[Federal Register: February 5, 2008 (Volume 73, Number 24)]
[Rules and Regulations]
[Page 6771-6828]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05fe08-18]
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Part II
Department of Health and Human Services
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Administration for Children and Families
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45 CFR Parts 261, 262, 263, and 265
Reauthorization of the Temporary Assistance for Needy Families (TANF)
Program; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Administration for Children and Families
45 CFR Parts 261, 262, 263, and 265
RIN 0970-AC27
Reauthorization of the Temporary Assistance for Needy Families
(TANF) Program
AGENCY: Administration for Children and Families (ACF), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule implements changes to the Temporary Assistance
for Needy Families (TANF) program required by the Deficit Reduction Act
of 2005 (DRA) (Pub. L. 109-171). The DRA reauthorized the TANF program
through fiscal year (FY) 2010 with a renewed focus on work, program
integrity, and strengthening families through healthy marriage
promotion and responsible fatherhood. On June 29, 2006, ACF published
an interim final rule implementing the required statutory changes with
a 60-day comment period that ended on August 28, 2006. We have
considered all comments received during this period and made necessary
changes as reflected in this final rule.
EFFECTIVE DATE: October 1, 2008.
FOR FURTHER INFORMATION CONTACT: Robert Shelbourne, Director, Division
of State TANF Policy, Office of Family Assistance, ACF, at (202) 401-
5150.
SUPPLEMENTARY INFORMATION: On June 29, 2006, the Administration for
Children and Families published an interim final rule implementing key
provisions of the Deficit Reduction Act of 2005. The DRA required
States to implement certain work requirements effective October 1,
2006, among which were including families with an adult receiving
assistance in a separate State program funded with qualified State
maintenance-of-effort expenditures (SSP-MOE) in the work participation
rates and revising the base year of the caseload reduction credit from
FY 1995 to FY 2005. The law also directed us to issue regulations to
ensure consistent measurement of work participation rates, including
defining work activities, determining the circumstances under which a
parent who resides with a child who is a recipient of assistance should
be required to participate in work activities, and requiring States to
establish and maintain work participation verification procedures.
Congress also explicitly permitted HHS to issue an interim final rule,
implicitly recognizing that States may have to revise practices once
final regulations were published. Under the interim final rule, States
were able to begin planning and implementing necessary changes to their
TANF programs and procedures under the new requirements. Under this
final rule States are accountable for moving more families to self-
sufficiency and independence.
Comment Overview
We provided a 60-day comment period, during which interested
parties could submit comments in writing by mail or electronically.
During this period, we also held five listening sessions across the
country in which State and local officials, legislators and key
associations representing them could provide oral comments that were
officially recorded and considered in developing this final rule.
We received 470 letters of comment on the interim final rule,
representing State human service agencies, State legislators, national
associations, advocacy and disability groups, community and faith-based
organizations, Indian Tribes and Tribal organizations, educators, and
the general public. Most commenters addressed several provisions of the
interim final rule. Some comments favored the rule, for example:
``Overall the regulations are very positive and set the correct tone
that countable activities need to meet the new federal definitions and
be verified.'' But, in general, most commenters had mixed views,
supporting some provisions and opposing others. A significant number of
commenters expressed concerns about statutory provisions of the DRA or
of existing law, over which we have no regulatory discretion. Others
expressed concerns about the policies reflected in the rule. In
response to these comments, ACF is committed to working with states,
particularly with regard to TANF adult recipients living with
disabilities, to explore additional approaches and innovative efforts
to promote and support their employment.
As discussed in more detail throughout this preamble, the final
rule includes a number of important changes to address these policy
concerns. These include: Allowing time spent in a bachelor's degree
program to count as vocational educational training; allowing up to an
hour of unsupervised homework time for each hour of class time in all
educational activities; expanding State flexibility by converting the
six-week limit on job search and job readiness assistance to an hourly
equivalent; adding the flexibility for a State to exclude a parent who
is a recipient of Social Security Disability Insurance (SSDI) benefits
from the definition of a work-eligible individual, as is the case with
a recipient of Supplemental Security Income (SSI); clarifying that
excused holidays are limited to 10 days in a year; and enhancing State
flexibility by allowing a State to account for ``excused hours'' rather
than an ``excused day.'' We have summarized the public comments and our
response to them throughout sections III through VIII of this final
rule.
Table of Contents
I. The Statutory Framework: TANF and the Deficit Reduction Act of
2005
II. Regulatory Principles and Provisions
III. Cross-Cutting Issues
A. Individuals With Disabilities
B. Domestic Violence
C. General Topics
D. Tribal TANF
IV. Part 261--Ensuring That Recipients Work
V. Part 262--Accountability Provisions--General
VI. Part 263--Expenditures of State and Federal TANF Funds
VII. Part 265--Data Collection and Reporting Requirements
VIII. Paperwork Reduction Act of 1995
IX. Regulatory Flexibility Analysis
X. Regulatory Impact Analysis
XI. Unfunded Mandates Reform Act of 1995
XII. Congressional Review
XIII. Assessment of Federal Regulations and Policies on Families
XIV. Executive Order 13132
I. The Statutory Framework: TANF and the Deficit Reduction Act of 2005
Enacted as part of the Personal Responsibility and Work Opportunity
Reconciliation Act (PRWORA) of 1996 (Pub. L. 104-193), the TANF program
is a Federal block grant to States designed to provide temporary
assistance while moving recipients into work and self-sufficiency.
States must help recipients find work and meet work participation rates
and other critical program requirements to avoid financial penalties.
States have broad flexibility to design and operate their TANF programs
and to determine eligibility criteria and the benefits and services
that families receive to achieve the four program 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;
(2) To end the dependence of needy parents on government benefits
by promoting job preparation, work, and marriage;
(3) To prevent and reduce the incidence of out-of-wedlock
pregnancies and establish annual numerical goals for
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preventing and reducing the incidence of these pregnancies; and
(4) To encourage the formation and maintenance of two-parent
families.
PRWORA initially authorized TANF through September 30, 2002.
Congress then funded TANF through a series of short-term extensions
until the Deficit Reduction Act of 2005 reauthorized the program
through FY 2010 with a renewed focus on work, program integrity, and
strengthening families through marriage promotion and responsible
fatherhood. Signed into law by President Bush on February 8, 2006, the
DRA maintained State flexibility and many provisions of PRWORA, but
included important changes to improve the effectiveness of the TANF
program.
Some comments on the interim final rule reflected a
misunderstanding of the Deficit Reduction Act confusion over which
original provisions of TANF Congress retained, which ones it changed,
what Congress directed the Department to do by regulation, and how HHS
exercised this regulatory authority in the interim final rule. This
section explains these distinctions.
The Deficit Reduction Act retained nearly all of the TANF
provisions enacted in the original welfare reform law. For example, the
law retained the requirement that 50 percent of all families with an
adult participate in the 12 allowable work activities for specified
hours each week and that 90 percent of two-parent families similarly
participate for certain, specified hours. The hourly work participation
requirements that adults must achieve to count in the State's work
participation rates also did not change. This requires a single
custodial parent with a child younger than six to participate for at
least an average of 20 hours a week and for all others to participate
for at least an average of 30 hours a week to count in the overall
participation rate. Similarly, two-parent families must participate for
at least an average of 35 hours a week (or an average of 55 hours a
week if federally-funded child care is provided) to count in the two-
parent participation rate.
The DRA maintained the penalty associated with failing to meet
these work requirements. As a result, we made no changes to the
regulatory process associated with a State's failure to meet the work
participation rate requirement in the interim final or final rule.
Further, the Deficit Reduction Act maintained provisions related to
the TANF purposes, State plan requirements, use of grants,
administrative provisions, prohibitions, appeals of adverse decisions,
Tribal TANF, waivers, charitable choice, application of relevant
Federal civil rights laws, and the limitation on Federal authority. Our
charge from Congress was to regulate in accordance with the changes
made by the Deficit Reduction Act, via an interim final rule if
appropriate. Since none of these provisions changed in the statute, the
associated regulatory provisions did not change in either the interim
final or this final rule.
Congress also made few changes in reauthorizing TANF funding. The
law retained the $16.5 billion per year capped entitlement for State
Family Assistance Grants and funding for the Contingency Fund. It
extended the Supplemental grants for the 17 States with historic low
grants per poor person and/or high population growth in the amount of
$319 million through FY 2008. Mandatory child care funding was
increased by $1 billion over five years. The law eliminated provisions
for Federal loans, the High Performance Bonus and the Illegitimacy
Reduction Bonus and replaced them with a $150 million-a-year research,
demonstration, and technical assistance fund for competitive grants to
strengthen family formation, promote healthy marriages, and support
responsible fatherhood. The Deficit Reduction Act also expanded a
State's ability to meet its maintenance-of-effort (MOE) requirement. A
State may now count expenditures that provide certain non-assistance,
pro-family activities to anyone, without regard to financial need or
family composition, if the expenditure is reasonably calculated to
prevent and reduce the incidence of out-of-wedlock births (TANF purpose
three) or encourage the formation and maintenance of two-parent
families (TANF purpose four).
The new law did make several key statutory changes and also
required HHS to promulgate rules in several areas. The statute added
separate State program cases receiving assistance funded with qualified
State maintenance-of-effort expenditures (SSP-MOE) to the calculation
of the work participation rates. This is a new requirement of law, not
within the discretion of our regulatory authority. Thus, regardless of
how commenters viewed this statutory provision, we could not change it
by regulation. The DRA continues to exclude any solely-State-funded
(SSF) program, that is, one for which it does not claim the State
expenditures as MOE under the TANF program. If a State established a
SSF, such cases would not be included in the calculation of a State's
work participation rates or subject to other program requirements.
The Deficit Reduction Act also changed the base year of the
calculation of the caseload reduction credit from FY 1995 to FY 2005.
While the statutory work participation rates did not change,
recalibrating the caseload reduction credit has the effect of
increasing the work participation requirements. For most States, we
estimate that in FY 2007 the overall work participation requirement
will be between 40 and 50 percent, depending upon the amount of
caseload reduction they had over the course of FY 2006 compared to the
new baseline of FY 2005.
Congress required HHS to do a number of things through regulation:
To define the meaning of each of the 12 countable work
activities specified in PRWORA, primarily because a U.S. Government
Accountability Office (GAO) study (GAO-05-821) reported that there was
great variation in State definitions of work activities. As a result,
State participation rates were not comparable. Of the activities, the
underlying statute also specified which nine activities count toward
meeting the first 20 hours of a 30-hour average weekly requirement; we
refer to them as ``core activities.'' Any additional hours needed to
meet the requirement can come from any of three ``non-core activities''
or from core activities. Under the statute, non-core activities may not
count as core activities.
To clarify who is a work-eligible individual. In addition
to families with an adult receiving TANF assistance, who were already a
part of the work participation rates, the DRA required us to include
such families receiving assistance under a separate State program and
to specify the circumstances under which a parent who resides with a
child who is a recipient of assistance should be included in the work
participation rates.
To ensure that State internal control procedures result in
accurate and consistent work participation information. Each State must
establish and maintain work participation verification procedures that
are based on regulations promulgated by the Secretary.
To establish a process for a new penalty in the event that
a State fails to establish and maintain adequate procedures to verify
reported work participation data.
II. Regulatory Principles and Provisions
To address these new statutory provisions and requirements of the
Deficit Reduction Act, the final rule:
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1. Defines each of the 12 countable work activities. Defining work
activities is necessary for consistent measurement and will ensure an
equitable and level playing field for the States. Because the statute
provides 12 distinct activities, we have tried to define them as
mutually exclusive, while still leaving flexibility for States to
address the critical needs of families.
2. Defines the term ``work-eligible individual.'' Generally a
``work-eligible individual'' is: (1) An adult (or minor child head-of-
household) receiving assistance under TANF or a separate State program;
or (2) a non-recipient parent living with a child receiving assistance.
The definition excludes the following non-recipient parents: a minor
parent who is not the head-of-household, a non-citizen who is
ineligible to receive assistance due to his or her immigration status,
or, at State option on a case-by-case basis, a recipient of
Supplemental Security Income (SSI) benefits. In addition, the term
excludes some parents, whether they are recipients or not: a parent
providing care for a disabled family member living in the home, if
there is medical documentation to support the need for the parent to
remain in the home to provide that care; and, at State option on a
case-by-case basis, a parent who is a recipient of Social Security
Disability Insurance (SSDI) benefits. We exclude these parents because
they either cannot work legally or we believe it would be inappropriate
to require them to work.
3. Clarifies that a State may count only actual hours of
participation. Under the original TANF rule, some States reported
scheduled hours of participation, which created an inconsistency among
States and reduced incentives to ensure that individuals actually
participated for assigned hours. Under the final rule, we clarify that
each State must report only actual hours of participation;
nevertheless, for individuals in unpaid work activities, we permit
States to count up to 10 days of holidays and an additional 80 hours
excused absences. To reduce the documentation burden on both employers
and workers, we also permit States to report projected hours of
employment on the basis of prior, documented actual hours of work.
Similarly, to reduce the documentation burden on both educational
providers and participants in an educational activity, we also allow
States to count up to one hour of unsupervised homework time for each
hour of class time.
4. Recalibrates the caseload reduction credit by updating the base
year from FY 1995 to FY 2005. As under PRWORA, the credit excludes
caseload changes due to changes in Federal law or State eligibility
criteria since the base year.
5. Requires each State to establish and maintain work participation
verification procedures through a Work Verification Plan. Each State
must: (1) Determine which work activities may count for participation
rate purposes; (2) determine how to count and verify reported hours of
work; and (3) identify who is a work-eligible individual. The State
must also develop and use internal controls to ensure compliance with
its procedures and submit them in a complete Work Verification Plan to
the Secretary for approval.
6. Establishes a new penalty for failure to comply with work
verification procedures. The final rule specifies that if a State fails
to establish or comply with its work participation verification
procedures and fails to correct the compliance deficiency, we will
impose a penalty of between one and five percent of the State Family
Assistance Grant (SFAG). The rule outlines the criteria under which we
will impose this penalty and explains how a State may claim reasonable
cause or submit a corrective compliance plan to correct the violation
and avoid the penalty.
7. Allows additional pro-family expenditures to count toward a
State's maintenance-of-effort (MOE) requirement. The final rule allows
a State to count expenditures on certain pro-family activities without
regard to financial need or family composition, if the expenditure is
reasonably calculated to prevent and reduce the incidence of out-of-
wedlock births (TANF purpose three), or encourage the formation and
maintenance of two-parent families (TANF purpose four), as long as they
meet all applicable MOE requirements and limitations. States receiving
Healthy Marriage or Responsible Fatherhood grants may count State
expenditures for any required match toward the State's TANF MOE
requirement, provided the expenditure also meets all applicable MOE
requirements and limitations.
Based on the consideration of all timely comments, this final rule
reflects adopted changes to 45 CFR Parts 261, 262, 263, and 265 of the
interim final rule of June 29, 2006. The comments and changes are
discussed in the preamble. Changes to these parts appear in sections IV
to VII of this document.
As in the interim final rule, the term ``we'' is used throughout
the regulatory text and preamble to mean the Secretary of the
Department of Health and Human Services (HHS) or the following
individuals or agencies acting on his behalf: the Assistant Secretary
for Children and Families, the Regional Administrators for Children and
Families, the Department of Health and Human Services, and the
Administration for Children and Families. The term ``Act'' refers to
the Social Security Act. We use the terms ``Deficit Reduction Act of
2005,'' ``Deficit Reduction Act,'' ``DRA,'' or ``Pub. L. 109-171'' when
we refer to the new law. States, the Territories, and the District of
Columbia are all subject to the TANF requirements, but a reference to
States means this entire group. Except as otherwise noted, we use the
term ``TANF'' to refer to TANF and any SSP-MOE programs in a State.
III. Cross-Cutting Issues
Many commenters raised general or cross-cutting issues about the
overall impact of the interim final rule or the impact on specific
populations. We address these issues in this section, followed by
comments on each section of the interim final rule.
A. Individuals With Disabilities
Comment: Many commenters maintained that the interim final rule
would hamper State efforts to design programs appropriate for people
with disabilities and discourage them from addressing their needs.
Commenters expressed concern that States would be much less likely to
invest the resources needed to provide the services that families with
disabilities need if they are not able to count those families toward
the work participation rates.
Some commenters recommended that we broaden work activity
definitions to accommodate the participation of people with
disabilities. Others urged us to permit lower hourly standards as an
accommodation. Otherwise, they recommended that we exclude clients with
disabilities from the definition of a work-eligible individual.
Response: We recognize that many individuals with disabilities are
capable of participating in productive work activities and encourage
States to explore these capabilities, rather than focusing on their
limitations. In fact, in the preamble to the interim final rule, we
encouraged States to provide self-sufficiency opportunities to
individuals with disabilities and to engage them in appropriate work
activities. We offered concrete examples, such as specialized work
experience sites, that would provide and demonstrate the skills and
experience needed to obtain employment. However, given the concern
expressed by commenters on this critical issue, we intend to expand our
technical assistance efforts in
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identifying and sharing effective models that have been developed by
vocational rehabilitation agencies and the entire disability community.
Under the TANF statute, the work participation rate calculations
generally include all families with an adult receiving assistance. When
Congress replaced the Aid to Families with Dependent Children (AFDC)
program with TANF, it eliminated a number of statutory exemptions
related to incapacity, temporary illness, and age. There was no
suggestion in PRWORA that the activities or hours that count toward the
work participation rate should vary for clients with disabilities. By
limiting the maximum participation rate to 50 percent, Congress
recognized that some individuals would not be able to satisfy the full
requirements. However, we believe States should work with and provide
services to individuals, whether they can participate for enough hours
to count toward the work participation rates or not. Because families
with adults receiving Federal assistance are subject to time limits, it
is important for States to serve the entire caseload so that all
recipients progress toward self-sufficiency. States should also provide
needed accommodations that can help all individuals reach their full
potential.
We believe the regulation provides States with increased
flexibility and incentives to work with people with disabilities. In
the definition of ``work-eligible individual'' in Sec. 261.2, we give
States the option of either including or excluding parents who receive
SSI or SSDI benefits and whose children are TANF recipients. If the
parent works enough to count in the rate, the State can include the
family, but it is not disadvantaged if the parent receiving SSI or SSDI
cannot work. In the final rule, we allow States to adjust prior
reported data and to back out of the participation denominator any
appropriate family with a work-eligible individual whose application
for SSI or SSDI was approved retroactively, as long as the adjustment
is within the allowable reporting time frame for the fiscal year. Also,
we have reaffirmed in the final rule that a parent needed in the home
to care for a disabled family member is also excluded from the
participation rate.
Comment: Many commenters suggested that the interim final rule
makes it difficult for States to meet the work requirements and to
comply with the Americans with Disabilities Act (ADA) of 1990 and
Section 504 of the Rehabilitation Act of 1973.
Response: We recognize and underscore that States must continue to
comply with relevant civil rights laws, including the ADA and Section
504 of the Rehabilitation Act of 1973 (Section 504). We believe that
this final rule gives States several ways to count activities that they
would be legally required to provide under the ADA and Section 504. It
is also important to note that a State may be legally obligated to
provide a reasonable accommodation/modification under the ADA and
Section 504 even if it will not receive credit toward its Federal work
activity requirements for the accommodation/modification. As identified
in the preamble of the interim final rule, HHS developed and will
develop additional technical assistance related to the application of
civil rights laws in the TANF context. Existing tools may be found at
the HHS Office for Civil Rights (OCR) Web site at http://www.hhs.gov/ocr/tanf.
Among other help, the webpage includes guidance entitled
``Prohibition Against Discrimination on the Basis of Disability in the
Administration of TANF,'' which addresses the application of the ADA
and Section 504 in the TANF context, the legal requirements of ensuring
equal access, reasonable accommodations/modifications,
nondiscriminatory operational methods, and includes a discussion of
promising practices. Complaints alleging violations of these
requirements are not infrequent. OCR currently has open TANF
complaints, many of which allege that States are denying TANF
applicants and beneficiaries with disabilities equal access and/or not
providing reasonable accommodations/modifications. Such complaints are
often resolved by a State agreeing to implement effective and
comprehensive screening and assessment of TANF applicants and
beneficiaries.
We were also trying to make one other key point. It is
discriminatory to deny a person with a disability the right to
participate in or benefit from the aid, benefit, or service provided by
a public entity. The benefits and services provided must be equal to
those provided to others, and as effective in affording equal
opportunity to obtain the same result, to gain the same benefit, or to
reach the same level of achievement as those provided to others.
Services, programs, and activities must be administered in the most
integrated setting appropriate to the needs of qualified individuals
with disabilities. Separate or different aids, benefits, or services
are permitted, but only when necessary to ensure that they are as
effective as those provided to others. Persons with disabilities must
also have the option of declining to accept a particular accommodation.
Thus, State agencies must offer people with disabilities an equal right
to participate in programs instead of automatically exempting them from
participation requirements.
The Supreme Court, in School Board of Nassau County v. Arline
noted, ``* * * society's accumulated myths and fears about disability
and disease are as handicapping as are the physical limitations that
flow from actual impairment.'' 480 U.S. 273, 284 (1987).
Provisions of the ADA and the Rehabilitation Act prohibit exclusion
and segregation of individuals with disabilities and the denial of
equal opportunities enjoyed by others, based on, among other things,
assumptions, patronizing attitudes, fears, and stereotypes about
individuals with disabilities. Public agencies are required to ensure
that their actions are based on facts applicable to individuals and not
on assumptions as to what a class of individuals with disabilities can
or cannot do.
The ADA covers individuals who vary widely in the severity of their
disability, degree of disadvantage, capabilities, and skills, and their
appropriate path to self-sufficiency and independence must be assessed
on an individual basis, just like everyone else. It is exactly for
these reasons that Congress chose not to exclude individuals with
disabilities from the participation requirements and the benefits and
results that accrue to working individuals and families. We believe
that potential danger lies in altered expectations and opportunities,
in automatic exemptions, and in exclusions from integrated requirements
and services designed to lead to self-sufficiency and independence.
TANF agencies must provide programs in the most integrated setting
appropriate to the needs of people with disabilities. Agencies should
take steps to ensure that individuals with disabilities can participate
in all programs and services for TANF clients, not just those programs
and services that are designed solely for people with disabilities. In
addition, TANF agencies must ensure equal access to programs and
services for TANF clients. In ensuring equal access, it is critical
that TANF agencies have comprehensive and effective screening and
assessment tools in place.
Clearly, a State must provide appropriate accommodations and
services when necessary to afford an individual with a disability an
equal opportunity to participate in, and enjoy the benefits of, the
service, program, or activity, and the opportunity to request such
accommodations and services.
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States can and must make necessary accommodations in the number of
hours and types of activities they require, if needed. But,
accommodations that enable clients to work are clearly just as
critical. States must ensure that individuals with disabilities are not
excluded from services, programs and activities because buildings are
inaccessible, and these include the buildings of contractors and
providers. Agencies must also provide accommodations to individuals
with disabilities, at no additional cost, where necessary to ensure
effective communication with individuals with hearing, vision, or
speech impairments. (Accommodations include but are not limited to such
services or devices as qualified interpreters, assistive listening
headsets, television captioning and decoders, telecommunications
devices for the deaf [TDDs], videotext displays, readers, taped texts,
materials in Braille, and large print materials.)
Comment: One commenter suggested, ``Employment of individuals with
mental illness should be a top priority for policy makers at all levels
of government. Unfortunately, due to stigma, organizational, financial
and other barriers, employment is often a low priority, if it is a
priority at all. It's doubtful that the Interim Final Rules, as
currently drafted, will result in greater work opportunities for people
with psychiatric disabilities.''
Response: We agree that employment of individuals with disabilities
should be a priority, and this Administration has made it a priority
for all executive agencies. President Bush, in announcing his ``New
Freedom Initiative'' in 2001, stated, ``Every American should have the
opportunity to participate fully in society and engage in productive
work. Unfortunately, millions of Americans with disabilities are locked
out of the workplace because they are denied the tools and access
necessary for success.'' The number of recipients with disabilities who
are currently working significantly understates both the capability and
desire of people with disabilities to work. Under significant work
participation requirements, States will need to expand preparatory and
employment options for individuals with disabilities. We will continue
to work closely with our colleagues in the Substance Abuse and Mental
Health Services Administration, the Social Security Administration, and
the disability community to enhance services to all people with
disabilities.
Comment: One commenter noted that the preamble to the interim final
rule often encouraged States to engage individuals with disabilities
but that the rule did not offer practical ways to assist States in
doing so. The commenter urged us to ensure that the final rule includes
better mechanisms to allow all TANF recipients with disabilities to
meet work participation requirements.
Response: We agree that TANF agencies need to find more effective
ways to engage people with disabilities in their caseloads than many
have used in the past. Increased efforts should be pursued in a number
of areas. For some States, TANF agencies need to re-engage with State
rehabilitation agencies to use their proven knowledge and expertise to
address the barriers individuals with disabilities face and to help
them enter the workplace. Much needs to be done to overcome negative
stereotypes and misperceptions among the public. Job developers need to
educate employers, since research shows that working individuals with
disabilities are very effective employees. Agencies need to improve
their marketing of the advantages and benefits of work to individuals
with disabilities, while ensuring that benefits, such as medical
coverage, are sustained.
In the first 10 years of the TANF program, there has been
inadequate attention to engaging individuals with disabilities in work;
however, few States raised concerns to us about their ability to serve
people with disabilities during this period. Oftentimes, individuals
with disabilities face challenges in entering the workforce and pose
challenges to State agencies trying to help them enter the workforce.
Sometimes, a disability is debilitating enough that a person cannot
work. Federal programs such as SSI and SSDI serve such people. But for
many others, a disabling condition does not preclude the possibility
and the rewards of work, even if it creates challenges.
It is precisely for this reason that we have not categorically
removed individuals with disabilities from the definition of work-
eligible individual. Individuals who happen to have disabilities should
be afforded the same opportunities to engage in work--to find work-
related training, work experience, and employment--as those who do not
have a disability. By keeping such individuals in the work
participation rate, as they have been since the inception of TANF,
States have an added incentive to address the needs of people with
disabilities.
We look forward to working with States in this area through our
technical assistance efforts and anticipate disseminating information
about promising approaches to helping individuals with disabilities and
establishing linkages between organizations serving the needs of
individuals with disabilities. ACF will use its Welfare Peer Technical
Assistance Network to disseminate information on promising practices
for serving individuals with disabilities. In addition, ACF will work
with States to explore additional approaches and innovative efforts to
promote and support the employment of TANF adult recipients living with
mental, intellectual and physical disabilities.
Comment: Many commenters urged us to permit ``deeming'' for
individuals with disabilities. They recommended that we allow States to
count recipients who participate in accordance with an employment plan
that includes accommodations for disabilities as having met required
hours to count in the participation rate. They stressed that this would
give States an incentive to engage such individuals to their greatest
ability. Similarly, they urged us to let States count recipients who
miss scheduled hours of work participation because they were caring for
a family member with a disability. They suggested that, in the same way
that we permit ``deeming'' to respond to the requirements of the Fair
Labor Standards Act, we should allow lesser hours of participation to
count for the full required number of hours when needed to make
accommodations required under the ADA.
Response: We agree with the commenters' concerns that individuals
with disabilities should have appropriate accommodations in their work
assignments and believe this regulation provides States with more
flexibility and incentives to work with people with disabilities than
they have ever had previously. As we noted in response to earlier
comments, the TANF work participation rates have always included people
with disabilities. States can and must make necessary accommodations in
the number of hours and types of activities they require of individuals
with disabilities.
As noted earlier, ACF is committed to working with States to
explore additional approaches and innovative efforts to promote and
support the employment of TANF recipients living with disabilities. As
we work with States, we will begin to get a better understanding of the
potential promises and logistical challenges of all such approaches.
With respect to individuals caring for people with disabilities,
the regulation makes two accommodations. First, the definition of a
work-eligible individual excludes a parent caring for a disabled family
member living in the home, as long as there is medical documentation
[[Page 6777]]
to support the need for that parent to remain in the home to care for
the disabled family member. Second, the regulation gives States credit
for excused absences for all work-eligible individuals in unpaid work
activities. Thus, if a State excuses an individual who misses time
because she must care for a disabled family member, the State could
count those missed hours as actual participation, within the limits the
regulation sets out. Please refer to Sec. 261.60 for further
discussion of excused absences.
B. Domestic Violence
Comment: Some commenters asserted that the interim final rule
conflicted with the Family Violence Option (FVO). One commenter noted,
``The regulations are also silent on how domestic violence services are
allowed and how domestic violence cases are treated.'' Another
commenter asserted, ``Women need time to effectively remove the
barriers that have prevented them from obtaining quality employment.''
Another suggested that ``the limited time allowed in job search and job
readiness for barrier removal activities is inflexible and should not
apply to family violence victims.''
Response: Existing provisions in the law address work participation
rate issues for States dealing with victims of domestic violence. A
State that elects the Family Violence Option under Section 402(a)(7) of
the Social Security Act must screen and identify victims of domestic
violence, refer such individuals to services and, if needed, waive
participation and other program requirements for as long as necessary
to escape domestic violence. The rules at Part 260, Subpart B allow
States to grant good cause domestic violence waivers to victims of
domestic violence that waive various program requirements, including
work requirements. States have broad flexibility in determining which
program requirements to waive and for how long. Although these
recipients remain in the work participation rate calculation, there may
be some activities that meet one of the work activity definitions that
would make them countable toward the participation rate. If a State
fails to meet a work participation rate, we will determine that it had
reasonable cause if the State can demonstrate that it failed to meet
the rate due to granting federally recognized good cause domestic
violence waivers. In this circumstance, we would recalculate the work
participation rate taking out any families in which individuals
received a federally recognized good cause domestic violence waiver of
work participation requirements.
We believe the 1999 TANF final rule regarding the treatment of
victims of domestic violence ensures services and waivers for victims
and provides adequate ``reasonable cause'' reduction or elimination of
penalties for States. Consequently, we did not propose revision to Part
260, Subpart B in the interim final rule; therefore, general concerns
related to rules on victims of domestic violence are outside the scope
of this rulemaking.
C. General Topics
Alternative Measures of Performance
Comment: Several commenters suggested shifting the focus of
participation from process to outcome measures. One commenter found
that the existing participation rates were too limited for purposes of
assessing State performance measuring comparability across States. The
commenter suggested that we use alternative measures of program
success, including measures related to poverty, the employment rates of
current and former recipients, and the completion rates for applicants
and recipients enrolled in education and training programs. One
commenter recommended continuing the High Performance Bonus outcome
measures, even though bonuses are no longer available under the DRA.
Another commenter urged work participation credit for those families
who get jobs and work their way off welfare.
Response: We do not have the regulatory discretion to replace the
existing work participation rate requirements with alternative,
performance-based measures. Nevertheless, we do continue to track
several of the outcome measures from the high performance bonus.
Negative Consequences and Challenging Standards of
Participation
Comment: Several commenters suggested that the interim final rule
makes it more difficult for States to design effective programs to move
families from welfare to work. Some commenters predicted that States
may adopt punitive approaches to reduce the denominator for the work
participation rate.
Some commenters suggested that we do not appreciate the need for
flexibility and the difficulty of meeting a 50-percent overall
participation rate. As an example, one commenter thought that we failed
to recognize ``the reality that reaching a 50 percent participation
rate is difficult in large part because of the many legitimate reasons
why a recipient may not meet the full hourly participation requirements
in any particular month, including illness, temporary gaps between work
components, and family emergencies such as trying to forestall an
eviction, the need to find new housing, the need to care for an ill
relative who may not live with the recipient, or the need to attend to
a domestic violence issue.'' One commenter said that the rules ``would
steadily diminish state flexibility through the imposition of rigid
federal mandates.'' Another stated, ``The new regulations have
eliminated the states' ability to be flexible in determining what they
may assess for countable work activities when in reality the needs of
the particular participants and states vary vastly.''
Response: We do appreciate the difficulty in engaging a large and
varied client population in countable work activities for enough hours
to meet the work participation rate. Instilling the work habits and
providing the supports that different families need to engage in work
is a challenge that all States must strive to achieve. We have given
serious consideration to the commenters' concerns and would like to
point out certain aspects of statute as well as others of the TANF rule
that help States achieve the work participation rate. There are several
categories of individuals that continue to be excluded from the
calculation of the work participation rate under the new law. One of
the largest is the State option to disregard, on a case-by-case basis,
single-custodial-parent families caring for a child under the age of
one year. A State may also disregard a family subject to a work-related
sanction for up to three months in the preceding 12 months. In
addition, the interim final rule allowed States to exclude from the
definition of ``work-eligible individual'' parents caring for a
disabled family member living in the home. Our excused absence policy
addresses concerns related to hours missed due to short-term illnesses
or emergencies. Finally, States have a special reasonable cause
provision if they miss the work participation rate because they serve a
large number of families dealing with domestic violence issues.
Also, we would like to emphasize that when States cannot count the
participation of some individuals in certain activities because they do
not meet one of the work activity definitions or because the hours of
participation are not sufficient, the States should still serve these
individuals. The requirements and expectations for each family should
be set by the State taking into consideration the needs of the family,
obligations under the ADA and
[[Page 6778]]
Section 504 of the Rehabilitation Act of 1973, and program goals. Thus,
in any individual case, a State may require fewer hours of an adult
than needed to count toward the Federal participation rate and that
family will not help the State meet its work participation rate.
Similarly, a State may, and many do, require more hours of an adult
than needed to count the family in the participation rate. Moreover,
States continue to have the flexibility to allow families to engage in
broader and different activities from those that count for the Federal
participation rate.
We are convinced that States can and will meet these challenges,
thus dramatically improving the lives of families. We also believe that
the standards must be challenging to ensure that the maximum number of
recipients move toward self-sufficiency. This conviction is based on
the well-documented results and achievements made by States in response
to PRWORA. We believe the DRA provides the appropriate steps and
direction for the next phase of welfare reform.
We are confident that, under the new rule, States that operate
effective and efficient welfare-to-work programs will be able to
satisfy their work participation rate standards and enhance the
services to clients at the same time.
Partial Credit
Comment: Several commenters suggested that we should give States
partial or pro rata credit for individuals who are engaged in work
activities for some hours, but not enough to be included in the work
participation rate calculation. One commenter pointed out that this
would avoid the current ``all-or-nothing'' standard and would permit
some individuals who have limitations to be credited with
participating. Another maintained that partial credit is not
prohibited, even if the rules do not specifically allow it.
Response: Neither PRWORA nor the DRA provided for counting partial
participation of a case in meeting the work participation rates; either
the adult meets the requirements for being ``engaged in work'' and the
family counts in the rate or the adult does not meet the hours
requirement and the State does not get credit for that family in the
participation rate. We remind readers that the regulations at
Sec. Sec. 261.22(d)(1) and 261.24(d)(1) do provide the flexibility of
counting a partial month of assistance as a month of participation if a
work-eligible individual is engaged in work for the minimum average
number of hours in each full week that the family receives assistance
in that month. Please refer to the regulatory text of those sections
and to the preamble discussion in the original TANF rule at 64 FR
17771. In addition, the excused absence policy described in Sec.
261.60(b) allows a State to receive credit for short-term excused
absences and allows some families that would otherwise fall short of
the minimum hourly requirements to count in the participation rate.
Increased Costs
Comment: Some commenters suggested that the new regulations would
require States to increase participation in work activities, which
would raise program costs. This, in turn, they thought, would force
States to curtail services because TANF is a fixed block grant.
Response: The dramatic decline in welfare caseloads since the 1996
welfare reform has produced savings that far exceed any additional
costs from new work requirements. More specifically, TANF funding,
measured on a per TANF family basis, was $9,100 in 1996 (inflation-
adjusted) compared to $15,977 in 2007 (projected), an increase of
$6,877 per family, or 76 percent. While we recognize that States have
dramatically extended work services and support benefits to low-income
working families, and pre-kindergarten care and education to children
that are not receiving ``assistance,'' we believe that States have
sufficient resources to allocate among priority programs while
implementing these new requirements.
Child Care Needs
Comment: Some commenters thought that there was not enough child
care funding to pay for the added costs associated with implementing
the work requirements under the Deficit Reduction Act of 2005,
particularly for child care for non-recipient parents.
Response: Since 1996, Federal child care funding through the Child
Care and Development Fund (CCDF) has more than doubled--from $2.2
billion in FY 1996 to $4.8 billion in FY 2005. HHS data on Federal and
State child care spending in just three programs--TANF, CCDF, and the
Social Services Block Grant (SSBG)--show that spending increased by
nearly 225 percent between FY 1996 and FY 2005, from $3.6 billion to
$11.5 billion. The Deficit Reduction Act increases Federal child care
funding in the CCDF from $4.8 billion to $5 billion, effective FY 2006.
In addition to increasing child care funding, the Deficit Reduction Act
fully funds TANF at $16.5 billion per year for five years. With
significantly lower caseloads than in 1996, we believe that States
should have adequate funding to provide needed child care under the
Deficit Reduction Act requirements.
Monitoring
Comment: Several commenters suggested that the rule imposes rigid
monitoring and reporting requirements. Some expressed concern that
frequent demands for proof of participation could overburden providers
or cause families to lose assistance.
Response: We believe that the rule simply clarifies what has always
been the expectation of law, of the original TANF rule, and of the
requirements of 45 CFR part 92: That a State should report only actual
participation that it has adequately documented and verified. As a
result of numerous single audit findings questioning the validity of
participation rates, we decided to clarify this expectation in the rule
so that States may avoid potential penalties. In addition, for the four
activities involving paid employment, which historically have
represented the bulk of State work participation, we have substantially
reduced the burden on clients, employers, and States by allowing the
reporting of projected actual hours of participation for up to six
months based on current, documented hours of work.
Consultation
Comment: One commenter stated that we did not consult Tribes about
the interim final rule and that Tribes were expressly discouraged from
providing input because the rule was directed at States and was not
intended to impact Tribal TANF programs directly.
