Statewide Automated Child Welfare Information Systems

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 1355 and 1356

RIN 0970-AB38

Statewide Automated Child Welfare Information Systems

AGENCY: Office of Information Systems Management (OISM), ACF, HHS.

ACTION: Final rule.

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SUMMARY: These final rules implement section 13713 of the Omnibus

Budget Reconciliation Act of 1993 (Pub. L. 103-66). Under section

13713, funding is made available for the planning, design, development

and installation of statewide automated child welfare information

systems. Such systems must be comprehensive in that they must meet the

requirements for an Adoption and Foster Care Analysis and Reporting

[[Page 26830]] System (AFCARS) required by section 479(b)(2) of the

Social Security Act (the Act) and implementing regulations; to the

extent practicable, be capable of interfacing with State child abuse

and neglect automated systems; to the extent practicable, be capable of

interfacing with, and retrieving information from the State automated

system for determining eligibility for title IV-A assistance; and, be

determined by the Secretary to be likely to provide more efficient,

economical, and effective administration of the programs carried out

under State plans approved under title IV-B or IV-E of the Act.

Enhanced Federal funding at the 75 percent matching rate is

provided for such activities as well as for the cost of hardware

components effective October 1, 1993. This funding rate is eliminated

under the statute after September 30, 1996, at which time a Federal

matching rate of 50 percent is available. Also effective October 1,

1993, Federal financial participation at the 50 percent matching rate

is available for the operation of such systems.

EFFECTIVE DATE: May 19, 1995.

FOR FURTHER INFORMATION CONTACT: Naomi Marr (202) 401-6960.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

This rule contains information collection activities which are

subject to review by the Office of Management and Budget (OMB) under

the Paperwork Reduction Act of 1980 (44 U.S.C. Chapter 35).

In accordance with the Paperwork Reduction Act of 1980, the

Department resubmitted for OMB clearance the APD process, described in

this document, under which States may apply for and obtain Federal

financial participation in their ADP acquisitions. This reporting

requirement was previously approved under OMB control number 0990-0174.

The reporting burden over and above what the States already do for

the current APD approval process is estimated to average 10 hours for

the initial submission of an APD. This includes time for reviewing

instructions, and collecting and reporting the needed information in

the APD.

Send comments regarding the burden estimate or any other aspect of

this collection of information, including suggestions for reducing

burden, to the Administration for Children and Families, 370 L'Enfant

Promenade, SW, Washington, DC, 20447 and the Office of Information and

Regulatory Affairs, Office of Management and Budget, Room 3208, New

Executive Office Building, Washington, DC 20503, Attn: Desk Officer for

ACF.

Statutory Authority

These regulations are published under the authority of several

provisions of the Social Security Act (the Act), as amended by Pub. L.

103-66. Section 474(a)(3) of the Act contains new requirements

providing funding for statewide automated child welfare information

systems to carry out the State's programs under parts IV-B and IV-E of

the Act. Under section 474(a)(3)(C), Federal financial participation at

the 75 percent matching rate is available from October 1, 1993 through

September 30, 1996 (after which time the rate is reduced to 50

percent), for the planning, design, development and installation of

statewide automated child welfare information systems (including the

full amount of expenditures for hardware components for such systems)

to the extent that such systems--

(i) Meet the requirements imposed by regulations promulgated

pursuant to section 479(b)(2);

(ii) To the extent practicable, are capable of interfacing with the

State data collection system that collects information relating to

child abuse and neglect;

(iii) To the extent practicable, have the capability of interfacing

with, and retrieving information from, the State data collection system

that collects information relating to the eligibility of individuals

under part IV-A (for the purposes of facilitating verification of

eligibility of foster children); and

(iv) Are determined by the Secretary to be likely to provide more

efficient, economical and effective administration of the programs

carried out under a State's plans approved under part IV-B or IV-E of

the Act.

Under section 474(a)(3)(D), Federal financial participation at the

50 percent matching rate is available for the operation of the systems

described above.

Section 474(e) provides that the Secretary treat as necessary for

the proper and efficient administration of the State plan, all

expenditures of a State necessary to plan, design, develop, install,

and operate the information retrieval system under section

474(a)(3)(C), without regard to whether the systems may be used with

respect to foster or adoptive children other than those on behalf of

whom foster care maintenance payments or adoption assistance payments

may be made under part IV-E of the Act.

These regulations are also published under the general authority of

section 1102 of the Act which requires the Secretary to publish

regulations that may be necessary for the efficient administration of

the functions for which she is responsible under the Act.

Background

The title IV-E Foster Care and Adoption Assistance program provides

Federal funds to States for the care of eligible dependent, abused or

neglected children who must be placed in foster care, and for adoption

assistance payments for certain children with special needs. The title

IV-B, subpart 1 program provides Federal funds for service programs for

children and their families aimed at strengthening families and

preventing the unnecessary separation of children from their families;

assuring adequate care by the State of children who are away from their

homes; providing services to return children when separation occurs;

and placing children for adoption or other permanent placement when

restoration to the family is not possible or appropriate.

The title IV-B, subpart 2 program is a capped entitlement for

family preservation and family support services. Family preservation

services are targeted to families that are already in crisis and

children who are at risk of being placed in foster care and include

intensive interventions to help families weather crises, provide for

reunification of families by returning home foster care children

whenever possible, and by arranging for the adoption of or permanent

and appropriate living arrangements for those children who cannot

return home. Family support services are designed to help increase the

strength and stability of families and include programs to improve and

reinforce parenting skills and to provide respite care for care

providers and drop-in centers for families.

In recognition of the critical need for effective statewide

automated capability to support these programs in a comprehensive

fashion, section 13713 of Pub. L. 103-66 amends the funding provisions

under section 474 of the Act to provide for the development and

operation of comprehensive information systems to assist in the

administration of title IV-B and IV-E programs. To encourage States to

act quickly to develop efficient comprehensive statewide automated

information systems, Congress limited the availability of Federal

funding at the 75 percent matching rate for statewide automated child

welfare information systems (SACWIS) to Fiscal Years 1994, 1995 and

1996. [[Page 26831]]

When implemented, these information systems will result in more

efficient and effective practices in administering child welfare

programs which in turn will ultimately result in improved service

delivery. Readily available information and automated procedures to

assist in case assessments and plans will allow States to be more

proactive in program administration and to focus efforts on preventive

services and measures rather than constantly reacting to crisis. With a

single statewide automated information system, States will realize more

efficient and effective processes and procedures.

An interim final rule providing the requirements for States wishing

to pursue enhanced funding for the development of statewide automated

child welfare information systems was published in the Federal Register

December 22, 1993 (58 FR 67939). We received 22 letters of public

comment regarding the interim final rule from State agencies and other

interested parties. Specific comments and responses follow the

discussion of regulatory provisions. These comments did not generate

any changes to the regulatory provisions outlined in the interim final

rule.

