# Reauthorization of the Temporary Assistance for Needy Families (TANF) Program

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URL: https://www.frixlaw.com/law-library/documents/fr%3A08-455

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** February 5, 2008
- **Citation:** 73 FR 6772

## Text

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.

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

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:

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

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 § 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.

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

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 § 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

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 §§ 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 § 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

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

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.

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 §§ 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

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 § 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

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 § 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 § 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

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 § 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

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 § 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 § 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

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

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 § 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

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 infor

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A08-455. Public record. Not legal advice.