Response: The rulemaking process included a period for public
comment on the interim final rule. Tribes as well as other
organizations and individuals were free to express their opinions and
to offer advice on the rule. Several Tribes and Tribal Organizations
took the opportunity to submit comments, which we have addressed in the
preamble to this final rule. Further, ACF representatives actively
participated in a National Summit on State and Tribal TANF in July
2006, at which State and Tribal representatives discussed the
provisions of the DRA and the interim final rule in detail and
expressed comments. The National Alliance of Tribal TANF, one of the
Summit sponsors, summarized these comments and formally submitted them
to us. They are also addressed in this preamble.
D. Tribal TANF
Comment: One commenter observed that Tribal TANF programs could be
adversely affected by States that fail to meet the work participation
rates because the funds that States transfer are critical to the
operation of Tribal TANF programs. This commenter also
[[Page 6779]]
expressed concern that funding and regulatory changes to State TANF
programs will negatively affect various Tribal programs.
Response: State MOE funding plays an important role for Tribal TANF
programs. We will continue to encourage States to support the Tribal
TANF grantees with MOE funding; however, the decision to provide MOE
funding rests solely with the States. States may also impose conditions
on Tribal TANF programs on the use of State MOE funds. Primarily, the
Federal role regarding State MOE is to ensure that States expend the
required amount of funds in compliance with requirements. (For a more
detailed discussion of Federal policy on MOE funds provided to Tribal
TANF programs, please see our Policy Announcement, TANF-ACF-PA-00-4
dated November 27, 2000.)
We do not think it is likely that State TANF agencies will reduce
MOE funding for Tribal TANF programs. If a State does fail a work
participation rate, it must meet an 80 percent MOE requirement. States
that meet the work participation rates need only spend at the 75
percent MOE level. Any State that may potentially fail either the
overall or two-parent participation rate needs to ensure that it has
expended 80 percent of its historic level of spending, a five
percentage point increase for many States. In addition to the need to
expend additional MOE funds, we have heard no State indicate that it is
contemplating any reductions in providing funding to Tribal TANF
programs.
Comment: A few commenters expressed concern that restrictions
imposed by this regulation could create an influx of Tribal clients
moving to areas in which Tribal TANF programs exist, thereby increasing
the costs to these programs. Because Tribal funding is based on 1994
caseload data, Tribes have substantially limited ability to renegotiate
effectively for increased funding.
Response: We understand the commenters' concerns; however, we have
seen no evidence that this rule will prompt Tribal members to move into
areas served by a Tribal TANF program or that such a potential influx
would exceed the 1994 caseload level. In fact, if States effectively
implement the DRA provisions, we expect further caseload declines.
Comment: One commenter expressed opposition to any attempt to
extend these regulations to the Tribal TANF program regulations.
Response: As we noted in the preamble to the interim final rule,
the regulatory changes promulgated in response to the enactment of the
DRA only apply to States, the District of Columbia, and the Territories
of Guam, Puerto Rico, the Virgin Islands, and American Samoa. We are
not planning to amend the Tribal TANF program regulations at 45 CFR
part 286 to comport with these DRA 2005 final rules.
IV. Part 261--Ensuring That Recipients Work
Section 261.2 What Definitions Apply to This Part?
This section of the regulation defines work activities and work-
eligible individuals. Section 407(d) of the Social Security Act
specifies 12 separate and distinct activities. Under the original TANF
rule, we chose not to define these work activities to provide maximum
program design flexibility to States. We simply listed the 12 work
activities in 45 CFR 261.30 in the order they appear in the Act. As GAO
found, this led to disparities in State definitions of work activities
that resulted in inconsistent work participation measurement and
undermined the principle of equitable treatment. In particular, States
with narrow definitions were at a disadvantage in meeting the
participation requirements compared to States with broader definitions.
In addition, the GAO report (GAO-05-821) raised concerns that some
States integrated activities to avoid various statutory limitations on
some TANF work activities, such as the six-week time limit on counting
hours spent in job search and job readiness assistance.
The Deficit Reduction Act of 2005 required HHS to promulgate
regulations to ensure consistent measurement of work participation
rates. The law specifically required us to determine whether an
activity of a recipient of assistance may be treated as a work
activity. Thus, in the interim final rule, we defined each of the
countable work activities to promote consistency in the measurement of
work participation rates and to maintain the integrity of the work
participation rates. By defining work activities, we ensure that all
States are judged on the same basis that is, that there is a level
playing field.
Our definitions follow the order of the list of work activities in
section 407(d) of the Social Security Act. For ease of reference, we
refer to the nine work activities that count for the first 20 hours of
required work or the corresponding 30-hour requirement for two-parent
families (or 50-hour requirement for two-parent families receiving
federally subsidized child care) as ``core'' activities and the three
activities that can only count as participation after the core
requirement is met as ``non-core'' activities.
We were guided by four basic principles in developing the work
activity definitions in this final rule.
First, we attempted to define each work activity in a common sense
way. If a particular activity was not explicitly listed in the statute,
we attempted to see if it could fit under one of the 12 activities
listed in law. For example, treatment, counseling, and rehabilitation
activities, in our judgment, fit best under job search and job
readiness assistance, when such activity prepares an individual for
work. However, we could not add wholesale categories of work activities
to the 12 listed in the law. Our task was to specify whether and where
certain activities fit within these already existing statutory
categories.
Second, we defined each activity to focus on work and help move
families to self-sufficiency. Work activities should help individuals
develop the skills necessary to become job ready and go to work. We do
not want families to exhaust their time-limited benefits and discover
that they are not prepared to support themselves.
Third, we tried, as far as possible, to make the definitions
mutually exclusive of one another. Since Congress created 12 distinct
activities, we wanted to bring meaning to them as distinct activities.
Fourth, we made supervision an explicit part of each definition.
For programs to be successful, it is important that the case manager or
provider knows what each person is supposed to be doing and that he or
she is accountable on a timely basis for ensuring that the client
actually performs such assigned tasks.
Comments and Responses on Cross-Cutting Issues for Work Definitions
We received many comments on this section of the interim final
rule. Some comments applied to multiple activities or applied generally
to defining the activities at all. We respond to those cross-cutting
comments in this section and have grouped the comments and our
responses by topic for the ease of the reader. We respond to comments
that focus more narrowly on a specific definition in the discussion of
each activity below.
General Topics
Comment: Some commenters wrote that the work activity definitions
in the interim final rule narrowed the range of what States can count
toward their work
[[Page 6780]]
participation rates and recommended giving States more flexibility in
defining work activities. One commenter recommended allowing States to
develop their own definitions.
Response: The DRA directed HHS to define work activities to achieve
greater consistency among States. For some States, the new definitions
may narrow countable activities, but we believe they actually expand
them in other States. For example, under the original rule, some States
counted substance abuse and mental health treatment as community
service or as job search and job readiness assistance. Some States did
not count these activities at all, even if a substantial number of
individuals participated in such treatment. Our new definitions make
substance abuse treatment, mental health treatment, or rehabilitation
activities an explicit part of job search and job readiness assistance.
This will allow all States to count individuals participating in these
activities and thus could actually increase work participation rates in
these States. In general, we believe the work activity definitions
specified in the interim final rule were reasonable and consistent with
the goals of the TANF program, and thus we have retained them, with
appropriate modification, in the final rule. As a practical matter, we
do not believe that these definitions have a restrictive effect on what
most States currently count because the dominant activity in most
States has traditionally been unsubsidized employment, an activity
whose definition most commenters did not find restrictive.
Comment: Several commenters expressed the view that the emphasis on
mutually exclusive activities restricts State flexibility in developing
cost-effective programs by making it more difficult for them to
``blend'' program activities. The commenters recommended that we make
the definitions more ``flexible'' and permit program approaches that
integrate and combine activities under one work activity definition.
Response: Programs that combine work with training or other
services have shown promise in helping TANF recipients make the
transition to the labor force and move toward self-sufficiency. We
believe that the final rule gives States the flexibility to operate
programs of blended activities. Section 407(d) of the Act specifies 12
separate and distinct activities. Thus, we have tried to define each
activity to have a specific and distinct meaning, but it was not always
possible to make them mutually exclusive. In fact, some types of
activities can be categorized under more than one work activity
definition. For example, many of the training activities counted under
vocational educational training can also count under job skills
training directly related to employment and education directly related
to employment. The former is a core work activity that is limited to 12
months in a lifetime, whereas the latter are non-core activities that
can only count once the core activity requirement has been met.
Comment: Some commenters maintained that the most effective
welfare-to-work programs included a variety of employment and education
and training activities. In their opinion, mutually exclusive
definitions would discourage States from combining work activities.
Moreover, they maintained that doing so would require separate tracking
of each activity and impose an added administrative burden. In
addition, because some activities, such as job search and job readiness
assistance and vocational educational training, have statutory
limitations on their duration, the commenters thought that States might
be reluctant to include these activities in a broader program that
blends activities because it would limit the long-term use of those
activities. Commenters urged us to allow States to combine activities
and report all participation under one activity. Several commenters
suggested that States should be allowed to count an individual
participating in more than one activity in the activity that makes up
the majority of the hours of participation. For example, many of these
commenters recommended that we allow States to count a limited number
of hours of job search or training as part of another activity, such as
work experience, if the other activity represents the majority of the
hours of participation.
Response: We strongly support State programs that combine
activities and believe that our definitions fit well with such blended
programs. It is important that States report the hours of participation
for each work activity in the appropriate category to ensure that the
data are comparable across States. If an individual has exhausted the
time allowed to count an activity, it does not prevent a State from
continuing to combine it with other activities; it only affects what a
State can report toward the participation rates. We note that a policy
that allows some activities to count within others based on standards
such as what constitutes a ``significant majority'' of hours would
still require States to track the hours of each activity separately to
determine which activity is the primary activity. Thus, combining the
activities would not achieve the suggested administrative
simplification.
Comment: Many commenters expressed general support for education
activities or for the ability to count a wider array of educational
activities. Several commenters asserted that the regulations will limit
access to education and training, and were concerned that this would
hinder client access to higher paying jobs and undermine their efforts
to become self-sufficient. For those with limited basic skills and
language difficulties, some commenters proposed expanding the
definitions of various core activities to increase opportunities of
countable participation. Commenters also suggested that we expand the
definition of vocational educational training to include education
directed at achieving a baccalaureate or advanced degree.
Response: We appreciate the value of education and training for all
individuals. Some recipients need to develop skills to become
employable; others benefit from education and training in order to
advance in the workplace. While we cannot add educational categories to
the explicit 12 activities listed in the TANF statute, we believe that
our definitions permit considerable flexibility to provide a range of
education and training services to TANF families. Under vocational
educational training, we permit a variety of postsecondary education
activities, including associate degree programs, instructional
certificate programs, industry skill certifications, and other course
work. In addition, the definition of job skills training directly
related to employment permits virtually all vocational educational
training activities to count under that component as well. States may
choose this activity for those individuals who have exhausted their 12-
month limit on vocational educational training or to conserve these
months for those who have sufficient additional participation in other
core work activities. Remedial education and ESL can count under
vocational educational training, if they are a necessary and regular
part of the work activity, and also can count under education directly
related to employment. States have considerable flexibility to mix and
match work activities so that they can count a wide range of
activities. Although the interim final rule did not permit States to
count participation in baccalaureate or advanced degree programs in
vocational educational training, we have been persuaded by commenters
to allow such participation and have changed the definition
accordingly.
[[Page 6781]]
Comment: Some commenters thought that the new work activity
definitions ``do not allow for the singular economic, cultural, and
geographic circumstances'' that characterize some States. For example,
they pointed out that the rural nature of some communities makes it
difficult to serve some work-eligible individuals, both because the
range of activities may be limited and also because various
documentation and supervision standards are hard to apply.
Response: We are sympathetic to concerns related to serving remote
areas and areas where employment opportunities are limited due to high
unemployment or other conditions. However, the statute does not make
any allowance for such factors in the calculation of work participation
rates, except that it limits the maximum overall rate to 50 percent.
Under one of TANF's predecessor programs, the Job Opportunities and
Basic Skills Training (JOBS) program, States could exempt individuals
living in remote areas, but Congress chose not to continue this
exemption when it enacted TANF in 1996. The law does provide penalty
relief, though, if a State can demonstrate that high unemployment or
regional recession caused or contributed to its failure to meet the
work participation rates. Readers should refer to Sec. Sec. 261.51(d)
and 262.5 of this chapter for more information on penalty relief.
Comment: Some commenters suggested that the work activity
definitions exceeded our legal authority. One commenter noted, ``Many
states have used more expansive definitions over the past 10 years, and
HHS has never suggested that they were in violation of the statute.''
Another commenter asserted that there is ``no statutory basis to impose
a mutually exclusive list of definitions to what Congress said should
be viewed as a whole.'' Some commenters contended that specific
regulatory provisions were not consistent with the statute.
Response: The Deficit Reduction Act of 2005 specifically required
us to determine ``whether an activity * * * may be treated as a work
activity. * * *'' We believe the interim final rule was consistent with
Congressional and statutory intent. We did not intend to suggest that
States were in violation of the prior statute and rules. Rather,
Congress saw a need for uniform definitions and the rule provides them.
Comment: Some commenters wrote that aspects of our definitions were
not necessary because they were not required by the statute, for
example, the limitation that only supervised homework can count.
Response: The statute is generally silent on what we should include
in most definitions. In defining the work activities, we found it
necessary to specify what can count as part of an activity and the
conditions that must be met to ensure that actual participation in the
activity occurs and thus keep definitions consistent across States.
Comment: One commenter urged us to count as part of a work activity
the time it takes to travel to and from the work or training site. The
commenter thought this was particularly important in rural areas that
are isolated and lack public transportation.
Response: Travel time to and from work sites does not count toward
the participation rates. We chose not to count commuting time to and
from a work site because commuting is not ``engaging'' in the activity
for which the State gets credit and because this approach is analogous
to the work world, since most employees receive no pay for the time it
takes them to commute to their jobs. However, we do allow a State to
count the time an individual spends in job search and job readiness
assistance traveling between multiple interviews. Please refer to the
preamble discussion of that work activity for more detail in this area.
Daily Supervision
Comment: Several commenters asked for clarification regarding the
daily supervision requirement for unpaid work activities. Several
commenters objected to the requirement that job search and job
readiness assistance include daily supervision because they said it is
a costly and time-consuming requirement. These commenters generally
noted that the time and resources spent on daily supervision should be
focused on providing direct services to help families move toward self-
sufficiency. Several commenters suggested that we limit the requirement
so that ``someone with responsibility for oversight of the individual's
participation had contact with the recipient, and that the supervision
does not have to be done by the TANF agency itself or an employment
services contractor.'' Some commenters recommended eliminating the
requirement altogether.
Response: We agree with many of these points and would like to
clarify this requirement. Daily supervision means that a responsible
party has daily responsibility for oversight of the individual's
participation, not necessarily daily, in-person contact with the
participant. The goal of such supervision is to ensure that individuals
are participating and making progress in their assigned activities. A
work site sponsor, classroom instructor, contracted service provider,
community-based provider, job search instructor, treatment provider, or
even a TANF agency employee could fulfill that role. In addition, the
supervision need not involve in-person contact, but can be by telephone
or electronic contact where those methods are suitable.
Daily supervision as described above is a central part of the final
rule. It ensures that individuals who participate in work activities
make progress in their assigned activities. Supervision is part of
everyday life in paid employment, despite the cost and time involved,
because it provides value. We should expect no less for all TANF work
activities.
Comment: One commenter asked for clarification regarding whether
``supervision is only required on days when an individual is scheduled
to participate,'' noting that it would not make sense to require
supervision on the other days.
Response: We agree and have clarified the final rule to indicate
that supervision is only required for days when an individual is
scheduled to participate.
Distance Learning Activities
Comment: Several commenters asked whether time spent in distance
learning programs could count toward the work participation rates. They
noted that this was particularly important in rural areas and that some
programs keep track of the time individuals spend on a computer in ways
that participants cannot change.
Response: We agree that distance learning is an important way for
some families to gain the skills needed to move toward self-
sufficiency. We will count time spent in distance learning to the
extent that such programs otherwise meet the work activity definitions
and include supervision. A State should explain in its Work
Verification Plan how it will provide supervision and monitor hours of
participation in distance learning.
Good or Satisfactory Progress
Under the definitions in the interim final rule, two of the TANF
work activities involving education required that participants make
``good or satisfactory progress'' in order for their hours of
participation to count: Education directly related to employment and
satisfactory attendance at secondary school or in a course of study
leading to a certificate of general equivalence (GED). The preamble to
the
[[Page 6782]]
interim final rule explained that this includes a standard of progress
developed by the educational institution or program in which the
individual was enrolled. It also said that good or satisfactory
progress should be judged by both a qualitative measure of progress,
such as grade point average, as well as a quantitative measure, such as
a time frame within which a participant is expected to complete such
education. We expressed interest in receiving comments that describe
other possible criteria or definitions for what constitutes making
``good or satisfactory progress.''
Comment: Several commenters observed that the preamble to the
interim final rule described ``good or satisfactory progress'' somewhat
differently for the two activities to which it applied. In the case of
``education directly related to employment'' we wrote that the standard
could be developed by either the education institutions or the program.
For ``satisfactory attendance at secondary school,'' we allowed the
State or the educational institution/program to set the standard. The
commenters asked for clarification of this policy and recommended a
wide variety of approaches for setting ``good or satisfactory
progress'' standards. Some commenters urged us to leave the standards
to educational institutions and programs, while others recommended that
States establish them. A number of commenters also proposed giving
States the flexibility to choose to establish either or both
qualitative and quantitative measures.
Several commenters cautioned that the criteria for ``good or
satisfactory progress'' should not discourage placing individuals with
barriers in education, noting that they may require more time and help
in meeting such standards. They suggested that the standards should
include appropriate accommodations for individuals with disabilities.
Other commenters recommended that we eliminate the requirement of
``good or satisfactory progress'' because many individuals with
learning disabilities are often not identified by State agencies and
fall through the cracks.
Some commenters recommended creating good cause exceptions for
those facing unusual or unexpected circumstances that prevented them
from making progress as expected. Good cause exceptions, they
maintained, would prevent States from being penalized when individuals
participate for the required number of hours but are unable to progress
due to various circumstances. Another commenter asked us to clarify
that States would not be retroactively denied credit toward the
participation rate because a client participated for the required hours
but failed to make adequate progress.
One commenter noted that the interim final rule did not specify the
frequency with which ``good or satisfactory progress'' should be
verified and commented that some measures of progress, such as grade
point average, may not be available until the end of a quarter or
semester. The commenter also explained that some educational programs,
such as Adult Basic Education, may not have testing that produces
grades to calculate a grade point average. The commenter recommended
that States use ``subjective performance evaluations provided by the
instructor to demonstrate progress * * * that simply indicate if
academic performance was unsatisfactory or satisfactory.''
Response: The commenters raised many compelling points. We believe
that the easiest way to accommodate these concerns is simply to delete
the requirement for ``good or satisfactory progress'' from the
definitions of education directly related to employment and
satisfactory attendance at secondary school or in a course of study
leading to a GED. Although we believe such standards are valuable and
should be part of any educational activity, based on the input from
commenters, we have determined that the appropriate standards can vary
based on too many circumstances to mandate their inclusion in these two
activities. Educational institutions are generally in the best position
to establish standards of progress, but they may not make separate
determinations of progress based on the circumstances of individuals, a
role a caseworker might best perform. Therefore, the final rule gives
States flexibility in deciding whether to set standards of ``good or
satisfactory progress'' and, if they do, to develop the standards that
are best suited for their clients.
Assessment
Comment: Several commenters recommended that the definition of
various work activities include the assessment of participants' skills.
Response: Our work activity definitions permit assessment of an
individual's suitability for a particular work activity.
Section 261.2(b) Unsubsidized Employment
In the interim final rule, we defined unsubsidized employment as
full-or part-time employment in the public or private sector that is
not subsidized by TANF or any other public program. We did not change
the definition in the final rule. We have responded to comments
concerning self-employment activities in the discussion of Sec.
261.60(c).
Comment: Commenters found our definition of unsubsidized employment
to be appropriate.
Response: We agree and have retained the same definition in the
final rule.
Sections 261.2(c) and (d) Subsidized Private Sector Employment and
Subsidized Public Sector Employment
In the interim final rule, we defined both subsidized private
sector employment and subsidized public sector employment as employment
for which the employer receives a subsidy from TANF or other public
funds to offset some or all of the wages and costs of employing a
recipient. We described three possible subsidized employment program
approaches: (1) To use TANF funds that would otherwise be paid as
assistance to reimburse some or all of an employer's costs; (2) to rely
on a third party as the employer of record during the trial employment
period, like a temporary staffing agency; and (3) to develop
``supported work'' programs for individuals with disabilities.
In the final rule, we made a minor wording change to the
definitions of each of these activities, substituting the word
``individual'' for ``recipient.'' We made this change both for
consistency with other definitions and to make clear that these
activities are allowable for any work-eligible individual.
Comment: Several commenters asked whether participation in various
supportive activities, such as substance abuse treatment, mental health
treatment, and rehabilitation activities could count as subsidized
private sector or public sector employment. These and other activities
are often integrated as part of a supported work program, transitional
jobs program, or other subsidized employment activity.
Response: Hours of participation in various supportive activities
can count if they are integrated parts of subsidized employment. This
means that, in order to count, the individuals must be paid for all of
the hours they participate in such activities. For example, some
transitional jobs programs are structured to include direct work and 10
to 15 hours of barrier removal or other activities, including mental
health and substance abuse treatment, job search, and training.
Participants are paid wages for all hours of participation. Otherwise,
if the individuals are not paid while participating in these
[[Page 6783]]
activities, the participation should be reported as a blend of
subsidized employment and another appropriate activity. Most likely
this would be job search and job readiness assistance, but could be
another activity.
Comment: Several commenters noted that some individuals assigned to
subsidized employment soon have earnings that are sufficient to make
them ineligible for assistance. They asked whether such individuals
could continue to count in the numerator of the participation rate.
Response: Although we understand the commenters' concern, the work
participation rate calculations include only families with a ``work-
eligible individual.'' (Please refer to the discussion of Sec.
261.2(n) for more detailed information about the definition of ``work-
eligible individual.'') If a State wants to count a family
participating in subsidized employment that is ineligible for a regular
assistance payment, it could create and pay an alternative assistance
grant. The State could then count the family toward the rate. Of
course, since the family retains assistance, this would not generate a
caseload reduction credit, as might be the case otherwise.
Comment: Several commenters asked whether employers would be
required to hire and retain individuals engaged in subsidized
employment once the subsidy period ended. The preamble guidance to the
interim final rule stated, ``At the end of the subsidy period, the
employer is expected to retain the participant as a regular employee
without receiving a subsidy.'' Some commenters explained that many
transitional jobs programs place participants in short-term subsidized
employment to provide experience, training, and guidance that enable
that individual to obtain unsubsidized employment elsewhere, even
though it may not result in a permanent position with the same
employer. Other commenters recommended that we limit the expectation of
continued employment to private sector employers to avoid creating a
``revolving door'' of subsidized employees.
Response: The preamble language in this regard was a suggestion,
not a requirement. We continue to caution that States should not allow
employers to recycle TANF recipients in subsidized employment slots
simply to reduce their competitive labor costs. The positions should
lead to ongoing, stable employment or prepare individuals for such
employment.
Comment: Several commenters asked whether they must limit the
duration of subsidized employment positions. They noted that the
preamble to the interim final rule suggested ``that States generally
limit the duration of subsidized employment programs to six to twelve
months.''
Response: The limited duration is a recommendation, not a
requirement. Longer placements may be appropriate, for example, in
supported employment of individuals with disabilities or for other
participants based on their individual circumstances, economic
conditions, or other factors.
Comment: One commenter noted, ``Congress listed public and private
sector subsidized employment as separate work activities; therefore it
is reasonable to have different expectations depending on the sector of
the employer.'' In particular, the commenter suggested that it may be
appropriate to limit the duration of the employment subsidy to private
sector employers ``where there is an expectation of continued
employment with that employer,'' but that such limits should not be
placed on public sector (and non-profit) employment.
Response: We agree that durational limits help ensure that the
primary benefit of the subsidy is to the employee, but do not see the
need to apply different standards to the private and public sectors. We
leave it to States to determine such limits regardless of whether they
apply to private sector or public sector employment.
Comment: One commenter recommended that States describe in their
Work Verification Plans how a subsidized employment program will lead
to unsubsidized employment ``where there is an expectation of continued
employment with the same employer, and how the program will avoid
displacement of current workers.''
Response: We agree that the ultimate goal of subsidized employment
is to move the individual to unsubsidized employment and off welfare.
However, the purpose of the Work Verification Plan is to ensure that
States report participation data that is consistent with the law and
regulations and that States adequately verify the accuracy of that
participation data. The Work Verification Plan does require States to
describe how their services and programs meet the definition of a work
activity.
There is a statutory prohibition on displacement for all work
activities in section 407(f) of the Act and the existing regulatory
provision at Sec. 261.70. Thus, we do not believe the Work
Verification Plan needs to include this information.
Comment: One commenter recommended that HHS ``design the payment
structure'' to reflect the range of services offered under subsidized
employment.
Response: We believe the details of program design should be left
to the States because the circumstances of individuals and the
effectiveness of program activities may vary based on a number of
factors.
Section 261.2(e) Work Experience
In the interim final rule, we defined work experience (including
work associated with the refurbishing of publicly assisted housing) if
sufficient private sector employment is not available, as a work
activity performed in return for welfare that provides an individual
with an opportunity to acquire the general skills, training, knowledge,
and work habits necessary to obtain employment. We reminded readers
that work experience participants continue to receive their TANF grants
and that they do not receive wages or compensation by virtue of
participating in the activity. Nonetheless, they may be considered
employees for the purpose of the Fair Labor Standards Act (FLSA), which
means that they must be compensated at no less than the higher of the
Federal or State minimum wage.
Comment: Several commenters suggested that work experience could
sometimes be considered a ``paid'' activity. Others thought that the
definition should exclude the phrase ``performed in return for
welfare.''
Response: We considered these views carefully but chose to retain
the definition of work experience we published in the interim final
rule, keeping it as an unpaid activity to distinguish it from the four
``paid'' activities that already exist. In our view, the purpose of
work experience is to gain the skills needed to acquire a paid
position. States that have work experience programs that involve the
payment of wages should reclassify them as subsidized employment or on-
the-job training. The fact that there may be an employer-employee
relationship in a work experience assignment, triggering the minimum
wage requirements of the FLSA, does not make the work activity
``paid.'' Rather, the individual is receiving compensation from the
family's TANF grant in lieu of wages.
Comment: Several commenters asked us to clarify that not all work
experience activities are subject to the FLSA. One commenter asked for
clarification on who the employer is with respect to work experience
positions--the State or the work site sponsor (if other than the
State). The commenter was unsure
[[Page 6784]]
because the State provides worker's compensation.
Response: It is the responsibility of the Department of Labor to
determine whether or not the FLSA applies to an activity and who the
employer is. We recommend that readers direct any questions regarding
the FLSA to the Wage and Hour Division of the U.S. Department of Labor
at 1-866-4-USWAGE, TTY 1-877-889-5627 or the following Web site: http://www.dol.gov/esa/whd/flsa/index.htm
.
Comment: Several commenters asked whether the definition of work
experience precludes a State from counting a participant who combines
unsubsidized employment with work experience because the statutory
language limits work experience to situations where ``sufficient
private sector employment is not available.'' In addition, the interim
final rule defined the purpose of work experience as improving the
employability ``of those who cannot find unsubsidized employment.''
Response: The statutory language does not prevent States from using
work experience for those who are in paid employment. We recognize that
there may be circumstances in which an individual's employment is not
sufficient to meet the work activity requirement and a State may place
such an individual in another work activity. In this circumstance, work
experience could be appropriate because sufficient employment may not
be available for ``full-time'' work. Although we cannot strike the
statutory phrase, ``if sufficient private sector employment is not
available,'' we are clarifying that ``sufficient'' means enough for
full-time employment.
Comment: Several commenters recommended that the definition of work
experience (and community service) include ``background checks and
assessment of participants'' skills as they related to a job site and
required by a specific work experience slot.''
Response: Our definition permits background checks and the on-site
assessment of an individual's suitability for a particular work
experience slot. States must assess each recipient of assistance over
18 years of age or who has not finished high school (or the
equivalent).
Comment: Some commenters suggested that we consider training,
education, and vocational educational training to be part of work
experience. They noted that the preamble discussion of community
service programs in the interim final rule offered a rationale for
providing training within that activity, citing the example of an
individual assigned to clerical support who needs to attend a computer
training class. They suggested that a similar provision should apply to
work experience and that we should expand it to include other forms of
educational or vocational educational training activities.
Response: States may wish to supplement work experience with
training, but we do not believe that formal training, education, and
vocational educational training programs should be considered part of
work experience. Work experience is defined as work performed in return
for welfare and is intended to provide an individual with an
opportunity to acquire the general skills, knowledge, and work habits
necessary to obtain employment. We make an exception in community
service because that activity involves a service that is of direct
benefit for the community and limited training may count if it is an
integral part of the activity. We have deleted the reference to
``training'' in the definition of ``work experience'' to clarify this
point, as that reference referred to training in general workplace
skills, not to formal instruction that can be provided through other
TANF work activities.
Comment: Several commenters asked whether short periods of job
search and job readiness assistance or vocational educational training
could be embedded and counted within work experience. These commenters
suggested that such programs are more effective than work experience
alone and that not permitting such embedded activities to count would
discourage States from combining work experience with activities
designed to move TANF recipients into unsubsidized jobs. Other
commenters contended that ESL should be included as part of work
experience because the ability to speak English is a prerequisite for
employment.
Response: As we have noted before, we fully support State efforts
to integrate and combine work activities. Reporting hours of work
separately for the different activities should not impede a State's
ability to offer integrated services or encourage individuals to
combine activities. We attempted to define activities so that they are
mutually exclusive because the law provides 12 distinct activities, so
in general, including activities that meet one of the other work
activity definitions would be inappropriate, particularly in the case
of activities with established limitations in statute, i.e., job search
and job readiness assistance and vocational educational training. ESL
is an educational activity that can count under vocational educational
training, if it is a necessary and regular part of the work activity,
and also can count under education directly related to employment.
However, we note that States can count short absences from various
activities to participate in, for example, a job search activity under
the excused absence policy (described in Sec. 261.60(b) of this
chapter). In addition, as we describe in the section on job search and
job readiness assistance, we give States greater flexibility to count
sporadic hours of participation in job search and job readiness
assistance without triggering a full week in that activity that would
otherwise count against its durational limits.
Comment: One commenter recommended that we require States to
``consider TANF workers as employees of the state, eligible therefore
for all state employee benefits and covered by all worker protection
statutes.''
Response: The DRA did not change the worker protections or employee
benefits available to work activity participants, so the final rule
does not make any changes to existing policy in this regard. The
original TANF rule clarified that, notwithstanding specific language
limiting the scope of the TANF rules, TANF programs are subject to
Federal employment and non-discrimination laws. These protections
continue to apply under the final rule. Since there is no statutory
basis for a requirement such as the commenter suggested, we do not
believe we have the authority to require TANF workers to be considered
employees of the State. State law generally governs whether an
individual must be considered an employee or may be considered an
employee for purposes of State employee benefits. Also, the worker
protection statutes themselves define the situations that they cover,
many of which apply to individuals participating in TANF work
activities.
Comment: One commenter asked for clarification that work experience
positions could be created with private sector employers. The commenter
stated that this would expand the number of placement opportunities and
the chances for individuals to transition into unsubsidized employment.
Response: Work experience positions may be created with public
sector, private sector, community-based, faith-based, or nonprofit
employers or work site sponsors.
Section 261.2(f) On-the-Job Training
In the interim final rule, we defined on-the-job training (OJT) as
training in the public or private sector that is given to a paid
employee while he or she is
[[Page 6785]]
engaged in productive work and that provides knowledge and skills
essential to the full and adequate performance of the job. In the
preamble to the interim final rule we invited comments on whether the
definition of OJT should be broadened ``beyond paid employment to
include other aspects of training.''
Comment: Several commenters suggested that we expand the definition
to include unpaid training, such as occupational training, basic skills
remediation, and English language instruction, as well as pre-
employment skill upgrading. Several commenters noted that many
employers provide both on-site and off-site training to employees. The
commenters maintained that including unpaid training positions would
help ensure that recipients receive needed work skills and would
simplify reporting. Other commenters recommended including unpaid
internships or externships, arguing that participants would have an
opportunity to learn in a work setting that could lead to employment
opportunities.
Response: We considered all of these suggestions carefully in
writing the final rule. Ultimately, we chose not to expand OJT to
include unpaid training activities. We made this decision because,
first, we could not reconcile the notion of unpaid training with being
``on-the-job,'' and second, such unpaid training can count under a
variety of other work activities, including vocational educational
training and job skills training directly related to employment. We
think this is the most common-sense way to bring meaning to the 12
distinct work components. Regarding the location of training, we would
like to emphasize that paid training, whether provided off-site or at
the work site, fits the definition of OJT.
Comment: Several commenters recommended expanding the definition of
OJT to include training for prospective employees in addition to paid
employees.
Response: We have not included training for prospective employees
under OJT because they are not yet ``on-the-job.'' Instead, such
training could count under other work activities, including vocational
educational training or job skills training directly related to
employment, depending on the nature of the training.
Comment: Several commenters recommended including barrier-removal
activities in OJT if integrated into the program.
Response: We fully support the use of barrier-removal activities
for individuals who need these services. States may generally include
such services as part of a job search and job readiness assistance
activity. Also, such activities can count as unsubsidized or subsidized
employment if the individual is paid during the time of participation
in such activities.
Comment: Several commenters asked whether an employer was expected
to hire an OJT participant, based on the statement in the preamble:
``Upon satisfactory completion of the training, we expect the employer
to retain the participant as a regular employee. * * *''
Response: The preamble language was a suggestion, not a
requirement. As with subsidized employment, we expect employers to
provide training, guidance, and direction to help employees obtain
unsubsidized employment, whether with the employer providing the
training or with another employer. As long as the position is designed
to lead to unsubsidized employment, the activity would meet the primary
goal of the program.
Section 261.2(g) Job Search and Job Readiness Assistance
In the interim final rule, we defined job search and job readiness
assistance as the act of seeking or obtaining employment, preparation
to seek or obtain employment, including life skills training, and
substance abuse treatment, mental health treatment, or rehabilitation
activities for those who are otherwise employable. Such treatment or
therapy must be determined to be necessary and certified by a qualified
medical or mental health professional. We retained the general
framework of the definition in the final rule, but deleted the
requirement that an individual be ``otherwise employable'' because the
term was confusing and raised concerns that it could potentially deny
treatment to those who have a disability or face multiple barriers to
employment. We also deleted the term ``certified'' because it too
created some confusion. The final rule requires that there must be a
documented need for treatment or therapy determined necessary by a
qualified medical, substance abuse, or mental health professional.
The preamble to this section of the interim final rule also defined
a ``week'' for purposes of counting no more than six weeks per fiscal
year (or 12 weeks, for qualifying States) of job search and job
readiness assistance, no more than four of which may be consecutive. We
explained that the most commonly understood and simplest way to answer
this question was to use the ordinary definition of a week: seven
consecutive days, regardless of which day participation starts. We
received many comments on this provision. Most commenters contended
that six weeks was not enough time to help individuals with barriers to
employment. Many others urged us to consider an hourly equivalent to
these limitations to increase State flexibility.
In order to respond adequately to the comments we received, we
determined that it was necessary to include Sec. 261.34, which
specifies the limitations on counting job search and job readiness
assistance, in this final rule, despite the fact that it was not in the
interim final rule. Based on these comments, we have adopted an hourly
equivalent for purposes of the six-week (or 12-week) limit, giving
States more flexibility to provide job search and job readiness
assistance services, especially when such services are only needed for
a few hours per week. We describe the policies on these limitations in
more detail in the discussion of Sec. 261.34, but also respond to
comments on this topic here.
For the ease of the reader, we have grouped the comments and our
responses by topic within this section.
Treatment of Barrier Removal Activities
Comment: Many commenters welcomed the inclusion of substance abuse
treatment, mental health treatment, and rehabilitation activities as
countable activities. However, many commenters also expressed concerns
about limiting these specific activities to the category of job search
and job readiness assistance alone, an activity that can count for only
six weeks in a fiscal year (or 12 weeks, for qualifying States). They
said that these barriers to work are prevalent among the TANF
population and that States need more time to address them than the
durational limits allow. A number of commenters recommended that we
allow these activities to count under community service, job skills
training directly related to employment, or education directly related
to employment.
Response: Under the final rule, we generally limit the counting of
substance abuse treatment, mental health treatment, and rehabilitation
activities to the job search and job readiness assistance activity. In
defining work activities, we tried to determine whether such services
appropriately fit in any work component. The statute does not
specifically name substance abuse treatment, mental health treatment,
and rehabilitation activities as work activities or even otherwise
refer to these services. Because these are activities designed to make
somebody work-ready, we count them as job
[[Page 6786]]
readiness activities. We realize this means that counting participation
in these activities is limited to six weeks (or 12 weeks, for
qualifying States) in the preceding 12-month period, of which no more
than four weeks may be consecutive, but this was the only category
where it made sense to include them. However, if a portion of substance
abuse treatment, mental health treatment, or rehabilitation service
meets a common-sense definition of another work activity, then the
hours of participation in that activity may count under the appropriate
work category, such as work experience. In addition, if hours in
unsubsidized, subsidized private sector, and subsidized public sector
employment include treatment or rehabilitation services, a State may
count those paid hours under that work category.
Because counting participation in job search and job readiness
assistance is time-limited by statute, we caution States to assess
carefully the use of treatment, counseling, and rehabilitation
activities so that they count participation in these activities only
when they are needed to prepare recipients for work.
Comment: Several commenters objected to the requirement that a
qualified medical or mental health professional must determine when
treatment or therapy is necessary. One commenter maintained that it
could discourage some individuals from acknowledging the presence of
such barriers and delay or prevent the State from addressing them. In
addition, the commenter thought that the certification process would
pose an administrative burden for the States.
