Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA); Interpretation of ``Federal Means-Tested Public Benefit''

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

Personal Responsibility and Work Opportunity Reconciliation Act

of 1996 (PRWORA); Interpretation of ``Federal Means-Tested Public

Benefit''

agency: Office of the Secretary, HHS.

Action: Notice with comment period.

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summary: This notice with comment period interprets the term ``Federal

means-tested public benefit[s]'' as used in Title IV of the Personal

Responsibility and work Opportunity Reconciliation Act of 1996

(PRWORA), Pub. L. 104-193, to include only mandatory spending programs

of the Federal Government in which eligibility for the programs'

benefits, or the amount of such benefits, or both, are determined on

the basis of income or resources of the eligibility unit seeking the

benefit. At HHS, the benefit programs that fall within this definition

(and are not explicitly excepted from the definition by Section 403(c))

are Medicaid and Temporary Assistance for Needy Families (TANF).

dates: Effective Date: This notice is effective on August 26, 1997.

comment period: Written comments will be considered if we receive them

at the appropriate address, as provided in the addresses section below,

no later than 5 p.m. on October 27, 1997.

addresses: Mail comments (1 original and 3 copies) to the following

address: Division of Economic Support for Families, Office of the

Assistant Secretary for Planning and Evaluation, Department of Health

and Human Services, Room 404E, 200 Independence Ave., SW, Washington,

DC 20201, Attention: David Nielsen.

for further information contact: David Nielsen, (202) 690-7148.

Copies of comments may be inspected at the above address. Inquiries

regarding how a particular program is affected by this notice should be

submitted to DHHS program staff responsible for managing the program at

either the appropriate Regional Office, or Headquarters in Washington,

DC. The above contact should be used only to submit general comments

regarding the policy interpretation contained in this notice.

[[Page 45257]]

supplementary information:

I. Background

Title IV of PRWORA contains several references to the term

``Federal means-tested public benefit[s].'' The most significant of

these references are found in Sections 403 and 421. Section 403 denies

``Federal means-tested public benefit[s]'' to aliens who entered the

United States with a qualified alien status ``on or after the date of

the enactment of this Act'' for 5 years beginning on the date of the

aliens' entry into the United States. Section 421 provides that new

sponsor-to-alien deeming rules apply to ``any Federal means-tested

public benefits program.'' In the absence of a statutory definition of

``Federal means-tested public benefit'', HHS is interpreting the term

to include only benefits provided by means-tested, mandatory spending

programs.

Early versions of PRWORA contained a definition of ``Federal means-

tested public benefit'' that could have encompassed benefits provided

by both discretionary spending programs and mandatory spending

programs. (These early versions provided that, with certain exceptions,

``the term `Federal means-tested public benefit' meant a public benefit

(including cash, medical, housing, and food assistance and social

services) of the Federal Government in which the eligibility of an

individual, household, or family eligibility unit for benefits, or the

amount of such benefits, or both are determined on the basis of income,

resources, or financial need of the individual, household, or unit.''

142 Cong. Rec. S8481 (daily ed. July 22, 1996).) During debate over the

bill in the Senate, a member of the Senate raised a point of order

pursuant to the Byrd Rule, and the definition was struck. The Senate

Parliamentarian upheld the Byrd Rule objection, the Senate did not

appeal the ruling, and PRWORA was ultimately enacted without defining

the term.

PRWORA was subject to Section 313 of the Congressional Budget Act

of 1974, also known as the ``Byrd Rule,'' because it was enacted as a

budget reconciliation bill. Under the Byrd Rule, a Senator may raise a

point of order to strike or prevent the incorporation of ``extraneous''

material. A provision in a reconciliation bill will be considered

``extraneous'' and subject to a point of order if, among other things,

``it produces changes in outlays or revenues which are merely

incidental to the non-budgetary components of the provision.'' 2 U.S.C.

Sec. 644(b)(1)(D). The legislative history of PRWORA indicates that the

Senate understood the significance of the Byrd Rule objection in terms

of limiting the scope of the definition of ``Federal means-tested

public benefit'' to mandatory spending programs, while leaving

discretionary programs unaffected. See 142 Cong. Rec. at S9403 (daily

ed. August 1, 1996) (statement of Senator Chafee); 142 Cong. Rec. at

S9400 (statements of Senators Graham, Kennedy and Exon). Therefore, to

the extent the definition of ``Federal means-tested public benefit''

included benefits provided by discretionary spending programs, it was

subject to a Byrd Rule objection.

