# Temporary Assistance for Needy Families Program (TANF)

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-30195

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** November 20, 1997
- **Citation:** 62 FR 62124

## Text

SUMMARY: The Administration for Children and Families (ACF) proposes to
issue regulations governing key provisions of the new welfare block
grant program enacted in 1996--the Temporary Assistance for Needy
Families, or TANF, program. It replaces the national welfare program
known as Aid to Families with Dependent Children (AFDC) and the related
programs known as the Job Opportunities and Basic Skills Training
Program (JOBS) and the Emergency Assistance (EA) program.
The proposed rules reflect new Federal, State, and Tribal
relationships in the administration of welfare programs; a new focus on
moving recipients into work; and a new emphasis on program information,
measurement, and performance. The proposed rules also reflect the
Administration's commitment to regulatory reform.

DATES: You must submit comments by February 18, 1998.

ADDRESSES: You may mail or hand-deliver comments to the Administration
for Children and Families, Office of Family Assistance, 5th Floor East,
370 L'Enfant Promenade, SW, Washington, DC 20447. You may also transmit
written comments electronically via the Internet. To transmit comments
electronically, or download an electronic version of the proposed rule,
you should access the ACF Welfare Reform Home Page at http://
www.acf.dhhs.gov/news/welfare/ and follow any instructions provided.
We will make all comments available for public inspection on the
5th Floor East, 901 D Street, SW, Washington, DC 20447, from Monday
through Friday between the hours of 9 a.m. and 4 p.m. For additional
information, see Supplementary Information section of the preamble.

FOR FURTHER INFORMATION CONTACT: Mack Storrs, Director, Division of
Self-Sufficiency Programs, Office of Family Assistance, ACF, at 202-
401-9289, or Robert Shelbourne, Chief, Program Development Branch, at
202-401-5150.
Deaf and hearing-impaired individuals may call the Federal Dual
Party Relay Service at 1-800-877-8339 between 8 a.m. and 7 p.m. Eastern
time.

SUPPLEMENTARY INFORMATION:

Comment Procedures

We will not consider comments received beyond the 90-day comment
period in developing the final rule. Because of the large number of
comments we anticipate, we will only accept written comments. In
addition, all your comments should:
Be specific;
Address only issues raised by the proposed rule, not the
law itself;
Where appropriate, propose alternatives;
Explain reasons for any objections or recommended changes;
and
Reference the specific section of the proposed rule that
you are addressing.
We will not acknowledge the comments we receive. However, we will
review and consider all that are germane and received during the
comment period.

Table of Contents

I. The Personal Responsibility and Work Opportunity Reconciliation
Act
II. Regulatory Framework
A. Consultations
B. Related Regulations under Development
C. Statutory Context
D. Regulatory Reform
E. Scope of This Rulemaking
F. Applicability of the Rules
III. Principles Governing Regulatory Development
A. Regulatory Restraint
B. State Flexibility
C. Accountability for Meeting Program Requirements and Goals
IV. Discussion of Individual Regulatory Provisions
A. Part 270--General Temporary Assistance for Needy Families
(TANF) Provisions
B. Part 271--Ensuring that Recipients Work
C. Part 272--Accountability Provisions--General
D. Part 273--State TANF Expenditures
E. Part 274--Other Accountability Provisions
F. Part 275--Data Collection and Reporting Requirements
V. Regulatory Impact Analyses
A. Executive Order 12866
B. Regulatory Flexibility Analysis
C. Paperwork Reduction Act
D. Unfunded Mandates Reform Act of 1995