Response: Substance abuse treatment, mental health treatment, and
rehabilitation activities are important activities that can help
individuals overcome serious barriers to employment. We eliminated the
requirement for a ``certification'' but we believe that States must
document the need for such treatment or therapy by a qualified medical,
substance abuse, or mental health professional to ensure that a proper
diagnosis is made and an effective remedy is prescribed.
Otherwise Employable
Comment: Several commenters recommended that substance abuse
treatment, mental health treatment, and rehabilitation activities
should not be limited to those who are ``otherwise employable.'' They
suggested that such a limitation may be a violation of the Americans
with Disabilities Act of 1990 (ADA) and Section 504 of the
Rehabilitation Act of 1973 because States could use it to deny such
treatment to those who have a disability or face multiple barriers to
employment. The commenters noted that such individuals may need a broad
range of services beyond job search and job readiness, such as
subsidized employment or vocational educational rehabilitation, before
they are employable. One commenter suggested that individuals who are
not ``otherwise employable'' should be excluded from the definition of
a ``work-eligible individual.'' Some commenters also claimed that the
determination of who would be employable and who would not would create
an added administrative burden. Finally, they noted that job search and
job readiness assistance is already limited to six weeks per fiscal
year and that this language was more restrictive than needed and could
discourage States from providing these kinds of services to individuals
facing barriers to work.
Response: We think the commenters raised reasonable concerns. We
never intended the phrase ``otherwise employable'' to exclude
individuals who need more than one form of service or training before
they could become employed from counting via participation in mental
health or substance abuse treatment or rehabilitation activities. Our
intention was to ensure that the necessary services that work-ready
individuals may require were delivered in a logical and sequential
fashion. Too frequently, an applicant or new recipient is automatically
assigned to job search and job readiness assistance, regardless of the
needs identified in the client's initial assessment or in the
individual responsibility plan. Because the counting of this activity
is time-limited by statute, we wanted to ensure that such services were
available and appropriately provided at the time they would do the most
good in preparing for and finding work for participants. However, we
agree that this phrase may be confusing or could be misconstrued. Thus,
we have deleted it from the final rule; however, we still encourage
States to develop and deliver services based on the individual needs of
clients, rather than in automatic sequential steps.
Domestic Violence Activities
Comment: Some commenters recommended that we expand the definition
of job search and job readiness assistance to include participation in
domestic violence resolution activities. One commenter suggested that
we should classify such activities as ``rehabilitation activities.''
The commenter noted that victims of domestic violence often require job
readiness activities akin to rehabilitation activities to transition to
self-sufficiency, citing the following examples of domestic violence
resolution activities: ``having to relocate due to the violence, apply
for court orders of protection, attend court hearings, address
children's needs for trauma counseling or other supports, attend
counseling and support groups at a domestic violence program, meet with
case managers at domestic violence programs, etc.'' One commenter
explained that these were important activities that were apparently
consciously omitted from the interim final rule. Another recommended
allowing a certified domestic violence professional to certify the need
for such activities. A number of commenters indicated that counting
domestic violence resolution activities would address a problem noted
in the preamble to the interim final rule, notably the concern that
``States have been less effective in placing clients with multiple
barriers in work, including * * * those subject to domestic violence.''
They contended that the limitations of job search and job readiness
assistance ``exacerbate the difficulty victims have in participating
and advancing towards financial stability.''
Response: We fully support the efforts of States to identify
victims of domestic violence and to assist them in accessing
appropriate services to abate ongoing violence, to recover from
physical and emotional trauma, and to help children cope with the
effects of domestic violence. In the original TANF rule, all of Part
260, Subpart B was devoted to the special provisions for victims of
domestic violence. Those rules are unchanged and continue to offer the
same protections they have since their promulgation. The interim final
rule did not make modifications to that part of the regulation, in part
because it was outside the scope of our interim final rule authority,
but also because we stand by those protections. We continue to
encourage States to adopt the Family Violence Option (FVO), to
implement comprehensive strategies to identify and serve domestic
violence victims, and to grant federally recognized good cause domestic
violence waivers where victims need them.
Many domestic violence resolution activities should already meet
the definition of job search and job readiness assistance because they
accomplish the very goal of that work component: To help individuals go
to work. Any domestic violence service that directly relates to
preparing for
[[Page 6787]]
employment could be considered a job readiness activity. A State should
describe the activities it will offer in its Work Verification Plan and
explain how it prepares someone for employment. If the State provides
domestic violence services as ``rehabilitation activities,'' they
should be included in a service plan developed by a trained individual
and must be designed to lead to work. We note that few States counted
domestic violence resolution activities under the original rules,
despite the flexibility they had to do so.
In addition, as we noted in the cross-cutting issues section of
this preamble, existing provisions in the law address work
participation rate issues for States dealing with victims of domestic
violence. In particular, section 402(a)(7) of the Social Security Act
and the rules at Part 260, Subpart B allow States to grant good cause
domestic violence waivers to victims of domestic violence. States have
broad flexibility to determine which program requirements to waive and
for how long. Although these families remain in the work participation
rate calculation, there may be some activities that meet one of the
work activity definitions that would make them countable toward the
participation rate. If a State fails to meet a work participation rate,
we will determine that it had reasonable cause if the State can
demonstrate that its failure was due to granting federally recognized
good cause domestic violence waivers. As a matter of course, when we
determine the amount of a penalty for failure to meet the work
participation rate requirements, we recalculate the work participation
rate taking out any families in which individuals received a federally
recognized good cause domestic violence waiver of work requirements.
This may result in no penalty or a reduction in the penalty associated
with failure to meet the work participation rate. Please refer to Sec.
261.51 for more information about the formula for calculating the work
participation rate penalty.
Comment: One commenter asserted that the interim final rule
conflicted with the Family Violence Option in Federal law, which
provides for waivers of requirements that would place victims of
domestic violence at increased risk. The commenter added, ``As those
situations are going to have to be determined on a case-by-case basis,
the limited time for barrier removal activities is inflexible and
should not apply to barrier removal for family violence victims.''
Response: As the commenter noted, a State that elects the FVO must
screen and identify victims of domestic violence, refer such
individuals to services and, if needed, waive participation and other
program requirements for as long as necessary to escape domestic
violence. However, in providing this option to States, Congress did not
remove such families from the denominator of the participation rate
during the period of the domestic violence waiver. We believe the
original rules concerning victims of domestic violence explained above
ensure services and waivers for victims and provide necessary
``reasonable cause'' reduction or elimination of penalties for States.
Other Activities
Comment: Some commenters recommended expanding the definition of
job readiness to include activities such as English as a Second
Language (ESL) and remedial education--activities that the preamble to
the interim final rule indicated would not be countable. Other
commenters suggested new activities, such as behavioral health services
and parenting skills training.
Response: As we indicated in the preamble to the interim final
rule, only programs that involve seeking and preparing for work can
meet the definition of job search and job readiness assistance.
Although some of the activities commenters recommended are valuable and
may be medically appropriate, they do not constitute work or direct
preparation for work. Some activities meet the definition of one of the
other 11 work activities. For example, ESL would more closely fit the
definition of education directly related to employment and should be
counted under that activity.
Comment: One commenter expressed appreciation for ``the ability to
count the time spent in a substance abuse treatment facility or halfway
house doing work activities such as preparing meals, housecleaning, or
scheduling group activities.'' The commenter suggested extending this
to ``persons living in supported residential facilities for both mental
health and domestic violence reasons.''
Response: We do not distinguish between countable work activities
based on whether an individual lives in a residential facility or not.
As long as the activity fits within an approved definition, it can
count for participation rate purposes.
Comment: Several commenters indicated that six weeks may not be
long enough for a homeless person to find a job, implying that looking
for housing might be a job readiness activity.
Response: We appreciate the added challenges that homeless
individuals face in entering and participating in the workforce. We
encourage States to develop strategies that best meet the needs of
their various client populations, including the homeless. Although a
person with stable housing may have an easier time finding a job and
performing well on the job, the act of looking for a home is not an
employment activity. A job search and job readiness assistance activity
must have a direct connection to improving employability or finding
employment.
Comment: One commenter suggested that we allow travel time required
to complete job search activities to count. Travel is an integral part
of job search, the commenter explained, as clients go from one
interview to another, especially in large metropolitan or rural areas.
Response: A State may count travel time between interviews as part
of a job search and job readiness assistance activity, but not the
travel time to the first job search interview or the time spent
returning home after the last one. We make this distinction so that it
is consistent with the treatment of other work activities and analogous
to the work world, since most employees receive no pay for the time it
takes them to commute to and from their jobs.
Using Job Interviews as Proxy for Hours
Comment: Several commenters urged allowing States to use a job
application as a proxy for a standard set of hours of participation,
e.g., completing one application or going on one interview would
constitute two hours of participation. They contended that this
approach is easier to administer and more consistent with existing
State practice.
Response: While we sympathize with the commenters'' desire to
minimize administrative burdens, we believe the most effective welfare-
to-work programs incorporate close supervision and careful monitoring.
This allows program administrators to track actual hours. Thus, we
explicitly require States to report the actual hours of participation
for each work activity. The rule does not allow a State to report
estimated hours of participation based on the number of job search
contacts an individual makes.
Four-, Six-, and 12-Week Limits
Comment: Several commenters suggested eliminating the six-week and
other durational limits on job search and job readiness assistance
because six weeks is not sufficient to address the
[[Page 6788]]
barriers faced by some recipients. Some commenters suggested limiting
such extensions to those with short-term disabilities that need more
than six weeks of treatment.
Response: The six-week and other durational limitations are
statutory and cannot be changed through regulation.
Comment: Several commenters recommended not counting participation
in job search and job readiness activities against the various
durational limits under certain circumstances, including situations in
which the participant does not have enough hours to count in the work
participation rate or has enough hours to count in the rate without
counting the hours in job search and job readiness assistance. Some
commenters noted that States could simply fail to report such hours so
as to avoid triggering the durational limits or report them under the
category ``Other Work Activities'' on the TANF and SSP-MOE Data
Reports, which reflects the hours of participation but does not apply
them in determining the work participation rates or the durational
limits. The commenters noted, however, that this would understate their
true level of participation and could be construed as violating the
``complete and accurate'' data reporting standard. Instead, they
recommended allowing States to submit this information, but not to
count participation if it were not needed to meet the work
participation rate.
Response: We understand the commenters'' concerns regarding the
durational limits on job search and job readiness assistance, but these
limits are set forth in the statute and we do not have the legal
authority to ignore hours of participation reported under this
activity. We strongly encourage States to report hours of job search
and job readiness assistance that they do not wish to count toward the
participation rate (and thus count against the various limits that
apply to that activity) under the category ``Other Work Activities'' on
their data reports, rather than to fail to report them at all because
using the ``Other'' category gives better information on the overall
engagement levels of individuals, even though those hours do not
contribute to State achievement in the work participation rates.
However, we do not consider either using the category ``Other Work
Activities'' or failing to report such hours at all as a violation of
the requirement for complete and accurate data.
Converting Weeks to Hours for the Six-Week (or 12-Week) Limit
Comment: Several commenters contended that the definition of a week
in the interim final rule was too rigid. It specified that even one
hour of participation in job search and job readiness assistance
triggered a week for the six-week (or 12-week) limit on the activity.
They suggested defining a week in terms of countable hours for job
search and job readiness assistance, that is, an hourly equivalent of
six weeks. For example, one commenter recommended that we define six
weeks as 120 hours for a single custodial parent with a child under six
years of age and 180 hours for all other work-eligible individuals.
This recommendation was based on the fact that such families need an
average of 20 and 30 hours, respectively, to count toward the overall
work participation rate. The commenters asserted that an hourly
conversion would give States more flexibility to structure work
activities to meet the needs of the participants.
Response: In defining work activities and related terms, we had to
balance legitimate practical concerns with statutory language. The
statute limits job search and job readiness assistance to six weeks
(or, under certain conditions, 12 weeks), with no more than four
consecutive weeks. These limitations were specifically included, in
large part because, under the former JOBS program, unstructured and
ongoing job search was the primary or only activity for many
participants. We share the commenters'' interest in increasing State
flexibility and have redefined a ``week'' of job search and job
readiness assistance for the six-week (or 12-week) limit based on the
average number of hours required for an individual's family to count in
the overall work participation rate. For this purpose, one week equals
20 hours for a work-eligible individual who is a single custodial
parent with a child under six years of age and equals 30 hours for all
other work-eligible individuals. Thus, six weeks of job search and job
readiness assistance equates to 120 hours for the first group and 180
hours for all others. For those months in which a State can count 12
weeks of this activity, these limits are 240 hours and 360 hours,
respectively. To ensure consistency with other provisions in this rule,
we have modified the requirements under Sec. 261.34 to make these
limits apply to the preceding 12-month period, rather than each fiscal
year. For example, the statute allows States to disregard from the work
participation rate calculation families that have been subject to a
work-related sanction for up to three months in ``the preceding 12-
month period.'' Similarly, this same time frame is used for the
``excused absence'' policy.
Defining a week in this way allows States to provide job search and
job readiness assistance activities incrementally and stretched over an
entire year or in six actual weeks, depending upon how the State
chooses to structure its particular work program for an individual.
Defining a week in this manner is consistent with Congressional intent
because it provides an overall cap on the amount of job search and job
readiness assistance that States can count as work participation, while
still giving States the ability to provide recipients with meaningful
job search and job readiness assistance activities.
Counting Sporadic/Episodic Periods of Job Search and Job Readiness
Assistance
Comment: Some commenters objected to counting limited periods of
participation in job search and job readiness assistance as a full week
of participation in the activity. They contended that this would
discourage States from engaging individuals in this activity or sending
them on job interviews. They suggested giving States flexibility to
integrate short periods of participation in this activity with other
countable activities. They noted that even a single hour of job search
reported in a week would ``constitute a full week for purposes of the
limitation [on counting job search and job readiness assistance].''
They maintained, ``The statutory time limit on these activities was
designed to prevent clients from being left to languish indefinitely in
unproductive job search, not to create barriers to helping recipients
move into unsubsidized employment after participating in other
services.'' Several commenters suggested alternative methods of
counting job search and job readiness assistance. One commenter
recommended excluding ``weeks in which less than half of the hours of
countable participation are from job search and job readiness
assistance.'' Some commenters used terms like ``significant majority''
to refer to the hours needed to constitute the primary activity.
Response: We understand the concern that an individual
participating for one hour in job search and job readiness assistance
could use up an entire week of this limited activity. By defining six
weeks as 120 hours for a single custodial parent of a child under age
six or 180 hours for all other work-eligible
[[Page 6789]]
individuals (and 12 weeks as 240 hours or 360 hours, respectively)
States can now engage individuals for limited periods of time without
using a entire week for purposes of the six-or 12-week limit. This
approach provides sufficient flexibility for States to structure their
job search and job readiness assistance activities and obviates the
need for alternative methods, such as excluding weeks in which a
minority of hours of participation come from job search and job
readiness assistance activities. Moreover, States continue to have the
flexibility to conserve these weeks by reporting sporadic hours under
``Other Work Activities'' on the TANF Data and SSP-MOE Data Reports
(though these hours would not count toward the participation rates) or
to count such hours under our excused absence policy as part of another
countable activity. Please refer to Sec. 261.60 for more detail about
excused absences.
Flexibility in Counting Hours of Participation
Comment: Several commenters suggested giving States the flexibility
to count hours of participation in job search and job readiness
assistance as a non-core activity without triggering any of the
durational limitations on this activity, if the individual meets the
core hours participation requirement through some other activity. The
commenters explained that this would not undermine the core activity
requirement, but would allow some individuals to benefit from
additional time spent in a job search and job readiness assistance
activity. Also, several commenters suggested that, if we use an hourly
equivalent, then any hours that exceed the 20 or 30 hours per week
required to meet the participation rate should not count against the
hourly limitation on this activity.
Response: We do not have the statutory authority to disregard hours
of participation in job search and job readiness assistance if the
hours are counted toward the calculation of the work participation
rate. Moreover, ``core activity'' is simply a term we use to indicate
that hours of participation in that activity can count toward the first
20 hours of participation; an activity does not become ``non-core''
once an individual meets the core requirement and durational limits do
not cease to apply to them. Of course, once a family meets the minimum
hours required to count in the work participation rate, a State may
assign an individual to whatever activity it chooses, including job
search and job readiness assistance. However, any hours reported under
this activity count toward the six-week limit. We encourage States to
report hours of participation that they do not wish to have counted
against the durational limits under the category ``Other Work
Activities'' on their TANF Data and SSP-MOE Data Reports, which
reflects the hours of participation but does not apply them in
determining the work participation rates. This would also apply to
hours that are beyond the TANF statutory requirements to count toward
the participation rates. In fact, under the final rule, a State should
report only those hours of job search and job readiness assistance that
are needed to meet the work requirements, because reporting ``extra''
hours would not help a State meet the rate and would draw down the
time-limited hours for the six-week (or 12-week) limit. In contrast,
under the interim final rule, it did not matter whether a State
reported one hour or 40 hours for an individual--either would trigger a
week toward the durational limits. We have written the rule this way to
give States the most flexibility possible while maintaining the spirit
of the law.
We would also like to point out that States have the additional
flexibility to count short absences from various activities to
participate in a job search activity under the excused absence policy
(described in Sec. 261.60(b) of this chapter).
Defining Four Consecutive Weeks
Comment: As with the six-week (or 12-week) limit, some commenters
suggested converting the four-week limit to an hourly equivalent.
Response: In the final rule, we have modified this definition. For
the six-week (or 12-week) limit on counting participation in job search
and job readiness assistance, we define a week as 20 hours for a work-
eligible individual who is a single custodial parent of a child under
six years of age and as 30 hours for all other work-eligible
individuals. However, for the limit of no more than four consecutive
weeks of job search and job readiness assistance we have retained the
definition in the interim final rule: seven consecutive days. In other
words, any hours of participation in job search and job readiness
assistance during the course of a seven-day period triggers a week for
the four-week limit. Once an individual has four consecutive weeks of
participation, that individual's participation in job search and job
readiness assistance may not count for one week, i.e., seven
consecutive days.
In order to bring meaning to the statutory language, we had to
interpret ``four consecutive weeks'' in this manner. Under the hourly
conversion the rule permits for the total limitation on job search and
job readiness assistance, a State could meet this limit while counting
hours over the course of multiple calendar weeks. However, because the
four-week limit is specifically a ``consecutive'' week restriction, we
think an hourly conversion in this instance would not meet the very
clear bounds set by Congress. If we used an hourly accrual system here,
it might take many calendar weeks to reach 80 or 120 hours and they
would in no way be ``consecutive.'' Thus, we think it is reasonable to
use the more rigorous definition of a week in this context to meet the
legislative requirement but incorporate overall flexibility in counting
job search and job readiness assistance hours.
We would also like to address the concern that the limit of
counting no more than four consecutive weeks of participation in this
activity would lead States to disrupt treatment regimens for
individuals who need short periods of substance abuse treatment, mental
health treatment, or rehabilitation activities each week. We stress
that this limitation applies to what a State may count for
participation purposes, not on what an individual can or should do;
thus, the law does not require an individual to take a week's break
from an activity, but does constrain what the State may report for that
week. The requirements and expectations for each family should be set
by the State taking into consideration the needs of the family,
obligations under the ADA and Section 504 of the Rehabilitation Act of
1973, and program goals, as opposed to what counts for participation
rate purposes. While we cannot remove this statutory limit, we suggest
that States have several options in how to treat such situations. We
urge States to consider these options carefully to take full advantage
of the flexibility in the law and our final rule in this area. If an
individual has sufficient hours from other activities or other weeks in
the month, the State will be able to count that individual's family in
the participation rate without worrying about the fifth consecutive
week in treatment. A State could consider using the excused absence
policy, which, under the final rule is also available as an hourly
equivalent, to accommodate short periods of treatment. In addition,
given that the overall work participation rate is never more than 50
percent of the caseload and likely less, we do not anticipate a
significant impact on the ability of States to meet the work
[[Page 6790]]
participation rate because of the four consecutive weeks limitation.
Three or Four Days as a Week of Participation
Comment: Several commenters contended that the statute requires
that participation in job search and job readiness assistance should
not be considered a week unless it is for more than four days in a
seven-day period. One commenter explained that section 407(c)(A)(2)(ii)
allows a State to count, not more than once per individual,
participation in job search and job readiness activities ``for 3 or 4
days during a week'' as having participated for the week. The commenter
contended that the ``clear implication'' of this was that an individual
would have to participate for more than four days during a seven-day
period to count as a week.
Response: There are several possible interpretations of the
statute's reference to a week. In the interim final rule, we defined a
week as seven consecutive days. We disagree with the commenter's
interpretation that the statute requires all other weeks of job search
and job readiness to consist of more than four days of participation in
the activity. However, these comments led us to reexamine the meaning
of a week under the various limitations of this activity, including the
``3 or 4 day'' provision. We have concluded that this provision allows
a State to apply the average hours that an individual participates
during three or four days to the remaining days in the week. In this
context, we consider a week to be five days rather than seven, because
the standard work week is a five-day week. We used a seven-day standard
in other contexts to account for the fact that typical week includes
five working days and two weekend days.
To illustrate this policy, consider the following example. If an
individual participated an average of five hours per day in job search
and job readiness assistance for three days in a week, a State could
assume that such individual participated the same five hours the
remaining two days of that week and thus, a State could assume and
count total participation of 25 hours in this activity for that week.
In our example, this would also use up 25 hours of the client's hourly
limitation under the six-week limit for job search and job readiness
assistance.
Qualifying for 12 Weeks
Comment: Several commenters asked for clarification regarding how a
State can qualify to count up to 12 weeks of participation in job
search and job readiness assistance per fiscal year due to high
unemployment or by qualifying as a ``needy State.'' Several commenters
suggested that HHS clarify that a State that qualifies in one month
qualifies for the extended counting of job search and job readiness
assistance for the entire year.
Response: A State with an unemployment rate that is at least 50
percent greater than the national rate or that qualifies as a ``needy
State'' may count up to 12 weeks of participation in job search and job
readiness assistance in the preceding 12-month period. Prior to
publication of this final rule, the regulation applied the 6- or 12-
week limit on a fiscal year basis, but under this final rule we now use
the preceding 12-month period as the basis for this durational limit to
make it more consistent with the treatment of other work participation
rate related provisions. Program Instruction TANF-ACF-PI-2006-04
explains the criteria to qualify for 12 weeks, how a State finds out if
it does, and in which months it can count extended participation in job
search and job readiness assistance. The Program Instruction is
available at: http://www.acf.hhs.gov/programs/ofa/pi-ofa/pi200604.htm.
Comment: One commenter asked for clarification regarding whether a
State actually had to access the Contingency Fund before counting up to
12 weeks of participation in job search and job readiness assistance.
Response: No, a State does not have to receive contingency funds to
count 12 weeks of participation. If a State qualifies to receive
contingency funds for a month, it may also count 12 weeks of job search
and job readiness assistance for that month. Please refer to Program
Instruction TANF-ACF-PI-2006-04 available at: http://www.acf.hhs.gov/programs/ofa/pi-ofa/pi200604.htm
.
Section 261.2(h) Community Service Programs
In the interim final rule, we defined community service programs as
structured programs in which TANF recipients perform work for the
direct benefit of the community under the auspices of public or
nonprofit organizations. We limited community service programs to
projects that serve a useful community purpose and those that are
designed to improve the employability of recipients. These two criteria
were and continue to be important because we do not want someone to
reach the time limit and discover that the family is no longer eligible
for a cash benefit under the TANF program but the adult is no more
employable than when he or she started in community service.
We made a technical change to the wording of the definition in the
final rule to clarify that all work-eligible individuals can count for
participation in this activity. The language in the interim final rule
limited it to TANF recipients only.
Comment: The preamble of the interim final rule described the
purpose of community service as improving the employability ``of
recipients not otherwise able to obtain employment.'' Several
commenters asked whether this precluded a State from counting a
participant who combined paid employment with community service.
Response: The preamble was not meant to preclude States from using
community service for those who are employed. We recognize that there
may be circumstances in which an individual's employment is not
sufficient to count for participation and a State would need to place
such an individual in another work activity to count the family for
that month. In such a circumstance, community service could be
appropriate because sufficient employment may not be available for
full-time work.
Comment: One commenter asked us to clarify that the term
``program'' does not preclude self-initiated community service
activities.
Response: Self-initiated community service activities can count as
long as they are approved by the State, described in the Work
Verification Plan, and meet the two key elements of the definition,
i.e., that they provide a direct benefit to the community and improve
the employability of the participant.
Comment: Several commenters recommended that we expand the
definition of community service to include barrier removal activities
such as substance abuse treatment, mental health treatment,
rehabilitation activities, and domestic violence counseling and related
services. Otherwise, they insisted, States will discontinue providing
these services. These commenters contended that counting these
activities under job search and job readiness assistance is too
restrictive and does not permit States to provide these services in a
meaningful way.
Response: Community service activities must meet the two key
elements of the activity's definition, i.e., that they provide a direct
benefit to the community and improve the employability of the
participant. Generally, they would not include activities that
primarily benefit a family or the individual participant, such as
[[Page 6791]]
substance abuse treatment, mental health and rehabilitation activities,
and family violence counseling. While these activities are important
and beneficial, they are not primarily directed to benefiting the
greater community. Moreover, we believe that States can provide
treatment services in meaningful ways under our rules. We refer readers
to the preamble discussion of the definition of job search and job
readiness assistance.
Comment: One commenter recommended that we count a range of non-
traditional work activities as community service in remote areas with
high unemployment. This would include traditional subsistence hunting
and fishing activities, as well as other culturally relevant
activities. The commenter explained that hunting and fishing affect the
community because, they emphasize, ``a significant element of cultural
and spiritual values that emphasize collective efforts in harvesting
and sharing of the harvest throughout the community.'' The commenter
also noted that these activities ``promote self-sufficiency by reducing
reliance on non-traditional foods that are imported at high cost. * *
*'' The commenter added that these and other activities ``strengthen
and reinforce cultural and community values that, in the long term,
benefit individuals and families.''
Response: Various non-traditional activities may count if they meet
the definition of one of TANF's 12 activities. It is possible, for
example, that some of the activities described would meet the
definition of community service programs, if the items produced are
shared by the community and collected as part of a structured and
supervised activity. Although we sympathize with the commenter about
difficulties presented by high unemployment and remoteness, we do not
have the authority to add new activities. And, as we explained earlier
in the preamble, the statute does not make any allowance for such
factors, except that it limits the maximum overall work participation
rate to 50 percent. Whereas TANF's predecessor program, AFDC, allowed
States to exempt individuals living in remote areas, the TANF law did
not continue this exemption.
Comment: Several commenters asked us to clarify whether or not all
community service activities are subject to the FLSA.
Response: The determination of whether or not the FLSA applies to
an activity is a decision for the Department of Labor. We recommend
that readers direct any questions regarding the FLSA to the Wage and
Hour Division of the U.S. Department of Labor at 1-866-4-USWAGE, TTY 1-
877-889-5627 or the following Web site: http://www.dol.gov/esa/whd/flsa/index.htm
.
Comment: Several commenters maintained that ``caring for a disabled
family member'' should be considered community service, if it includes
activities designed to improve the employability of participants. They
contended that, in some cases, caring for a disabled family member
could prepare individuals for jobs or ``home health care certification
or nursing credits through partnerships with community colleges.'' In
such circumstances, the commenter recommended that we allow States to
count the individual in the numerator and the denominator. This, they
suggested, would make the policy similar to the treatment of parents
receiving Supplemental Security Income (SSI) benefits in our definition
of a work-eligible individual. Another commenter added that counting
parents caring for a disabled family member as community service
reduces public costs by keeping some individuals out of a nursing home.
Response: Caring for a disabled family member cannot count as a
community service program, even if it improves the employability of the
caregiver, because the activity does not provide a direct benefit to
the community. However, to the extent that the activity is part of a
certification or degree program, it could likely count under another
activity, such as vocational educational training or job skills
training directly related to employment. We have no data on whether
counting caring for a disabled family member as a community service
activity would reduce some public costs, but we note that the policy in
the final rule allowing a State to exclude families in which a parent
is caring for a disabled family member from the denominator of the work
participation rate calculation would likely have a similar effect on
public costs.
Comment: One commenter questioned the requirement that community
service must involve work for the direct benefit of the community. The
commenter added, ``No other TANF activity has such a requirement.'' The
commenter disagreed with our interpretation that the term ``program''
following the listing of community service in the statute meant that
the activity should involve structure and supervision.
Response: We adopted what we believe is a common-sense definition
that limits community service programs to projects that serve a useful
community purpose. We agree that no other TANF activity has such a
requirement, but that is because the primary purpose of the other
activities is to help individuals move toward self-sufficiency.
Although that is also an objective of this activity, we give meaning to
the term ``community service.'' The DRA directed the Secretary of
Health and Human Services to define work activities, suggesting that,
while Congress did not have a specific definition in mind, it deferred
to the Department's judgment. Moreover, we believe all 12 TANF
activities should have structure and supervision, regardless of whether
the term ``program'' is used in the name of the activity.
Comment: Several commenters questioned the need for community
service to improve the employability of participants. One commenter
found that the interim final rule's definitions of work experience and
community service are substantially similar and violate the principle
of ``mutually exclusive'' activities. The commenter recommended making
a distinction between these activities by removing the requirement that
community service be designed to promote employability.
Response: Under our definitions, the principal distinction between
work experience and community service programs is that the latter
activity must serve a useful community purpose. We believe that
participation in a community service program should improve the
employability of recipients to prevent an individual from reaching the
time limit without becoming more employable than when he or she started
in that program. We have therefore retained this feature of the
definition in the final rule.
Comment: One commenter objected to the ``daily supervision''
requirement for TANF work activities with respect to community service,
arguing that some community service activities are ``intrinsically
difficult to supervise,'' such as Big Brother/Big Sister programs or
visiting the elderly.
Response: In response to comments, we have revised the regulatory
language relating to daily supervision in the final rule. As described
in the preamble to Sec. 261.2, ``Daily supervision means that a
responsible party has daily responsibility for oversight of the
individual's participation, not necessarily daily, in-person contact
with the participant.'' Thus, many organized community service programs
could meet this criterion. However, all community service programs must
be structured programs that provide a direct benefit to the community
and improve the employability of the participant. It is unclear whether
the
[[Page 6792]]
programs the commenter describes meet all of these criteria.
Comment: One commenter said, ``Very few community service sites are
equipped to handle either large numbers of volunteers for the 20 or 30
hours required for a primary activity or in our rural areas, to provide
the supervision.''
Response: Many community service providers have programs that meet
our definition of community service for the number of hours required to
satisfy the work participation requirements. If an individual's hours
fall short of the minimum hours needed, a State should be prepared to
find time in another activity to make up the shortfall. This is not
different from past TANF policy.
Section 261.2(i) Vocational Educational Training
In the interim final rule, we defined vocational educational
training (not to exceed 12 months with respect to any individual) as
organized educational programs that are directly related to the
preparation of individuals for employment in current or emerging
occupations requiring training other than a baccalaureate or advanced
degree.
Postsecondary Education
Comment: Several commenters recommended expanding the definition of
vocational educational training to include postsecondary education. One
commenter asked that we specify that an associate degree program is a
countable vocational activity.
Response: The definition of vocational educational training in the
interim final rule already permitted a wide range of postsecondary
educational activities, including programs that consist of both
academic and vocational for-credit course work. Completion of these
programs can provide an associate of arts (AA), associate of science
(AS), or associate of applied science (AAS) degree in fields defined as
vocational. Common fields of study include: business, computer and
information science, health-related professions, communication
technologies, personal services, protective services, construction,
automotive technology, and transportation. Associate degree programs
can take two or more years to complete. Because they generally combine
coursework with actual work, some portion could count as vocational
educational training, while some could count as on-the-job training (if
paid) or work experience (if unpaid). The only type of postsecondary
education that was excluded in the interim final rule was education
directed at receiving a baccalaureate or advanced degree, which the
final rule permits.
Baccalaureate Degrees
Comment: Several commenters objected to the definition of
vocational educational training because it specifically excluded
education directed at receiving a baccalaureate or advanced degree.
They recommended striking the phrase ``requiring training other than a
baccalaureate or advanced degree.'' They explained that people with
baccalaureate degrees, on average, earn significantly more than those
with a high school diploma. In addition, they noted that the number of
individuals likely to be enrolled in such programs would be small and
States should therefore have the flexibility to determine whether or
not to count them. Others suggested that we make an exception to the
restriction on counting participation in a baccalaureate or advanced
degree program where the client is 12 months away from completing such
a degree because the earnings gain from completing the degree would
increase the chances of permanently leaving welfare.
Response: We agree with the commenters and have expanded the
definition of vocational educational training. In the interim final
rule, we searched for other Federal definitions, especially in the U.S.
Department of Education, of vocational education and related terms. In
particular, we examined the regulatory definition of vocational
education governing the Carl D. Perkins Vocational and Applied
Technology Act (34 CFR 400.4(b)). That definition provided for a range
of educational and training programs preparing individuals for
employment ``in current or emerging occupations requiring other than a
baccalaureate or advanced degree.'' However, since the publication of
the interim final rule, this terminology has changed. The Carl D.
Perkins Career and Technical Education Improvement Act of 2006 (Pub. L.
109-270) was signed into law on August 12, 2006. The new law changed
the definition of ``vocational education,'' now called ``career and
technical education,'' to eliminate the restriction against
participation in a baccalaureate, master's or doctoral degree program.
In view of these changes and the comments we received, we are
expanding the definition of vocational educational training to include
organized educational programs that lead to a baccalaureate or advanced
degree. We continue to caution that, given the statutory 12-month
limitation on participation in vocational education, States can only
count one year of participation in vocational educational training for
any individual toward the work participation rate. Education leading to
a baccalaureate or advanced degree also counts under job skills
training directly related to employment (a non-core activity), as long
as it is directly related to a specific job or occupation.
Comment: Several commenters thought that the preamble to the
interim final rule was inaccurate when it stated, ``the TANF program
was not intended to be a college scholarship program for postsecondary
education.'' The commenters noted that TANF provided broad flexibility
in use of TANF funds, including funds for higher education.
Response: We agree that expenditures for higher education are
allowable uses of funds, even under the interim final rule. In
addition, under the final rule, participation in a baccalaureate or
advanced degree program can count toward the work participation rate.
Remedial/ESL
Comment: Several commenters expressed support for the inclusion of
basic skills education as a component of vocational educational
training. However, some expressed concern because the preamble
indicated that it would count only if it were of ``limited duration.''
These commenters noted that participation in vocational educational
training is, by definition, of limited duration--12 months in a
lifetime. They also noted that some programs combine basic skills
education and vocational training for the entire duration of the
program. They recommended eliminating the restriction related to the
duration of this component.
Response: We agree that there may be circumstances in which some
individuals require basic skills education as an ongoing and regular
part of the vocational educational training activity. As a result of
these comments, we have reconsidered our stance on the ``limited
duration'' requirement set forth in the preamble to the interim final
rule. Therefore, basic skills education may count as vocational
educational training as long as it is a necessary or regular part of
the vocational educational training. Each State should describe in its
Work Verification Plan how it integrates basic skills education into
its definition of vocational educational training and how it will
ensure that vocational training remains the primary focus of the
program.
Comment: Some commenters asked for clarification regarding whether
ESL could be integrated into vocational educational training in the
same way that ``basic skills'' training can be. They
[[Page 6793]]
explained that ESL may be a prerequisite for employment and that it is
especially important due to the increase in the number of immigrants.
As with basic skills training, they contended that there should be no
limit on counting participation in this activity, as long as the
individual has not exhausted the 12 months that this activity can count
in total.
Response: As we noted in the response above with respect to basic
skills education, ESL can also be integrated within a vocational
educational training activity as long as it is a necessary or regular
part of the vocational educational training. The State need not
demonstrate that the training is of limited duration as long as it
integral to the vocational education, not a stand-alone program. Each
State should describe in its Work Verification Plan how it integrates
ESL or other language instruction into its definition of vocational
educational training and how it will ensure that vocational training
remains the primary focus of the program. For example, a vocational
educational training provider could provide a statement indicating that
a participant in an otherwise approved vocational educational training
activity requires such instruction to participate in the program and
that such instruction is integrated into the activity.
Comment: Some commenters suggested that we allow States to adopt a
range of approaches to providing vocational educational training
programs, including programs that ``frontload'' these activities for
those who are not ready for the vocationally-oriented training. They
pointed out that after a few months of intensive instruction,
participants can improve their basic skills to take full advantage of a
vocational educational training program. Thus, they recommended that we
consider these activities to qualify if they are part of a sequence of
activities leading to a vocational educational training activity, even
if the initial period of participation involves no vocationally-
oriented training.
Response: We do not believe that a sequenced approach fits within a
definition of vocational educational training. Although basic skills
education and English language instruction may help prepare individuals
for vocational educational training, the programs must be provided in
combination with vocational instruction. Otherwise, the definition of
this activity would essentially permit any stand-alone educational
activities to count in this category. Stand-alone educational
activities may count as either education directly related to employment
or job skills training directly related to employment.
Comment: Some commenters suggested amending the definition of
vocational educational training to include adult basic education and
ESL even if they do not prepare individuals for a specific job. They
asserted that such basic skills are needed to compete in the workplace
and are crucial for making an individual more employable. For example,
one commenter urged us to count English language instruction as
vocational educational training when an individual needs such
instruction to succeed in the workplace. Some commenters indicated that
this was especially important for refugees, noting that it is very
difficult for refugees who do not speak English to become employed.
Response: We understand the commenters' concerns, but we do not
believe it would be appropriate to expand the definition of vocational
educational training to allow these stand-alone activities. They may
count as either education directly related to employment or job skills
training directly related to employment. We believe that Congress
intended these activities to count as non-core activities. When
Congress created TANF, it listed 12 allowable work activities. Of
these, nine were what we refer to as ``core activities'' that count
toward meeting the first 20 hours of a 30-hour average weekly
requirement. The only educational activity among these was vocational
educational training. Since neither Congress nor the U.S. Department of
Education included basic education and ESL as part of its definition of
vocational education, we believe it is clear that these activities must
be part of one of the three non-core educational activities.