Regulatory Provisions

The requirements for the automation of comprehensive child welfare

services are included under 45 CFR part 1355, which provides the

general requirements for Foster Care Maintenance Payments, Adoption

Assistance and Child Welfare Services. The purpose of these

regulations, as provided under Sec. 1355.50, is to set forth the

requirements and procedures States must meet in order to receive

Federal financial participation authorized under the Budget

Reconciliation Act of 1993 for the planning, design, development,

installation and operation of statewide automated child welfare

information systems.

Funding authority for statewide automated child welfare information

systems (SACWIS), is provided at Sec. 1355.52 to effect the statutory

provisions under section 474(a)(3)(C) of the Social Security Act

authorizing funding for comprehensive child welfare systems.

Paragraph (a) provides the basic requirements a State must meet in

order to be eligible for Federal financial participation at a 75

percent matching rate for fiscal years 1994, 1995 and 1996 and at a 50

percent matching rate thereafter for expenditures related to the

planning, design, development and installation of a statewide automated

child welfare information system.

First, under Sec. 1355.52(a)(1), the SACWIS must provide for the

collection and electronic reporting of data required under section

479(b) of the Act and the implementing regulations under Sec. 1355.40.

Under section 479(b) of the Act, States must establish and implement

adoption and foster care reporting systems designed to collect uniform,

reliable information on children who are under the responsibility of

the State title IV-B/IV-E agency for placement and care.

Under paragraph (a)(2), the SACWIS must, to the extent practicable,

provide for an interface with the State's data collection system for

child abuse and neglect. The phrase ``to the extent practicable'' as

used in this paragraph is statutory and reflects in part the voluntary

nature of the National Child Abuse and Neglect Data Systems (NCANDS)

established under Pub. L. 100-294, the Child Abuse Prevention, Adoption

and Family Services Act of 1988, as well as the inherent requirement

that such interface be cost beneficial to the title IV-B/IV-E programs.

(For more information on the term ``practicable'' as used throughout

this rule, refer to ACF-OISM-AT-95-001.)

As provided in the interim final rule, we would expect that most

States would integrate the automation of child abuse and neglect

activities as part of their SACWIS because of the direct association

between child protection and child welfare services. While the language

of the statute speaks of interfacing with child abuse and neglect data

systems, we understand that in many States these data are already a

part of a larger child welfare system and/or States will be considering

the integration of such data as part of an overall comprehensive

information/client system. Accordingly, the statewide automated child

welfare information systems development effort may include automated

procedures which will provide the State with the capability to meet the

National Child Abuse and Neglect Data System requirements.

While we believe that such interface/integration is vital, in

accordance with the statute any State which can clearly demonstrate

through the submission of documentation with the advanced planning

document (APD) that such integration or interface is not practicable

because no automated statewide database exists to complete the

interface or because of cost constraints would not be required to

include this provision in the SACWIS as a condition of approval. In the

latter case, the documentation should establish that the costs to

develop and operate an automated interface with the existing system

will exceed the combined costs of manual inquiry, verification and

information exchange with the existing system, and duplicate data entry

and maintenance in the SACWIS.

Similarly, paragraph (a)(3) requires that the SACWIS, to the extent

practicable, provide for interface with and retrieval of information

from the State automated information system that collects information

relating to eligibility of individuals under title IV-A of the Act.

Interface with, and access to, the data maintained by State IV-A

systems is of vital importance for gathering information about clients

or other relevant persons and because eligibility for foster care

maintenance payments as well as adoption assistance are based in part,

on a child's eligibility under the AFDC program. However, as provided

in greater detail under the discussion of Sec. 1355.53 below, this

requirement need not be met if a State clearly demonstrates through the

submission of documentation with the APD, as indicated under

Sec. 1355.52(a)(2), that electronic interface and data retrieval is not

practicable because of limitations in the design of the IV-A system or

because of cost constraints.

Finally, paragraph (a)(4) requires that the SACWIS provide for more

efficient, economical and effective administration of the programs

carried out under State plans approved under title IV-B and title IV-E.

As used here, efficient, economical and effective means that: the

system must improve program management and administration by addressing

all program services and case processing requirements by meeting the

requirements of Sec. 1355.53; the design must appropriately apply

computer technology; the project must not require duplicative

application system development or software maintenance; the procurement

must provide for maximum free and open competition; and the costs must

be reasonable, appropriate and beneficial.

Paragraph (b) provides that Federal financial participation

provided under paragraph (a) is also available for the full amount of

expenditures for hardware components. The matching rate provided is 75

percent with respect to Fiscal Years 1994, 1995 and 1996, and 50

percent thereafter. The general requirements applicable to the

treatment of hardware expenditures under part 95 apply to all such

expenditures.

Paragraph (c) provides that Federal financial participation at the

50 percent matching rate is available for the operating costs of

statewide automated [[Page 26832]] child welfare information systems

described under paragraph (a).

The conditions for funding systems under Sec. 1355.52 are provided

at Sec. 1355.53. Functional guidelines providing details of these

requirements were recently issued in the form of an action transmittal

(ACF-OISM-AT-95-001).

Under paragraph (a), as a condition of funding, the SACWIS must be

designed, developed (or an existing State system enhanced), and

installed in accordance with an approved advance planning document

(APD). The APD must provide for an efficient and effective design

which, when implemented, will produce a comprehensive system which will

improve the program management and administration of the State plans

for titles IV-B and IV-E. Comprehensive means that the SACWIS must, to

the extent feasible and appropriate, introduce, monitor and account for

all the factors of child welfare services, foster care and adoption

assistance, family preservation and support services, and independent

living services, as provided under paragraph (b).

Paragraphs (b)(1) through (b)(8) provide, in accordance with

section 474(a)(3)(C)(iv) of the Act, the functional requirements

determined by the Secretary to be likely to provide more efficient,

economical and effective administration of the programs carried out

under State plans approved under part IV-B and IV-E of the Act. First,

under paragraph (b)(1) the system must provide the State automated

support to meet the Adoption and Foster Care reporting requirements

through the collection, maintenance, integrity checking and electronic

transmission of the data elements specified by the Adoption and Foster

Care Analysis and Reporting System (AFCARS) requirements mandated under

section 479(b) of the Act and Sec. 1355.40 of this chapter.

Paragraph (b)(2) includes the requirements for system interface or

integration necessary for the coordination of services with other

Federally assisted programs and for the elimination of paperwork and

duplication of data collection and data entry. Under this paragraph the

SACWIS must provide for electronic data exchange with State systems

for: (A) Title IV-A, (B) National Child Abuse and Neglect Data Systems

(NCANDS), (C) title XIX, and (D) title IV-D, unless the State

demonstrates that such interface or integration would not be

practicable because of systems limitations or cost constraints.

