance plans.

HHS reduced the penalty for one State (North Carolina) under our discretionary authority. North Carolina documented the effects of a natural disaster on its ability to meet the participation rate. We calculated a reduced penalty by multiplying the penalty by the percentage of the two-parent caseload affected by the natural disaster and subtracting that reduction from the original penalty amount.

Appendices

	Download Excel Workbook
Table 3:1:a	TANF Work Participation Rates, With and Without Waivers, FY 2001
Table 3:1:b	Changes in TANF Work Participation Rates, FY 2000 to FY 2001
Table 3:2	Caseload Reduction Credits Overall and Two-parent Family, FY 2001
Table 3:3:a	Status of TANF Families as Related to Overall Work Participation Rates, FY 2001
Table 3:3:b	Status of TANF Families as Related to Two-parent Families Work Participation Rates, FY 2001
TANF Work Activities, Including Waivers
Table 3:4:a	Average Monthly Number of Adults with Hours of Participation by Work Activity, FY 2001
Table 3:4:b	Average Monthly Number of Adults with Hours of Participation by Work Activity as a Percent of the Number of Participating Adults, FY 2001
Table 3:4:c	Average Monthly Number of Adults with Hours of Participation by Work Activity as a Percent of the Total Number of Adults, FY 2001
Table 3:5	Average Hours of Participation in Work Activities, Including Waivers, for All Adults Participating in the Work Activity, FY 2001
Table 3:6:a	Average Monthly Number of Adults Participating in Work Activities for a Sufficient Number of Hours for the Family to Count as Meeting the All Family Work Requirements, FY 2001
Table 3:6:b	Average Monthly Percent of Adults Participating in Work Activities For a Sufficient Number of Hours for the Family to Count as Meeting the Overall Work Requirements, FY 2001
Table 3:7:a	Average Monthly Number of Parents in Two-parent Families Who are Participating in Work Activities for a Sufficient Number of Hours for the Family to Count as Meeting the Two-parent Families Work Requirements, FY 2001
Table 3:7:b	Average Monthly Percent of Parents in Two-parent Families Who are Participating in Work Activities for a Sufficient Number of Hours for the Family to Count as Meeting the Two-parent Families Work Requirements, FY 2001
Separate State Programs
Table 3:8	SSP-MOE Work Participation Rates, With and Without Waivers, FY 2001

Table of Contents

Fifth Annual Report to Congress (February 2003)

III. Work Participation Rates