Comment: One commenter suggested that we consider pursuit of a high
school diploma, such as GED testing, to be vocational educational
training. The commenter noted that such participation is consistent
with the definition of the activity in the interim final rule, which
defined this activity as ``organized educational programs that are
directly related to the preparation of individuals for employment in
current and emerging occupations * * *.''
Response: We do not agree that such education should count as
vocational educational training. Even when vocational education is
provided in high school, minor parents attending high school in a
vocational education track count as participating in ``satisfactory
attendance in secondary school or in a course of study leading to a
certificate of general equivalence.'' This avoids triggering the 12-
month lifetime limit on participation in vocational educational
training. For older adults, pursuit of a high school degree or GED
would more appropriately be classified as education directly related to
employment.
Comment: Several commenters asked whether vocational rehabilitation
activities were considered ``vocational educational training.''
Response: We would consider vocational rehabilitation activities
that are organized educational programs directly related to preparing
individuals for employment in current or emerging occupations to be
vocational educational training. Any vocational rehabilitation
activities that do not meet these criteria might meet the definition
for job search and job readiness assistance or job skills training
directly related to employment and should count under those activities,
as appropriate.
Other Training
In the preamble to the interim final rule, we asked for comments on
how States currently implement their vocational educational training
programs and whether we should broaden the definition we used in the
interim final rule. We noted that the current definition of vocational
educational training ``could overlap with other TANF work activities
that provide training, including on-the-job training and job skills
training.''
Comment: One commenter cautioned us not to narrow the definition of
vocational educational training just to distinguish it from on-the-job
training or job skills training. The commenter pointed out, ``it is
easy to imagine the same training being provided under vocational
educational training as that provided by an employer through on-the-job
training or job skills training directly related to employment,
particularly for lower-skilled TANF participants.''
Response: We agree and have not narrowed the definition. The
allowable overlap among various work activities can help States
structure their programs to maximize learning opportunities for
participants. In particular, many forms of vocational educational
training may take two or more years to complete, beyond the 12-month
lifetime limit under the program. By carefully structuring
participation, States can count participation under several of the
existing work activities. For example, obtaining a degree to become a
licensed practical nurse usually takes about two years to complete and
usually involves a combination of classroom instruction and clinical
activities. Clinical training
[[Page 6794]]
in a hospital or other setting could count as work experience or
community service because if, in the course of their training,
individuals are providing a service to the community through a hospital
or an elderly center, such participation would meet the definition of
those activities. If participants are paid, they might count under
unsubsidized employment or on-the-job training. Once they have met the
core activity requirement through these activities, additional
classroom instruction could be reported under job skills training
directly related to employment.
Specific Occupation
Comment: Several commenters did not believe we should limit the
definition of vocational educational training to ``activities that give
individuals the knowledge and skills to perform a specific occupation--
as opposed to more generally preparing them to become more employable
in a range of occupations.'' The commenters contended that basic and
remedial education should count as vocational educational training.
Response: Basic and remedial education clearly fall under the
category of education directly related to employment, and so cannot
serve as a stand-alone activity under vocational educational training.
However, as we explained in the preamble to the interim final rule,
such education can count as part of vocational educational training as
an embedded activity as long as it is a necessary and regular part of
the program.
Comment: Several commenters contended that the description of
vocational educational training in the preamble to the interim final
rule unnecessarily limited it to specific occupations. They maintained
that this was not good policy and that it was not consistent with the
TANF statute, noting that some activities in the statute included the
phrase ``directly related to employment,'' but that vocational
educational training was not one of them. They urged that, on this
basis, we expand the definition to include training and education
activities that were not related to a specific occupation, but that
improve employability more generally.
Response: Our definition of vocational educational training was
originally based on the Department of Education's description of the
term. This definition clearly related the term to educational programs
directly related to employment in ``current or emerging occupations.''
However, this does not mean that the activity is limited to a specific
job, but rather to a broadly defined job category.
12-Month Limit
Comment: One commenter suggested that time spent in vocational
educational training should only count against the 12-month limit
``when hours in this activity, either alone or in combination with
hours from other activities, enable a recipient to meet the work rates.
If an individual does not have the overall necessary hours to meet the
rate, time spent in this activity should not count against the 12-month
limit.''
Response: The statute places a lifetime 12-month limit on
participation in vocational educational training. As with durational
limits for job search and job readiness assistance, we do not have the
statutory authority to disregard hours of participation reported in
this category from counting against the lifetime 12-month limit. We
encourage States to include hours of work participation in this
category that do not count toward the work participation rates under
the category ``Other Work Activities'' on their TANF and SSP-MOE Data
Reports or to count such hours under our excused absence policy as part
of another countable activity. Please refer to Sec. 261.60 for further
discussion of excused absences.
Deeming
Comment: Several commenters suggested that individuals who attend
vocational educational training programs be ``deemed'' to meet the work
rate as long as they are full-time students and are making satisfactory
progress. One commenter also suggested options for dealing with less
than full-time participation, including a proportional counting
methodology.
Response: The interim final rule made explicit a long-standing
``actual hours'' standard and we retain that policy in the final rule.
We do not deem full participation simply because someone is a full-time
student and makes good or satisfactory progress. However, the final
rule allows States to count up to one hour of unsupervised homework for
each hour of classroom time. Thus, as a practical matter, many
individuals who attend school full-time would, in fact, satisfy the
work participation standards.
Section 261.2(j) Job Skills Training Directly Related to Employment
In the interim final rule, we defined job skills training directly
related to employment as training or education for job skills required
by an employer to provide an individual with the ability to obtain
employment or to advance or adapt to the changing demands of the
workplace. Job skills training can include customized training to meet
the needs of a specific employer or it can be general training that
prepares an individual for employment. This can include literacy
instruction or language instruction when such instruction is explicitly
focused on skills needed for employment or combined in a unified whole
with job training.
Comment: Several commenters suggested that the interim final rule
defined this activity too narrowly by excluding ``barrier removal
activities such as substance abuse counseling and treatment, mental
health services, and other rehabilitative activities.'' The commenters
asserted that these activities should be considered like other training
activities because they are needed to prepare an individual for
employment. One commenter contended that because barrier removal
activities were not explicitly excluded from the definition of job
skills training directly related to employment, it is within our
authority to interpret this activity to include them.
Response: As we indicated in the preamble to the interim final
rule, we tried to look for appropriate categories for each activity. We
explained that it would not be appropriate to include barrier removal
activities, such as substance abuse counseling and treatment, mental
health services, and other rehabilitative activities under the category
of job skills training directly related to employment. Under our
definitions, barrier removal activities are job readiness activities,
not job skills training directly related to employment. States continue
to enjoy flexibility to serve individuals, but in some cases are
limited in what they can count. We encourage States to work with
individuals with multiple barriers, but they should keep in mind that
the definition of job skills training focuses on education or training
that is designed specifically to help individuals move into employment.
Section 261.2(k) Education Directly Related to Employment, in the Case
of a Recipient Who Has Not Received a High School Diploma or a
Certificate of High School Equivalency
In the interim final rule, we defined education directly related to
employment, in the case of a recipient who has not received a high
school diploma or a certificate of high school equivalency, as
education related to a specific occupation, job, or job offer. This
definition included courses designed to provide the knowledge and
skills for specific occupations or work
[[Page 6795]]
settings, but may also include adult basic education and ESL. Where
required as a prerequisite for employment by employers or occupations,
this activity may also include education leading to a GED or high
school equivalency diploma.
We made a minor change to the wording of this definition in the
final rule, adding the words ``work-eligible'' before ``individual.''
We made this change both for consistency with other definitions and to
make clear that this activity is allowable for any work-eligible
individual. Although the statutory name of the activity refers to a
``recipient'' who has not received a high school diploma or certificate
of equivalency, we think that a work-eligible individual who is not a
recipient of assistance could also participate in this activity and
have those hours count for participation rate purposes.
Comment: One commenter noted that the situation of immigrants and
refugees who hold a high school diploma from overseas but do not have
an American high school diploma or GED should warrant an exception to
the requirement that individuals not have these credentials as a
prerequisite for participating in the activity. The commenter
explained, ``These individuals may lack the skills and credentials
employers require from native high school graduates.'' The commenter
urged a clarification that such individuals could participate in this
activity and that such participation include English language
instruction.
Response: The statute limits participation in this activity to
individuals who have not received a high school diploma or a
certificate of high school equivalency. We recognize that some
individuals may have received a high school diploma from other
countries that may not be directly comparable with an American high
school diploma. Moreover, it would be difficult for TANF agencies to
verify whether or not individuals have or have not obtained degrees or
credentials from overseas. We therefore give States the flexibility to
determine on a case-by-case basis whether such individuals qualify for
this activity. A State that uses this option should describe in its
Work Verification Plan how it will make such a determination.
Comment: One commenter recommended that we allow States to deem
individuals who make ``good or satisfactory progress'' as having met
``the minimum hours of independent study recommended by the educational
program.'' Those with unsatisfactory performance would receive credit
for only the verified and documented hours of classroom time.
Response: States must report actual hours of participation. We have
eliminated the requirement for ``good or satisfactory progress'' as
part of the Federal definition of this work activity. We encourage
States to monitor progress using both qualitative and quantitative
measures, but do not impose a specific standard. Please refer to the
cross-cutting issues related to the definitions at the beginning of
this section of the preamble for further discussion of this issue.
Comment: Several commenters recommended allowing this activity to
count for high school graduates or those with a certificate of high
school equivalency, but who score low on reading or math assessments.
Response: We do not have the statutory authority to expand the
scope of this activity to include those with a high school degree or a
certificate of high school equivalency.
Section 261.2(l) Satisfactory School Attendance at a Secondary School
or in a Course of Study Leading to a Certificate of General
Equivalence, in the Case of a Recipient Who Has Not Completed Secondary
School or Received Such a Certificate
In the interim final rule, we defined this activity to mean regular
attendance, in accordance with the requirements of the secondary school
or course of study, at a secondary school or in a course of study
leading to a certificate of general equivalence, in the case of a
recipient who has not completed secondary school or received such a
certificate. The former is aimed primarily at minor parents still in
high school, whereas the latter could apply to recipients of any age.
Unlike ``education directly related to employment,'' this activity is
not restricted to those for whom obtaining a GED is a prerequisite for
employment. However, it may not include other educational activities,
such as adult basic education or language instruction unless they are
linked to attending a secondary school or a GED program.
As in education directly related to employment, we made a minor
change to the wording of this definition in the final rule, replacing
``recipient'' with ``work-eligible individual.'' We made this change
both for consistency with other definitions and to make clear that this
activity is allowable for any work-eligible individual. Again, although
the statutory name of the activity refers to a ``recipient'' who has
not received a high school diploma or certificate of general
equivalence, we think that a work-eligible individual who is not a
recipient of assistance could also participate in this activity and
have those hours count for participation rate purposes.
Comment: One commenter noted that with respect to ``good or
satisfactory progress'' for this activity to count, the standard
``must'' include both a qualitative and quantitative measure of
progress.
Response: We have eliminated the requirement for ``good or
satisfactory progress'' as part of the Federal definition of this work
activity. We encourage States to monitor progress using both
qualitative and quantitative measures, but do not impose a specific
standard. Please refer to the cross-cutting issues related to the
definitions at the beginning of this section of the preamble for
further discussion of this issue.
Section 261.2(m) Providing Child Care Services to an Individual Who Is
Participating in a Community Service Program
In the interim final rule, we defined providing child care services
to an individual who is participating in a community service program as
providing child care to enable another TANF recipient to participate in
a community service program. In the final rule, we have clarified that
this is an unpaid activity and must be a structured program designed to
improve the employability of individuals who participate in it.
Alternatively, if an individual receives payment for providing child
care, the State should report that individual's hours as unsubsidized
employment.
Comment: One commenter recommended counting providing child care
for a TANF recipient in community service as extending to two-parent
families in which one parent stays home with the children while the
other participates in community service. The commenter stated that
children that have more time with their parents, especially during
their early years, have better outcomes. This would also reduce public
costs for child care and other services.
Response: We agree that parental time with children is extremely
important. However, in a two-parent family, one parent cannot count as
participating by providing child care for his or her own child while
the other parent participates in community service because the activity
neither involves supervision nor helps the parent providing child care
prepare for employment.
Comment: Several commenters noted that it would be difficult to
apply a daily supervision standard for an
[[Page 6796]]
individual who is participating as a child care provider for a TANF
recipient in community service. Some of the commenters recommended
counting this activity as self-employment and allowing States to
develop methods for projecting a typical number of hours per week.
Response: We have clarified in the final rule that this activity is
both unpaid and structured to improve an individual's employability.
The degree of supervision and methods for reporting hours would depend
on how the State structures this activity. Because it is an unpaid
activity, projecting hours would not be appropriate.
Comment: One commenter recommended expanding the definition of the
activity to include providing child care not only to a TANF recipient
in community service, but also to someone in a MOE-funded program.
Response: We agree with the commenter that this activity should
include providing child care for a recipient of TANF or SSP-MOE
assistance in community service.
Section 261.2(n) Work-Eligible Individual
The DRA required us to include families receiving assistance under
a separate State program (SSP) in the work participation rates if the
funding for those programs is counted towards the State's maintenance-
of-effort (MOE) requirement, and to specify the circumstances under
which a parent living with a child receiving assistance should be
included in the work participation rates.
In the interim final rule, we used the new term work-eligible
individual to describe anyone whose participation in work activities is
required in the calculation of the work participation rate. We drew the
term from the heading to the statutory provision requiring us to
include families receiving assistance under a SSP-MOE program and to
specify the circumstances under which a parent residing with a child
recipient of assistance should be included in the work participation
rates.
We have made modifications to the definition of a work-eligible
individual, but we have not changed our general approach to who is
included in the final rule. We continue to define a work-eligible
individual as either: (1) An adult (or minor child head-of-household)
receiving assistance under TANF or a separate State program; or (2) a
non-recipient parent living with a child receiving assistance. There
continue to be exclusions that apply specifically to the non-recipient
parents and others that apply more broadly to the definition.
As under the interim final rule, a non-recipient parent living with
a child receiving assistance is not a work-eligible individual if the
parent is: A minor parent who is not a head-of-household; a non-citizen
who is ineligible to receive assistance due to his or her immigration
status; or, at State option on a case-by-case basis, a recipient of
Supplemental Security Income (SSI) benefits. We deleted the phrase ``or
spouse of the head-of-household'' in the minor parent exclusion of the
interim final rule because such individuals are not required to
participate when they do receive assistance. Thus, only a minor parent
who is the head of household is required to be included in the
participation rate, whether she is receiving assistance or is a non-
recipient. We have also added a case-by-case exclusion for recipients
of Aid to the Aged, Blind, or Disabled under Title XVI of the Social
Security Act, which, in the Territories of Puerto Rico, Guam, and the
Virgin Islands, is analogous to SSI. 42 U.S.C. 1381 note et seq.
More broadly, the definition excludes a parent, whether or not a
recipient of assistance, who is caring for a disabled family member
living in the home. The State must provide medical documentation to
support the need for the parent to remain in the home to care for the
disabled family member. We have eliminated the interim final rule
provision that permitted a parent to be excluded only if the disabled
family member did not attend school on a full-time basis. We have also
added a State option to exclude on a case-by-case basis a parent who is
a recipient of Social Security Disability Insurance (SSDI) benefits. As
with a parent caring for a child with a disability, the SSDI exclusion
applies regardless of whether the parent receives TANF or not.
As in the interim final rule, we do not consider an adult in a
family served under an approved Tribal TANF program using State MOE
funding to be a work-eligible individual, unless the State includes the
family in calculating work participation rates, as permitted under
Sec. 261.25.
Unless excluded for one of the reasons outlined above, the term
work-eligible individual includes all non-recipient parents living with
a child receiving assistance and all adult recipients of assistance.
We received many comments suggesting that we exclude additional
groups of individuals from the definition of a work-eligible
individual. We considered each of these suggestions carefully as we
developed the final rule. We appreciate the concerns the commenters
raised, both about a State's ability to engage certain groups of
individuals and about the appropriateness of encouraging States to
engage other individuals in work by including them in the work
participation calculation. We address these concerns below.
Comment: Some commenters asked us to clarify that non-parental
caretakers in child-only cases continue to be excluded from the work
participation rate calculation. One commenter recommended excluding all
non-parental caretakers, even those ``who were sufficiently needy that
they qualified for TANF.'' The commenter asserted that not excluding
them could discourage non-parental caretakers from taking custody of
children.
Response: Child-only cases in which a parent does not reside with
the child, such as when a grandparent cares for the grandchildren, do
not include work-eligible individuals. In such cases, the grandparents
or other non-parental caretakers are not recipients of assistance
themselves and thus do not meet the first part of the work-eligible
individual definition. Neither do they meet the second part of the
definition because they are not non-recipient parents living with
recipient children. If a grandparent or other caretaker does receive
assistance, then that adult would be a work-eligible individual; we do
not have the authority to exclude non-parental caretaker relatives
receiving assistance from the work participation rate calculation. The
DRA limited our authority to determine whether a parent living with a
child receiving assistance should be included or excluded from the work
participation rate. Cases where a caretaker relative receives
assistance have been included in the work participation rate since the
inception of TANF and continue to be under the final rule.
Comment: Some commenters wanted us to exclude fugitive felons and
parole violators from the definition of work-eligible individual;
others contended that convicted drug felons and those ineligible
because of past fraud should not be work-eligible individuals. They
maintained that States are prohibited from using TANF dollars or
counting State MOE dollars for serving these felons and thus it is
unfair to require their inclusion in the work participation rate
calculation.
Response: Similar to a parent that incurs a work sanction, a case
in which a parent is a fugitive felon, parole violator, or a drug felon
is subject to a reduced grant by virtue of the behavior
[[Page 6797]]
of that parent. We think it would be inappropriate to treat such cases
differently from parents who abide by the law. More importantly, we
strongly believe that it is in the best interest of the children in
such families if States engage the parents in work activities, helping
them off welfare and out of poverty. Thus, we have not made the
suggested changes.
We would also like to clarify a State's limitations and flexibility
with regard to funding fugitive felons, drug felons, and individuals
convicted of fraudulently misrepresenting residence. Fugitive felons
and parole violators may not, by statute, receive federally funded
``assistance,'' as defined at 45 CFR 260.31. An individual who is
convicted of fraudulently misrepresenting his or her place of residence
in order to receive assistance simultaneously from two or more States
may not, by statute, receive federally funded ``assistance'' for ten
years after his or her conviction. That includes ``assistance'' paid
with pure Federal funds or with commingled State and Federal funds.
That individual may receive ``assistance'' using segregated State TANF
funds or separate State program funds. He or she may also receive non-
assistance benefits, i.e., benefits that are outside the regulatory
definition of ``assistance,'' such as non-recurrent benefits that do
not extend beyond four months or supportive services for the employed.
An individual convicted of a drug felony may not, by statute, receive
TANF-funded ``assistance,'' regardless of whether the funds are all
Federal, commingled Federal and State, or segregated State funds,
unless the State opts out of or limits the duration of the prohibition
by passing a State law; however, that individual may receive
``assistance'' using separate State program MOE funds and may receive
TANF-funded non-assistance benefits. Thus, while restrictions apply,
there are opportunities to use TANF or certain MOE funds to support the
family and engage the individuals in work.
We remind readers that the law does not prohibit spending Federal
or State funds on an individual who commits ``an intentional program
violation.'' States may choose to impose such penalties against
individuals who commit program fraud, or for other reasons, but they
are not prohibited from spending Federal funds on these cases.
Comment: A couple of commenters urged us to exclude for a limited
time period from the definition of work-eligible individual refugees
and certain other legal immigrants who cannot speak English, have
little education, and low levels of literacy. The commenters explained
that it may take time to improve their English proficiency to a level
that enables them to participate fully in the labor market.
Response: We have not excluded refugees from the definition of
work-eligible individual. TANF recipients who happen to be refugees
should be treated like other TANF recipients. States should determine
the most appropriate activities, which may be English language skills
or a combination of language training and other services, and then
engage the clients in those activities to the greatest extent possible.
We refer readers to the discussion of vocational educational training,
which clarifies that we have modified the definition of that activity
to permit ESL to count for the entire 12 months that the activity may
count under the law, as long as the language training is a necessary or
regular part of the vocational educational training.
Comment: A few commenters urged us to exclude from the definition
of ``work-eligible'' all parents who are not in the assistance unit.
Some asserted that not doing so creates an incentive to impose full-
family sanctions and ignores the impact such policies have on children.
Response: We did not exclude all parents who are not in the
assistance unit because Congress specifically directed HHS to specify
the circumstances under which a parent residing with a child who is a
recipient of assistance should be included in the work participation
rates. Since parents who were themselves recipients of assistance were
already part of the rates (other than those subject to either of two
special statutory exclusions), it was apparent that Congress intended
us to look at families in which the parent did not receive TANF
assistance but the child did. In addition, as we explained in the
preamble to the interim final rule, we considered in turn each type of
family in which a parent resides with a child recipient of assistance
to determine whether it was appropriate to include that group of
families in the calculation of the work participation rates. We believe
that our definition appropriately focuses on those parents who can
benefit from work activities and whose participation will help move the
family into employment and out of poverty.
We appreciate the commenters' concern about the well-being of
families in which the adult is subject to a sanction. We note that
States have other options when a family refuses to comply with work
requirements. A State that does not wish to use a full-family sanction
need not do so.
We repeat that not all ``work-eligible individuals'' are required
to engage in work for a specified number of hours. The State still
determines what each individual must do in accordance with its laws and
policies. The definition of a work-eligible individual defines the
denominator, and is a guideline of who should be engaged in work
activities. We believe that our definition creates reasonable
expectations of States. But, Congress established an overall work
participation rate of 50 percent. This leaves room for a State to
decide if an individual should be excused from work requirements,
whether because of a disability, lack of access to transportation, the
need for other services, or some other reason, regardless of whether
they are in the assistance unit or not.
Comment: Some commenters asserted specifically that adults whose
needs are removed from the assistance unit due to a sanction should not
be considered work-eligible individuals, because the family's grant has
already been reduced and it is difficult to get such adults to comply
with the work requirements.
Response: To ensure consistent treatment, we believe it is
appropriate to include all of the sanctioned parents of child-only
cases in the definition of ``work-eligible individual.'' A State may
either reduce the grant by a fixed percentage or fixed dollar amount or
remove the needs of the adult; only the latter approach results in a
child-only case. In the interim final rule, we clarified specifically
why we included as work-eligible individuals sanctioned cases in which
the adult's needs are removed from the case due to a work-related
sanction, but the child continues to receive assistance. The effect on
a family's grant of removing a parent's needs from the assistance unit
is similar to the effect of a fixed percentage or dollar amount
sanction. Yet, under the original TANF rule, these cases without an
adult were excluded from the calculation of work participation rates as
child-only cases. Cases in which the grants were reduced by a fixed
percentage or dollar amount due to a work-related sanction were, by
law, excluded for a maximum of only three months in a 12-month period.
The final rule treats all cases with a work-related sanction in the
same manner.
Comment: Some commenters recommended excluding the non-recipient
parents of children who continue receiving assistance after their
parents have received 60 months of Federal assistance. One commenter
explained that States cannot require
[[Page 6798]]
such parents to participate and, as a result, including them would
lower work participation rates. Another stated that, because the State
can no longer assist the parent with TANF funds, it is unfair to impose
a work requirement.
Response: The final rule continues to include as work-eligible
individuals parents that are no longer included in the assistance unit
because they have exhausted their time-limited benefits, but for whom
the State has chosen to extend benefits on behalf of their children. We
made this decision for several reasons. First and foremost, it provides
an incentive for States to work with every case right from the
beginning. Then, clients can preserve as much of their time-limited
benefit as possible. Second, we are very concerned about the negative
consequences for children living in families with reduced benefits for
long periods. The adults in families whose needs have been removed from
the grant are the most likely to be ignored. They face long-term
poverty and other negative consequences because States are no longer
helping them acquire work skills and find employment. Third, we do not
believe the only alternative to including such families in the work
participation rate is to impose a full-family sanction and ignore the
family completely. One alternative for those who reached the Federal
time limit is to use the law's flexibility to provide Federal
assistance to up to 20 percent of the caseload via a hardship
extension. If a family still needs help after 60 months, then the
hardship extension is the Federal safety net designed for that very
purpose. Finally, we included parents that have reached the time limit
because we think it is the best way to make the participation rates
consistent across States, one of our charges under the law.
We also remind readers that States have considerable flexibility in
deciding which families to assist with Federal versus State funds, even
when it comes to families reaching the 60-month time limit. The time
limit applies only to families receiving Federal or commingled funds,
not to all funds. A State could use either segregated or separate State
funds to assist families that have received 60 months of Federal
assistance.
Comment: A couple of commenters maintained that the definition of
work-eligible individuals should not include persons served in a
separate State program funded with MOE dollars who would not be
eligible for TANF, including non-qualified non-citizens. Some
commenters suggested that States should decide whether or not to
include as work-eligible individuals non-citizens receiving SSP
assistance so as not to penalize a State for humanitarian efforts.
Response: We appreciate the concerns that the commenters expressed
for State flexibility in deciding which families to assist through
separate State programs. However, we include these non-qualified
individuals because the participation rates are based on all adults who
receive assistance, either in the TANF program or in a SSP. Since these
non-qualified non-citizens receive assistance, they are included by the
statute. As with other non-recipient parents included as work-eligible
individuals, we believe that the children in such families will be
better off if States engage the parents in work activities, helping
them increase their incomes and move off welfare.
Comment: A number of commenters suggested we give States the option
to exclude an individual served under SSDI or under a State-funded
disability program from the definition of work-eligible individual. The
commenters reasoned that our rationale for including SSI recipients on
a case-by-case basis applied equally well to non-recipient parents
served by these other disability programs.
Response: We agree with the arguments the commenters made with
respect to SSDI recipients. Unlike SSI recipients, SSDI recipients
often are also TANF recipients; therefore, we have modified the rule to
allow a State to exclude on a case-by-case basis a parent who is
recipient of SSDI from the definition of work-eligible individual.
We did not find the commenters' arguments as persuasive with
respect to State disability programs. Because State disability
determinations and eligibility could vary so widely from one
jurisdiction to the next, we think that making this exclusion would not
meet our mandate to make the work participation rates more consistent.
Rather, we think it more appropriate to rely on a Federal standard of
disability for the purpose of excluding parents from the definition of
work-eligible individual.
Comment: Many commenters urged us to exclude from the definition
cases in which a parent's SSI or SSDI application is pending a decision
(including the appeal of an adverse decision). Some suggested that we
should exclude applicants who meet the disability standard. They argue
that parents whose disabilities are sufficiently grave to qualify them
for SSI or SSDI but do not yet receive it would have as much difficulty
working as someone whose application has been approved. Commenters also
urged us to exclude individuals who would qualify for SSI or SSDI but
for the durational requirements of those programs, i.e., that the
physical or mental impairment can be expected to result in death or has
lasted or can be expected to last for a continuous period of at least
12 months.
Response: We appreciate that individuals with disabilities may have
limitations in their ability to work. When the limitations are severe
enough, an individual may qualify for and receive SSI or SSDI. However,
applying for either program is no guarantee that the Social Security
Administration (SSA) will find that the applicant meets its definition
of disability and will approve the application. In fact, the majority
of initial applicants are denied benefits. The SSI and SSDI approval
process involves not just a simple determination that an individual
suffers from a disability on an approved list, but also a determination
that the individual cannot engage in any substantial gainful activity.
We believe that a Federal standard of disability is appropriate to
ensure consistency in excluding parents from the definition of work-
eligible individual. Since SSI and SSDI applicants have not yet met
that standard, the regulation does not exclude them from the definition
of work-eligible individual. However, as we explain later, States may
retroactively exclude adults in these families from the TANF Data and
SSP-MOE Data Reports once they are approved for SSI or SSDI benefits
and thus are no longer considered to be work-eligible individuals. This
partly addresses the concerns raised by the commenters.
We do want to clarify the status of TANF parents who ``meet the SSI
or SSDI criteria for severity.'' In some cases, SSA makes a presumptive
disability determination for SSI or SSDI benefits, based on the nature
of an applicant's impairment and other considerations. In such a case,
SSA pays expedited benefits while the applicant awaits a final
decision. These individuals are in fact receiving SSI or SSDI benefits
and thus the State would have the option to include or exclude them
from the definition of work-eligible individual. If subsequently, SSA
denies the application, the individual would no longer be receiving SSI
or SSDI benefits and thus would qualify as a work-eligible individual.
Parents in TANF cases who do not qualify for SSI or SSDI due to the
durational requirements are not excluded from the definition of work-
eligible individual because they do not receive benefits under those
programs. It is not appropriate to exclude them, due
[[Page 6799]]
to the temporary nature of their disabilities. For example, States
should prepare an individual who is recovering from an accident or
heart attack for work, examples several commenters cited as temporary
disabilities. The participation rate that Congress established provides
ample room for States to exempt individuals with temporary illnesses or
incapacities from participating in work activities. Indeed, under
TANF's predecessor program, JOBS, States could exempt individuals who
were ill or temporarily incapacitated, but the 1996 TANF law did not
include these exemptions.
Comment: Many commenters asked us to permit States to exclude
applicants for SSI or SSDI from the definition of work-eligible
individual retroactively back to the date of their applications once
those applications are approved. They explained that the SSI/SSDI
disability determination process can be lengthy and, once a
determination is made, benefits are paid retroactively for earlier
months.
Response: We agree with many of the comments and, within limits,
have amended the rule to allow States to revise work participation
data--including information on which individuals are or are not work-
eligible--after initially reporting it. Quarterly TANF and SSP-MOE Data
Reports are due within 45 days of the end of the quarter. States are
free to, and often do, revise data relating to previous quarters within
the fiscal year. Because a State is not liable for a reporting penalty
until the end of the quarter after the end of a fiscal year, a State
may, until December 31, submit its final data for the previous fiscal
year. Thus, a State that learns that a former work-eligible individual
has been approved for SSI or SSDI and for whom prior State TANF or SSP-
MOE benefits are reimbursed may revise its data for that individual by
December 31 for the months in the preceding fiscal year in which the
individual received benefits under one of those programs. If the
individual's application for SSI or SSDI predates the beginning of the
previous fiscal year, the State could not revise data back to the date
of application because only data from the previous fiscal year may be
revised by December 31. Please refer to Sec. 265.7(b) for further
discussion of the timing for revising work participation and caseload
data and to Sec. Sec. 265.4 and 265.8 for more information on when
quarterly reports are due and when penalties apply.
Comment: Some commenters recommended giving States longer than
until December 31 to amend TANF and SSP-MOE Data Reports for
determining work-eligible individual status due to the lengthy approval
process for disability benefits. One commenter suggested that we give
States until the point at which we finalize the participation rate
calculations for a fiscal year. Another suggested March 31, six months
after the end of the fiscal year, as an appropriate deadline.
Response: While it is true that disability determinations can be
lengthy, we have clarified that the deadline for retransmitting data is
December 31 because after that date, States are liable for data
reporting penalties.
Comment: One commenter urged us to exclude recipients of the
programs offered by ``209(b) States'' from the definition of work-
eligible individual in the same way we do SSI recipients. The commenter
contended that those programs have criteria that are stricter than SSI
and thus should also be excluded.
Response: The designation ``209(b) State'' refers to a mechanism by
which the State determines eligibility for Medicaid, not eligibility
for SSI or any other disability program. Most States, known as ``1634
States,'' provide automatic Medicaid coverage for recipients of SSI,
but they have the option of continuing to apply standards that predated
the SSI program and are more restrictive than those of the SSI program.
Those States are called ``209(b) States,'' a reference to a provision
in the 1972 law that created the SSI program. While such a State may
have more restrictive criteria for Medicaid, this provision does not
affect eligibility for SSI in the State and thus has no bearing on our
definition of work-eligible individual.
Comment: One commenter urged us to clarify that supported work for
individuals with disabilities (as discussed in the preamble concerning
subsidized employment) is a countable activity for work-eligible
individuals receiving SSI or SSDI whom the State opts to include in the
work participation rate.
Response: Any activity that can count toward the work participation
rate for other work-eligible individuals can also count for SSI and
SSDI recipients whom the State opts to include, including those
participating in a supported work program for individuals with
disabilities. Except where the statute explicitly imposes a restriction
(e.g., for certain educational activities), we do not limit countable
activities to any subset of work-eligible individuals.
Comment: One commenter thought the way we structured the definition
of work-eligible individual with respect to SSI recipients was
inequitable because it subjects individuals to the requirements of both
TANF and SSI. The commenter maintained that by including SSI recipients
within the definition of a work-eligible individual and allowing States
to exclude them on a case-by-case basis we created an inequity. The
commenter urged us to exclude all such individuals as a class and allow
States to include them on a case-by-case basis.
Response: We think the commenter misunderstood the purpose of this
provision. First, the definition of work-eligible individual only
includes a SSI recipient when a State opts to include such an
individual. A State must make a choice in each case and report data on
the case accordingly. Because there is a child receiving assistance, a
TANF case exists and the State must report data on that family,
including information on the work status of the adult or adults in the
family. No case is automatically included; the State reports the data
to us for each case. Second, the rule does not subject individuals to
the requirements of both SSI and TANF. Presumably, a State would not
choose to include a SSI recipient as a work-eligible individual unless
that individual had sufficient hours of work to allow the family to
count in the numerator of the participation rate. Moreover, this option
does not subject the SSI recipient to additional rules of the TANF
program. The family is already subject to the applicable rules of TANF,
because a child is receiving assistance. The SSI parent has no further
work obligation because the State chooses to use the hours that
individual works in the participation rate calculation.
Comment: Some commenters recommended that we exclude from the
definition of work-eligible individual those ``who are refugees,
asylees, or legal permanent residents who may qualify for TANF or MOE-
funded assistance but are ineligible for SSI based on their immigration
status.''
Response: While some refugees and asylees are in fact eligible to
receive SSI under current law, we do not believe the recommendation to
exclude parents ineligible for SSI due to their immigration status is
practical. Because these parents are ineligible for SSI, the Social
Security Administration will not process their disability
determinations. We, therefore, cannot ascertain whether or not they
would have met the appropriate disability standards and qualified for
SSI.
Comment: One commenter urged us to provide the same exclusion for
recipients of Title XVI benefits (Aid to
[[Page 6800]]
the Aged, Blind or Disabled in the Territories) as we do for SSI
recipients.
Response: We agree with the commenter and have modified the rule
accordingly.
Comment: A couple of commenters thought our approach to individuals
with disabilities and the definition of a work-eligible individual did
not make sense. They pointed out that we exclude a parent caring for a
disabled family member living in the home but not the disabled family
member that needs full time care.
Response: The exclusion for a parent caring for a disabled family
member living in the home primarily affects cases in which a parent
cares for a disabled child. Obviously, a disabled child would not be
subject to work requirements. While in some cases the disabled family
member may be a second parent, we did not want to broaden the
exclusions from the work participation rates beyond those that already
exist in the statute.
Comment: One commenter objected to the way the work-eligible
individual definition addressed two-parent families in which one parent
has a disability. The commenter pointed out that if the State finds
that a parent has a disability but the individual does not yet receive
SSI or SSDI, the family would not be part of the two-parent
participation rate but would be included in the overall rate. If there
is medical documentation to support it, the parent without a disability
will be exempted from the work-eligible category because she is needed
in the home to care for a disabled family member. However, the family
would still be in the work participation rate because the parent with a
disability would still be a work-eligible individual obligated to
engage in work for 30 hours per week to count for participation.
Response: We believe the final rule addresses most of the
commenter's concerns. This is a confusing area because one provision
relates to disability in general and is a State determination, and
another relates specifically to qualifying for SSI or SSDI, a Federal
determination. If a State finds that one parent in a two-parent family
has a disability then, by statute, the family comes out of the two-
parent work participation rate. If the parent that the State found to
have a disability does not receive SSI or SSDI, then he or she would
continue to be a work-eligible individual, just as a single parent
waiting for SSI or SSDI determination would be, and the family would
continue to be part of the overall rate. In all other respects, the
two-parent family is treated the same way as the single-parent family
for determining whether the parents are work-eligible individuals. If
both parents receive either SSI or SSDI, then both would be excluded
from the definition of a work-eligible individual. As we noted above,
within limits States may retroactively revise their data when
individuals meet SSI or SSDI criteria.
Comment: Several commenters recommended that we exclude parents on
TANF who are caregivers of family members with disabilities, regardless
of whether the family member with a disability lives in the same home
as the parent. The commenters explained that the burden of providing
care for family members living elsewhere may be just as great or
greater.
Response: The purpose of the TANF program is to enable parents or
relatives to care for children ``living in the home'' and to take
necessary steps to become self-sufficient. While we appreciate the
burden that having a family member outside the home that needs care
places on a family, the TANF program is not designed to provide such
care. Parents of TANF families face significant challenges to care for
everyone in their immediate household, and to prepare for or maintain
employment that will allow them to provide for their family. Given
these critical responsibilities and the time-limited nature of TANF
assistance, we do not agree that parents should be excluded from the
definition of a work-eligible individual in order to provide care for
someone outside the home.
Comment: Some commenters also suggested that we exclude from the
definition of work-eligible individual extended family members such as
aunts, uncles, and grandparents who were both receiving assistance and
caring for a disabled family member.
Response: We are sympathetic to the situation of non-parental
relatives who are both receiving assistance and caring for a disabled
family member. The statute (section 407(i)(1)(A)(i)(IV) of the Act)
only gives us the authority to determine ``the circumstances under
which a parent who resides with a child who is a recipient of
assistance should be included in the work participation rates''; thus,
a non-parental relative who receives assistance must be a work-eligible
individual. Since we do not have the authority to exclude non-parents
from the participation rate, this provision only excludes parents
caring for a disabled family member living in the home. A relative
would only be a work-eligible individual if he or she received TANF
assistance (the first part of the work-eligible individual definition)
or were a parent of another child recipient of assistance (the second
part of the definition).