With respect to the electronic exchange with the NCANDS and IV-A

systems, these are statutory conditions of funding which must be met to

the extent practicable. As indicated previously, we have defined

``practicable'' to mean that the interface requirement need not be met

if the responding program system is not capable of an exchange (and the

State does not wish to pursue such capability) or where cost

constraints render such an interface infeasible as demonstrated by the

State through the submission of documentation, in the APD, that the

development and operation of such an exchange would exceed the costs of

manual inquiry, verification and information exchange as well as the

cost of duplicate data entry and maintenance.

Similarly, the electronic data exchange with the title XIX system

is required unless the State Medicaid system does not have the capacity

for such an interface or the State clearly demonstrates through the

submittal of documentation that such an exchange would not otherwise be

practicable because of cost constraints. The requirement for an

interface with the State's child support enforcement system, unless

demonstrated to be impracticable, duplicates the systems requirements

under the title IV-D program, requiring statewide child support

enforcement systems to provide electronic data exchange with the title

IV-E program, to assure that benefits and services are provided in an

integrated manner and that the State is able to collect support from

the responsible parent.

Paragraph (b)(3) requires that the SACWIS enable the State to meet

the provisions of section 422 of the Act by providing for the automated

collection, maintenance, management and reporting of necessary

information. Section 422 of the Act requires that each child in foster

care under the responsibility of the State agency be afforded specific

protections related to case planning, case reviews and dispositional

hearings.

Accordingly, under paragraph (b)(3) the SACWIS must have automated

procedures and processes to assist the State in meeting the 422

requirements. At a minimum, these automated procedures would include

collection, maintenance, management and reporting of information on all

children in foster care under the responsibility of the State,

including statewide data from which the demographic characteristics,

location and goals for foster children can be determined.

Under paragraph (b)(4), the SACWIS must provide for the collection

and management of information necessary to facilitate the delivery of

client services, the acceptance and referral of clients, client

registration, and the evaluation of the need for services, including

child welfare services under title IV-B subparts 1 and 2, family

preservation and family support services, family reunification and

permanent placement. This provision speaks to intake and assessment

activities which include processing referrals for services, conducting

investigations and determining the need for services.

Under paragraph (b)(5), the SACWIS must collect and manage

information necessary to determine eligibility for the foster care

program, the adoption assistance program, and the independent living

program.

Paragraph (b)(6) requires that the SACWIS support necessary case

assessment activities. Under this requirement, the system must have

automated procedures to assist in evaluating the client's needs.

Under paragraph (b)(7), the SACWIS must assist the State in

monitoring case plan development, review and management, including

eligibility determinations and redeterminations.

Under this requirement the system must provide for service

provision and case management which entails determining eligibility and

supporting the caseworker's determination of whether continued service

is warranted, the authorization and issuance of appropriate payments,

the preparation of service plans, determining whether the agency can

provide services, authorizing services and managing the delivery of

services.

Finally, under paragraph (b)(8), the confidentiality and security

of the information and the system must be ensured.

Paragraph (c) provides other program functions which may be

included at State option in the SACWIS design under paragraph (a) of

this section. We believe that the vast majority of States would want to

incorporate these functions in their SACWIS development or enhancement

activities but we are sensitive to the need for State flexibility to

determine their own optimal level of automation and thus these elements

are optional.

Under paragraph (c)(1), the SACWIS may provide management and

tracking capability to assist the State in resource management,

including automated procedures to assist in managing service providers,

facilities, contracts and recruitment activities associated with foster

care and adoptive families. [[Page 26833]]

Under paragraph (c)(2) the SACWIS may provide for tracking and

maintenance of legal and court information, and preparation of

appropriate notifications to relevant parties.

Under paragraph (c)(3) the SACWIS may provide automated capability

to assist in the administration and management of staff and workloads.

This functionality would provide for a sensible and practical balance

between the workload and workforce and provide a methodology for

management to prioritize resource allocation and workload decisions.

Under paragraph (c)(4) of this section, the SACWIS may assist the

State in tracking and management of licensing verification activities.

Paragraph (c)(5) provides that the SACWIS may support the State in

priority setting and risk assessment or risk analysis activities. Such

automated support could include an expert systems module, or rule-based

automation to assist in consistent caseworker analysis and to aid in

decision-making to the extent the APD justifies that such automation is

both technologically and programmatically feasible as well as cost

effective.

Paragraph (d), provides that the SACWIS design may at State option

provide for interface with other automated information systems,

including, but not limited to: accounting and licensing systems, court

and juvenile justice systems, vital statistics and education, as

appropriate. Such interface or integration would create a link to

obtain and verify client information that is maintained in other

systems to ensure appropriate delivery of services such as information

on school attendance and performance. Other linkages could include

resource directories and license payment systems.

Under paragraph (e), if the cost benefit analysis submitted as part

of the APD indicates that full adherence to paragraph (c) and (d),

would not be cost beneficial (e.g., relative to the State caseload or

level of automation), final approval of the APD may be withheld pending

reassessment of the State's specific automation needs and, as

necessary, adjustment of the APD to reflect a level of automation which

is cost beneficial. This paragraph is intended to make clear that any

optional functionality to be undertaken by a State is subject to the

same requirement for cost effectiveness as required of all other

functional elements.

Paragraph (f) provides that a statewide automated child welfare

information system may be designed, developed and installed on a phased

basis, in order to allow States to implement AFCARS requirements

expeditiously as long as the approved APD includes the State's plan for

full implementation of a comprehensive system which meets all

functional and data requirements as specified in paragraphs (a) and (b)

of this section, and a design which provides for a comprehensive system

and which will support these enhancements on a phased basis.

Finally, paragraph (g) requires that the system perform quality

assurance functions to provide for the review of case files for

accuracy, completeness and compliance with Federal requirements and

State standards.

Requirements for submittal of advance planning documents are

provided at Sec. 1355.54. Under Sec. 1355.54, Submittal of advance

planning documents, the State title IV-E agency must submit an APD for

a statewide automated child welfare information system, signed by the

appropriate State official, in accordance with procedures specified by

45 CFR part 95, subpart F. The conditions for FFP at the applicable

rates for the costs of automatic data processing incurred under an

approved State plan for titles IV-A, IV-B and IV-E of the Act (among

others) are contained in 45 CFR part 95, subpart F.

ACF review and assessment of statewide automated child welfare

information systems is provided under Sec. 1355.55 of this regulation.

Under paragraph (a), ACF will, on a continuing basis, review, assess

and inspect the planning, design, development, installation and

operation of the SACWIS to determine the extent to which such systems:

(1) Meet Sec. 1355.53 of this chapter, (2) meet the goals and

objectives stated in the approved APD, (3) meet the schedule, budget,

and other conditions of the approved APD, and (4) comply with the

automated data processing services and acquisitions procedures and

requirements of 45 CFR part 95, subpart F.

Under Sec. 1355.56, Failure to meet the conditions of the approved

APD, information on the consequences and actions resulting from a

State's failure to meet the conditions of the approved APD is provided.