II. Interpretation

In light of the statutory language and legislative history, HHS is

defining ``Federal means-tested public benefit'' to apply only to

benefits provided by Federal means-tested, mandatory spending programs,

and not to any discretionary spending programs or to any mandatory

spending programs that are not means-tested. For purposes of this

Federal Register notice, a program is considered ``means-tested'' if

eligibility for the program's benefits, or the amount of such benefits,

or both, are determined on the basis of income or resources of the

eligibility unit seeking the benefit.

The following HHS programs are means-tested, mandatory spending

programs: Medicaid, Temporary Assistance for Needy Families (TANF),

Foster Care, Adoption Assistance, and part of the Child Care

Development Block Grant. Foster Care and Adoption Assistance, however,

are explicitly exempted from the term ``Federal means-tested public

benefit'' under Section 403(c)(2)(F). The Child Care Development Block

Grant program is unique in that it is funded from both mandatory and

discretionary parts of the budget. Since the funds are operationally

commingled at the state and local level, and since the mixed nature of

the funding results in budgetary effects more closely akin to those of

a discretionary spending program, we are treating Child Care as a

discretionary spending program for purposes of interpreting ``Federal

means-tested public benefit.'' Therefore, the HHS programs that

constitute ``Federal means-tested public benefits'' under PRWORA are

Medicaid and TANF.

This interpretation pertains only to HHS and its benefit programs.

Other Executive Branch agencies whose programs may be subject to

PROWORA will make independent determinations about the scope of the

term.

III. Comment Period and Effective Date

Although HHS is soliciting public comment on this interpretation,

we believe that it is necessary to apply this interpretation to HHS

programs immediately, prior to receipt and consideration of any

comments.

PRWORA was enacted in August, 1996, and since that time HHS has

received numerous inquiries regarding the application of the term

``Federal means-tested public benefit.'' Additional delay will cause

unnecessary or incorrect administrative actions by agencies or entities

that administer our programs. We also believe it is possible that due

to confusion about the application of the term ``Federal means-tested

public benefit'' people may have been denied critical benefits and

services who, according to the interpretation in this notice, are

otherwise eligible. Without prompt issuance of this interpretation,

state and local governments and other public and private benefit

providers will remain confused over how to implement the requirements

of Title IV of PRWORA. Finally, some states have indicated their

intention to define the term ``Federal means-tested public benefit'' on

their own if Federal guidance is not forthcoming soon. Independent

interpretations by states will only compound the confusion on this

issue since there is no certainty that each state will arrive at the

same definition of the term. In sum, although we are providing a 60-day

period for public comment, as indicated at the beginning of this

notice, this interpretation is effective immediately.

IV. Economic Impact

The Department has analyzed the costs and benefits of this notice

to determine whether it has a substantial economic effect on the

economy as a whole, on states, or on small entities. The purpose of

this analysis was to identify less burdensome or more beneficial

alternatives and thereby to influence the requirements imposed by the

notice.

PRWORA creates major economic effects, a large portion of which

results from changes in the law relating to immigrants' eligibility for

Federal benefits. We estimated the 1997-2002 Federal budget savings to

Medicaid due to the immigrant restrictions would be $5.1 billion. There

were no Federal budget savings estimated for TANF because, as a block

grant, its spending levels were fixed regardless of caseload size.

These Medicaid budget effects are essentially due to the eligibility

restrictions contained in the statute.

[[Page 45258]]

This notice provides HHS' interpretation as to whether any other HHS

programs are subject to the PRWORA requirements regarding immigrants'

eligibility for ``Federal means-tested'' benefits, and thereby serves

to prevent confusion among administering agencies, grantee agencies,

benefit providers, and the public. This interpretation has no effect on

overall spending levels for any discretionary-funded HHS programs. Nor

does this interpretation create burdens or mandates on states or small

entities.

As a result of the PRWORA eligibility restrictions, this notice is

classified as economically ``significant'' under Executive Order

12866's criterion of an economic effect of more than $100 million. For

the same reason, it is classified as a ``major rule'' for purposes of

Congressional review under 5 U.S.C. Sec. 801 et. seq., Subtitle E of

the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L.

104-121). And, for the same reasons noted in section III above, this

notice is effective immediately under the exception procedures of

Sec. 808 of that statute because we have determined for good cause that

delayed implementation is impractical and contrary to the public

interest.

Dated: August 21, 1997.

Donna E. Shalala,

Secretary.

[FR Doc. 97-22683 Filed 8-25-97; 8:45 am]

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