Comment: Many commenters took issue with the fact that the
exclusion under the interim final rule for parents caring for a
disabled family member living in the home applied only when the family
member with a disability did not attend school full-time. Some said
that parents with children with disabilities in school should be
treated the same as other TANF participants who must care for a
disabled family member not in school. They pointed out that children
with severe disabilities often cannot attend school regularly due to
medical care needs, even if they are enrolled full time. Others noted
that after-school care and care during school holidays (especially the
summer) is difficult to find for children with disabilities, even if
they attend school on a full-time basis. Some asked us to modify the
exclusion so that a parent would not be ``work-eligible'' if the
child's disability-related needs prevent the parent from working.
Another proposed that we give the State the option to include the hours
of such a parent in the work participation rate on a case-by-case
basis, based on criteria it set out in its Work Verification Plan. Some
asked for clarification regarding whether the exclusion applied to
children with disabilities who are full-time students but must be
tutored at home or are home-schooled.
Response: We appreciate the difficulties of caring for a disabled
family member, even when he or she is enrolled in school full time. The
commenters raised many compelling arguments about the need for a
parent's care even when a family member with a disability goes to
school full time. Based on these comments, we have expanded the
exclusion to apply when a family member's disability requires care-
giving that prevents the parent from working, whether or not the family
member is enrolled or attending school. Please refer to Sec.
261.2(n)(2)(i). Our intent had been to ensure that only parents who
would be unavailable during working hours because they were caring for
family members would be excluded from the definition. To that end, we
have also revised the medical documentation requirement, which is now
included in the regulation itself (also at Sec. 261.2(n)(2)(i)).
Medical documentation must show that a parent caring for a disabled
family member cannot engage in work because he or she is needed in the
home to provide that care. Thus, under the final rule, any parent
caring for a disabled family member will not be considered ``work-
eligible'' as long as there is
[[Page 6801]]
documentation to show that it is medically necessary for the parent to
provide the care and, as a result, cannot engage in work. We believe
the policy in the final rule will be both simpler to administer and
more equitable.
The rule does not permit parents who have such medical
documentation to be included in the participation rate calculation on a
case-by-case basis if they are working. If a medical professional has
documented that the parent needs to be in the home to care for a
disabled family member, then we believe it is inappropriate for these
parents to be working. Thus, there is no need for a case-by-case
option. Clearly, if the medical status of the disabled family member or
the living arrangements of the family changes, the State should then
report the parent as a work-eligible individual and engage the parent
in work. States should regularly reassess the status of excluded
parents who are caring for disabled family members. Closely monitoring
family situations will enable parents, who are no longer needed in the
home, to gain the skills and work experience that leads to
independence.
We would like to stress that this exclusion for a parent caring for
a disabled family member does not absolve the State of its
responsibility to help TANF recipients find appropriate child care,
including care for children with disabilities. We recognize that the
special care that some children with disabilities need may be less
available and may be more expensive. States should take these
considerations into account as they develop and budget for their child
care programs. A State may not exclude a child who has a disability
from available child care, if doing so would prevent the parent from
gaining needed skills, finding work, and moving the family out of
dependency.
Comment: One commenter recommended that the definition of work-
eligible individual allow for the exclusion of individuals who are
unable to participate in activities for the required number of hours
due to a disability.
Response: The regulation does not exclude such individuals from the
definition of work-eligible. We refer readers to the discussion of
individuals with disabilities in the cross-cutting issues section that
appears earlier in this preamble.
Subpart B--What Are the Provisions Addressing State Accountability?
PRWORA required States to meet two separate work participation
rates--the overall rate that has been 50 percent since FY 2002 and the
two-parent rate of 90 percent since FY 1999. A State that fails to meet
the required participation rates is subject to a monetary penalty. The
Deficit Reduction Act of 2005 retained the 50-percent participation
requirement overall and the 90-percent requirement for two-parent
families, but included families in separate State programs in the
calculation of the respective work participation rates.
In the interim final rule, we modified the provisions of this
subpart to reflect the new statutory requirements to include separate
State program families, as well as the requirement to determine when to
include non-recipient parents residing with children who receive TANF
assistance in the calculation of the work participation rates. We did
so using the new definition of ``work-eligible individual'' discussed
in detail in the preamble to Sec. 261.2(n) of this part.
Section 261.20 How will we hold a State accountable for achieving the
work objectives of TANF?
Under the interim final rule, as under the original TANF rule, this
summary section outlined how we held a State accountable for meeting
work requirements. We did not receive comments on this section and have
made no changes to it in the final rule.
Section 261.21 What overall work rate must a State meet?
This section of the interim final rule incorporated in regulatory
text the statutory requirement for a State to achieve an overall work
participation rate of 50 percent, minus any caseload reduction credit
to which it is entitled. We did not receive comments on this section
and have made no changes to it in the final rule.
Section 261.22 How will we determine a State's overall work rate?
The Deficit Reduction Act of 2005 modified the work participation
rate calculation to include families with an adult or minor child head-
of-household in SSP-MOE programs and required us to determine the
circumstances under which a family in which a parent residing with a
child receiving TANF should be included in the calculation. The interim
final rule modified the prior language in this section to reflect the
new calculation and adopted the use of the term ``work-eligible
individual'' for that purpose. It also continued the policy established
under prior rules of allowing a State to count a family that received
assistance for only a partial month in the work participation rate if a
work-eligible individual is engaged in work for the minimum average
number of hours in each full week that the family receives assistance.
We corrected one typographical error but made no other changes to
the regulatory text of this section.
Comment: One commenter asked for clarification regarding whether
the addition of families in separate State programs was effective in FY
2006 or FY 2007.
Response: Families receiving assistance through a separate State
program are added effective FY 2007. While the interim final rule as a
whole took effect with its publication on June 29, 2006, all the
provisions relating to the work participation rate--including the
revised caseload reduction credit, the new work definitions, and the
revisions to which cases are part of the calculation itself--take
effect in FY 2007 (October 1, 2006), the first fiscal year that begins
after the law and regulations came into existence.
Comment: One commenter asked us to exclude families residing in
Alaska Native villages from the work participation rate calculation,
due to ``the state's unique circumstances and the challenges inherent
in serving needy families in Alaska's most remote and economically
depressed communities.''
Response: The law does disregard from the 60-month time limit on
the receipt of Federal assistance any months that an adult receives
assistance while living in Indian country or in an Alaska Native
Village where at least 50 percent of the adults are not employed. We do
not have the authority under the statute to make a similar exclusion
from the work participation rate calculation.
Comment: One commenter asked us to exclude from the denominator
families ``during their first 30 days of eligibility.'' The commenter
noted that it takes several weeks to process an application, as well as
additional time to learn program requirements and develop a work plan.
``It is unrealistic to expect that this process can be completed
quickly enough for new participants to engage in sufficient hours of
work activities during their initial 30 days to meet the work
participation rate.'' Another commenter stated that the rule does not
provide a State option to count participation for families that receive
an initial partial month of assistance.
Response: As we noted in the preamble to the original TANF final
rule, ``* * * we cannot simply decide that some period of time for
which an individual receives assistance--such as time prior to
assignment in a work activity or a partial month of assistance--should
not be considered a
[[Page 6802]]
period of assistance and therefore exclude the individual's family from
the participation rate for that month. On the contrary, if a family
receives assistance for any portion of a month, then we must include
the family in the denominator of the participation rate for that month.
* * *'' (See 64 FR 17774.) However, Sec. Sec. 261.22(d) and 261.24(d)
do provide the flexibility to count a partial month of assistance as a
month of participation if a work-eligible individual is engaged in work
for the minimum average number of hours in each full week that the
family receives assistance in that month.
Comment: One commenter suggested that, if a State opts to count in
the work participation rate a family in which a parent receives SSI (or
SSDI), we should allow the State to exclude the family from the
denominator of the rate, counting it only in the numerator.
Response: We do not think we should include any family in the
numerator that we do not also include in the denominator. To do so
would skew the participation rate. The State has the flexibility to
decide on a case-by-case basis whether to include it or exclude it, but
any case that the State wants to count in the numerator must also be in
the denominator.
Comment: A couple of commenters asked about the meaning of Sec.
261.22(b)(2), which permits a State to exclude from the work
participation rate calculation for up to three months in a 12-month
period a case that is subject to a penalty for refusing to work.
Specifically, the commenters wanted clarification on whether ``subject
to a penalty'' means the State has reduced or terminated a family's
grant or whether it could refer to a family that the State has notified
of its intent to penalize but whose benefits it has not yet reduced or
terminated. After notification, the commenters pointed out that due
process or conciliation period requirements in the State often cause a
lag of one or two months before the State actually reduces or
terminates the family's grant. The commenters explained that, if we use
the former interpretation, as we have when asked by States for policy
clarification, then States that impose a full-family sanction ``receive
little practical value from this provision'' compared to States that
impose a penalty by reducing a family's grant.
Response: This rule does not change our long-standing
interpretation of when a family is ``subject to a penalty.'' During a
conciliation or notice period, before the State actually reduces or
terminates the family's grant, a family is not ``subject to a
penalty.'' Before that time, the family is at risk of a penalty but not
subject to it. We think this is the most reasonable interpretation of
the statute. In the original TANF rule, we included the following
language at Sec. 261.22(b)(3): ``If a family has been sanctioned for
more than three of the last 12 months, we will not exclude it from the
participation rate calculation.'' (Emphasis added.) Further, in the
interim final rule, we reiterated this concept in Sec. 261.22(b)(2) as
well, specifying that ``if a family with a work-eligible individual has
been penalized for refusal to participate in work activities for more
than three of the last 12 months, we will not exclude it from the
participation rate calculation.'' (Emphasis added.) In both instances,
this language makes clear that the State must actually have imposed the
penalty before we exclude the family from the participation rate
calculation.
We have applied this interpretation since the beginning of TANF
because it encourages a State to take action to resolve the problem
that led to the sanction in the first place. If we were to consider a
family ``subject to a penalty'' when the State had merely notified the
family of the possibility that it would reduce or terminate benefits,
it could benefit from disregarding the family from the participation
rate regardless of whether it provides services to address barriers to
employment or works to resolve a dispute.
With respect to the effect of our interpretation of this provision
on a State that chooses to impose a full-family sanction instead of
reducing the family's benefits, our interpretation treats the period
before actual imposition of a sanction in the same way for all States,
regardless of whether a State's policy choice is for a full or partial
sanction. If a State chooses a full-family sanction, then the family is
removed from the work participation calculation indefinitely and as a
result benefits from an indefinitely smaller denominator.
Comment: One commenter asked for clarification on ``whether the
`other sanctioned' individuals who now will be considered work-eligible
participants will have the same exclusion from the count for three
months out of twelve as those sanctioned for participation failure.''
Response: If the family of a work-eligible individual is subject to
a penalty for refusing to work, the State may exclude that family from
the work participation calculation for that month as long as the family
has not been penalized for more than three of the last 12 months. If
the family's sanction is for a different cause, such as failure to
cooperate with child support enforcement, then the case stays in the
work participation rate.
Comment: We received a comment concerning Sec. Sec. 261.22(c)(1)
and (c)(2). The first section provides a State with the option not to
require a single custodial parent of a child under age one to engage in
work and the second allows it to disregard such a family from the work
participation rate. The commenter noted, ``The preamble to the final
TANF regulations in the April 12, 1999 Federal Register indicates that
these two provisions are not dependent on each other, but rather, a
state can exclude such a case from the work participation rate
calculation without having to exclude it from engaging in work
activities.'' The commenter urged us to include the same clarification
in this preamble to avoid any confusion.
Response: The commenter is correct that the preamble to the
original TANF rule clarified that point. We wrote, ``Based on the
comments and after reexamining the statutory provision, we agree that
we need not link the State's option not to require a single custodial
parent of a child under 1 to work to the exclusion of such parents from
the rate calculations. The State can make separate decisions about
exempting and excluding a family from its rate. The statute describes a
certain individual, that is, `a single custodial parent caring for a
child who has not attained 12 months of age' and then separately
indicates that `such an individual' may be disregarded in calculating
the participation rates. We have rewritten the regulation to allow
disregard of a family with such an individual, since the rates actually
measure families and not individuals.'' The overall framework of this
provision did not change in this rule, including the distinct natures
of these two points.
Section 261.23 What two-parent work rate must a State meet?
This section of the interim final rule incorporated in regulatory
text the statutory requirement for a State to achieve a two-parent work
participation rate of 90 percent, minus any caseload reduction credit
to which it is entitled. We did not receive comments on this section
and have made no changes to it in the final rule.
Section 261.24 How will we determine a State's two-parent work rate?
This section of the rule is analogous to Sec. 261.22 but applies
to the two-parent rather than the overall work participation rate. The
interim final rule modified the calculation of the two-parent rate to
include families served in
[[Page 6803]]
SSP-MOE programs. The Deficit Reduction Act, as we noted before,
required us to determine the circumstances under which a family in
which a parent living with a child receiving TANF should be included in
the work participation rates, which we did in the definition of ``work-
eligible individual'' in Sec. 261.2(n). The interim final rule
provided a minimum definition of a two-parent family for the two-parent
work participation rate calculation.
We made no changes to this section in the final rule.
Comment: One commenter asked for clarification regarding whether
the addition of two-parent families in separate State programs was
effective in FY 2006 or FY 2007.
Response: Two-parent families receiving assistance through a
separate State program are added effective FY 2007. While the interim
final rule as a whole took effect with its publication on June 29,
2006, all the provisions relating to the work participation rate
including the revised caseload reduction credit, the new work
definitions, and the revisions to which cases are part of the
calculation itself take effect in FY 2007 (October 1, 2006), the first
fiscal year that begins after the law and regulations came into
existence.
Comment: One commenter stated that when a two-parent family is
included in the overall participation rate it is counted as if it were
two separate households, rather than as a single family or household
and thought that was unfair, because ``all the benefits in being a
married or stable two-parent family are lost.''
Response: The overall participation rate includes each family once.
A two-parent family counts in the overall rate in the same way that any
other family does: based on the hours of participation of one work-
eligible individual. If the second parent has hours of participation,
those count only toward the two-parent participation rate, which, by
statute, can combine the hours of both parents.
Section 261.25 Do we count Tribal families in calculating the work
participation rate?
We would like to clarify existing policy with respect to counting
Tribal families in the State TANF work participation rate. During our
listening tour sessions around the country, it came to our attention
that some readers may not fully understand the requirements of this
section of the rule.
In the preamble to the original TANF regulation, we explained that
a State has the option to include or exclude families receiving
assistance under a Tribal TANF or Tribal Native Employment Works (NEW)
program from the denominator of the State TANF participation rates. But
to count any family in the numerator of the State's participation rate
for a month, the family must meet the standards for counting a family
in the State rate, both with respect to hours of participation and
countable activities. We went on to stress that this was true
regardless of whether the family received assistance under a State TANF
program, a Tribal TANF program, or a Tribal NEW program.
This standard continues to apply under the final TANF rule. To
count toward a State's participation rate, the family must meet the
standards of that rate. Therefore, if a Tribe offers activities that
meet the definition of countable State work activities and engages
individuals for the requisite hours to meet the State rate, the State
may choose on a case-by-case basis to include such families in the
calculation of the State's participation rate. However, if the Tribal
program defines and includes countable activities that do not meet the
work activity or work-eligible individual definitions of this final
rule, such activities may not count toward the State's participation
rate. Of course, any family that the State wishes to count in the
numerator must also be included in the denominator.
We received few comments on this section and have not changed the
regulatory text from the interim final rule.
Comment: A couple of commenters took issue with the phrase ``at
State option'' in this section of the rule, arguing that the State
cannot opt to include Tribal TANF families without the consent of the
Tribe. The commenters thought that the wording ignored Tribal
sovereignty and they urged us to change it.
Response: This regulatory wording comes from section 407(b)(4) of
the Act and remains unchanged from the original TANF rule. While the
law and regulations give States the option to include Tribal TANF or
Tribal NEW participants in the State work participation rates, Tribal
sovereignty is not at issue because States will need to confer with
Tribes to know whether individuals are participating in activities and
meeting standards that comport with the requirements of the State's
work participation rate. This provision does not give States control
over Tribal programs or governments. A State cannot opt to include
families unless they are already participating in accordance with State
TANF participation standards. If the Tribe's program does not meet that
standard, the State simply would not be able to opt to include those
families.
Comment: One commenter pointed out that the Federal regulations
governing Tribal TANF and NEW programs allow flexibility in defining
work activities and the hours of participation. State TANF programs
working with Tribal populations not covered by the Tribal TANF or NEW
programs do not have the same flexibility. The commenter thought this
was inequitable and urged us to grant States the same flexibility when
providing services to American Indians living on reservations.
Response: We do not have the authority to implement the commenter's
suggestion. The difference between State and Tribal TANF work
participation requirements is statutory. Section 412(c) of the Social
Security Act allows Tribal TANF programs to negotiate work activities
and hours of participation, whereas section 407 of the Act, which
specifies State work requirements, does not permit such flexibility.
Subpart C--What Are the Work Activities and How Do They Count?
The interim final rule did not change the structure of this subpart
but did make some important additions to Sec. Sec. 261.31 and 261.32.
In particular, the rule added provisions to allow States to ``deem''
participation in core hours when the minimum wage laws of the Fair
Labor Standards Act (FLSA) preclude an individual that works the
maximum allowed from participating for all of the required core hours.
The final rule maintains this basic policy of the interim final rule
but we have modified the regulatory text in response to comments.
Section 261.31 How many hours must a work-eligible individual
participate for the family to count in the numerator of the overall
rate?
We received many comments relating both directly and indirectly to
this subpart of the regulations.
Dozens of readers offered comments about individuals with
disabilities, urging us to provide relief in the hours they must engage
in work activities and generally to structure the regulations to
encourage States to work with the people with disabilities. We refer
readers to the cross-cutting issues section of this preamble for an
overarching discussion of how the regulations address the needs of
individuals with disabilities. We
[[Page 6804]]
respond to specific issues related to hours of participation for people
with disabilities in that cross-cutting section as well. We have
grouped the comments and our responses by topic for the ease of the
reader.
We received numerous comments about the provisions in the interim
final rule that permit a State to ``deem'' participation when an
individual is restricted by the minimum wage laws from engaging in
sufficient hours to meet the core hours requirements of the
participation rates.
The interim final rule allowed States to ``deem core hours'' for
TANF families with a work-eligible individual participating in work
experience or community service who works the maximum number of hours
permitted under the minimum wage requirements of the Fair Labor
Standards Act (FLSA), but still falls short of the core hours
requirement. The final rule continues this general policy. As in the
interim final rule, it limits deeming to States that combine TANF (or
SSP-MOE) and food stamp benefit amounts when calculating maximum hours.
A State can achieve this by adopting the mini-Simplified Food Stamp
Program (mini-SFSP), an option that simply permits States to count the
value of food stamps in determining maximum hours. In accordance with
the FLSA and the applicable regulations at 29 CFR 531.29-531.32 and
guidance issued by the Department of Labor (DOL) this can include
facilities such as child care and transportation subsidies but might
include other subsidies. We recommend that any questions regarding the
FLSA should be directed to Office of the Assistant Secretary for
Policy, Office of Compliance Assistance Policy. Their Web site is:
http://www.dol.gov/compliance.
Food Stamp Issues
Comment: Several commenters raised questions about what is involved
to implement a food stamp workfare program and questioned why it is
necessary.
Response: To ``deem core hours,'' the preamble of the TANF interim
final rule required States to adopt a food stamp workfare program and
conform TANF and Food Stamp Program (FSP) exemption policies under the
SFSP. Since then, we have been informed by the Food and Nutrition
Service (FNS) at the U.S. Department of Agriculture that neither of
these is necessary. A mini-SFSP alone allows a State to count the value
of food stamps with the TANF (or SSP-MOE) benefit in determining the
maximum number of hours permitted under the FLSA. The TANF work
experience or community service program then automatically serves in
place of the food stamp workfare program.
Comment: Several commenters asked about the preamble guidance that
said the SFSP ``must be structured to match food stamp exemptions to
those of the TANF program so that work requirements could be applied to
as many work-eligible individuals as possible.'' One commenter
suggested that we ``clarify that states do not need to make parents of
young children mandatory Food Stamp Employment and Training (FSET)
participants in order to include food stamp benefits in the calculation
of countable hours and qualify them for the deeming provision.'' The
commenter noted that the FSP exempts parents with children under six
years of age from mandatory participation and that changing the food
stamp exemptions to match those of the TANF program would require
States to impose food stamp sanctions on such parents when they do not
comply with TANF's work requirements.
Response: Since the publication of the interim final rule, the FNS
has explained that a State can create a mini-SFSP that will allow it to
count the value of food stamps toward this FLSA calculation but that it
does not need to conform the exemption for the age of youngest child
between food stamps and TANF or expand the use of food stamp sanctions.
For additional information see the Food and Nutrition Service's Web
site at: http://www.fns.usda.gov/fsp/whats_new.htm. Under the heading,
``What's New,'' item 25 for Fiscal Year 2006 provides a sample letter
for States to request a mini-SFSP and additional questions and answers
on implementing the mini-SFSP.
Comment: Several commenters asked whether the SFSP is required.
Response: Yes, a State must implement at least a mini-SFSP in order
to combine food stamp and TANF (or SSP-MOE) benefits for the purpose of
calculating maximum hours. ACF intended to allow States to qualify for
deeming only if they combine food stamp and TANF benefits. The State
should notify FNS of its desire to implement a mini-SFSP that replaces
the FSP work obligation rules with TANF rules. A State that has not
implemented a mini-SFSP cannot deem core hours for participation rate
purposes, but must still combine TANF with allowable facilities, in
accordance with applicable DOL guidance and regulations in order to
maximize the number of work hours permitted under the FLSA. Allowable
facilities usually include child care and transportation subsidies, but
might include other subsidies. We recommend that any questions
regarding the FLSA should be directed to Office of the Assistant
Secretary for Policy, Office of Compliance Assistance Policy. Their Web
site is: http://www.dol.gov/compliance.
Comment: Some commenters objected to the requirement to include
food stamp benefits in the calculation of the number of hours needed to
satisfy the work participation rate. They asserted that this undermined
State flexibility and created inequities because some families would
have to work off a food stamp grant, while others would not, because of
variations in circumstances, such as the receipt of child support and
family size. Some contended that including food stamp benefits in the
requirement was punitive.
Response: We considered the comments carefully but have retained
the requirement to include food stamp benefits in order to deem core
hours of participation. The main effect of the commenters'
recommendation would be to reduce the number of hours that a State
could require an individual to participate in work activities while
still counting in the work participation rate. We believe that
participation in work activities is crucial for families to move from
dependence on public support to increased self-sufficiency. Further
reducing the hours required is contrary to the goals of the TANF
program. We do not believe that the policy generates inequities,
because the number of hours that a family must participate to count in
the work participation rate is directly based on the value of the
combined benefits, up to a maximum. If a family has a reduced work
obligation because of deeming, it is because that family receives less
support from the government than a family with a higher work
obligation--just as someone who works fewer hours in paid employment
earns less than someone who works more hours at the same wage.
The new policy is not intended to be punitive. Rather, it gives
States the opportunity to count a family in the participation rate with
fewer hours of real participation than the State would otherwise need.
We adopted the policy so that a State would not have to place an
individual in another core activity once that individual worked the
maximum hours possible under the FLSA rules. This makes it more likely,
not less likely, that a person would meet the participation rates.
Comment: Several commenters asked whether the SFSP provisions apply
to
[[Page 6805]]
families receiving assistance through a separate State program.
Response: FNS does not distinguish between TANF and SSP-MOE
programs; therefore, the mini-SFSP provisions can apply to a SSP. As
long as a State combines a family's SSP-MOE grant with its food stamp
allotment, we will permit deeming in a SSP in the same way as we do
TANF.
Fair Labor Standards Act (FLSA) Issues
Comment: One commenter asked ACF to approach the Department of
Labor (DOL) to specify the benefits package a State can use in the FLSA
calculation and requested that the list of such benefits include child
care and transportation costs. Another commenter recommended that we
include other Federal benefit programs, such as subsidized housing
assistance and Medicaid.
Response: The determination of whether or not the FLSA applies to
an activity and which benefits must be used in the minimum wage
calculation are matters that must be resolved by each State with the
Department of Labor. The final rule does not require the inclusion of
these benefits for the purpose of deeming core hours. We chose not to
require States to include these benefits because doing so would further
complicate the calculation of deemed core hours. We recommend that any
broader questions regarding the FLSA should be directed to the Office
of the Assistant Secretary for Policy, Office of Compliance Assistance
Policy. Their Web site is: http://www.dol.gov/compliance.
FLSA Deeming Issues
Comment: Several commenters recommended that we expand the deeming
policy from satisfying the core work activity requirement to the entire
work requirement. The commenters were concerned that even if some
individuals were deemed to meet the 20-hour requirement, they would not
be able to find other activities to meet the remaining 10 hours needed
to satisfy the average weekly participation requirements. Some
commenters asserted that requiring additional participation in non-core
activities would create logistical and transportation problems for TANF
administrators and families alike. They also noted that it may be
difficult to find programs that offer additional activities for an
average of just 10 hours per week.
Response: We adopted the deeming policy so that States would be
able to count participants toward the core activity requirement if they
participated in a work experience or community service activity as much
as permitted under the FLSA rules. Work experience and community
service programs are often reserved for individuals who have difficulty
participating in TANF's other core work activities. In the absence of
the deeming policy, work experience and community service participants
who were prevented by the FLSA from meeting the core hours requirement
and could not find paid employment would have to participate in
vocational educational training or job search and job readiness
assistance to count them in the rate. But, oftentimes States are
reluctant to engage individuals in these activities when they need only
a few hours to count because they are subject to durational limits. We
chose not to expand deeming to the required non-core hours because many
of these participants can benefit from one of TANF's non-core
activities, primarily either job skills training directly related to
employment or education directly related to employment. A State would
not have to engage a client in only 10 hours per week of the non-core
activity. If a program and an individual's needs call for more hours,
the State could still place the individual in that program.
We would also like to point out that allowing States to deem does
not impose any new or additional logistical or transportation problems.
On the contrary, the new deeming policy provides additional flexibility
and in doing so significantly reduces logistical and transportation
problems. For example, a family with a 20-hour requirement that the
State deems under this provision will count with just one activity.
Under prior rules, the State would have had to find that family another
core activity.
Comment: One commenter asked whether the deeming policy could apply
in Puerto Rico because it does not participate in the Food Stamp
Program and thus cannot adopt a SFSP.
Response: The final rule permits deeming in States that have
adopted the SFSP. Puerto Rico operates the Nutrition Assistance Program
which is funded by a block grant in lieu of the Food Stamp Program.
This block grant provides sufficient flexibility so that the value of
food stamps, or their equivalent, could count without the need for the
SFSP. Therefore, Puerto Rico may deem core hours, when necessary, as
long as it counts the value of Nutritional Assistance Program benefits
in determining the individual's work obligation.
Comment: One commenter asked if our reference to the 30 or 50 hours
for two-parent families was a mistake in drafting the regulation.
Response: The reference to the 30 or 50 hours is not a mistake.
Under the statute, the core hours requirement for the two-parent rate
is 30 or 50 hours, depending on whether or not the family receives
federally subsidized child care.
Child Support Collections and the FLSA Minimum Wage
Comment: Several commenters suggested that we remind States that
the TANF assistance benefit used in the FLSA calculation must be the
net amount of assistance provided after subtracting from the benefit
the amount of any current child support collection retained by the
State and Federal governments to offset the cost of providing that
assistance.
Response: We agree. In determining the maximum number of hours of
work experience and/or community service that may be required of a
recipient to meet the minimum wage requirements of the FLSA, States
should calculate the amount of assistance net of any child support
collections received in the month and retained to reimburse the State
or Federal government for the current month's assistance payment.
Under the community work experience provisions of the former JOBS
program, the portion of child support collection, if any, used to
reimburse the amount of AFDC was explicitly excluded by law. Section
482(f)(1)(B)(i) of the Social Security Act outlining the minimum wage
formula specified that ``* * * (and the portion of a recipient's aid
for which the State is reimbursed by a child support collection shall
not be taken into account in determining the number of hours that such
individual may be required to work).''
This prior provision of law is no longer in effect, but we believe
that States should use the amount of assistance, net of the retained
child support collection so that they do not require a parent to ``work
off'' assistance amounts that the non-custodial parent has repaid. We
are not specifying the operational procedure that States must follow to
determine the benefit amount, net of retained child support. Under the
prior law, States generally used one of two approaches. Under
retrospective budgeting, States used the income less child support
collections received in the budget month to determine the benefit
amount used to calculate the work experience obligation for the payment
month. Under prospective budgeting, States used the ``best estimate''
of income less child support collections for the month, based on prior
experience. This works better in wage
[[Page 6806]]
withholding cases where regular child support collections may be
predicted.
The Deficit Reduction Act of 2005 created incentives to States to
send more child support collected on behalf of families on TANF to the
families themselves in both current and former assistance cases.
Beginning October 1, 2009, or as early as October 1, 2008, at State
option, a State may elect to pay the family a portion of the assigned
support obligation. The State will not be required to pay to the
Federal Government the Federal share of the ``excepted portion'' of
such collections if the State pays the excepted portion to the family
and disregards it in determining TANF assistance. The ``excepted
portion'' may not exceed $100 per month, or in the case of a family
that includes two or more children, $200 per month.
Under this new DRA provision, the State should not deduct the State
and Federal portions of assigned support collections that it ``passes-
through'' to the family in calculating the ``net'' payment to the
family that can be counted in determining the number of hours an
individual can be required to work. For example, if a family with two
children receives $500 in TANF and the State collects assigned child
support in the amount of $250 and elects to ``pass-through'' $150 to
the family, the ``net'' payment that can be counted for FLSA purposes
would be $400. See OCSE-AT-07-05 for further information concerning
pass-through payments in former as well as current assistance cases.
The State could also, of course, claim its share of the pass-through
toward its MOE requirement.
Other ``Deeming'' Issues
Comment: Several commenters proposed expanding the ``deeming''
concept to work-eligible individuals who work the maximum number of
hours allowed by a doctor to receive full credit for their
participation. Other commenters recommended that we allow States to
deem individuals who are working ``as many hours as their medically
documented reasonable accommodation plans allow as meeting the federal
work requirement.'' Another commenter suggested that States be
``allowed to count recipients who participate in work activities for
the number of hours required under an employment plan that includes
accommodations for disabilities (or accommodations based on a
recipient's need to care for a family member with a disability) as
having met the federally required number of hours of participation.''
The commenter went on to note that this approach is consistent with the
treatment of families in work experience or community service who were
working ``less than the minimum number of hours to satisfy the
participation rates.'' The commenters asserted that these options would
encourage States to do more to engage these individuals.
Response: We extended the deeming option to participants in work
experience and community service because the FLSA provisions may
actually prevent a State from meeting the ``core'' work requirement
using these two activities. We did not extend the deeming option to
other groups because we believe that Congress, in setting the maximum
50 percent participation rate, recognized that some families might not
be able to work the full hours required. We encourage States to
continue to work with these families to help move them to work and
self-sufficiency. Our final rule does allow States to exclude
recipients of Federal disability programs and those caring for a
disabled family member from the definition of work-eligible individual.
For more discussion of how the rules affect individuals with
disabilities, readers should refer to the cross-cutting issues section
at the beginning of this preamble.
Section 261.32 How many hours must a work-eligible individual
participate for the family to count in the numerator of the two-parent
rate?
We did not receive any comments that were directed strictly at this
section of the regulations; however, the comments that we addressed in
the previous section, Sec. 261.31 of this subpart, often applied
equally to this section. We refer readers to the discussion there and
to the preamble about the definition of work-eligible individual in
Sec. 261.2 of this subpart for further discussion of counting two-
parent families toward the two-parent participation rate.
Section 261.34 Are there any limitations in counting job search and job
readiness assistance toward the participation rates?
In the interim final rule, we did not make any changes to the
various limitations in counting job search and job readiness
assistance. Indeed, we did not include this section of the TANF rules
in the interim final rule at all. After reviewing the comments we
received, we have concluded that it is necessary to include this
section in order to clarify how States should apply the various limits
on counting job search and job readiness assistance.
In the final rule, we define a week for each of the limits in this
section. For the six-week (or 12-week) limit on participation in job
search and job readiness assistance, we define one week as 20 hours for
a work-eligible individual who is a single custodial parent with a
child under six years of age and as 30 hours for all other work-
eligible individuals. Thus, six weeks of job search and job readiness
assistance equates to 120 hours for the first group and 180 hours for
all others. For those months in which a State can count 12 weeks of
this activity, these limits are 240 hours and 360 hours, respectively.
To make this section more consistent with other work participation
rate provisions, we modified the six-week (or 12-week) limit to apply
to ``the preceding 12-month period,'' rather than to a fiscal year. We
also define ``four consecutive weeks'' and clarified the provision that
allows an individual who participates in job search and job readiness
assistance for ``3 or 4 days during a week'' to count ``as a week of
participation in the activity.''
Subpart D--How Will We Determine Caseload Reduction Credit for Minimum
Participation Rates?
PRWORA created a caseload reduction credit that reduces the
required work participation rate that a State must meet for a fiscal
year by the percentage that a State reduces its overall caseload in the
prior fiscal year compared to its caseload under the Title IV-A State
plan in effect in FY 1995. The calculation excludes reductions due to
Federal law or to State changes in eligibility criteria. The Deficit
Reduction Act of 2005 recalibrates the credit by changing the base year
to FY 2005.
We received only a handful of comments relating to subpart D. We
made one change to the regulatory text in Sec. 261.42 and we also
clarified our policy with respect to excluding ``excess MOE'' in Sec.
261.43. We explain both of these below.
Section 261.40 Is there a way for a State to reduce the work
participation rates?
Comment: A few commenters questioned the effective date of the
regulations governing the caseload reduction credit with the
recalibrated base year. They asked us to clarify that the original base
year of FY 1995 applies to the FY 2006 credits and that the new base
year of FY 2005 applies to the FY 2007 credits.
Response: The commenters are correct that we will not use the new
base year of FY 2005 until we calculate the FY 2007 caseload reduction
credits. For that year's credits, we will compare FY 2005 to FY 2006 to
determine the
[[Page 6807]]
caseload reduction credit to which States are entitled. The FY 2005
base will apply from that point forward. While the interim final rule
as a whole took effect with its publication on June 29, 2006, all the
provisions relating to the work participation rates--including the
revised caseload reduction credit, the new work definitions, and the
revisions to which cases are part of the calculation itself--take
effect in FY 2007 (beginning October 1, 2006), the first fiscal year
that begins after the law and regulations came into existence.
Comment: One commenter suggested that we allow the caseload
reduction credit to apply in ``real time,'' as opposed to applying it
``backward-looking'' as it currently does. The commenter contended that
rewarding a State for ``present reductions'' would give it an incentive
to keep working to reduce the caseload rather than ``resting on past
laurels.''
Response: The statute establishes the structure of the caseload
reduction credit and thus is beyond our authority to change. We think
that Congress chose to update the base year of the calculation for
precisely the reason that the commenter noted, finding it no longer
appropriate to reward a State in its participation rate for caseload
declines it achieved many years earlier.
Section 261.41 How will we determine the caseload reduction credit?
This section of the interim final rule specified the method that we
use for calculating the caseload reduction credit. In the final rule,
we corrected two typographical errors in paragraph (c) that erroneously
referred to ``the FY 2005 comparison-year'' caseload when they should
have read ``the FY 2005 base-year'' caseload.
Comment: One commenter requested clarification of the data a State
should report to establish the FY 2005 base-year caseload for two-
parent families in which one parent receives TANF and the other does
not. The commenter stated, ``The interim final rule defines a non-
recipient parent living with a child receiving assistance as a work-
eligible individual. Under this definition, single-parent households
with non-recipient second parents will be included in the two-parent
caseload.'' The commenter suggested that the FY 2005 baseline include
these two-parent cases to ensure caseloads are comparable when
calculating caseload reduction credit.
Response: The commenter raises a valid point. Under this rule, the
minimum definition of a two-parent family has changed. Since the old
definition applied to FY 2005, a State submitting a caseload reduction
report based on the two-parent caseload would have caseload data based
on the old definition for FY 2005 and the new one for the comparison-
year caseload. We have changed the rule at Sec. 261.40(d) to provide
for adjusting data in this kind of situation. To correct such an
inconsistency, a State may adjust its FY 2005 two-parent caseload data
as part of its caseload reduction report. A State that wishes to make
such an adjustment should explain in its report how it arrived at the
adjusted number. Please refer to the instructions to form ACF-202, the
Caseload Reduction Report, for further information.
Section 261.42 Which reductions count in determining the caseload
reduction credit?
Comment: A couple of commenters noted that we deleted part of this
section that listed types of eligibility changes a State might make and
for which it cannot receive a caseload reduction credit. One thought
this deletion was inadvertent; another believed that the language
remains relevant as States consider new program designs. All commenters
urged us to restore the language.
Response: We have restored the language in the final rule. We had
removed the text in the interim final rule because it was strictly
illustrative and we thought States had enough experience with the
caseload reduction credit to know the types of changes in eligibility
criteria that they need to include on the caseload reduction report. We
also did not want to suggest that the list in the original rule was
exhaustive; States must report all changes in eligibility between the
base year and the comparison year. However, since commenters found the
language particularly useful, we restored the language with the
clarification that the list is not comprehensive.
Comment: One commenter urged us to permit eligibility changes that
increase the caseload to count for credit above and beyond offsetting
the effect of changes that decrease the caseload. The commenter
reasoned that, since we had established the offset by regulation,
rather than implementing a statutory provision, we have authority to
expand it in this way. Further, the commenter suggested that failing to
do so would be fundamentally unfair.