Under paragraph (a) of Sec. 1355.56, if ACF finds that the State fails

to meet any of the conditions cited in Sec. 1355.53, or to

substantially comply with the criteria, requirements and other

undertakings prescribed by the approved APD, approval of the APD may be

suspended.

Paragraph (b) provides events which shall take place should

suspension of the APD occur. Under paragraph (b)(1), if the approval of

an APD is suspended during the planning, design, development,

installation, or operation of the SACWIS the State will be given

written notice of the suspension stating: (A) The reason for the

suspension, (B) the date of the suspension, (C) whether the suspended

system complies with Part 95 criteria for 50 percent FFP, and (D) the

actions required by the State for future enhanced funding.

Under paragraph (b)(2), the suspension will be effective as of the

date the State failed to comply with the approved APD. Paragraph (b)(3)

further provides that the suspension shall remain in effect until ACF

determines that such system complies with prescribed criteria,

requirements, and other undertakings for future Federal funding. Should

a State cease development of an approved system, either by voluntary

withdrawal or as a result of Federal suspension, paragraph (b)(4)

provides that all Federal incentive funds invested to date that exceed

the normal administrative FFP rate (50 percent) will be subject to

recoupment.

The issue of cost allocation is addressed under Sec. 1355.57. Under

paragraph (a), all expenditures of a State to plan, design, develop,

install, and operate the data collection and information retrieval

system described in Sec. 1355.53 of this chapter shall be treated as

necessary for the proper and efficient administration of the State plan

under title IV-E, without regard to whether the system may be used with

respect to children other than those on behalf of whom foster care

maintenance payments or adoption assistance payments may be made under

the State plan.

Paragraph (b) provides that cost allocation and distribution for

the planning, design, development, installation and operation must be

in accordance with Part 95.631 and section 479(e) of the Act, if the

SACWIS includes functions, processing, information collection and

management, equipment or services that are not directly related to the

administration of the programs carried out under the State plans

approved under titles IV-B or IV-E.

A conforming provision is provided under Sec. 1356.60, Fiscal

requirements (title IV-E), in paragraph (e), Federal matching funds for

SACWIS. This paragraph merely reiterates the statutory provision that

all expenditures related to an approved APD under Sec. 1355.52, will be

treated as necessary for the proper and efficient administration of the

State plan, without regard to whether the system is used with respect

to foster or adoptive children other than those on behalf of whom

foster care [[Page 26834]] maintenance or adoption assistance payments

are made under title IV-E.

Response To Comments

We received a total of 22 comments on the interim final rule

published in the Federal Register December 22, 1993, (58 FR 67939) from

State agencies and other interested parties.

Specific comments and our responses follow.

General Comments

Comment: Commenters were extremely supportive of the interim final

rules. They were pleased with the flexibility provided and noted that

the rules incorporate the diversity of child welfare programs into a

realistic automation plan. One commenter however was concerned about

the limited comment period provided.

Response: We believe that the partnership strategy employed in

developing these rules fostered a positive dialogue between the Federal

government and States and led to the development of a better rulemaking

document which provides States with the tools they need to improve IV-

B/IV-E effectiveness. As indicated in the preamble to the interim final

rule, in developing these rules we relied heavily on information from

existing State efforts to establish systems and the efforts of a State

and Federal child welfare system workgroup.

So that the States could begin development and avoid the risk that

the rules would change, we restricted the comment period to 30 days in

an effort to quickly identify whether there were any fundamental

problems or concerns with the terms of the interim rules which would

have necessitated a major change in direction in the final rule. We

felt this was critical because of the relatively short window of

opportunity related to the availability of enhanced funding.

Requirements for FFP

Comment: One commenter questioned the criteria used to distinguish

between development and operation and asked how implementation costs

will be funded. Another commenter asked at what point a system is

considered operational for the purpose of claiming expenditures at the

regular rate, particularly under a phased approach.

Response: Enhanced funding is available for the planning, design

development and installation of a SACWIS, while operational costs are

funded at the regular administrative match rate. We view implementation

costs as part of design, development and installation of the system.

The State's ability to claim enhanced funding ceases when the system

(or portion of the SACWIS, in a phased development effort) has

successfully passed a pilot test and is used to support child welfare

activities in an automated fashion in any geographical area. However, a

State may continue to claim enhanced funding for costs associated with

the planning, design, development and installation of a subsequent

phase of the total project, as well as allowable installation costs

(e.g., conversion and training activities) for parts of the State that

have not yet been converted to the new system.

As provided in ACF-OISM-AT-95-001, the operational stage of the

SACWIS is the point at which the system is used for automated

processing. The implementation APD covers the design, development and

installation of the SACWIS. It should also be noted that hardware costs

are eligible for 75 percent matching within the window provided by

statute regardless of the operational status of the system.

HHS and the Food and Consumer Service (formerly the Food and

Nutrition Service) published changes to our information technology

policies regarding the depreciation or expensing of data processing

equipment (Action Transmittal AT-94-5, dated July 22, 1994). Equipment

having a useful life of more than one year and a unit acquisition cost

of less than $5,000 may now be expensed for the quarter in which it is

purchased. These recent policy changes should allow States to expense a

large portion of the hardware necessary for SACWIS; however, there will

still remain hardware with a unit acquisition cost of greater than

$5,000. For equipment that falls into this category, the State must

either depreciate or charge use allowance for the cost of the equipment

over its useful life, and in accordance with statewide accounting

practice.

For more information, see 45 CFR part 95, subpart F, ``Automated

Data Processing Equipment and Services; Conditions for Federal

Financial Participation (FFP).''

Comment: One commenter asked what effect the rules will have on

current and future claims at the 50 percent matching rate for systems

enhancements that may not meet these requirements. Another commenter

asked whether the effective date limitation means that the entire

system must be accepted prior to September 30, 1996 for enhanced

funding to be available.

Response: In response to the first commenter, these rules apply

only to systems funded at the enhanced matching rate provided in the

1993 legislation. However, any system initially funded under these

rules would continue to be subject to these requirements even after the

start of FY 1997 when the enhanced funding allowance expires.

With respect to the second comment, the system need not be fully

operational by September 30, 1996 to receive enhanced funding. As

provided in ACF-OISM-95-001, the three-year window for claiming

enhanced funding does not mean that the project must be completed prior

to the expiration of the availability of enhanced funding. However,

even though the project may not be complete within this time, the

statute is clear that expenditures after this date are no longer

eligible for enhanced funding.

Comment: A number of commenters expressed concern that the three

year window for enhanced funding is too short, especially for States

which are starting with primitive systems or which require the consent

of the State legislature. Others were concerned with the limitation in

light of their immediate need to meet the AFCARS requirements.

Response: The three-year time limit on the availability of enhanced

funding for statewide automated child welfare information systems is

contained in statute and we have no statutory authority to extend the

availability of this funding rate. With respect to the second point,

however, we understand that States may have difficulty in dedicating

the necessary time and resources to meet the AFCARS and SACWIS

requirements concurrently and for this reason the rule provides a

phase-in strategy to allow the AFCARS requirements of the system to be

pursued first.