Response: It is our longstanding policy to permit caseload
expansions from eligibility changes to offset changes that decrease the
caseload. We originally established this policy to allow the caseload
reduction credit to reflect a more accurate picture of the change in
the caseload. However, we have never allowed caseload increases to do
more than offset decreases, in other words, to credit a State for
greater caseload reduction than it actually experienced. The interim
final rule incorporated that policy in Sec. 261.42(a)(3) and the final
rule retains that provision.
Section 261.43 What is the definition of a ``case receiving
assistance'' in calculating the caseload reduction credit?
When we published the interim final rule, this section remained
largely unchanged from the original TANF rules. Subsection (a) explains
that we calculate the caseload reduction credit using cases that
receive assistance, either TANF or SSP-MOE assistance. In the final
rule we have made minor wording changes to this subsection to remove
extraneous language and thereby improve the clarity and understanding
of exactly which cases are included in the calculation. We have made no
substantive change in the definition of cases used in the calculation.
Subsection (b) allows a State to exclude from the caseload
reduction credit calculation cases on which the State has spent
``excess MOE,'' that is, MOE in excess of the amount it needs to meet
its MOE requirement. If a State applies this provision, for the
comparison-year caseload we would use the sum of the State average
monthly TANF and SSP-MOE assistance caseloads, minus cases whose
receipt of assistance is attributable solely to MOE funds in excess of
the State's 80- or 75-percent MOE requirement. Since the publication of
the interim final rule, this ``excess MOE'' provision has drawn
considerable attention. In our listening sessions across the country,
it was a topic of considerable discussion and also elicited formal
comments on the interim final rule. Prior to issuing these rules, only
one State had ever made use of it since its inception in the original
TANF regulation.
Because of this new interest in the excess MOE provision, we
thought it would be helpful to specify the methodology for calculating
excess MOE and have revised this subsection to incorporate the
specifics of this calculation. If a State wishes to have us take its
excess MOE spending into account in the caseload reduction credit
calculation, it needs to follow this methodology as part of its
Caseload Reduction Report (form ACF-202).
One problem in calculating excess MOE is that a given dollar of MOE
spending cannot track to a given case.
[[Page 6808]]
Since the caseload reduction credit considers only cases receiving
``assistance'' and not all cases, it is nonetheless important to
develop an approach for determining the share of State spending on
assistance that is in excess of its MOE requirement. Some methodologies
would over-represent the amount of spending on ``assistance'' that was
indeed excess MOE. For example, a methodology that assumed that all
spending on two-parent families came from excess MOE would, in effect,
artificially manipulate the credit, especially the two-parent credit.
Therefore, we think that the only fair and reasonable approach is to
consider average costs per case when determining how many cases were
funded with excess MOE and thus should be excluded from the caseload
reduction credit calculation. In fact, the only method we have approved
prior to this final rule used average costs per case.
Our method divides the total TANF (Federal and State) and SSP-MOE
spending on assistance for the comparison year by the State's average
monthly assistance caseload (combined TANF and SSP-MOE) for the
comparison year to arrive at an average annual assistance cost per case
for the fiscal year. The method then computes total spending on
assistance as a percentage of total spending. We use total spending
because spending with Federal and State MOE funds on assistance are
largely interchangeable. If we based the calculation solely on MOE
funds, the size of the credit would vary not based on the amount of
excess State MOE spending, but rather on the distribution of assistance
spending between State MOE and Federal funds. We then subtract the
required 80 percent of historic State expenditures (80-percent MOE
requirement) from the State's actual MOE expenditures and multiply the
remaining ``excess MOE'' by the percentage of spending on assistance.
Finally, we divide this excess MOE spending on assistance by the
average annual assistance spending per case to determine how many cases
were funded with excess MOE. If the excess MOE calculation is for a
separate two-parent caseload reduction credit, we multiply the number
of assistance cases funded with excess MOE by the average monthly
percentage of two-parent cases in the State's total (TANF plus SSP-MOE)
average monthly caseload. All financial figures in the methodology must
agree with data reported on the State's ACF-196 TANF Financial Report
and all caseload data must agree with information reported on the ACF-
199 TANF Data Report and ACF-209 SSP-MOE Data Report.
The following example illustrates our methodology. In this example
we are calculating a FY 2007 caseload reduction credit, which will
reduce the State's FY 2007 required participation rate, and thus the
comparison year is FY 2006. Assume that the State's total MOE for FY
2006 equals $100 million and its Federal spending in FY 2006 equals
$175 million for a combined total of $275 million. Of this amount,
total spending on assistance (combined Federal and State) equals $110
million. This means spending on assistance equals 40 percent of total
spending ($110 million divided by $275 million). The State's combined
TANF and SSP-MOE average monthly caseload, as reported on the TANF Data
and SSP-MOE Data Reports for FY 2006, equals 20,000. Therefore, the
average spending on assistance per case equals $5,500 ($110 million
divided by 20,000). The State's 80-percent MOE requirement equals $80
million, so it spent $20 million above that level. Of that ``excess
MOE,'' we attribute that $8 million, or 40 percent, to assistance
spending. Finally, we divide that $8 million by the average assistance
spending of $5,500 per case to conclude that 1,455 of 20,000 average
monthly cases were funded with excess MOE and should be subtracted from
the FY 2006 caseload in the caseload reduction credit calculation.
We require the use of 80 percent MOE rather than 75 percent because
the statutory requirement is for 80 percent MOE spending unless a State
meets the work participation requirements for the year. If a State
meets both participation rates for the comparison year, and thus its
required MOE drops to 75 percent, it may revise its caseload reduction
credit to reflect the lower required MOE level. It is possible that we
will already have that information for the comparison when we calculate
the caseload reduction credit; if so and the State met both rates, we
will use 75 percent at that time.
We have revised the Caseload Reduction Report (form ACF-202) to
include a new worksheet and made some other changes to the form to
assist a State in claiming excess MOE as part of the caseload reduction
credit.
Comment: Several commenters noted that we retained the provision
that allows a State that spends MOE funds in excess of its required
level to report for the caseload reduction credit only the pro rata
share of cases receiving assistance that is required to meet the basic
MOE requirements. The commenters urged us to retain the provision in
the final rule.
Response: The final rule does retain the provision allowing a State
to receive caseload reduction credit for excess MOE spending. During
our listening tour for the interim final rule, we expressed doubts
about this provision and suggested that we might not retain it. Our
concerns were and remain that: (1) The provision has not proved
effective in encouraging States to spend additional MOE funds, as most
States spend only to the level required; and (2) the interaction
between this provision and the new flexibility in the DRA concerning
the types of expenditures that can count for MOE, particularly that a
State can spend MOE on non-needy families, could result in large,
artificial caseload reduction credits.
We do want to clarify that, if a State uses this provision and
receives caseload reduction credit for excess MOE spending, it may not
subsequently revise its reported financial data to reduce the level of
State MOE expenditures for which it received such credit and replace
those expenditures with Federal ones. It would be inherently unfair to
credit a State for expenditures of State funds that it later reports
did not come from State funds.
Section 261.44 When must a State report the required data on the
caseload reduction credit?
Comment: One commenter asked us to put back language that the
interim final rule deleted stating that we would issue the caseload
reduction credits by March 31 of the fiscal year to which the credit
applied. The commenter stated, ``We understand that negotiations
sometimes result in the notification to an individual state being
delayed past this date, but think it is important that states have the
general expectation that the information be received by March 31.''
Response: We did not make the change in the final rule that the
commenter recommended. We deleted the March 31 date that was part of
the original TANF rule because, after many years of experience with the
caseload reduction credit, we did not find that it served a useful
purpose. Moreover, there is no statutory basis for this or any other
specific issuance date. Nevertheless, we will continue to endeavor to
issue the credits within the fiscal year to which they apply.
Subpart F--How Do We Ensure the Accuracy of Work Participation
Information?
The Deficit Reduction Act of 2005 requires HHS to issue rules that
ensure
[[Page 6809]]
the consistent measurement of work participation rates, including
information with respect to: (1) Determining whether the activities of
a recipient of assistance may be treated as a work activity; (2)
establishing uniform methods for reporting hours of work of a recipient
of assistance; (3) identifying the types of documentation needed by the
State to verify reported hours of work; and (4) specifying the
circumstances under which a parent who resides with a child who is a
recipient of assistance should be included in the work participation
rates.
We received many comments about this subpart. Several readers
offered general comments about the increased burden that the interim
final rule placed on administrators and clients, particularly with
respect to reporting actual hours and documenting participation in work
activities. Others provided specific comments and suggestions, which we
address below.
Section 261.60 What hours of participation may a State report for a
work-eligible individual?
The interim final rule made explicit in regulation our long-
standing policy of counting only actual hours of participation and not
scheduled hours. It required that each State have in place a system for
determining whether the hours it reports for the participation rates
correspond to hours in which work-eligible individuals actually
participate in work activities. The final rule continues this same
actual hours standard.
In conjunction with the actual hours policy, the interim final rule
also introduced to the regulations the concept of giving States credit
for excused absences for TANF participation in unpaid activities. Under
the interim final rule, a State could define and count reasonable
short-term, excused absences for days missed due to holidays and a
maximum of 10 additional days of excused absences in any 12-month
period, no more than two of which may occur in a month. To count an
excused absence as actual hours of participation, the individual must
have been scheduled to participate in a countable work activity for the
period of the absence that the State reports as participation.
In the final rule, we have clarified the holidays policy, limiting
it to 10 days in a year. Because we did not specify in the interim
final rule the number of holidays, States proposed counting widely
varied holidays in their Work Verification Plans, some proposing
impossibly long lists of the days they would excuse and count toward
the participation rates. We realized that we had not provided adequate
guidance in the regulation and that, as written in the interim final
rule, the holidays policy would not meet the spirit of our mandate to
make work participation rate calculations consistent across States. We
deliberated at length about the appropriate number, considering the
number granted on average by private companies, the average number of
State paid holidays, and the number of Federal holidays. Ultimately, we
chose to limit it to 10 to be consistent with the number of Federal
holidays. Each State must designate the days that it wishes to count as
holidays for those in unpaid activities in its Work Verification Plan.
It may designate no more than 10 such days. The State is free to excuse
an individual on other days for religious or other reasons, but it may
not count other days for participation rate purposes as holidays. It
may also exercise the additional excused absences policy.
During our listening tour and in written comments many people
expressed misgivings about the way we structured credit for additional
excused absences. Many urged us to permit a State to implement an
hourly equivalent to the 10 days, since individuals sometimes need to
be excused for only a portion of a day. Others thought that the number
of additional excused days was insufficient and objected to the
restriction on counting no more than two per month.
In writing the final rule, we struck a balance between our
responsibility to ensure State accountability for the work
participation rates in the law and giving States participation credit
for occasional absences due to circumstances beyond an individual's
control. We were persuaded by the comments that excused hours makes
more sense than excused days because some situations require an
individual to be absent for only part of a day. The final rule permits
a State to count up to 80 hours of additional excused absences in a
year for each work-eligible individual. It may not report more than 16
of these hours in any month. As in the interim final rule, the State
must describe its excused absence policy (including holidays) in its
Work Verification Plan.
Readers should note that we have modified the title of this section
for clarity of comprehension. We think it should now be more readily
apparent that this section addresses the hours that can count for
participation, while Sec. 261.61 speaks to documentation requirements
to support hours of participation, and Sec. 261.62 specifies how
States should verify the hours that they report and document.
In keeping with this clarification, this section of the final rule
incorporates the provision permitting a State to report projected hours
of employment for up to six months on the basis of current, documented
actual hours of work. In the interim final rule, this provision
appeared in Sec. 261.61. We have made no change to the text of the
provision but moved it to this section because it fit better under the
rubric of reporting hours than it did under documenting hours.
This section of the interim final rule also specified the hours
that a State could count for self-employed individuals. The final rule
does not change this provision.
Finally, the interim final rule limited the counting of homework
and study time for individuals participating in vocational educational
training or any other educational work activity to supervised settings.
The final rule allows a State to count unsupervised homework time,
subject to certain limitations.
Reporting Hours of Each Activity Separately
Comment: In conjunction with comments we received about our effort
to draft mutually exclusive definitions of work activities, a number of
commenters objected to the requirement to report actual hours for each
activity separately. They maintained that separate tracking would
discourage States from combining work activities and would impose an
added administrative burden. They urged us to allow States to combine
activities and report all participation under one activity. For
example, one commenter suggested that we allow States to count an
individual's hours from several activities in the activity that
``constitutes the majority of the hours of participation.''
Response: We strongly support State programs that combine
activities. Having States report hours for each work activity in the
appropriate category will help ensure that the data are comparable
across States. Reporting participation by activity is required by
section 411 of the Social Security Act and does not prevent a State
from creating integrated programs. Moreover, a policy that allows some
activities to count within others based on standards such as what
constitutes a ``significant majority'' of hours would still require
States to track the hours of each activity separately to determine
which activity is the primary activity. Thus, combining the activities
for purposes of reporting hours of participation would not
[[Page 6810]]
achieve the suggested administrative simplification.
The main effect of these recommendations would be to allow States
to bypass statutory limitations on counting participation in certain
activities, most notably the six-week limit on job search and job
readiness assistance and the lifetime 12-month limit on vocational
educational training, or to count educational activities during core
hours.
Actual Hours versus Scheduled Hours
Comment: Some commenters recommended we allow States to report
scheduled hours. One commenter thought that we should allow school
districts to count scheduled hours with excused absences for good cause
because it would ``benefit the client and these districts.'' Another
maintained that requiring a State to develop a ``system for reporting/
counting of actual hours instead of scheduled hours is an unfunded
mandate.'' Another commenter wrote that it will ``require a significant
investment of program resources in activities and systems to measure
the number of actual hours of participation.''
Response: Our current policy simply extends the previous policy.
Under TANF, States have always been required to report actual hours and
not scheduled hours. Although the regulations did not explicitly state
it, the instructions to the TANF Data Report (Form ACF-199, transmitted
via Program Instruction TANF-ACF-PI-99-3, dated October 27, 1999)
state, ``For each work activity in which an adult or minor child head-
of-household participates, States are to collect actual hours of
participation for each week in the report month. * * *'' Thus, States
should already have had systems in place to capture and report actual
hours of participation.
Holidays and Additional Excused Absences
Comment: Some commenters thought that 10 days per year (a maximum
of two days per month) of excused absences beyond holidays was not
sufficient to accommodate the needs of TANF recipients. One commenter
thought that our policy was ``not a commonly accepted or reasonable
standard.'' Commenters asserted that low-income, single parents often
needed extra time to deal with court or agency mandated appointments,
school appointments, meetings with child protective caseworkers, and
caring for sick children, as well as to attend to personal needs that
arise. Several commenters wrote that it is ``unreasonable to require
caregivers to ignore emergencies or fail to take handicapped children
to the doctor during work hours when the doctor is available so that
the State can get credit for their participation in a work
requirement.'' Some recommended specific standards to replace the
excused absence policy described in the interim final rule (e.g., up to
120 hours per year, with a maximum of 30 hours per month, or 2 days per
month but 24 days per year), while others suggested we allow unlimited
excused absences as long as States can ``verify the reason for excused
absence'' and it is in their approved Work Verification Plans.
Some commenters argued that there should be exceptions to the
excused absence policy for specified reasons. They recommended that we
grant extensions for various reasons, such as job interviews, meetings
required by other governmental agencies (e.g., child welfare, child
support, schools, courts, or other assistance programs), and illness,
either of the participant or the participant's child. They suggested
that we count these absences toward participation without limit and not
as part of the regular excused absence allotment because such
appointments are beyond the control of the individual and, in some
cases, it is not possible to make up the hours for some activities
because they do not fit a provider's schedule. A number of commenters
suggested that we use the providers'' definition of holidays and other
excused absences for individuals in education and training programs, as
long as they make satisfactory progress.
Response: The TANF work participation rate has always been based on
actual hours. Congress did not include an excused absence policy, in
part because the hourly standard has always been well below the
customary 40-hour work week; it is 20 hours per week for a single-
parent family with a child under six years of age. As a result, most
individuals already had a built-in excused absence policy of 10 to 20
hours per week. This gives States the flexibility to work around hours
that a client misses and to allow the individual to make them up where
feasible. Notably, it also means that TANF clients have more time to
address the kinds of issues the commenters raised than many non-TANF,
low-income, working parents.
The interim final rule expanded this statutory flexibility by
including holidays and up to 10 additional days per year (no more than
two days per month) of excused absences to count as participation, a
first in the history of the TANF program. Now, under the final rule, we
have expanded flexibility further to excuse up to 10 holidays and up to
80 additional hours of excused absences in a year, not more than 16 of
which can be reported in a month.
Equally important, we remind readers that there is a distinction
between the allowances a State or service provider may choose to make
for an individual and the participation allowances we are granting to
States in excused absences. The State determines how many hours an
individual must engage in work and what it considers a good cause
excuse for missing those hours. The law and regulations determine what
a State gets credit for in the work participation rate. We established
the limits on excused absences based on a reasonable standard derived
from common employment practices. Nevertheless, those limits on
counting for participation do not preclude States from excusing
additional absences without penalty to the individual.
Comment: Some commenters thought that our excused absence policy
conflicted with ``the intent and spirit of the Family Violence Option
(FVO) by punishing individuals who have experienced domestic
violence.''
Response: For the first time under TANF, we have given States
participation credit for allowing clients to address emergencies.
Rather than conflicting with the FVO, the excused absence policy
provides another avenue, in addition to granting program waivers, for
States to respond to needs of victims of domestic violence.
Comment: Many commenters recommended that the regulations count as
excused absences hours missed due to the disability of an adult TANF
recipient or due to caring for a family member with a disability. For
example one commenter stated, ``Disabilities and responsibility for
caring for a disabled person clearly result in an overall greater
frequency of absences from work activities than would otherwise be
necessary.'' One commenter noted that the standard excused absence
policy on which the interim final rule is based makes exceptions for
disability-related absences. The commenter explained that ``employers
are actually required by the federal Family Medical Leave Act to allow
individuals to take up to three months of leave if related to the
employee's health or the employee's need to care for an ill family
member.'' The commenter recommended that we allow States ``to count all
excused absences related to verified medical purposes.''
Response: We have addressed the commenters'' concerns about the
need for excused absences due to caring for a child with a disability
by excluding
[[Page 6811]]
such individuals from the definition of work-eligible individual.
Please refer to the preamble discussion of Sec. 261.2(n) for more
detail about the definition of a work-eligible individual.
With respect to the Family and Medical Leave Act, States must
comply with its mandate that ``eligible employees'' are entitled to 12
weeks of unpaid leave during any 12 month period for reasons of
childbirth, adoption, in order to care for an ailing family member, or
a serious health condition that impedes the employee from performing
her job. 29 U.S.C. Sec. 2612(a)(1). The term ``eligible employee'' is
defined at 29 U.S.C. Sec. 2611(2). The State's responsibility to
comply with the FMLA does not expand the hours of excused absence for
which the State can get credit under the TANF work participation rate.
We anticipate that a State would give a good cause exception from any
State work requirement to an individual who is entitled to leave under
the FMLA during such a period of leave, but the family would still be
included in the calculation of the participation rate. For further
information regarding how to comply with the FMLA, we refer readers to
the Department of Labor and the applicable statutes and regulations.
Comment: Several commenters stated that our excused absence policy
would ``reduce State credit'' toward meeting the work participation
rates. Another asserted that our policy would ``not only hurt States''
efforts to meet the work rates, but will mean that the work
participation rates themselves give policymakers and the public an
inaccurate picture of the extent to which recipients are actively
engaged in work activities.''
Response: We would like to stress again that allowing States to
count excused absences in the participation rates does not hurt State
efforts to meet the work participation rates or ``reduce State
credit''; it does exactly the opposite. This is a policy of expanded
credit, where prior rules did not count excused absences. We appreciate
that some readers think we should have expanded credit even further,
but we crafted an excused absence policy we think is reasonable and
derived from common employment practices.
Comment: Many commenters recommended changing the standard from a
daily one to an hourly one. They argued that this would more closely
approximate typical employment policies where those who miss work
typically take off some number of hours rather than a full day. They
thought that a policy of daily excused absences would reduce incentives
for individuals to participate in work activities before or after
required appointments because such participation would not affect their
countable hours of participation. Most commenters recommended
converting our 10-day excused absence policy for purposes of the
participation rate to 80 hours of excused absences in any 12-month
period, no more than 16 of which they could use in a month. One
commenter emphasized that a day should be ``fixed at 8 hours,
regardless of the number of hours a participant is required to
participate.'' Otherwise, a single day's absence could consume more
than one day's worth of excused absences.
Response: We agree that excusing hours rather than days gives
greater flexibility and more closely approximates a work experience. As
we noted above, we considered several approaches for converting days to
hours. The final rule permits up to 80 hours of excused absences for a
work-eligible individual in a 12-month period, no more than 16 of which
may be reported in a month.
Comment: Some commenters objected to the two-day per month limit on
counting excused absences. One commenter argued that this did not
reflect employment practices in the real world and that States should
be allowed to count individuals for as many excused absences as needed
in a given month, up to the total allowed for the year.
Response: We realize that some employers may permit employees to
take more than two excused absence days (or the hourly equivalent) per
month. However, most employers also require employees to accrue these
days (or hours). It may take a full year for an employee to earn the
equivalent of 10 days of leave, so, as a practical matter, the amount
of leave many new employees are entitled to is restricted as well. More
important, however, is that this policy applies only to what States can
count, not to what they can allow for individual participants as a
matter of policy. Also, since most TANF recipients face participation
requirements of either 20 or 30 hours per week, there is room to make
up the missed hours, which would not be so easy for someone working
full-time.
Comment: Several commenters suggested that we extend the excused
absence policy to individuals participating in paid as well as unpaid
activities. They noted that many low-income workers do not receive paid
leave for holidays or other absences. In addition, they argued that
this holds many of those who are working to a higher standard than
those in unpaid activities.
Response: We considered extending the excused absence policy to
give States credit for individuals in paid employment, but ultimately
decided to retain the policy in our interim final rule. As a practical
matter, the State would already be getting credit for the client's
hours of work, including excused absences, whether paid or not, because
a State can project the hours of participation for individuals in paid
employment for up to six months (based on documented, actual hours).
Comment: One commenter asked for clarification regarding the
activity under which it should count excused absences it grants to
allow an individual to search for a job. The commenter asked whether
such an excused absence should count as job search and job readiness
assistance or as part of the activity from which the individual was
excused.
Response: States should report hours of excused absences as hours
of participation in the activity from which the individual was excused.
For example, if an individual were participating in a community service
program but needed to be excused for two hours to go to a job
interview, the State should report those excused hours as hours of
community service, not as hours of job search and job readiness
assistance.
Comment: Several commenters expressed concern over the fact that
some excused absences may not be verified until after the State submits
its participation data. They recommended allowing States to correct
attendance records retroactively to reflect excused absences up until
the date on which the data report becomes final.
Response: Because a State is not liable for a reporting penalty
until the end of the quarter after the end of a fiscal year, a State
has until December 31 to submit its final data for the previous fiscal
year.
Projecting Hours of Employment
Comment: One commenter recommended allowing States to project hours
in certain non-employment activities for up to three months ``based on
a history of successful participation.'' The commenter stated that this
would reduce stigma and the burden of attendance sheets.
Response: We have allowed projected reporting of actual hours of
participation in paid work activities because an employer has both a
fiscal interest and a stewardship responsibility to ensure that
employees work for the hours of pay. A similar situation does not exist
in the other
[[Page 6812]]
activities; therefore, we have not adopted this suggestion.
Self-Employment Hours
Comment: Several commenters proposed allowing States to project
employment hours for up to six months for individuals who are self-
employed. They argued that these approaches recognize the inherent
challenges of verifying the hours of self-employment.
Response: The option to project hours of participation for a
maximum of six months does apply to self-employment. Self-employment is
a form of unsubsidized employment and therefore may be projected for up
to six months based on prior, documented hours of actual employment.
Comment: Some commenters expressed concern because the regulations
limit the hours a State can count for self-employed recipients to the
number derived by dividing the individual's self-employment income
(gross income less business expenses) by the Federal minimum wage. They
explained that some types of self-employment take time before income is
generated. Another commenter noted that some types of self-employment
are affected by seasonal factors, so that income is only generated in
some months, even though the work is ongoing. They recommended various
approaches that would take into account hours needed to prepare for
employment and sporadic work schedules, including criteria based on
self-attestation, earnings, and preparation time.
Response: We think the best approach for calculating hours of self-
employment is to rely on the net income (gross income minus business
expenses) of the individual. We adopted this method because States
already calculate net income when determining the eligibility of the
self-employed for TANF benefits and thus our approach minimizes the
administrative burden on States. We do not believe it is necessary to
modify the rule to address these suggestions. The regulation allows a
State to ``propose an alternative method of determining self-employment
in its Work Verification Plan.'' This description should indicate how
the State plans to monitor and supervise this activity to ensure that
it reports actual hours and that the self-employment progresses to the
point where the individual can effectively earn more than the minimum
wage. We will not approve alternative plans that provide for an
individual's self-reporting of participation without additional
verification. We believe the rule's provision for approximating hours
using the Federal minimum wage is a reasonable approach and minimizes
administrative burdens.
Comment: One commenter suggested that the calculation of hours for
self-employment be based on the higher of the applicable Federal or
State minimum wage.
Response: The final rule retains the calculation based on the
Federal minimum wage. We consciously chose the Federal minimum wage
because it allows States with higher State minimum wages to count more
hours of employment than if the calculation were based on the higher of
the two. This also provides consistency in the treatment of self-
employment hours across States.
Homework Time
Comment: Several commenters suggested that limiting homework or
study time to supervised settings does not reflect the way educational
programs work. They noted that most adult education and training
programs require significant out-of-class homework and study time, but,
unlike secondary school where supervised ``study halls'' are common,
many postsecondary programs do not have supervised study settings. They
explained that students who do not finish their homework cannot make
satisfactory progress and successfully complete their courses of study;
thus, they maintained, a supervised homework policy is not necessary.
In addition, they thought that requiring formal study periods creates
administrative burdens on educational institutions and increases
program costs related to providing supervision and child care for
parents who must stay longer in study sessions rather than completing
the work at home. Finally, commenters contended that singling TANF
recipients out for special study sessions might increase stigma by
identifying them as welfare recipients. Some commenters did not like
the implication of the preamble language, saying that it suggested that
TANF participants in educational activities cannot be trusted to
complete homework assignments and to study the material as needed to
succeed in the training or educational program.
Several commenters emphasized the administrative value of having an
easy way to determine the number of hours of participation that can
count for homework. They noted that most educational programs have a
``rule of thumb'' for the number of homework hours associated with each
class hour and suggested that State education agencies can assist TANF
programs in assessing the appropriate number of homework or study
hours. Commenters proposed a wide range of ratios of class time to
homework time, generally ranging from a half hour to two hours of
homework time for every hour of class time.
Some commenters expressed concern that the daily supervision
requirement for unpaid work activities would mean that program
administrators or some other responsible third-party would have to
monitor homework on a daily basis.
Response: We agree with many of these comments. In Sec. 261.60(e)
of the final rule, we have expanded State flexibility in counting
homework time. The rule now permits a State to count supervised
homework time and up to one hour of unsupervised homework time for each
hour of class time. Total homework time counted for participation
cannot exceed the hours required or advised by a particular educational
program. It was never our intent in the interim final rule to have an
individual participate in more hours of supervised homework than the
program actually requires, but the rule was not explicit on this point.
Where the State opts to count homework time, it must document what the
homework or study expectations of the program are to ensure it does not
exceed those hours.
Section 261.61 How must a State document a work-eligible individual's
hours of participation?
This section of the interim final rule described the documentation
standards that a State must meet for its work participation data. In
particular, it included an explicit requirement that a State verify
through documentation in the case file all hours of participation that
it reports. It also specified the types of documentation we expected a
State to require for each activity. The preamble to the interim final
rule stated that a State may not report data to us on the basis of
``exception reporting'' where it assumes that clients participate in
all scheduled hours unless it receives a report to the contrary from a
service provider.
The interim final rule also permitted States to report projected
actual hours of unsubsidized or subsidized employment or OJT for up to
six months at a time on the basis of prior, documented actual hours of
work. Although this section did not address the frequency of
documentation for other activities, the preamble to Sec. 261.62 of
this subpart explained that we expected a State's Work Verification
Plan to describe the documentation it uses to monitor participation and
ensure that it reports actual hours of participation. We explained that
we were establishing a
[[Page 6813]]
range of documentation guidelines that vary by type of activity. We
expected job search and job readiness assistance to be documented daily
and other unpaid work activities to be documented no less than every
two weeks.
In the final rule we have reiterated our position that all hours of
participation must be reported affirmatively and supported by
documentation in the case file, but we no longer require daily
documentation of job search and job readiness assistance or biweekly
documentation of other unpaid work activities. All paid activities must
include written documentation of hours of employment. Wage stubs and
other employer-produced documents are the best sources of verifiable
documentation of paid hours. All unpaid activities should rely on
written, signed documents to support hours of participation. Generally,
documents verifying actual hours of participation should include: the
participant's name; actual hours of participation; the name of the work
site supervisor, educational provider, or other service provider; and
the name and phone number of the person verifying hours.
We also moved the provision permitting projection of hours that was
formerly at Sec. 261.61(c) to Sec. 261.60(c) because it fit better
under the rubric of reporting hours than it did under documenting
hours. However, we have incorporated in this section a provision
specifying the documentation standards when a State projects hours of
employment. We have also explained that the documentation for homework
must include a statement about the amount of homework or study time
advised by the particular educational program. Finally, we reorganized
the section for clarity.
Documenting All Hours of Participation
Comment: Several commenters objected to the interim final rule's
prohibition on the use of ``exception reporting.'' They explained that
this is not the same as reporting scheduled hours and noted that many
States have contracts with providers that include exception reporting
and that such reporting ``reduces the administrative burden of
reporting while maintaining accountability.''
Response: We continue to believe that a State should affirmatively
determine that an individual participates in an activity in order to
count such participation toward the work participation rates. Exception
reporting systems may operate effectively in automated or well-
documented reporting situations; however, we prohibited their use on
the basis of concerns raised by single audits. Without an adequate
system of recordkeeping or documentation, it is impossible to determine
whether reports are appropriately filed when a client fails to show up
or meet the day's participation requirements.
Documenting Paid Employment
Comment: Most commenters supported the interim final rule's
provision allowing States to project actual hours of employment for up
to six months based on current, documented actual hours of unsubsidized
employment, subsidized employment, and OJT. Most commenters appreciated
that this significantly reduced the burden on employers and recipients
and was less stigmatizing for recipients. One commenter noted that the
description of this provision at Sec. 261.61(b) seemed to limit this
policy to ``unsubsidized employment,'' rather than all forms of paid
employment.
Response: We have retained this provision in the final rule and
clarified that the documentation requirements described apply to all
forms of paid employment, whether unsubsidized or not.
Documenting Unpaid Activities
Comment: Some commenters said that the rules impose rigid
monitoring and burdensome reporting requirements for individuals in
unpaid activities. One commenter asserted, ``Frequent demands for proof
of participation subject families to loss of assistance.'' Another
commenter explained, ``The goal of these requirements is to ensure that
the data reported about work participation is accurate, not to create
administrative burdens on recipients that create barriers to
participation and aid receipt for families.''
Response: We believe the final rule provides a reasonable balance
between the need for accurate information and the burden inherent in
documenting hours of participation. For example, under the final rule,
we allow States to count an hour of unsupervised homework time for each
hour of class time, thereby reducing the reporting and monitoring
requirements for those individuals in various educational activities.
Moreover, while the rule does require States to document participation
through methods beyond client self-reporting, these have been
requirements all along. We appreciate that such procedures may pose
challenges in some situations, but they serve to substantiate actual
hours of participation and protect the State in the event of an audit.
Comment: Many commenters opposed the daily and two-week
documentation requirements. They noted that the statute requires States
to report information on a monthly basis and recommended that
documentation requirements conform to the same monthly time frame. They
suggested that the standards of documenting participation ``daily'' and
``every two weeks'' in the interim final rule were ``too prescriptive
and will be onerous for activity providers and local TANF program
administrators.'' They observed, ``Increasing reporting requirements
will force providers to dedicate additional resources to data tracking,
often at the risk of depleting resources from another program function
such as case management. The more time staff must spend compiling data,
the less time they have to assist clients.'' In addition, several
commenters asked for clarification regarding the specifics of what must
be in the case file, including whether each file must include a hard
copy of all individual attendance records. The commenters recommended
allowing States to ``create a central or electronic file that would
meet the purpose of documenting attendance.''
Response: We agree with the commenters and have changed our policy
accordingly. The documentation must be available in the case file to
support all the actual hours of participation it claims in the monthly
work participation data it reports. A State should describe in its Work
Verification Plan the documentation it uses to monitor participation
and ensure that it reports actual hours of participation. This may
include electronic records.
Comment: One commenter asked us to ``clarify that, while job search
and job readiness participation must be supervised and recorded daily,
the documentation of participation does not need to be submitted to the
State agency more frequently than monthly.''
Response: We agree with this comment. While supervision of
participation must occur on a daily basis, States report monthly
participation data for job search and job readiness assistance with all
other participation data and the documentation in the case file must
support what the State reports.
Comment: Several commenters asked us to clarify the types of
documentation needed to substantiate homework time.
Response: The final rule allows a State to count up to one hour of
unsupervised homework for each hour
[[Page 6814]]
of class time, if the educational program calls for such homework time.
The only documentation that is required for unsupervised homework time
is a statement from the educational program indicating the amount of
homework required. For supervised homework, we require this same
documentation along with a time sheet or record of attendance signed by
the individual supervising the activity.
Comment: One commenter urged us to use the same verification
standards for self-employment as we allow for other forms of
employment. Another commenter noted that States have developed a
variety of mechanisms for monitoring self-employment and that ``all or
nearly all of these mechanisms rely on various types of self-reporting
by the participant.'' The commenter asserted that ``the issue is not
self-reporting, but rather the type of self-reporting documentation and
level of detailed required,'' expressing concern that additional
verification requirements would impose a significant administrative
burden on States.
Response: We believe a different standard is warranted because
self-employment is not analogous to other forms of employment. With
self-employment, there is no pay stub, no supervisor, and no employer
whose interests are distinct from the employee. It is because self-
employment differs so dramatically from other forms of employment that
we required States to explain in their Work Verification Plans how they
will document hours of work and preclude the use of self-reporting.
Section 261.62 What must a State do to verify the accuracy of its work
participation information?
The interim final rule described the requirements for a Work
Verification Plan. Although some commenters expressed concern about the
burden associated with meeting these requirements and the timeframe for
doing so, we did not change the final rule. We explained that States
should already have verification, documentation, and internal control
procedures in place to support the work participation data they report
and that the new requirements should not pose a significant
administrative burden.
Comment: We received several comments concerning the burden the
Work Verification Plan and the underlying documentation and
verification requirements placed on States.
Response: States should already have verification, documentation,
and internal control procedures in place to support the work
participation data they report. The Work Verification Plan requirements
reflect the Congressional mandate in the DRA that States report to us
in a Work Verification Plan what those procedures are. This should not
represent an undue burden for States.
Comment: One commenter recommended that we avoid recreating a
quality control system as we ensure State compliance with the work
verification requirements of the DRA. The commenter expressed concern
that such a system could focus State efforts more on reducing
documentation errors than on helping recipients enter the workforce.
Response: One goal of TANF is to enable recipients to prepare for
and enter employment leading to self-sufficiency. Documentation and
verification requirements should never detract from that goal. However,
accurate documentation is key to determining whether States are meeting
this goal. We think we have structured a rule that minimizes the burden
of documentation while meeting our responsibility to be good stewards
of Federal funds and programs.
Comment: One commenter urged us to correct regulatory language that
requires States to describe how they determine the number of countable
hours of self-employment under each countable work activity. The
commenter noted that this appeared to be a drafting error, since self-
employment cannot count under all the activities.
Response: The commenter is correct and we have modified the rule
accordingly. States must only describe how they determine self-
employment hours under unsubsidized employment. Nevertheless, the Work
Verification Plan must describe how the State determines countable
hours for each activity.
Comment: One commenter noted there was ``Insufficient time for
states to retool and meet new requirements by October 1, 2006. New
documentation, monitoring, and reporting requirements place heavy
burdens on caseworkers, providers, and our state's computer tracking
system. States were informed of the interim rules and new requirements
on June 29, 2006.''
Response: For many States, the Work Verification Plan that was due
on October 1, 2006, was a description of longstanding documentation,
verification, and internal control systems and did not require new
procedures. We do not have the authority to modify the statutory
deadline for States to submit the Work Verification Plan; however, we
have delayed imposition of a penalty for failure to maintain adequate
documentation, verification, or internal controls until FY 2008.
Comment: Several commenters suggested that States use information
contained in the National Directory of New Hires (NDNH) not only for
the purpose of tracking work participation rates, but also for
additional purposes. For example, one commenter suggested that we
require States to use NDNH information to identify circumstances in
which actual hours of work change. Another commenter recommended that
we make each State's NDNH match results available to all States for
comparison purposes.
Response: While we appreciate these recommendations, the uses of
the NDNH are restricted by law. The law prohibits the use or disclosure
of information in the NDNH, as well as information resulting from NDNH
comparisons, except as expressly provided. The use of NDNH information
for verification of work participation purposes is a permissible use,
as it is a program responsibility of the State TANF agency. Matches for
this purpose may occur only to the extent and with the frequency that
the Secretary of HHS determines to be effective in assisting States to
carry out their responsibilities under the TANF program. Access to
confidential information in the NDNH is restricted to authorized
persons and the use of such information is limited to authorized
purposes. Any misuse of NDNH information is subject to penalty.
Comment: One commenter questioned the benefit of using NDNH data to
calculate work participation rates. The commenter stated that a pilot
in two urban counties of one State indicated that NDNH data were not
useful for the intended purpose, because not all employers provided
NDNH data and the data pertain to new employees only, not ongoing
employment. The commenter urged us to acknowledge that the NDNH is not
a panacea.
Response: We agree that the NDNH has limitations in contributing to
work participation data, particularly because it does not collect the
number of hours of employment. However, we would like to note that the
NDNH does contain quarterly wage data about individuals engaged in
ongoing employment, as well as information about newly hired employees,
which the State may not be able to obtain as quickly and efficiently
from any other source. The Federal Office of Child Support Enforcement,
which manages the NDNH, is committed to working closely with State TANF
agencies to help agencies understand the NDNH and how the data may be
used for optimal results. To conduct a data match between its data
[[Page 6815]]
and NDNH data, for purposes of verifying work participation, a State
TANF agency must enter into a written Memorandum of Understanding (MOU)
with the Federal Office of Child Support Enforcement. The MOU addresses
the terms and conditions governing the data match and the security
measures required for safeguarding NDNH match results. NDNH data may
only be used for certain narrowly defined purposes, including assisting
States in carrying out their responsibility under the federally-funded
TANF program to establish and maintain work participation procedures.
NDNH data may not be used to determine eligibility in State MOE or
solely State-funded programs.
Section 261.63 When is the State's work verification plan due?
In accordance with the Deficit Reduction Act of 2005, our interim
final rule required each State to submit an interim Work Verification
Plan that included procedures for validating reported work activities
to the Secretary no later than September 30, 2006. A State must submit
revisions requested by the Department within 60 days of receipt of our
request, and must submit and operate under an approved Work
Verification Plan no later than September 30, 2007. If a State modifies
its verification procedures for TANF or SSP-MOE work activities or
internal controls for ensuring a consistent measurement of the work
participation rate, then the State must submit for approval an amended
Work Verification Plan by the end of the quarter in which the State
modifies the procedures or internal controls. We have retained these
provisions in the final rule.
We received no comments on this section, so we have not made any
substantive changes to the provision.
Section 261.64 How will we determine whether a State's work
verification procedures ensure an accurate work participation
measurement?
The DRA added a new penalty to section 409(a)(15) of the Social
Security Act for a State that fails to establish or maintain adequate
work participation verification procedures. The interim final rule
outlined the two-part penalty. First, a State will be liable for a
penalty if it fails to submit an interim Work Verification Plan by
September 30, 2006, and a plan that we have approved by September 30,
2007. Second, effective October 1, 2007, States must maintain adequate
internal controls and verification procedures to ensure that reported
work participation data is accurate.
We will use the single audit under OMB Circular A-133 in
conjunction with other reviews, audits, and data to determine whether
the State's controls and procedures result in accurate data. A State
must maintain case documentation and pertinent findings of its
verification process for use by the single audit or other reviews.
Readers should note that we revised the title of this section and
of Sec. 261.65 of this part to be more concise.
Comment: We received a couple of comments that expressed concern
over the burden imposed by maintaining case file documentation and
findings until a single audit is resolved.
Response: The DRA and our interim final rule did not change the
record retention and record access rules that apply to TANF. These
separate rules are in 45 CFR 92.42. These requirements apply to all
financial and programmatic records, supporting documents, statistical
records, and other records of grantees or sub-grantees. Records must be
retained for three years, or longer, if any litigation, claim,
negotiation, audit, or other action involving the records has been
started before the expiration of the three-year period. If extended,
records must be retained until all issues have been resolved. We issued
Program Instruction TANF-ACF-PI-2003-1, dated January 28, 2003, to
clarify the start date of the three-year record retention period for
Federal TANF funds and State MOE expenditures. For Federal TANF awards,
the record retention period starts on the day the grantee submits its
final expenditure report showing that all the funds awarded in the
particular Federal fiscal year have been expended. For State MOE
expenditures, the record retention period starts on the day the State
submits its final expenditure report for a Federal fiscal year.
Comment: One commenter asked whether HHS or the single audits will
use a threshold or a specified percentage to determine whether the
State had inadequate controls and procedures for accurate work
participation data.
Response: As under the original rule, we will not impose a penalty
based on isolated failures to document and verify work participation
information reported to HHS. We will impose a penalty if the audit or
review identifies a systemic problem or weakness. To ensure that our
conclusion is not based on incorrect information, it is critically
important for States to dispute ``questioned'' audit findings and
refute the allegation with appropriate documentation. States also have
the opportunity to dispute our penalty finding, to claim reasonable
cause, and to submit a corrective compliance plan to correct the
deficiency.
Comment: One commenter expressed concern that a State that submits
participation data for the universe of cases would be at a disadvantage
in an audit or review compared to a State that submits sample data. The
commenter suggested that ``States reporting on all participants be
allowed to pull their own samples for audit based on general ACF
guidelines.''
Response: Auditors must follow prescribed procedures for conducting
audits regardless of whether the State submits universe or sample data.
They use the sample standards of the American Institute of Certified
Public Accountants (AICPA) and the GAO auditing standards. In addition,
we provide them with a compliance supplement to guide their review of
our programs.
Section 261.65 Under what circumstances will we impose a work
verification penalty?
Under our interim final rule, the penalty amount is based on the
State's degree of noncompliance and is equal to an amount of not less
than one percent and not more than five percent of the State's adjusted
SFAG. We will impose the maximum penalty of five percent if a State
fails to submit its interim Work Verification Plan by the due date of
September 30, 2006, or if it fails to revise its procedures based on
Federal guidance and submit the complete plan by September 30, 2007.
This is because the State will not have complied with the fundamental
requirement to establish a Work Verification Plan. But, States must
also implement the procedures. If we determine that a State fails to
maintain adequate documentation, verification, and internal control
procedures, we will impose a penalty based on the number of years of
noncompliance, i.e., one percent of the adjusted SFAG for the first
year, two percent for the second year, three percent for the third year
until a maximum of five percent is reached. If, after any failure, a
State demonstrates effective work verification procedures for two
consecutive years, then we will consider any future failure to be the
first occurrence.
Readers should note that we revised the title of this section and
of Sec. 261.64 of this part to be more concise.
We only received a few comments on this section of the interim
final rule. The comments mainly concerned the distinction between this
penalty and the penalty for failing the work participation rate(s) and
the criteria that a State must meet to comply with the
[[Page 6816]]
work verification requirements for any given year.
Comment: One commenter asked whether the work verification penalty
applies if a State operates its work participation verification system
poorly.
Response: If we determine that any of the State's procedures is
inadequate, a penalty could result. Once a State has an approved Work
Verification Plan, the penalty is based on whether the internal
controls and verification procedures ensure consistent and accurate
work participation rates. A State's system of internal controls and
verification procedures includes a whole array of activities, such as:
ensuring that it counts only work activities that are consistent with
the Federal definitions; verifying and monitoring actual hours of
participation; identifying work-eligible individuals; and validating
the accuracy of the data reported. All of these factors contribute to
an effective internal control system.
Comment: Some commenters asked us to clarify the distinction
between the penalty for failure to meet the work participation rate and
the work verification penalty.
Response: These are two completely separate penalties established
by the statute. A State could meet its required work participation
rates and still risk imposition of the work verification penalty as a
result of inadequate work verification procedures and/or internal
control procedures. Similarly, a State could fail a work participation
rate but meet the work verification requirements. We expect States to
review and monitor their processes and procedures regularly to ensure
the accuracy of the data used in calculating the work participation
rates.
Comment: Several commenters asked about the criteria that a State
must meet to be found in compliance with the work verification
requirements for any given year. For example, one commenter inquired
whether a State must be error-free or, alternatively, required to stay
below a specific threshold. The commenter also asked whether a State
that responded to errors appropriately and timely in an agreed-upon
manner would be considered to be in compliance.
Response: States must maintain adequate documentation,
verification, and internal control procedures to ensure the accuracy of
the data used in calculating the work participation rates. We will
determine through audits or other reviews whether the State has
adequate controls. Our penalty determinations will be made only after
fully considering the auditor's findings, the State's reply, if any, to
the auditor's findings, and any other reports, audits, and data
sources, as appropriate. We will also consider the controls the State
has in place and actions the State takes to review and to address any
problems so that the State's work verification procedures and internal
controls are working properly. We will not impose a penalty based on
non-systemic errors.
Comment: Some commenters suggested alternative penalty structures,
finding the structure in the interim final rule to be too severe. For
example, one commenter suggested that ``ACF apply a 2nd or subsequent
year penalty only for the repetition of an error penalized in the 1st
year. In other words, if ACF determined that a state's internal control
procedures were inadequate and imposed a 1% penalty in the 1st year,
and then found that the state did not maintain adequate documentation
in the 2nd year, the 2nd year penalty would again be 1% since it
involved a separate error. Any penalty should be lifted after the state
has complied with the work verification procedures for one full year,
not two.''
Response: While we understand the commenter's concern, the work
verification requirements were imposed by Congress to ensure that
States implement procedures to ensure accurate and consistent work
participation data. We also note that the requirement to document and
verify work participation information is not new. States were always
required to comport with the accurate and complete data standard at
Sec. 265.7 under the existing regulations. Our penalty structure
represents a reasonable, graduated approach, increasing only by the
number of years of failure (degree of noncompliance). We do not believe
it would be appropriate to treat a subsequent year of failure for
another reason as if the prior failure had not occurred. Therefore, we
have not accepted this recommendation.
V. Part 262--Accountability Provisions--General
The DRA added an additional penalty at section 409(a)(15) of the
Social Security Act for States that fail to establish or comply with
work participation verification procedures. The interim final rule
clarified that if a State failed to comply, we would reduce the
adjusted SFAG payable for the immediately succeeding fiscal year by not
less than one percent and not more than five percent. A State that
fails to meet the work verification requirements may claim reasonable
cause or submit a corrective compliance plan under the procedures
described in Sec. Sec. 262.4-262.7 of this chapter. If we impose the
penalty, we will reduce the SFAG payable for the immediately succeeding
fiscal year.
Section 262.1 What penalties apply to States?
We received no comments on this section, so we have made no changes
to the provision.
Section 262.2 When do the TANF penalty provisions apply?
The penalty for failing to establish and submit a Work Verification
Plan takes effect on October 1, 2006. The penalty for failing the
ongoing requirement to maintain adequate work verification procedures
takes effect on October 1, 2007.
Comment: Several commenters noted that many States will not have
time to legislate the changes needed to comply with the new rules by
October 1, 2006, and urged ACF to withhold penalties until States have
a reasonable amount of time to pass legislation. For example, one
commenter noted that, in order for the State to comply fully with the
requirements may take both legislative and automation changes. Since
that State's legislature does not meet until January 2007, the
commenter encouraged ACF to take these factors into consideration.
Response: We are sensitive to the fact that some States must make
both legislative and automation changes to implement the new DRA
requirements. There are several recourses available to States to avoid
or mitigate financial penalties. Under this rule, we have delayed the
imposition of a penalty for inadequate work verification procedures
until FY 2008 as one way to address this concern. Under prior,
continuing law and regulations, there are a number of remedies
available to a State that is potentially liable for a penalty. If we
issue a penalty notice to a State, the State may submit a reasonable
cause argument outlining the specific legislative provisions that it
needed and the impact of the delay in getting such provisions through
the legislative process. We will consider granting a reasonable cause
exception if a State can demonstrate that it was impossible to meet the
requirements absent such legislation. Also, the State may submit a
corrective compliance plan to meet the requirements at a future time.
This will allow States additional implementation time. We look forward
to working cooperatively with States to help them operate effective
programs, ensuring that they can submit timely, accurate data and avoid
financial penalties.
[[Page 6817]]
Section 262.3 How will we determine if a State is subject to a penalty?
In the interim final rule, we explained that we would use the
single audit under OMB Circular A-133 in conjunction with other
reviews, audits, and data sources to assess whether the State
maintained adequate controls and procedures to ensure accurate data are
reported to calculate work participation rates.
We received no comments on this section, so we have made no changes
to the provision.
Section 262.6 What happens if a State does not demonstrate reasonable
cause?
Comment: A significant number of commenters proposed that we grant
reasonable cause exemptions to States that have not completed a
legislative session since the publication of the interim final TANF
regulations on June 29, 2006, both for failure to meet the work
participation rates and failure to maintain adequate work verification
procedures. One commenter contended that elements of the Work
Verification Plan will require more staff, resources, and additional
system support than are currently funded within the State's existing
budget. Others suggested that the rule should provide ``phase-in time''
to comply with the new requirements or to respond to delays in
adjusting the participation requirements or adding parents to the
requirements.
Response: We do not have the authority to adjust or modify the
statutory participation requirements or rates. While we recognize that
this rule may impose new requirements on States, few of them require
actual legislative action. With respect to work verification
requirements, our rule permits the Work Verification Plan to be phased-
in over time and to be revised in future months. But, to give meaning
to the participation rate requirements, the State must have adequate
procedures and internal controls in place by October 1, 2007. The State
may amend its Work Verification Plan at any time during the course of
the fiscal year in accordance with Sec. 261.63(c) of this chapter.
While we have not created an automatic reasonable cause exemption, any
State that fails the work participation requirements or work
verification requirements may avail itself of the penalty resolution
process described in Sec. Sec. 262.4-262.7 of this chapter. This
allows a State to outline the basis of its request for a reasonable
cause exception for failing to meet a requirement, including the
argument that lack of timely State legislation caused it to fail to
meet the requirement.
VI. Part 263--Expenditures of State and Federal TANF Funds
Subpart A--What Rules Apply to a State's Maintenance of Effort?
Section 263.2 What kinds of State expenditures count toward meeting a
State's basic MOE expenditure requirement?
The Deficit Reduction Act of 2005 retained the same MOE spending
levels required in PRWORA; however, it also added a new provision,
``Counting of Spending on Certain Pro-Family Activities'' at section
409(a)(7)(B)(I)(V) of the Social Security Act. We included this
provision in Sec. 263.2(a)(4) of the interim final rule to allow
States to count non-assistance expenditures on pro-family activities if
the expenditure is reasonably calculated to prevent and reduce the
incidence of out-of-wedlock pregnancies (TANF purpose three), or to
encourage the formation and maintenance of two-parent families (TANF
purpose four). Under this provision, non-assistance, pro-family
expenditures for benefits and services were not limited to ``eligible''
families (as defined in Sec. 263.2(b)), which under prior rules, was a
limitation on all MOE spending. Instead, States could claim qualified
pro-family expenditures for non-assistance benefits and services
provided to or on behalf of an individual or family, regardless of
financial need or family composition.
In developing the final rule, based on comments we received, we
reconsidered the scope of the pro-family claiming provision. We have
concluded that ``Counting of Spending on Certain Pro-Family
Activities'' within TANF purposes three or four means counting of non-
assistance expenditures on only the activities enumerated in the
healthy marriage promotion and responsible fatherhood section of the
DRA (sections 403(a)(2)(A)(iii) and 403(a)(2)(C)(ii) of the Act)--
unless a limitation, restriction or prohibition under this subpart
applies. For other allowable expenditures within TANF purposes three or
four, States may only claim toward their MOE requirement the portion
expended for or on behalf of eligible families. We have amended the
pro-family claiming provision at Sec. 263.2(a)(4) to specify which
non-assistance, pro-family expenditures within TANF purposes 3 or 4 are
not limited to eligible families.
With the exception of the pro-family claiming provision discussed
above, States must continue to limit the provision of all other MOE-
funded assistance and non-assistance benefits to eligible families as
defined at Sec. 263.2(b), regardless of the TANF purpose. We remind
readers that Federal TANF assistance is also limited to eligible
families, regardless of the TANF purpose.
Congress also created new TANF discretionary funding streams
(Grants for Healthy Marriage Promotion and Responsible Fatherhood) in
the DRA. These funds are in Title IV-A, sections 403(a)(2)(A)(iii) and
403(a)(2)(C)(ii) of the Social Security Act. Under MOE, States may
count qualified expenditures that are made as a condition of receiving
Federal funds under Title IV-A toward their MOE requirement. For FY
2006, Healthy Marriage Promotion and Responsible Fatherhood grantees
had to contribute a matching share of the total approved costs of a
project as a condition of receiving any of the Federal discretionary
funds. Thus, a State may count these State expenditures, when made on
allowable activities under the Healthy Marriage Promotion and Promoting
Responsible Fatherhood programs, toward its MOE requirement, unless a
limitation, restriction, or prohibition under this subpart applies.
This provision is outlined in Sec. 263.2(g).
The regulations at 45 CFR part 92 on matching or cost-sharing
requirements permit States to count toward their MOE requirement
qualified, non-Federal, cash or in-kind expenditures by a third party.
For example, this may include Healthy Marriage and Responsible
Fatherhood providers in a State. As set forth in the policy
announcement, TANF-ACF-PA-2004-01, dated December 1, 2004, and repeated
in the interim final rule at Sec. 263.2(e), we require an agreement in
writing between the State and any third party allowing the State to
count such expenditures toward its MOE requirement. This policy was
initially explained in a policy announcement, TANF-ACF-PA-2004-01,
dated December 1, 2004 and repeated the policy in the interim final
rule at Sec. 263.2(e).
Comment: We received several comments of concurrence and
appreciation for clarifying these provisions. One commenter asked us to
clarify whether ``pro-family'' expenditures are limited to TANF
eligible families, or whether it is broader and may include other low-
income families. Other commenters wondered whether countable
expenditures for activities like pre-K or after-school programs fall
under the new pro-family claiming provision.
Response: When Congress created the expanded pro-family spending
provision, it limited the provision to ``certain pro-family
activities.'' Moreover, it created this new provision
[[Page 6818]]
as part of the section of the DRA titled ``Grants for Healthy Marriage
Promotion and Responsible Fatherhood.'' In reevaluating our rule to
respond to these comments, we have concluded that this placement
signaled Congressional intent that ``certain'' pro-family activities
means the healthy marriage promotion and responsible fatherhood
activities it described in this section of the DRA. Thus, the final
rule limits pro-family activities for the purposes of this new
provision to the healthy marriage activities listed in section
403(a)(2)(A)(iii) of the Act and the responsible fatherhood activities
listed in section 403(a)(2)(C)(ii) of the Act, unless a limitation,
restriction, or prohibition under this subpart applies to any such
activity. These are the only expenditures within TANF purposes three or
four that are not limited to eligible families.
We recognize that this additional claiming provision became
effective on October 1, 2005 (FY 2006). We further recognize that,
since publication of the interim final rule, States may have been
claiming toward their MOE requirement a whole array of non-assistance
expenditures--e.g., after-school programs, pre-K programs, college
scholarship programs--as a result of this new provision. This is
because we presented this new claiming provision in the interim final
rule in a general way. As a result, we have advised States that, until
we publish the final rule, they may draw their own reasonable
conclusions as to the sort of pro-family expenditure within TANF
purpose three or four to claim under this new provision. Therefore,
this amended provision will be effective with the effective date of
this final rule.
In summary, with the exception of the pro-family, non-assistance
expenditures described above, States may only claim toward their MOE
requirement expenditures for or on behalf of eligible families. We
remind readers that an eligible family is a financially needy family
that consists of, at a minimum, a child living with a caretaker
relative or consists of a pregnant woman. Please see Sec. 263.2(b) for
further information on eligible families.
Section 263.5 When do expenditures in State-funded programs count?
Due to an oversight on our part, we did not include this section in
the interim final rule. It addresses the MOE ``new spending''
limitation in section 409(a)(7)(B)(i)(II) of the Social Security Act,
which continues to apply. States may only count, for MOE purposes,
expenditures in pre-existing State or local programs that exceed the
amount expended in such programs during FY 1995. The original TANF rule
provides that the new spending amount is determined by comparing total
FY 1995 expenditures in the pre-existing program with total qualified
expenditures for or on behalf of eligible families during the current
fiscal year. The State may claim the excess, if any, toward its MOE
requirement. This new spending limitation does not apply to
expenditures under State or local programs that had been previously
authorized and allowable under the State's former title IV-A programs
in effect as of August 21, 1996.
Comment: A commenter noted an inconsistency between Sec. 263.2 of
the interim final regulations and this ``new spending'' section. One
allows States to claim as MOE, expenditures for pro-family activities,
regardless of whether a family is financially ``eligible'' or not, but,
the ``new spending'' test still refers only to ``eligible'' families.
The commenter suggested that the new spending calculation needed to be
changed to count qualified, pro-family, non-assistance expenditures
within TANF purposes three or four.
Response: We agree with the commenter. This was an oversight. We
have amended the new spending provision at Sec. 263.5(b). The amount
of expenditures that may be claimed for MOE purposes is limited to the
amount by which total current fiscal year expenditures for certain non-
assistance, pro-family activities within TANF purposes three or four
exceed total State expenditures in the program during FY 1995. Readers
should refer to the discussion of Sec. 263.2 for more detail on
counting these pro-family expenditures.
Section 263.6 What kinds of expenditures do not count?
As we stated in the preamble of the interim final regulations, the
Deficit Reduction Act of 2005 did not change the prohibition at section
409(a)(7)(B)(iv)(IV) of the Social Security Act. This provision
prohibits States from counting expenditures made ``as a condition of
receiving Federal funds ``other than under this part'' toward its TANF
MOE requirement. Because paragraph (c) of our original rule did not
accurately reflect this prohibition, we corrected it to say that the
prohibition only applies to expenditures that a State makes as a
condition of receiving Federal funds under another program that is not
in Part IV-A of the Act. States may count the non-Federal share of
expenditures on allowable activities under the healthy marriage
promotion or promoting responsible fatherhood programs in sections
403(a)(2)(A)(iii) or 403(a)(2)(C)(ii) of the Act, unless a limitation,
restriction or prohibition under this subpart applies.
We received no comments on this section; thus, it has been retained
without change in the final rule.
VII. Part 265--Data Collection and Reporting Requirements
Section 411(a) of the Social Security Act imposes specific data
reporting requirements on States to provide information about program
effectiveness and to assure State accountability for key requirements,
including work participation. Section 411(a)(7) permits the Secretary
to prescribe such regulations as may be necessary to define the data
elements required in the reports mandated by section 411(a). The
Deficit Reduction Act of 2005 added these same data collection
requirements for cases receiving assistance in separate State programs.
Section 265.1 What does this part cover?
We received no comments on this section and made no changes to it
in the final rule.
Section 265.2 What definitions apply to this part?
We received no comments on this section and made no changes to it
in the final rule.
Section 265.3 What reports must the State file on a quarterly basis?
Section 265.3(b) TANF Data Report
We have made some changes to the TANF Data Report--Section one. In
order to implement the policy on deeming core hours for the overall
work participation rate and the two-parent work participation rate, we
are adding two data elements to the TANF Data Report--Section one. The
new data elements are: (1) ``Number of Deemed Core Hours for the
Overall Rate''; and (2) ``Number of Deemed Core Hours for the Two-
Parent Rate.'' Tennessee is the only State with an ongoing 1115 welfare
reform waiver and the waiver ends on June 30, 2007. Thus, we are
removing two data elements from the TANF Data Report--Section One that
we no longer need. The data elements are: (1) ``Additional Work
Activities Permitted Under Waiver Demonstration''; and (2) ``Required
Hours of Work Under Waiver Demonstration.''
Comment: One commenter stated that we require extensive and
detailed disaggregated data in the TANF Data Report--Section One,
including individual social security numbers, and commented that
collecting social
[[Page 6819]]
security numbers does not serve any useful research purpose. The
commenter expressed concern for the privacy of individuals and further
suggested that we should be collecting data on the well-being of
children.
Response: Collecting social security numbers is an existing
requirement. We have been collecting the social security numbers for
TANF family members since October 1999. This information is protected
by the safeguards under the Privacy Act. The TANF recipient social
security numbers are encrypted during data transmission, maintained in
a secure location and use and access to them is limited. We have found
them very useful in our research, especially as it relates to the use
of the National Directory of New Hires database to assess the impact of
welfare reform on TANF recipients using such measures as job entry, job
retention, and earnings gain. We do not have statutory authority to
collect additional data on the well-being of children; the statute
limits the data that the Department can collect.
Comment: One commenter requested that we make the new data file
layouts and caseload reduction forms available as quickly as possible
due to the reprogramming needs of our State reporting. The commenter
further requested that, following the sorting of participation reports,
we give States a spreadsheet showing which participants did not meet
the participation rates so that they can better manage participation
and address particular areas of need.
Response: We already have made the data file layouts and caseload
reduction credit forms, based on the interim final rule, available to
the States in a timely manner. We will also make available to States
any changes to these forms based on the final rule as quickly as
possible. We have in the past made available and will continue to make
available in the future a file showing on a case-by-case basis which
families are counted as participating and which ones are not, upon
request from a State.
Comment: One commenter noted that the adult work participation
activities fields in Section 1 of the TANF Data Report did not have
enough significant digits to determine whether someone meets the work
participation requirements. The commenter wrote, ``If a person
participates for 1 or 2 hours a month in an activity, the field for
that activity will contain average weekly hours of 0. Those 1 or 2
monthly hours, in combination with other countable activities may
result in successful participation. For example, 2 monthly hours in
Work Experience plus 83 monthly hours in Unsubsidized Employment result
in 85 monthly hours, or 19.6 total average weekly hours. That rounds to
20 average weekly hours. That is successful participation for a single
parent with a child less than age 6. This case should be in the
numerator and denominator of the overall work participation rate.
However, under current reporting protocol, this case is not included in
the numerator because the sum of the individual activities is only
19.''
Response: If we use more significant digits to collect the data,
there would be no need to round the final result to the nearest whole
number. The commenter is using the 4.33 weeks per month. The 2 hours
converts to 0.4618 hours per week and the 83 hours converts to 19.1686
hours per week. If we had collected the data with two digits after the
decimal place, the State would have reported 0.46 and 19.17 hours per
week. The sum would be 19.63 hours per week, which is less than the 20
hours per week required. Requiring States to report the average hours
per week of participation with more digits would increase reporting
burden and not provide us with an additional benefit.
Section 265.3(d) SSP-MOE Data Report
We received no comments on this subsection of the regulation.
Section 265.4 When are quarterly reports due?
We received no comments on this section, so we have made no changes
to the provision in the final rule.
Section 265.7 How will we determine if the State is meeting the
quarterly reporting requirements?
Although the interim final rule did not include this section of the
TANF regulations, we have added it to this final rule in order to
respond to requests we received as part of the comment period to
clarify the period of time during which States may revise work
participation and caseload data.
The original TANF regulations at Sec. 265.7(b) defined the
``complete and accurate'' standard for reporting disaggregated data for
the TANF Data Report. In describing this standard in the preamble to
that April 12, 1999 final rule, we recognized the necessity for States
to revise their quarterly data submissions occasionally. In practice, a
number of States submit revised data after each quarterly submittal up
to the due date for the final data submittal for the fourth quarter
data for a fiscal year, i.e., December 31. We have decided to amend
these final DRA regulations to recognize this practice. We are taking
this action for two reasons. First, we want States to provide us with
complete and accurate data and we recognize that States often receive
data from a variety of sources that require correction of submitted
quarterly data. Second, we define a ``work-eligible individual'' under
rule at Sec. 261.2(n)(iii) to exclude at State option a recipient of
Supplemental Security Income (SSI) or Social Security Disability
Insurance (SSDI). States have informed us that the SSI/SSDI application
approval process is lengthy. We have advised States that they can
remove retroactively work-eligible individuals that they included in
the quarterly data submittal for a fiscal year who subsequently are
approved for SSI or SSDI, so long as the data correction occurs by the
end of the reporting for the fiscal year, i.e., December 31.
Section 265.8 Under what circumstances will we take action to impose a
reporting penalty for failure to submit quarterly and annual reports?
We received no comments on this section, so we have made no changes
to the provision in the final rule.
VIII. Paperwork Reduction Act of 1995
This final rule contains information collection requirements that
have been submitted to the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995. Under this Act, no persons are
required to respond to a collection of information unless it displays a
valid OMB control number. If you have any comments on these information
collection requirements, please submit them to OMB within 30 days. The
address is: Office of Management and Budget, Paperwork Reduction
Project, 725 17th Street, NW., Washington, DC 20503, Attn: ACF/HHS Desk
officer.
This final rule incorporates our response to comments regarding the
reporting burden that we received in response to the interim final rule
and Paperwork Notice we published on June 29, 2006. The rule requires
States to submit a TANF Data Report, SSP-MOE Data Report, Work
Verification Plan, and, if a State wants to request a caseload
reduction credit, a Caseload Reduction Report. In addition, States must
provide documentation in support of the caseload reduction credit, work
verification, and the reasonable cause/corrective compliance
documentation processes.
We considered comments by the public on these collections of
information in:
Evaluating whether the collections are necessary for the
proper performance of our functions, including
[[Page 6820]]
whether the information will have practical utility;
Evaluating the accuracy of our estimate of the burden of
the collections of information, including the validity of methodology
and assumptions used, and the frequency of collection;
Enhancing the quality, usefulness, and clarity of the
information to be collected; and
Minimizing the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technology, e.g., the
electronic submission of responses.
We received only two comments from one individual specifically
addressing the hour burden stated in the interim final rule. The
commenter believed that we understated the burden associated with these
new data reporting requirements, especially with respect to work
verification requirements. In calculating the additional burden
associated with the preparation and submission of State data
verification procedures, we considered that States already had
procedures in place to comport with the complete and accurate
requirements under Sec. 265.7 of the regulations.
The commenter also thought that we were requiring an unnecessary
paper burden when electronic reporting would suffice. The commenter
stated that Sec. 261.61(a) of the interim final rule would, for
example, require for 50 job search participants the copying and filing
of 50 separate daily attendance sheets into individual case files,
while a central or electronic file would meet the purpose of
documenting attendance. We did not intend to preclude the use of a
central or electronic file. States may use these kinds of files as long
as they are available for the single audit and other reviews. Our
burden estimates in the interim final rule took this into
consideration.
In addition to considering the comments, we also made some changes
to the TANF Data Report based on the need to implement the deeming of
core hours in the final rule. As discussed in Sec. 265.3, we are
adding only two new data elements. Some burden hours will be required
for programming of the State systems, but actual additional reporting
burden hours should be minimal. In addition, total burden will be
slightly offset by elimination of two data elements related to waivers.
We estimate that the net additional burden averaged out over a period
of a year will result in a net increase of eight hour per quarter per
respondent for each of the two data reports. We show the adjustment in
the following table.
The estimated burden hours for these information collections are:
----------------------------------------------------------------------------------------------------------------
Average Final rule Interim rule
Instrument or requirement Number of Yearly burden hours total annual total annual
respondents submittals per response burden hours burden hours
----------------------------------------------------------------------------------------------------------------
Preparation and Submission of 54 1 640 34,560 34,560
Data Verification Procedures--
Sec. Sec. 261.60--261.63....
Caseload Reduction Documentation 54 1 120 6,480 6,480
Process, ACF-202--Sec. Sec.
262.4, 262.6, & 262.7; Sec.
261.51.........................
Reasonable Cause/Corrective 54 2 240 25,920 25,920
Compliance Documentation
Process--Sec. Sec. 262.4,
262.6, & 262.7; Sec. 261.51..
TANF Data Report--Part 265..... 54 4 2,201 475,416 473,688
SSP-MOE Data Report--Part 265.. 29 4 714 82,824 82,824
----------------------------------------------------------------------------------------------------------------
Estimated total burden hours: 625,200.
Copies of an information collection may be obtained by e-mailing
the ACF Reports Clearance Officer at robert.sargis@acf.hhs.gov or by
writing to the Administration for Children and Families, Office of
Administration, Office of Information Services, 370 L'Enfant Promenade,
SW., Washington, DC 20447, Attn: ACF Reports Clearance Officer. All
requests should be identified by the title of the information
collection.
IX. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires the
Federal government to anticipate and reduce the impact of rules and
paperwork requirements on small businesses and other small entities.
Small entities are defined in the Act to include small businesses,
small non-profit organizations, and small governmental entities. This
rule will affect primarily the 50 States, the District of Columbia, and
certain Territories. Therefore, the Secretary certifies that this final
rule will not have a significant impact on small entities.
X. Regulatory Impact Analysis
Executive Order 12866 requires that regulations be reviewed to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
final rule is consistent with these priorities and principles. These
regulations primarily implement statutory changes to TANF included in
the Deficit Reduction Act of 2005.
XI. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that a covered agency prepare a budgetary impact statement before
promulgating a rule that includes any Federal mandate that may result
in the expenditure by State, local, and Tribal governments, in the
aggregate, or by the private sector, of $100 million or more in any one
year.
If an agency must prepare a budgetary impact statement, section 205
requires that it select the most cost-effective and least burdensome
alternative that achieves the objectives of the rule consistent with
the statutory requirements. Section 203 requires a plan for informing
and advising any small government that may be significantly or uniquely
impacted.
The Department has determined that this final rule, in implementing
the new statutory requirements, would not impose a mandate that will
result in the expenditure by State, local, and Tribal governments, in
the aggregate, or by the private sector, of more than $100 million in
any one year. The DRA maintains the basic funding structure and
flexibility of the TANF program. For the next five years, the TANF
block grant provides States with $16.5 billion in Federal funds and
requires States to expend around $11 billion a year in State
Maintenance of Effort (MOE) funds. Along with available, unobligated
TANF balances, we believe States have adequate resources to achieve the
DRA requirements. Fixed funding for States is based on welfare spending
at the time of historic high caseloads, which have been reduced by
half. States retain wide latitude to design their programs, to
establish
[[Page 6821]]
eligibility criteria, benefit levels and the type of services and
benefits to provide to TANF clients.
The Department estimates that between FYs 2008 and 2012, States
will incur penalties of $62 million due to failure to meet work
requirements. Our estimate assumes that most States will meet the work
participation rates through a renewed focus on work and internal
control systems. We do not anticipate assessing penalties under new
requirements until FY 2009. States may also claim reasonable cause or
enter into a corrective compliance process to eliminate or reduce the
penalty amount. We estimate issuing penalties amounting to $0 in FY
2008, $20 million in FY 2009, $19 million in FY 2010, $19 million in FY
2011, and $4 million in FY 2012. Accordingly, we have not prepared a
budgetary impact statement or prepared a plan for informing impacted
small governments.
XII. Congressional Review
This regulation is not a major rule as defined in 5 U.S.C. Chapter
8.
XIII. Assessment of Federal Regulations and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act of 1999 requires Federal agencies to determine whether a proposed
policy or regulation may negatively affect family well being. The
Department has conducted this assessment and concluded that these final
rules will not have a negative impact on family well being. This final
rule promotes activities leading to work and self-sufficiency for low-
income families and will thus have a positive impact on family well
being.
XIV. Executive Order 13132
Executive Order 13132, Federalism, requires that Federal agencies
consult with State and local government officials in the development of
regulatory policies with federalism implications. Consistent with
Executive Order 13132, we specifically solicited comment from State and
local government officials in the interim final rule. In addition, in
concert with the National Governors Association (NGA), the American
Public Human Services Association (APHSA), the National Conference of
State Legislators (NCSL), and the National Association of Counties
(NACo), we held five ``listening sessions'' across the country to which
State and local executive and legislative officials were invited.
During the ``listening sessions,'' ACF outlined the statutory and
regulatory provisions associated with the DRA and offered the
opportunity for attendees to ask questions and to submit comments which
were recorded and considered in the final rule.
We seriously considered all comments in developing the final rule.
We considered and carefully assessed each of the options and
suggestions of commenters. In the end, we adopted those suggestions
that we believe promote effective programs leading to self-sufficiency,
while also reducing inconsistency in work measures. At the same time,
the policies reflected in the final rule provide enough flexibility to
States to address the varying needs and characteristics of TANF
clients, including those with disabilities. To count and verify
allowable work activities, States are offered guidelines that permit
different types of documentation based on the type of work activity.
List of Subjects in 45 CFR Parts 261, 262, 263, and 265
Administrative practice and procedure, Day care, Employment, Grant
programs--social programs, Loan programs--social programs, Penalties,
Public assistance programs, Reporting and recordkeeping requirements,
Vocational education.
Dated: January 29, 2008.
Daniel C. Schneider,
Acting Assistant Secretary for Children and Families.
Approved: January 29, 2008.
Michael O. Leavitt,
Secretary of Health and Human Services.
0
For the reasons stated in the preamble, the interim final rule amending
45 CFR chapter II published on June 29, 2006, (71 FR 37454) is
confirmed as final with the following changes:
PART 261--ENSURING THAT RECIPIENTS WORK
0
1. The authority citation for part 261 continues to read as follows:
Authority: 42 U.S.C. 601, 602, 607 and 609.
0
2. Revise Sec. 261.2 to read as follows:
Sec. 261.2 What definitions apply to this part?
(a) The general TANF definitions at Sec. Sec. 260.30 through
260.33 of this chapter apply to this part.
(b) Unsubsidized employment means full-or part-time employment in
the public or private sector that is not subsidized by TANF or any
other public program.
(c) Subsidized private sector employment means employment in the
private sector for which the employer receives a subsidy from TANF or
other public funds to offset some or all of the wages and costs of
employing an individual.
(d) Subsidized public sector employment means employment in the
public sector for which the employer receives a subsidy from TANF or
other public funds to offset some or all of the wages and costs of
employing an individual.
(e) Work experience (including work associated with the
refurbishing of publicly assisted housing) if sufficient private sector
employment is not available means a work activity, performed in return
for welfare, that provides an individual with an opportunity to acquire
the general skills, knowledge, and work habits necessary to obtain
employment. The purpose of work experience is to improve the
employability of those who cannot find unsubsidized full-time
employment. This activity must be supervised by an employer, work site
sponsor, or other responsible party on an ongoing basis no less
frequently than once in each day in which the individual is scheduled
to participate.
(f) On-the-job training means training in the public or private
sector that is given to a paid employee while he or she is engaged in
productive work and that provides knowledge and skills essential to the
full and adequate performance of the job.
(g) Job search and job readiness assistance means the act of
seeking or obtaining employment, preparation to seek or obtain
employment, including life skills training, and substance abuse
treatment, mental health treatment, or rehabilitation activities. Such
treatment or therapy must be determined to be necessary and documented
by a qualified medical, substance abuse, or mental health professional.
Job search and job readiness assistance activities must be supervised
by the TANF agency or other responsible party on an ongoing basis no
less frequently than once each day in which the individual is scheduled
to participate.