As provided in ACF-OISM-AT-95-001, a phased approach might allow

the roll-out of a system on a phased basis under which workers could

begin to use some of the planned functionality of the system, such as

enhanced data collection capability which would enable compliance with

the AFCARS reporting requirements, while additional modules or

components are not yet available.

Functional Requirements

Comment: One commenter asked whether guidance will be offered to

assure that States have a clear understanding of the systems

requirements.

Response: Since issuance of the interim final rule, general

guidance on systems requirements and functionality has been provided to

the States in [[Page 26835]] several forums, such as the semi-annual

ACF User Group Meeting, various ACF sponsored State technical advisory

groups, System and Child Welfare related conferences, State and Federal

Child Welfare Collaboratives, and issuance of a draft and final version

of a child welfare related action transmittal (ACF-OISM-AT-95-001). As

indicated in the interim final rule, we stand ready to assist in the

planning, design, development and installation of a SACWIS upon

request.

Comment: One commenter was concerned that the requirements are too

client focused, rather than family focused, stating that in a system

growing out of concern for family preservation, there needs to be

greater attention to the identification of the strengths and needs of

the family.

Response: We disagree with the commenter and believe that the

SACWIS design envisioned under this rule supports the family. These

projects are intended to be more than information systems but rather

comprehensive tools to make service delivery more responsive to the

needs of families and communities. It is our strong expectation, which

we had hoped to convey in the interim final rule, that States will take

advantage of this opportunity to move the child welfare service system

into a direction which would lead to a more coordinated, flexible

system, built on and linked to existing community services and support

able to serve children and their families in a more effective way.

A. Interfaces

Comment: One commenter asked about the availability of FFP for

systems modifications to enable the interface and data exchange

requirements with SACWIS to be met. Another requested additional

clarification as to what must be addressed in an interface component.

Still another asked if the cost of an interface is placed completely on

the State's child welfare agency and questioned the role of the

agencies with jurisdiction over IV-A, Medicaid and IV-D?

Response: As provided in ACF-OISM-AT-95-001, FFP is available for

the IV-B/IV-E portion of the interface. FFP is not available for the

cost of automating the respondent agency. Because we have no

legislative authority to pay for the reciprocating end of any

interface, any modifications to another existing system to support an

interface with a SACWIS (optional or required) must be funded by the

program that supports the system to which this interface is being

established.

To the extent that such programs are automated, the SACWIS would be

required to establish an interface. Where these entities are not

automated, no automated interface is possible, and the State will not

need to fulfill this requirement. Further, as provided in the above

cited action transmittal, FFP is not available to develop functionality

in a SACWIS when it duplicates functionality which already exists in

other State system(s) to which an interface is required.

The purpose of these requirements is to provide integrated services

to clients through more accurate, timely and effective exchange of

information.

Comment: One commenter asked that we provide clarification on cost

allocation procedures between programs sharing data for purposes of the

interface requirements.

Response: As indicated above, FFP is not available to develop

functionality when it duplicates functions which already exist in

another State system. If a function supports but does not exclusively

or primarily benefit the program under title IV-E or IV-B, the cost

must be allocated among all benefitting programs. To illustrate, our

action transmittal provided the example of factors pertaining to the

determination of eligibility for an income maintenance program such as

AFDC. While the determination of eligibility for such benefits is

clearly linked to the provision of services to children and families

under title IV-E and IV-B, it is not reasonable to allocate the cost of

developing eligibility subsystems or modules to title IV-E as the

primary program benefitting from such automation. In these cases, the

cost must be allocated between title IV-E and the other benefitting

eligibility processes.

The issue of cost allocation is addressed in more detail in

response to comments later in the preamble and in ACF-OISM-AT-95-001.

Comment: One commenter requested clarification of the requirement

for interface with the IV-A (AFDC) and IV-D (child support enforcement)

programs.

Response: We believe each of the interfaces referenced by the

commenter are important to SACWIS development in that they are

intricately related to the title IV-E program. Title IV-A eligibility

is a determining factor in title IV-E eligibility. Further, the

requirement for an interface where practicable between the SACWIS and

the State's IV-A system is mandated in statute. The title IV-D

interface requirement replicates a functional requirement of a

certified IV-D system. Interface between the child support agency and

the SACWIS may be extremely beneficial to the goals of both programs in

that it may assist in the collection of increased child support on

behalf of children receiving child welfare services and could assist in

the unification and permanent placement of children with formerly

noncustodial parents.

As with the requirements for interface with the State Medicaid

agency and the State child abuse and neglect system, we believe an

electronic interface will be far more effective in service delivery

than redundant data entry to multiple systems.

B. Case Assessment Activities

Comment: One commenter was concerned that the approach to services

is not sufficiently individual and stated that an adequate SACWIS needs

to support a sophisticated and highly individualized approach to the

provision of services.

Response: Automation is intended to assist workers' needs in

effective service delivery, not supersede their judgment. We

wholeheartedly agree that individual assessment is critical but believe

that the system can support and inform the caseworker by ensuring that

the right questions are asked and addressed.

C. Confidentiality and Security

Comment: One commenter was particularly concerned about the

requirement that the State agency responsible for the APD be

accountable for the confidentiality of the SACWIS and raised related

concerns regarding access to information and the cross-training of

agency workers. Concern was raised by another commenter that the rule

does not mention confidentiality which the commenter considers to be an

important aspect of any required cross-agency interface. Still another

questioned how confidentiality of information can be assured in an

interface system and what rules the agency with jurisdiction over IV-A,

IV-D and Medicaid have for treatment?

Response: These regulations require under Sec. 1355.53, that at a

minimum the SACWIS must ensure the confidentiality and security of the

information and the system. Under this requirement, States are expected

to build systems which provide necessary safeguards which would, for

example, enable them to share information, when such sharing is legal

and appropriate, without identifying the source, or which would enable

them to limit access to specific data elements.

Each of the programs subject to an interface expectation is also

subject to [[Page 26836]] specific statutory confidentiality

requirements which the system must provide. However, Federal statute

and regulations allow, and in many cases require, designated State

agencies to disclose confidential information to other State agencies

for the purpose of administering other Federal programs. Thus,

confidentiality rules should not be an obstacle to the development of

an effective interface with the systems used to administer the title

IV-A, IV-D and XIX programs.

For more information on the issue of confidentiality, see our

action transmittal, ACF-OISM-AT-95-001.

Optional Functionality

Comment: One commenter expressed hope that the final regulations

will speak to the importance of incorporating outcome measure data

collection within the comprehensive system development and that data

collection specifically related to capturing training information for

State staff be provided as an optional feature.

Response: We agree that data collection to support outcome measures

are important to comprehensive systems design and believe that we have

provided States with flexibility to incorporate these measures in their

SACWIS. Data collection necessary to support outcome measures are

integral to meeting the AFCARS requirements and are also embraced under

Sec. 1355.53(g), which requires that the system perform Quality

Assurance functions for the review of casefiles for accuracy,

completeness and compliance with Federal requirements as well as State

standards. This would include generation of summary management reports

and exception reports related to services needed and provided.

With respect to the second point, under Sec. 1355.53(c)(1), the

system may perform functions related to resource management which would

include information captured for training purposes.

Comment: One commenter asked whether the provision at

Sec. 1355.53(c)(3) includes systems administration or administration of

staff and workload and asked for clarification of whether costs

associated with systems administration are eligible for enhanced

funding and then regular funding for operational costs.

Response: Under Sec. 1355.53(c)(3) the SACWIS may provide automated

capability to assist in the administration and management of staff and

workloads. This would provide a methodology for management to

prioritize resource allocation and workload decisions to support

program staff. It is not intended to provide systems administrative

support.

Comment: One commenter asked for clarification of whether the

allowance at Sec. 1355.53(c)(5), i.e., that the system may provide for

risk analysis, was the same as risk assessment.

Response: Yes, as used under Sec. 1355.53(c)(5) risk analysis is

the same as risk assessment.

Comment: Also regarding risk analysis, one commenter expressed

concern that ACF may be suggesting that commercially-available off-the-

shelf (COTS) technology is limited in use to the area mentioned in the

regulation and encouraged ACF to restate the position on this

technology and its use so it is clear that they are not restricting it

in some manner or endorsing any particular system approach. The

commenter further questioned ACF's reference to ``rule based''

automation and noted that COTS technology is far preferable to the

customized rule based software modules which have been embedded in

other human service systems.

Response: It was not our intent to suggest that commercially

available off the shelf technology (COTS) is either limited in its use

or inferior to customized rule based technology. However, we are not

aware of a COTS package available today that will meet the case

management, service delivery and automated support needed to qualify as

a SACWIS. A State may build or transfer a customized application

software which is enabled by a COTS software development tool.

Comment: One commenter questioned whether the intent of

Sec. 1355.53(e) was to provide that if one of the optional functions

under paragraph (c) and (d) is not cost beneficial, final approval of

the APD may be withheld.

Response: Paragraphs (c) and (d) of Sec. 1355.53 are optional

levels of system functionality which States have discretion to adopt,

and for which enhanced funding may be provided, if such functionality

will be efficient and effective. However, if a State decides to include

any or all of these elements in their SACWIS design, the APD would have

to indicate that their inclusion would not negatively affect the cost-

effectiveness of the system. The fact that they are optional functions

does not eliminate the requirement that the system design prove to be

cost beneficial. For example, if in a given State inclusion of one or

more of these elements resulted in over-automation for demographic

reasons, that is, automated to a level beyond the State's needs and

thus was not cost beneficial, approval of the APD would be withheld

until the area of over-automation was dropped.

If it is shown through the cost benefit assessment that it is more

cost-effective not to automate to the degree provided under the

optional functionality, approval of the APD may be withheld.

Comment: We were asked by one commenter to state that the ``mays''

of the system are purely optional. This commenter also remarked that

States should not have to justify why these functions are not included

in their APD.

Response: We would reiterate that the functionality included under

paragraphs (c) and (d) of Sec. 1355.53 are State options as indicated

in the preamble. If a State chooses not to include these elements in

their SACWIS design, no justification is necessary in the APD. However,

as provided under paragraph (e), if any of these items is included, the

State must indicate in the APD that such element(s) will be cost

beneficial.

Comment: One commenter asked for clarification regarding what

functions can reside within a statewide payment system and what is

required for the SACWIS.

Response: We are not limiting the use or functions of statewide

payment systems under this regulation. States have flexibility to

continue to use such systems as long as the IV-B/IV-E related

information necessary to meet these regulations is accessible through

communication or link with the SACWIS. In this case, enhanced funding

may be claimed for the interface to the existing statewide payment

system. However, any modifications to a separate system must be

allocated to all benefitting programs affected by such modification.

Any costs allocable to title IV-B or IV-E for such modifications will

only be matched at the regular funding rate.

Comment: One commenter questioned whether it would be possible to

modify the APD at a later date to include optional interfaces.

Response: Yes, under Sec. 1355.53(d), the system may interface with

other automated information systems. This could be included under the

original APD or as an amendment to the APD, as long as the State can

show, in accordance with paragraph (e), that such an interface would be

cost beneficial.

Comment: One commenter stated appreciation for the section in the

rules that addresses optional systems functions, acknowledging that not

all States will be in a position to develop systems so far reaching.

Response: Our intent was to outline the level of functionality we

thought appropriate for the vast majority of [[Page 26837]] States

while recognizing the need for maximum State flexibility.

Comment: We were asked by one commenter to clarify whether the need

for a cost benefit analysis in the APD process could be waived.

Response: The need for a cost benefit analysis in the APD cannot be

waived. Cost benefit analyses are a required portion of all APDs,

necessary to determine efficiency, effectiveness and economy of system

design. As noted in the preamble to the interim final rule, OBRA '93,

in authorizing enhanced funding for automated information systems for

family and children's programs, specifically requires for the first

time that the Secretary include economic considerations along with the

traditional statutory provisions for systems implementation of

``efficiency and effectiveness'' in determining whether a system should

be funded. In accordance with existing requirements at 45 CFR Part 95,

before a project is approved the State must present a cost benefit

analysis as part of an APD. We have issued technical assistance in this

area in the form of a publication entitled Feasibility, Alternatives,

and Cost/Benefit Analysis Guide. Following our initial publication, we

issued additional guidance entitled Companion Guide Cost/Benefit

Analysis Illustrated. Both of these documents are available through

ACF.

Sound management practices require that a State perform a cost/

benefit analysis of any proposed undertaking which would result in the

expenditure of a large amount of funds.

Comment: One commenter suggested that it might be helpful to revise

the language in Sec. 1355.53(e) to provide ``any function described

under paragraph (c) and (d) included in the APD by the State will

require cost justification or final approval of the APD may be

withheld.''

Response: Under paragraph (e), if a State chooses to include

optional functionality in its system design, such functions are subject

to all cost benefit tests required of any other functional

specification. If a State cannot design a system including such

optional functionality in a manner that proves cost beneficial in the

APD, approval of the APD may be withheld until such time as the system

is designed in such a manner that it is cost beneficial.

While the language suggested by the commenter is acceptable, since

we did not receive a substantial number of questions on this issue, we

are not revising the language from that provided in the interim final

rule.