(h) Community service programs mean structured programs and
embedded activities in which individuals perform work for the direct
benefit of the community under the auspices of public or nonprofit
organizations. Community service programs must be limited to projects
that serve a useful community purpose in fields such as health, social
service, environmental protection, education, urban and rural
redevelopment, welfare, recreation, public facilities, public safety,
and child care. Community service programs are designed to improve the
employability of individuals not otherwise able to obtain
[[Page 6822]]
unsubsidized full-time employment, and must be supervised on an ongoing
basis no less frequently than once each day in which the individual is
scheduled to participate. A State agency shall take into account, to
the extent possible, the prior training, experience, and skills of a
recipient in making appropriate community service assignments.
(i) Vocational educational training (not to exceed 12 months with
respect to any individual) means organized educational programs that
are directly related to the preparation of individuals for employment
in current or emerging occupations. Vocational educational training
must be supervised on an ongoing basis no less frequently than once
each day in which the individual is scheduled to participate.
(j) Job skills training directly related to employment means
training or education for job skills required by an employer to provide
an individual with the ability to obtain employment or to advance or
adapt to the changing demands of the workplace. Job skills training
directly related to employment must be supervised on an ongoing basis
no less frequently than once each day in which the individual is
scheduled to participate.
(k) Education directly related to employment, in the case of a
recipient who has not received a high school diploma or a certificate
of high school equivalency means education related to a specific
occupation, job, or job offer. Education directly related to employment
must be supervised on an ongoing basis no less frequently than once
each day in which the work-eligible individual is scheduled to
participate.
(l) Satisfactory attendance at secondary school or in a course of
study leading to a certificate of general equivalence, in the case of a
recipient who has not completed secondary school or received such a
certificate means regular attendance, in accordance with the
requirements of the secondary school or course of study, at a secondary
school or in a course of study leading to a certificate of general
equivalence, in the case of a work-eligible individual who has not
completed secondary school or received such a certificate. This
activity must be supervised on an ongoing basis no less frequently than
once each day in which the individual is scheduled to participate.
(m) Providing child care services to an individual who is
participating in a community service program means providing child care
to enable another TANF or SSP recipient to participate in a community
service program. This is an unpaid activity and must be a structured
program designed to improve the employability of individuals who
participate in this activity. This activity must be supervised on an
ongoing basis no less frequently than once each day in which the
individual is scheduled to participate.
(n)(1) Work-eligible individual means an adult (or minor child
head-of-household) receiving assistance under TANF or a separate State
program or a non-recipient parent living with a child receiving such
assistance unless the parent is:
(i) A minor parent and not the head-of-household;
(ii) A non-citizen who is ineligible to receive assistance due to
his or her immigration status; or
(iii) At State option on a case-by-case basis, a recipient of
Supplemental Security Income (SSI) benefits or Aid to the Aged, Blind
or Disabled in the Territories.
(2) The term also excludes:
(i) A parent providing care for a disabled family member living in
the home, provided that there is medical documentation to support the
need for the parent to remain in the home to care for the disabled
family member;
(ii) At State option on a case-by-case basis, a parent who is a
recipient of Social Security Disability Insurance (SSDI) benefits; and
(iii) An individual in a family receiving MOE-funded assistance
under an approved Tribal TANF program, unless the State includes the
Tribal family in calculating work participation rates, as permitted
under Sec. 261.25.
0
3. Revise subpart B to part 261 to read as follows:
Subpart B--What Are the Provisions Addressing State Accountability?
Sec.
261.20 How will we hold a State accountable for achieving the work
objectives of TANF?
261.21 What overall work rate must a State meet?
261.22 How will we determine a State's overall work rate?
261.23 What two-parent work rate must a State meet?
261.24 How will we determine a State's two-parent work rate?
261.25 Does a State include Tribal families in calculating the work
participation rate?
Sec. 261.20 How will we hold a State accountable for achieving the
work objectives of TANF?
(a) Each State must meet two separate work participation rates in
FY 2006 and thereafter, one--the two-parent rate based on how well it
succeeds in helping work-eligible individuals in two-parent families
find work activities described at Sec. 261.30, the other--the overall
rate based on how well it succeeds in finding those activities for
work-eligible individuals in all the families that it serves.
(b) Each State must submit data, as specified at Sec. 265.3 of
this chapter, that allows us to measure its success in requiring work-
eligible individuals to participate in work activities.
(c) If the data show that a State met both participation rates in a
fiscal year, then the percentage of historic State expenditures that it
must expend under TANF, pursuant to Sec. 263.1 of this chapter,
decreases from 80 percent to 75 percent for that fiscal year. This is
also known as the State's TANF ``maintenance-of-effort'' (MOE)
requirement.
(d) If the data show that a State did not meet a minimum work
participation rate for a fiscal year, a State could be subject to a
financial penalty.
(e) Before we impose a penalty, a State will have the opportunity
to claim reasonable cause or enter into a corrective compliance plan,
pursuant to Sec. Sec. 262.5 and 262.6 of this chapter.
Sec. 261.21 What overall work rate must a State meet?
Each State must achieve a 50 percent minimum overall participation
rate in FY 2006 and thereafter, minus any caseload reduction credit to
which it is entitled as provided in subpart D of this part.
Sec. 261.22 How will we determine a State's overall work rate?
(a)(1) The overall participation rate for a fiscal year is the
average of the State's overall participation rates for each month in
the fiscal year.
(2) The rate applies to families with a work-eligible individual.
(b) We determine a State's overall participation rate for a month
as follows:
(1) The number of TANF and SSP-MOE families that include a work-
eligible individual who meets the requirements set forth in Sec.
261.31 for the month (i.e., the numerator), divided by,
(2) The number of TANF and SSP-MOE families that include a work-
eligible individual, minus the number of such families that are subject
to a penalty for refusing to work in that month (i.e., the
denominator). However, if a family with a work-eligible individual has
been penalized for refusal to participate in work activities for more
than three of the last 12 months, we will not exclude it from the
participation rate calculation.
[[Page 6823]]
(3) At State option, we will include in the participation rate
calculation families with a work-eligible individual that have been
penalized for refusing to work no more than three of the last 12
months.
(c)(1) A State has the option of not requiring a single custodial
parent caring for a child under age one to engage in work.
(2) At State option, we will disregard a family with such a parent
from the participation rate calculation for a maximum of 12 months.
(d)(1) If a family receives assistance for only part of a month, we
will count it as a month of participation if a work-eligible individual
is engaged in work for the minimum average number of hours in each full
week that the family receives assistance in that month.
(2) If a State pays benefits retroactively (i.e., for the period
between application and approval of benefits), it has the option to
consider the family to be receiving assistance during the period of
retroactivity.
Sec. 261.23 What two-parent work rate must a State meet?
Each State must achieve a 90 percent minimum two-parent
participation rate in FY 2006 and thereafter, minus any caseload
reduction credit to which it is entitled as provided in subpart D of
this part.
Sec. 261.24 How will we determine a State's two-parent work rate?
(a)(1) The two-parent participation rate for a fiscal year is the
average of the State's two-parent participation rates for each month in
the fiscal year.
(2) The rate applies to two-parent families with two work-eligible
individuals. However, if one of the parents is a work-eligible
individual with a disability, we will not consider the family to be a
two-parent family; i.e., we will not include such a family in either
the numerator or denominator of the two-parent rate.
(b) We determine a State's two-parent participation rate for the
month as follows:
(1) The number of two-parent TANF and SSP-MOE families in which
both parents are work-eligible individuals and together they meet the
requirements set forth in Sec. 261.32 for the month (i.e., the
numerator), divided by,
(2) The number of two-parent TANF and SSP-MOE families in which
both parents are work-eligible individuals during the month, minus the
number of such two-parent families that are subject to a penalty for
refusing to work in that month (the denominator). However, if a family
with a work-eligible individual has been penalized for more than three
months of the last 12 months, we will not exclude it from the
participation rate calculation.
(3) At State option, we will include in the participation rate
calculation families with a work-eligible individual that have been
penalized for refusing to work no more than three of the last 12
months.
(c) For purposes of the calculation in paragraph (b) of this
section, a two-parent family includes, at a minimum, all families with
two natural or adoptive parents (of the same minor child) who are work-
eligible individuals and living in the home, unless both are minors and
neither is a head-of-household.
(d)(1) If the family receives assistance for only part of a month,
we will count it as a month of participation if a work-eligible
individual in the family (or both work-eligible individuals, if they
are both required to work) is engaged in work for the minimum average
number of hours in each full week that the family receives assistance
in that month.
(2) If a State pays benefits retroactively (i.e., for the period
between application and approval of benefits), it has the option to
consider the family to be receiving assistance during the period of
retroactivity.
Sec. 261.25 Do we count Tribal families in calculating the work
participation rate?
At State option, we will include families with a work-eligible
individual that are receiving assistance under an approved Tribal
family assistance plan or under a Tribal work program in calculating
the State's participation rates under Sec. Sec. 261.22 and 261.24.
0
4. Revise Sec. 261.31 to read as follows:
Sec. 261.31 How many hours must a work-eligible individual
participate for the family to count in the numerator of the overall
rate?
(a) Subject to paragraph (d) of this section, a family with a work-
eligible individual counts as engaged in work for a month for the
overall rate if:
(1) He or she participates in work activities during the month for
at least a minimum average of 30 hours per week; and
(2) At least 20 of the above hours per week come from participation
in the activities listed in paragraph (b) of this section.
(b) The following nine activities count toward the first 20 hours
of participation: unsubsidized employment; subsidized private-sector
employment; subsidized public-sector employment; work experience; on-
the-job training; job search and job readiness assistance; community
service programs; vocational educational training; and providing child
care services to an individual who is participating in a community
service program.
(c) Above 20 hours per week, the following three activities may
also count as participation: job skills training directly related to
employment; education directly related to employment; and satisfactory
attendance at secondary school or in a course of study leading to a
certificate of general equivalence.
(d)(1) We will deem a work-eligible individual who participates in
a work experience or community service program for the maximum number
of hours per month that a State may require by dividing the combined
monthly TANF or SSP-MOE grant and food stamp allotment by the higher of
the Federal or State minimum wage to have participated for an average
of 20 hours per week for the month in that activity.
(2) This policy is limited to States that have adopted a Simplified
Food Stamp Program option that permits a State to count the value of
food stamps in determining the maximum core hours of participation
permitted by the FLSA.
(3) In order for Puerto Rico, which does not have a traditional
Food Stamp Program, to deem core hours, it must include the value of
food assistance benefits provided through the Nutrition Assistance
Program in the same manner as a State must include food stamp benefits
under subsection (d)(1).
0
5. Revise Sec. 261.32 to read as follows:
Sec. 261.32 How many hours must work-eligible individuals participate
for the family to count in the numerator of the two-parent rate?
(a) Subject to paragraph (d) of this section, a family with two
work-eligible parents counts as engaged in work for the month for the
two-parent rate if:
(1) Work-eligible parents in the family are participating in work
activities for a combined average of at least 35 hours per week during
the month, and
(2) At least 30 of the 35 hours per week come from participation in
the activities listed in paragraph (b) of this section.
(b) The following nine activities count for the first 30 hours of
participation: unsubsidized employment; subsidized private-sector
employment; subsidized public-sector employment; work experience; on-
the-job training; job search and job readiness assistance; community
service programs; vocational educational training; and providing child
care services to an individual who
[[Page 6824]]
is participating in a community service program.
(c) Above 30 hours per week, the following three activities may
also count for participation: job skills training directly related to
employment; education directly related to employment; and satisfactory
attendance at secondary school or in a course of study leading to a
certificate of general equivalence.
(d)(1) We will deem a family with two work-eligible parents in
which one or both participates in a work experience or community
service program for the maximum number of hours per month that a State
may require by dividing the combined monthly TANF or SSP-MOE grant and
food stamp allotment by the higher of the Federal or State minimum wage
to have participated for an average of 30 hours per week for the month
in that activity.
(2) This policy is limited to States that have adopted a Simplified
Food Stamp Program option that permits a State to count the value of
food stamps in determining the maximum core hours of participation
permitted by the FLSA.
(3) In order for Puerto Rico, which does not have a traditional
Food Stamp Program, to deem core hours, it must include the value of
food assistance benefits provided through the Nutrition Assistance
Program in the same manner as a State must include food stamp benefits
under paragraph (d)(1) of this section.
(e)(1) Subject to paragraph (f) of this section, if the family
receives federally funded child care assistance and an adult in the
family does not have a disability or is not caring for a child with a
disability, then the work-eligible individuals must be participating in
work activities for an average of at least 55 hours per week to count
as a two-parent family engaged in work for the month.
(2) At least 50 of the 55 hours per week must come from
participation in the activities listed in paragraph (b) of this
section.
(3) Above 50 hours per week, the three activities listed in
paragraph (c) of this section may also count as participation.
(f)(1) We will deem a family with two work-eligible parents in
which one or both participates in a work experience or community
service program for the maximum number of hours per month that a State
may require by dividing the combined monthly TANF or SSP-MOE grant and
food stamp allotment by the higher of the Federal or State minimum wage
to have participated for an average of 50 hours per week for the month
in that activity.
(2) This policy is limited to States that have adopted a Simplified
Food Stamp Program option that permits a State to count the value of
food stamps in determining the maximum core hours of participation
permitted by the FLSA.
(3) In order for Puerto Rico, which does not have a traditional
Food Stamp Program, to deem core hours, it must include the value of
food assistance benefits provided through the Nutrition Assistance
Program in the same manner as a State must include food stamp benefits
under paragraph (d)(1) of this section.
0
6. Revise Sec. 261.34 to read as follows:
Sec. 261.34 Are there any limitations in counting job search and job
readiness assistance toward the participation rates?
Yes. There are four limitations concerning job search and job
readiness assistance.
(a) Except as provided in paragraph (b) of this section, an
individual's participation in job search and job readiness assistance
counts for a maximum of six weeks in the preceding 12-month period.
(b) If the State's total unemployment rate is at least 50 percent
greater than the United States' total unemployment rate or if the State
meets the definition of a ``needy State'', specified at Sec. 260.30 of
this chapter, then an individual's participation in job search and job
readiness assistance counts for a maximum of 12 weeks in that 12-month
period.
(c) For purposes of paragraphs (a) and (b) of this section, a week
equals 20 hours for a work-eligible individual who is a single
custodial parent with a child under six years of age and equals 30
hours for all other work-eligible individuals.
(d) An individual's participation in job search and job readiness
assistance does not count for a week that immediately follows four
consecutive weeks in which the State reports any hours of such
participation in the preceding 12-month period. For purposes of this
paragraph a week means seven consecutive days.
(e) Not more than once for any individual in the preceding 12-month
period, a State may count three or four days of job search and job
readiness assistance during a week as a full week of participation. We
calculate a full week of participation based on the average daily hours
of participation for three or four days and will prorate participation
at that level for the remaining one or two days to determine the total
hours for a five-day week. Any prorated hours of participation must be
included in the calculation of total hours permitted under the
limitation in this section.
0
7. Revise subpart D to part 261 to read as follows:
Subpart D--How Will We Determine Caseload Reduction Credit for
Minimum Participation Rates?
Sec.
261.40 Is there a way for a State to reduce the work participation
rates?
261.41 How will we determine the caseload reduction credit?
261.42 Which reductions count in determining the caseload reduction
credit?
261.43 What is the definition of a ``case receiving assistance'' in
calculating the caseload reduction credit?
261.44 When must a State report the required data on the caseload
reduction credit?
Sec. 261.40 Is there a way for a State to reduce the work
participation rates?
(a)(1) If the average monthly number of cases receiving assistance,
including assistance under a separate State program (as provided at
Sec. 261.42(b)), in a State in the preceding fiscal year was lower
than the average monthly number of cases that received assistance,
including assistance under a separate State program in that State in FY
2005, the minimum overall participation rate the State must meet for
the fiscal year (as provided at Sec. 261.21) decreases by the number
of percentage points the prior-year caseload fell in comparison to the
FY 2005 caseload.
(2) The minimum two-parent participation rate the State must meet
for the fiscal year (as provided at Sec. 261.23) decreases, at State
option, by either:
(i) The number of percentage points the prior-year two-parent
caseload, including two-parent cases receiving assistance under a
separate State program (as provided at Sec. 261.42(b)), fell in
comparison to the FY 2005 two-parent caseload, including two-parent
cases receiving assistance under a separate State program; or
(ii) The number of percentage points the prior-year overall
caseload, including assistance under a separate State program (as
provided at Sec. 261.42(b)), fell in comparison to the FY 2005 overall
caseload, including cases receiving assistance under a separate State
program.
(3) For the credit calculation, we will refer to the fiscal year
that precedes the fiscal year to which the credit applies as the
``comparison year.''
(b)(1) The calculations in paragraph (a) of this section must
disregard caseload reductions due to requirements of Federal law and to
changes that a
[[Page 6825]]
State has made in its eligibility criteria in comparison to its
criteria in effect in FY 2005.
(2) At State option, the calculation may offset the disregard of
caseload reductions in paragraph (b)(1) of this section by changes in
eligibility criteria that increase caseloads.
(c)(1) To establish the caseload base for FY 2005 and to determine
the comparison-year caseload, we will use the combined TANF and
Separate State Program caseload figures reported on the Form ACF-199,
TANF Data Report, and Form ACF-209, SSP-MOE Data Report, respectively.
(2) To qualify for a caseload reduction, a State must have reported
monthly caseload information, including cases in separate State
programs, for FY 2005 and the comparison year for cases receiving
assistance as defined at Sec. 261.43.
(d)(1) A State may correct erroneous data or submit accurate data
to adjust program data or to include unduplicated cases within the
fiscal year.
(2) We will adjust both the FY 2005 baseline and the comparison-
year caseload information, as appropriate, based on these State
submissions.
(e) We refer to the number of percentage points by which a caseload
falls, disregarding the cases described in paragraph (b) of this
section, as a caseload reduction credit.
Sec. 261.41 How will we determine the caseload reduction credit?
(a)(1) We will determine the overall and two-parent caseload
reduction credits that apply to each State based on the information and
estimates reported to us by the State on eligibility policy changes
using application denials, case closures, or other administrative data
sources and analyses.
(2) We will accept the information and estimates provided by a
State, unless they are implausible based on the criteria listed in
paragraph (d) of this section.
(3) We may conduct on-site reviews and inspect administrative
records on applications, case closures, or other administrative data
sources to validate the accuracy of the State estimates.
(b) In order to receive a caseload reduction credit, a State must
submit a Caseload Reduction Report to us containing the following
information:
(1) A listing of, and implementation dates for, all State and
Federal eligibility changes, as defined at Sec. 261.42, made by the
State since the beginning of FY 2006;
(2) A numerical estimate of the positive or negative average
monthly impact on the comparison-year caseload of each eligibility
change (based, as appropriate, on application denials, case closures or
other analyses);
(3) An overall estimate of the total net positive or negative
impact on the applicable caseload as a result of all such eligibility
changes;
(4) An estimate of the State's caseload reduction credit;
(5) A description of the methodology and the supporting data that a
State used to calculate its caseload reduction estimates; and
(6) A certification that it has provided the public an appropriate
opportunity to comment on the estimates and methodology, considered
their comments, and incorporated all net reductions resulting from
Federal and State eligibility changes.
(c)(1) A State requesting a caseload reduction credit for the
overall participation rate must base its estimates of the impact of
eligibility changes on decreases in its comparison-year overall
caseload compared to the FY 2005 overall caseload baseline established
in accordance with Sec. 261.40(d).
(2) A State requesting a caseload reduction credit for its two-
parent rate must base its estimates of the impact of eligibility
changes on decreases in either:
(i) Its two-parent caseload compared to the FY 2005 base-year two-
parent caseload baseline established in accordance with Sec.
261.40(d); or
(ii) Its overall caseload compared to the FY 2005 base-year overall
caseload baseline established in accordance with Sec. 261.40(d).
(d)(1) For each State, we will assess the adequacy of information
and estimates using the following criteria: Its methodology; Its
estimates of impact compared to other States; the quality of its data;
and the completeness and adequacy of its documentation.
(2) If we request additional information to develop or validate
estimates, the State may negotiate an appropriate deadline or provide
the information within 30 days of the date of our request.
(3) The State must provide sufficient data to document the
information submitted under paragraph (b) of this section.
(e) We will not calculate a caseload reduction credit unless the
State reports case-record data on individuals and families served by
any separate State program, as required under Sec. 265.3(d) of this
chapter.
(f) A State may only apply to the participation rate a caseload
reduction credit that we have calculated. If a State disagrees with the
caseload reduction credit, it may appeal the decision as an adverse
action in accordance with Sec. 262.7 of this chapter.
Sec. 261.42 Which reductions count in determining the caseload
reduction credit?
(a)(1) A State's caseload reduction credit must not include
caseload decreases due to Federal requirements or State changes in
eligibility rules since FY 2005 that directly affect a family's
eligibility for assistance. These include, but are not limited to, more
stringent income and resource limitations, time limits, full family
sanctions, and other new requirements that deny families assistance
when an individual does not comply with work requirements, cooperate
with child support, or fulfill other behavioral requirements.
(2) At State option, a State's caseload reduction credit may
include caseload increases due to Federal requirements or State changes
in eligibility rules since FY 2005 if used to offset caseload decreases
in paragraph (a)(1) of this section.
(3) A State may not receive a caseload reduction credit that
exceeds the actual caseload decline between FY 2005 and the comparison
year.
(4) A State may count the reductions attributable to enforcement
mechanisms or procedural requirements that are used to enforce existing
eligibility criteria (e.g., fingerprinting or other verification
techniques) to the extent that such mechanisms or requirements identify
or deter families otherwise ineligible under existing rules.
(b) A State must include cases receiving assistance in separate
State programs as part of its FY 2005 caseload and comparison-year
caseload. However, if a State provides documentation that separate
State program cases overlap with or duplicate cases in the TANF
caseload, we will exclude them from the caseload count.
Sec. 261.43 What is the definition of a ``case receiving assistance''
in calculating the caseload reduction credit?
(a) The caseload reduction credit is based on decreases in
caseloads receiving TANF- or SSP-MOE-funded assistance (other than
those excluded pursuant to Sec. 261.42).
(b)(1) A State that is investing State MOE funds in excess of the
required 80 percent or 75 percent basic MOE amount need only include
the pro rata share of caseloads receiving assistance that is required
to meet basic MOE requirements.
(2) For purposes of paragraph (b)(1) of this section, a State may
exclude from the overall caseload reduction credit calculation the
number of cases funded
[[Page 6826]]
with excess MOE. This number is calculated by dividing annual excess
MOE expenditures on assistance by the average monthly expenditures on
assistance per case for the fiscal year,
(i) Where annual excess MOE expenditures on assistance equal total
annual MOE expenditures minus the percentage of historic State
expenditures specified in paragraph (v) of this section, multiplied by
the percentage that annual expenditures on assistance (both Federal and
State) represent of all annual expenditures, and
(ii) Where the average monthly assistance expenditures per case for
the fiscal year equal the sum of annual TANF and SSP-MOE assistance
expenditures (both Federal and State) divided by the average monthly
sum of TANF and SSP-MOE caseloads for the fiscal year.
(iii) If the excess MOE calculation is for a separate two-parent
caseload reduction credit, we multiply the number of cases funded with
excess MOE by the average monthly percentage of two-parent cases in the
State's total (TANF plus SSP-MOE) average monthly caseload.
(iv) All financial data must agree with data reported on the TANF
Financial Report (form ACF-196) and all caseload data must agree with
data reported on the TANF Data and SSP-MOE Data Reports (forms ACF-199
and ACF-209).
(v) The State must use 80 percent of historic expenditures when
calculating excess MOE; however if it has met the work participation
requirements for the year, it may use 75 percent of historic
expenditures.
Sec. 261.44 When must a State report the required data on the
caseload reduction credit?
A State must report the necessary documentation on caseload
reductions for the preceding fiscal year by December 31.
0
8. Revise subpart F to part 261 to read as follows:
Subpart F--How Do We Ensure the Accuracy of Work Participation
Information?
Sec.
261.60 What hours of participation may a State report for a work-
eligible individual?
261.61 How must a State document a work-eligible individual's hours
of participation?
261.62 What must a State do to verify the accuracy of its work
participation information?
261.63 When is the State's Work Verification Plan due?
261.64 How will we determine whether a State's work verification
procedures ensure an accurate work participation measurement?
261.65 Under what circumstances will we impose a work verification
penalty?
Sec. 261.60 What hours of participation may a State report for a
work-eligible individual?
(a) A State must report the actual hours that an individual
participates in an activity, subject to the qualifications in
paragraphs (b) and (c) of this section and Sec. 261.61(c). It is not
sufficient to report the hours an individual is scheduled to
participate in an activity.
(b) For the purposes of calculating the work participation rates
for a month, actual hours may include the hours for which an individual
was paid, including paid holidays and sick leave. For participation in
unpaid work activities, it may include excused absences for hours
missed due to a maximum of 10 holidays in the preceding 12-month period
and up to 80 hours of additional excused absences in the preceding 12-
month period, no more than 16 of which may occur in a month, for each
work-eligible individual. Each State must designate the days that it
wishes to count as holidays for those in unpaid activities in its Work
Verification Plan. It may designate no more than 10 such days. In order
to count an excused absence as actual hours of participation, the
individual must have been scheduled to participate in a countable work
activity for the period of the absence that the State reports as
participation. A State must describe its excused absence policies and
definitions as part of its Work Verification Plan, specified at Sec.
261.62.
(c) For unsubsidized employment, subsidized employment, and OJT, a
State may report projected actual hours of employment participation for
up to six months based on current, documented actual hours of work. Any
time a State receives information that the client's actual hours of
work have changed, or no later than the end of any six-month period,
the State must re-verify the client's current actual average hours of
work, and may report these projected actual hours of participation for
another six-month period.
(d) A State may not count more hours toward the participation rate
for a self-employed individual than the number derived by dividing the
individual's self-employment income (gross income less business
expenses) by the Federal minimum wage. A State may propose an
alternative method of determining self-employment hours as part of its
Work Verification Plan.
(e) A State may count supervised homework time and up to one hour
of unsupervised homework time for each hour of class time. Total
homework time counted for participation cannot exceed the hours
required or advised by a particular educational program.
Sec. 261.61 How must a State document a work-eligible individual's
hours of participation?
(a) A State must support each individual's hours of participation
through documentation in the case file. In accordance with Sec.
261.62, a State must describe in its Work Verification Plan the
documentation it uses to verify hours of participation in each
activity.
(b) For an employed individual, the documentation may consist of,
but is not limited to pay stubs, employer reports, or time and
attendance records substantiating hours of participation. A State may
presume that an employed individual participated for the total number
of hours for which that individual was paid.
(c) The State must document all hours of participation in an
activity; however, if a State is reporting projected hours of actual
employment in accordance with Sec. 261.60(c), it need only document
the hours on which it bases the projection.
(d) For an individual who is self-employed, the documentation must
comport with standards set forth in the State's approved Work
Verification Plan. Self-reporting by a participant without additional
verification is not sufficient documentation.
(e) For an individual who is not employed, the documentation for
substantiating hours of participation may consist of, but is not
limited to, time sheets, service provider attendance records, or school
attendance records. For homework time, the State must also document the
homework or study expectations of the educational program.
Sec. 261.62 What must a State do to verify the accuracy of its work
participation information?
(a) To ensure accuracy in the reporting of work activities by work-
eligible individuals on the TANF Data Report and, if applicable, the
SSP-MOE Data Report, each State must:
(1) Establish and employ procedures for determining whether its
work activities may count for participation rate purposes;
(2) Establish and employ procedures for determining how to count
and verify reported hours of work;
(3) Establish and employ procedures for identifying who is a work-
eligible individual;
(4) Establish and employ internal controls to ensure compliance
with the procedures; and
[[Page 6827]]
(5) Submit to the Secretary for approval the State's Work
Verification Plan in accordance with paragraph (b) of this section.
(b) A State's Work Verification Plan must include the following:
(1) For each countable work activity:
(i) A description demonstrating how the activity meets the relevant
definition at Sec. 261.2;
(ii) A description of how the State determines the number of
countable hours of participation; and
(iii) A description of the documentation it uses to monitor
participation and ensure that the actual hours of participation are
reported;
(2) A description of the State's procedures for identifying all
work-eligible individuals, as defined at Sec. 261.2;
(3) A description of how the State ensures that, for each work-
eligible individual, it:
(i) Accurately inputs data into the State's automated data
processing system;
(ii) Properly tracks the hours though the automated data processing
system; and
(iii) Accurately reports the hours to the Department;
(4) A description of the procedures for ensuring it does not
transmit to the Department a work-eligible individual's hours of
participation in an activity that does not meet a Federal definition of
a countable work activity; and
(5) A description of the internal controls that the State has
implemented to ensure a consistent measurement of the work
participation rates, including the quality assurance processes and
sampling specifications it uses to monitor adherence to the established
work verification procedures by State staff, local staff, and
contractors.
(c) We will review a State's Work Verification Plan for
completeness and approve it if we believe that it will result in
accurate reporting of work participation information.
Sec. 261.63 When is a State's Work Verification Plan Due?
(a) Each State must submit its interim Work Verification Plan for
validating work activities reported in the TANF Data Report and, if
applicable, the SSP-MOE Data Report no later than September 30, 2006.
(b) If HHS requires changes, a State must submit them within 60
days of receipt of our notice and include all necessary changes as part
of a final approved Work Verification Plan no later than September 30,
2007.
(c) If a State modifies its verification procedures for TANF or
SSP-MOE work activities or its internal controls for ensuring a
consistent measurement of the work participation rate, the State must
submit for approval an amended Work Verification Plan by the end of the
quarter in which the State modifies the procedures or internal
controls.
Sec. 261.64 How will we determine whether a State's work verification
procedures ensure an accurate work participation measurement?
(a) We will determine that a State has met the requirement to
establish work verification procedures if it submitted an interim Work
Verification Plan by September 30, 2006 and a complete Work
Verification Plan that we approved by September 30, 2007.
(b) A ``complete'' Work Verification Plan means that:
(1) The plan includes all the information required by Sec.
261.62(b); and
(2) The State certifies that the plan includes all the information
required by Sec. 261.62(b) and that it accurately reflects the
procedures under which the State is operating.
(c) For conduct occurring after October 1, 2007, we will use the
single audit under OMB Circular A-133 in conjunction with other
reviews, audits, and data sources, as appropriate, to assess the
accuracy of the data filed by States for use in calculating the work
participation rates.
Sec. 261.65 Under what circumstances will we impose a work
verification penalty?
(a) We will take action to impose a penalty under Sec.
262.1(a)(15) of this chapter if:
(1) The requirements under Sec. Sec. 261.64(a) and (b) have not
been met; or
(2) We determine that the State has not maintained adequate
documentation, verification, or internal control procedures to ensure
the accuracy of the data used in calculating the work participation
rates.
(b) If a State fails to submit an interim or complete Work
Verification Plan by the due dates in Sec. 261.64(a), we will reduce
the SFAG payable for the immediately succeeding fiscal year by five
percent of the adjusted SFAG.
(c) If a State fails to maintain adequate internal controls to
ensure a consistent measurement of work participation, we will reduce
the adjusted SFAG by the following percentages for a fiscal year:
(1) One percent for the first year;
(2) Two percent for second year;
(3) Three percent for the third year;
(4) Four percent for the fourth year; and,
(5) Five percent for the fifth and subsequent years.
(d) If a State complies with the requirements in this subpart for
two consecutive years, then any penalty imposed for subsequent failures
will begin anew, as described in paragraph (c) of this section.
(e) If we take action to impose a penalty under Sec. Sec.
261.64(b) or (c), we will reduce the SFAG payable for the immediately
succeeding fiscal year.
PART 263--EXPENDITURES OF STATE AND FEDERAL TANF FUNDS
0
9. The authority citation for part 263 continues to read as follows:
Authority: 42 U.S.C. 604, 607, 609, and 862a.
0
10. Revise Sec. 263.2 to read as follows:
Sec. 263.2 What kinds of State expenditures count toward meeting a
State's basic MOE expenditure requirement?
(a) Expenditures of State funds in TANF or separate State programs
may count if they are made for the following types of benefits or
services:
(1) Cash assistance, including the State's share of the assigned
child support collection that is distributed to the family, and
disregarded in determining eligibility for, and amount of the TANF
assistance payment;
(2) Child care assistance (see Sec. 263.3);
(3) Education activities designed to increase self-sufficiency, job
training, and work (see Sec. 263.4);
(4) Any other use of funds allowable under section 404(a)(1) of the
Act including:
(i) Nonmedical treatment services for alcohol and drug abuse and
some medical treatment services (provided that the State has not
commingled its MOE funds with Federal TANF funds to pay for the
services), if consistent with the goals at Sec. 260.20 of this
chapter; and
(ii) Pro-family healthy marriage and responsible fatherhood
activities enumerated in part IV-A of the Act, sections
403(a)(2)(A)(iii) and 403(a)(2)(C)(ii) that are consistent with the
goals at Sec. Sec. 260.20(c) or (d) of this chapter, but do not
constitute ``assistance'' as defined in Sec. 260.31(a) of this
chapter; and
(5)(i) Administrative costs for activities listed in paragraphs
(a)(1) through (a)(4) of this section, not to exceed 15 percent of the
total amount of countable expenditures for the fiscal year.
(ii) Costs for information technology and computerization needed
for tracking or monitoring required by or under part IV-A of the Act do
not count towards the limit in paragraph (5)(i) of this section, even
if they fall within the definition of ``administrative costs.''
[[Page 6828]]
(A) This exclusion covers the costs for salaries and benefits of
staff who develop, maintain, support, or operate the portions of
information technology or computer systems used for tracking and
monitoring.
(B) It also covers the costs of contracts for the development,
maintenance, support, or operation of those portions of information
technology or computer systems used for tracking or monitoring.
(b) With the exception of paragraph (a)(4)(ii) of this section, the
benefits or services listed under paragraph (a) of this section count
only if they have been provided to or on behalf of eligible families.
An ``eligible family'' as defined by the State, must:
(1) Be comprised of citizens or non-citizens who:
(i) Are eligible for TANF assistance;
(ii) Would be eligible for TANF assistance, but for the time limit
on the receipt of federally funded assistance; or
(iii) Are lawfully present in the United States and would be
eligible for assistance, but for the application of title IV of PRWORA;
(2) Include a child living with a custodial parent or other adult
caretaker relative (or consist of a pregnant individual); and
(3) Be financially eligible according to the appropriate income and
resource (when applicable) standards established by the State and
contained in its TANF plan.
(c) Benefits or services listed under paragraph (a) of this section
provided to a family that meets the criteria under paragraphs (b)(1)
through (b)(3) of this section, but who became ineligible solely due to
the time limitation given under Sec. 264.1 of this chapter, may also
count.
(d) Expenditures for the benefits or services listed under
paragraph (a) of this section count whether or not the benefit or
service meets the definition of assistance under Sec. 260.31 of this
chapter. Further, families that meet the criteria in paragraphs (b)(2)
and (b)(3) of this section are considered to be eligible for TANF
assistance for the purposes of paragraph (b)(1)(i) of this section.
(e) Expenditures for benefits or services listed under paragraph
(a) of this section may include allowable costs borne by others in the
State (e.g., local government), including cash donations from non-
Federal third parties (e.g., a non-profit organization) and the value
of third party in-kind contributions if:
(1) The expenditure is verifiable and meets all applicable
requirements in 45 CFR 92.3 and 92.24;
(2) There is an agreement between the State and the other party
allowing the State to count the expenditure toward its MOE requirement;
and,
(3) The State counts a cash donation only when it is actually
spent.
(f)(1) The expenditures for benefits or services in State-funded
programs listed under paragraph (a) of this section count only if they
also meet the requirements of Sec. 263.5.
(2) Expenditures that fall within the prohibitions in Sec. 263.6
do not count.
(g) State funds used to meet the Healthy Marriage Promotion and
Responsible Fatherhood Grant match requirement may count to meet the
MOE requirement in Sec. 263.1, provided the expenditure also meets all
the other MOE requirements in this subpart.
0
11. Amend Sec. 263.5 by revising paragraph (b) to read as follows:
Sec. 263.5 When do expenditures in State-funded programs count?
* * * * *
(b) If a current State or local program also operated in FY 1995,
and expenditures in this program would not have been previously
authorized and allowable under the former AFDC, JOBS, Emergency
Assistance, Child Care for AFDC recipients, At-Risk Child Care, or
Transitional Child care programs, then countable expenditures are
limited to:
(1) The amount by which total current fiscal year expenditures for
or on behalf of eligible families, as defined in Sec. 263.2(b), exceed
total State expenditures in this program during FY 1995; or, if
applicable,
(2) The amount by which total current fiscal year expenditures for
pro-family activities under Sec. 263.2(a)(4)(ii) exceed total State
expenditures in this program during FY 1995.
PART 265--DATA COLLECTION AND REPORTING REQUIREMENTS
0
12. The authority citation for part 265 continues to read as follows:
Authority: 42 U.S.C. 603, 605, 607, 609, 611, and 613.
0
13. Amend Sec. 265.7 by revising paragraph (b) to read as follows:
Sec. 265.7 How will we determine if the State is meeting the
quarterly reporting requirements?
* * * * *
(b) For a disaggregated data report, ``a complete and accurate
report'' means that:
(1) The reported data accurately reflect information available to
the State in case records, financial records, and automated data
systems, and include correction of the quarterly data by the end of the
fiscal year reporting period;
(2) The data are free from computational errors and are internally
consistent (e.g., items that should add to totals do so);
(3) The State reports data for all required elements (i.e., no data
are missing);
(4)(i) The State provides data on all families; or
(ii) If the State opts to use sampling, the State reports data on
all families selected in a sample that meets the specification and
procedures in the TANF Sampling Manual (except for families listed in
error); and
(5) Where estimates are necessary (e.g., some types of assistance
may require cost estimates), the State uses reasonable methods to
develop these estimates.
* * * * *
[FR Doc. 08-455 Filed 1-29-08; 4:40 pm]
BILLING CODE 4184-01-P