Comment: Paragraph (f) of Sec. 1355.53 provides that a statewide

automated child welfare information system may be designed, developed

and installed on a phased basis, in order to allow States to implement

AFCARS requirements expeditiously, in accordance with section 479(b) of

the Act, as long as the APD includes the State's plan for full

implementation of a comprehensive system which meets all functional

requirements and a system design which will support these enhancements

on a phased basis. According to a commenter, it is not clear in the

case of a State which has included mandatory components and optional

components whether they only have to meet the mandatory components

addressed in the APD to keep from jeopardizing their enhanced match.

Several commenters indicated that they were pleased with the phased

approach. One of these requested clarification on enhanced funding

allowed for the development of non-required features.

Response: With respect to the first comment, if a State initially

anticipates developing a system on a phased basis which includes

mandatory and optional functionality and later decides not to pursue

the optional elements, they would not jeopardize the enhanced funding.

In such a case, we would simply adjust funding approvals to reflect

changes for the cost of the optional elements which were dropped from

the systems effort. Corresponding changes will be required in the cost-

benefit analysis for the project to reflect the anticipated differences

in cost-effectiveness resulting from the change in systems

functionality. However, we expect such situations to be rare and that

APDs will realistically provide what the State can do.

With respect to the latter comment, optional elements are eligible

for enhanced funding as long as other general requirements for enhanced

funding are met.

Comment: One commenter expressed the view that the term quality

assurance functions has no singular or clear meaning in the child

welfare or social services arena and stated that States should not be

expected to perform functions beyond their current staffing and

legislative mandates and scope.

Another commenter indicated that this provision might be troubling

because it sounds like the system would need to include almost the

entire casefile in order to perform the functions necessary to assure

compliance with Federal requirements and State standards. The commenter

questioned this mandate since it was not in statute.

Other commenters requested clarification of why the quality

assurance function is needed and said the definition should include

whether it is related to data integrity for AFCARS or rather review of

a casefile to assure compliance with program policy requirements. One

commenter asked for further guidance on the requirements for quality

assurance functions to provide for review of casefiles.

Response: While not specifically mandated by statute, we believe

the requirement for quality assurance capability is necessary to meet

the statutory requirements of efficiency, economy and effectiveness.

Since a State's SACWIS is intended to be the source of child welfare

information, it is essential that the State have in place a process to

ensure the quality and completeness of the data. As provided in our

action transmittal (ACF-OISM-AT-95-001), it is essential that the

system incorporate quality assurance measures, processes and functions

to ensure completeness, accuracy and consistency of critical data and

to support sound management practices. The requirement is intended to

ensure that all current and historical information and data maintained

by the system are kept in logical sequence, and accessible in a timely

manner to monitor operation and assess performance. With respect to the

commenter's concern about the need for the system to maintain the

State's entire casefile, we would remind the commenter that such a

requirement is inherent in the statutory requirement that the system

meet the SACWIS case management and AFCARS requirements, to the extent

that these requirements comprise the most significant data elements

included in the casefile.

Further guidance on meeting the requirements for quality assurance

are detailed in our action transmittal referenced above.

Comment: One commenter stated that quality assurance functions are

focused on agency process rather than outcomes for children and

families and expressed concern that while good attention is given to

documenting service delivery only minimal attention is given to outcome

measures. The commenter was concerned that an adequate SACWIS must not

only address the scope of services but their effectiveness.

Response: We encourage States to use their SACWIS as a means for

measuring the effectiveness of service delivery. Furthermore, we

believe that the language is flexible enough to allow States to address

outcome measures as part of their SACWIS effort. However, effective

outcome measures of service delivery do not ensure the accuracy and

[[Page 26838]] completeness of data, and while we encourage State to

use the flexibility allowed, it is essential that the system

incorporate quality assurance measures to ensure the completeness,

accuracy and consistency of critical data.

Comment: One commenter stated a desire to see a statement in the

optional section that allows the Secretary to approve other

enhancements to the child welfare automated systems not mentioned in

this section but which will result in a comprehensive system.

Response: Additional functionality beyond what is defined in

Sec. 1355.53 of the regulation may be funded at the enhanced rate as

long as the State can demonstrate that it will provide more efficient,

economical and effective administration of the programs under title IV-

B and IV-E. To be eligible, added functionality may not duplicate

functionality included in an existing system to which an interface is

required and the APD must address the cost benefit of the optional

functionality requested for approval by the State.

APD Submission

Comment: One respondent asked how States which have already

submitted an APD expressing the intent to seek funding for a

comprehensive system should submit claims now for the enhanced funding.

Response: Such States would submit requests using existing form IV-

E-12, State Quarterly Report of Expenditures and Estimates, and

following existing procedures for requesting program funding under

title IV-E. Procedures for submitting APDs are specified by 45 CFR part

95, subpart F.

Comment: Two commenters expressed agreement with the transfer

policy provided in the interim final rule. However, another requested

that systems transfer be addressed in the final rule. Still another

suggested that system transfer may not be the best solution.

Response: As stated in the preamble to the interim final rule, our

intent in publishing these rules is to provide States necessary

flexibility to develop systems fitting their individual needs. Under

part 95 requirements, a State must conduct an alternative analysis to

consider both the enhancement of any existing systems and the transfer

of a system to determine the most cost effective approach. However, as

noted in the interim final rule, we recognize that at this time, there

is only limited State experience in comprehensive child welfare systems

development. Because of the limited scope of current comprehensive

child welfare systems, a flexible approach has been adopted in

considering justifications for not transferring existing systems.

Comment: Two commenters expressed interest in pursuing any

technical assistance which ACF can provide. Another commenter

questioned how technical assistance can be provided when ACF Regional

Office staff have no travel money.

Response: Budget limitations often necessitate difficult decisions

concerning allocation of resources, including decisions which may serve

to limit the availability of on-site technical assistance. However, we

do not believe that technical assistance must necessarily be on-site to

be effective. In fact, we are hopeful that our action transmittal and

our involvement in national users meeting and conferences have

alleviated much of the need for on-site assistance. Furthermore, ACF

has awarded a contract to assist in the development of a Child Welfare

prototype system. As part of that contract, we will sponsor several

national and regional conferences to share information and provide

technical assistance to States. Central and Regional Office staff stand

ready to provide States with help upon request.

Comment: One commenter asked whether, in the interest of saving

time, if it is possible to share APD work being done by various other

States and whether the Federal government will facilitate sharing.

Another expressed interest in efforts to develop a consortia of States

with similar commitments to permit more rapid and efficient development

of systems which have greater capability to produce information of

quality.

Response: We have and will continue to share system related

documents, such as APDs, RFPs and other design documents, as they

become available. These materials are available to the public upon

request. We have distributed information to various States, child

welfare related foundations, vendors and other public interest groups.

We have entered into partnerships with States to coordinate the joint

design of child welfare information systems. We have established

different State Technical Advisory groups to identify the best

approaches for sharing information. We have participated in regional

and national system and child welfare conference and we will continue

to encourage the sharing of State experience at the ACF Users Group

meetings.

Review and Assessment and Part 95 Requirements

Comment: One commenter stated that depreciation of equipment is a

major concern. For many States the three year window could conceivably

be very narrow for the planning, design and development phases,

especially under a phased-in approach and for States just entering the

planning phase and asked that this be addressed in the guidance

provided under an action transmittal.

Others stated that the depreciation period should be over the same

period as the availability of enhanced funding, i.e., equipment should

be depreciated over a three year period instead of a five year time

span.

These commenters point out that the regulation appears to conflict

with the statute which states that payments to States ``including 75

percent of the full amount of expenditures for hardware components for

such system'' and suggested that since enhanced funding is available

for only 3 years, the rule should reflect an exception to the 5-year

depreciation schedule requirements.

On a related issue, commenters thought that language on financing

of hardware appears to be the same as depreciation and suggested that

expensing be instituted.

Response: As provided in our action transmittal, recent policy

changes delineated at ACF-AT-94-5, dated July 22, 1994, may allow

States to expense a large portion of the hardware necessary for SACWIS.

For additional information, see ACF-OISM-AT-95-001.

However, the statute explicitly eliminates enhanced funding for

system activities as of October 1, 1996. We have no authority to adjust

this statutory date or to revise the Department's requirements for

capitalization and depreciation of equipment in this final rule. The

controlling requirements for depreciation are found in 45 CFR part 95,

subparts F and G.

Comment: One commenter recommended that a clear timeframe for

review and assessment of the systems be provided to allow States to

view the process as cooperative, supportive and one that allows regular

feedback, technical support and a mechanism for State accountability.

Response: As indicated previously, technical assistance is

available to ensure that the process for APD review and approval and

subsequent system approval is as cooperative and supportive as

possible. Unlike the case with other State systems, the review process

established does not entail a certification requirement in order to

allow maximum flexibility. [[Page 26839]]

Comment: With respect to the submittal of Advance Planning Document

Updates, one commenter noted that meeting the timeframe for submitting

an APD may be problematic due to new Federal requirements,

identification of proposed project changes and the internal State

review process.

Similarly, another commenter expressed concern that the timeframe

will be difficult for some States to meet and encouraged ACF to

actively seek out States to which this section applied to ensure they

understand the importance of meeting this critical deadline.

Response: The regulations at 45 CFR 95.605(3)(b), indicate that a

State must submit an As Needed APD Update when significant changes are

expected to a project. We have identified and worked with the States

affected by this requirement and have either granted final or

conditional approval of their APD Updates. None of the concerned States

were adversely affected by this requirement.

Comment: On a miscellaneous issue, one commenter noted that

paragraph (b) has been reserved under 45 CFR 95.641 or 45 CFR 1355.55

and questioned this.

Response: The issue raised by the commenter merely speaks to a

regulatory drafting requirement. Under regulatory drafting rules it is

inappropriate to refer to a paragraph designated as ``(a)'' without

referencing a ``(b)'' cite. There are no plans to add to this section.

Failure to Meet the Condition of the Approved APD

Comment: One commenter thought that it was unclear whether

recoupment of enhanced FFP applies only to those components of the APD

that are required under 45 CFR 1355.53. States could develop an APD

that proposes to develop an automated system that included some

permissive components, develop required components and then fail to get

sufficient funding to complete the permissive components. States should

not be penalized for revising the APD downward as long as they meet the

minimum requirements.

Response: While we would hope that States would ensure that their

plans are realistic prior to submittal, States would not be penalized

in cases where optional automation plans were dropped, unless such

changes negatively affected either the cost-effectiveness of the system

or the State's ability to complete the project successfully. In such

cases, if a State pulled back on discretionary items, we would simply

recalculate funding to make the necessary adjustments.

Comment: Another commenter noted that Sec. 1355.56 provides that

failure to meet the conditions of these regulations may result in an

approved APD being suspended while at the same time recognizing that

penalties are provided for failure to comply with the AFCARS

regulations. The commenter was concerned that this could put States in

the position of being unable to meet AFCARS because of a loss of SACWIS

funding.

Response: We would like to clarify that the loss of funding

discussed with respect to Sec. 1355.56 refers only to enhanced funding

for SACWIS and good systems planning would ensure that no State is put

in the position of losing this funding.

We agree that there is a strong interrelationship between AFCARS

implementation and SACWIS development and for this reason have allowed

States to implement their SACWIS on a phased based to ensure that

AFCARS requirements are met expeditiously.

Cost allocation

Comment: One commenter expressed interest that we acknowledge that

systems transfer from another State may not be the best solution, but

shared development (and funding) program to program in the State be

encouraged.

Another asked that we provide more detail on cost allocation.

Response: We agree that systems transfer from another State may not

be the best solution in SACWIS design and, as indicated in the preamble

to the interim final rule, plan to be flexible in our consideration of

State analysis provided in the APD for not going this route in SACWIS

development.

For information regarding the effect of shared development on cost

allocation or for detailed specification of the cost allocation

requirement, please see our action transmittal, ACF-OISM-AT-95-001.

Regulatory Impact Analysis

Executive Order 12866 requires that regulations be reviewed to

ensure that they are consistent with the priorities and principles set

forth in the Executive Order. The Department has determined that this

rule is consistent with these priorities and principles. An assessment

of the costs and benefits of available regulatory alternatives

(including not regulating) demonstrated that the approach taken in the

regulation is the most cost-effective and least burdensome while still

achieving the regulatory objectives.

Regulatory Flexibility Analysis

Consistent with the Regulatory Flexibility Act (Pub. L. 96-354)

which requires the Federal government to anticipate and reduce the

impact of rules and paperwork requirements on small businesses and

other small entities, the Secretary certifies that this rule has no

significant effect on a substantial number of small entities.

Therefore, a regulatory flexibility analysis is not required.

List of Subjects

45 CFR Part 1355

Adoption and foster care, Child welfare, Data collection,

Definitions grant programs--Social programs

45 CFR Part 1356

Adoption and foster Care, Administrative costs, Child welfare,

Fiscal requirements (title IV-E), Grant programs--social programs,

Statewide information systems

(Catalog of Federal Domestic Assistance Program No. 13.658, Foster

Care Maintenance, 13.659, Adoption Assistance and 13.645, Child

Welfare Services--State Grants)

Approved: April 5, 1995.

Mary Jo Bane,

Assistant Secretary for Children and Families.

Accordingly, the interim rule amending 45 CFR Parts 1355 and 1356

which was published at 58 FR 67939 on December 22, 1993, is adopted as

a final rule with the following change:

PART 1355--GENERAL

1. The authority citation for Part 1355 continues to read as

follows:

Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq.; 42

U.S.C. 1301 and 1302.

Sec. 1355.53 [Amended]

2. Section 1355.53(b)(3) is amended by replacing the reference to

``section 427'' in the first line with a reference to ``section 422.''

[FR Doc. 95-11909 Filed 5-18-95; 8:45 am]

BILLING CODE 4184-01-P