I. The Personal Responsibility and Work Opportunity Reconciliation
Act

On August 22, 1996, President Clinton signed ``The Personal
Responsibility and Work Opportunity Reconciliation Act of 1996''--or
PRWORA--into law. The first title of this new law (Pub. L. 104-193)
establishes a comprehensive welfare reform program designed to change
the nation's welfare system dramatically. The new program is called
Temporary Assistance for Needy Families, or TANF, in recognition of its
focus on moving recipients into work and time-limiting assistance.
Other key features of TANF include its provisions to reward States for
high performance and to encourage continued State expenditures on
assistance to needy families.
PRWORA repeals the existing welfare program known as Aid to
Families with Dependent Children (AFDC), which provided cash assistance
to needy families on an entitlement basis. It also repeals the related
programs known as the Job Opportunities and Basic Skills Training
program (JOBS) and Emergency Assistance (EA).
The new TANF program went into effect on July 1, 1997, except in
States that elected to submit a complete plan and implement the program
at an earlier date.
The new law reflects widespread, bipartisan agreement on a number
of key principles:
Welfare reform should help move people from welfare to
work.
Welfare should be a short-term, transitional experience,
not a way of life.
Parents should receive the child care and the health care
they need to protect their children as they move from welfare to work.
Child support programs should become tougher and more
effective in securing support from absent parents.
Because many factors contribute to poverty and dependency,
solutions to these problems should not be ``one size fits all.'' The
system should allow States, Indian tribes, and localities to develop
diverse and creative responses to their own problems.
The Federal government should focus less attention on
payment accuracy and program procedures and place more emphasis on
program results.
This landmark welfare reform legislation dramatically affects not
only needy families, but also intergovernmental relationships. It
challenges Federal, State, Tribal and local governments to foster
positive changes in the culture of the welfare system and to take more
responsibility for program results and outcomes. It transforms the way
agencies do business, requiring that they engage in genuine
partnerships with each other,

[[Page 62125]]

with businesses, community organizations and needy families.
The new law provides an unparalleled opportunity to achieve true
welfare reform. It also presents very significant challenges for
families and State and Tribal entities in light of the changing program
structure, loss of Federal entitlements, creation of time-limited
assistance, and new penalty and bonus provisions.
Most of the resources in the AFDC program went to support mothers
raising their children alone. In the early years, the expectation was
that these mothers would stay home and care for their children; in
fact, in a number of ways, program rules discouraged work. Over time,
as social and economic conditions changed, and more women entered the
work force, the expectations changed. In 1988, Congress enacted the new
JOBS program to provide education, training and employment that would
help needy families avoid long-term welfare dependence. By 1994, 20
percent of the non-exempt adult AFDC recipients nationwide were
participating in the JOBS program.
In spite of these changes, national sentiment supported more
drastic change. Policy-makers, agency officials and the public
expressed frustration about the slow progress being made in moving
welfare recipients into work and the continuing decline in family
stability. States were clamoring for more flexibility to reform their
programs.
While the Clinton Administration had supported individual reform
efforts in almost every State, approving 80 waivers in its first five
years, the waiver process was not an ideal way to achieve systemic
change. It required separate Federal approval of each individual reform
plan, limited the types of reforms that could be implemented, and
enabled reforms to take place only one State at a time. Governors
joined Congress and the President in declaring that the welfare system
was ``broken.''
After more than two years of discussion and negotiation, PRWORA
emerged as a bipartisan vehicle for comprehensive welfare reform. On
July 31, 1996, President Clinton issued a statement indicating that the
pending bill had the potential ``to transform a broken system that
traps too many people in a cycle of dependence to one that emphasizes
work and independence, to give people on welfare a chance to draw a
paycheck, not a welfare check. It gives us a better chance to give
those on welfare what we want for all families in America, the
opportunity to succeed at home and at work.''
The law that was enacted three weeks later gives States, and
federally recognized Indian tribes, the authority to use Federal
welfare funds ``in any manner that is reasonably calculated to
accomplish the purpose'' of the new program.
It provides them broad flexibility to set eligibility rules and
decide what benefits are most appropriate. It also enables States to
implement their new programs without getting the ``approval'' of the
Federal government. In short, it offers States and Tribes an
opportunity to try new, far-reaching changes that can respond more
effectively to the needs of families within their own unique
environments.
PRWORA redefines the Federal role in administration of the nation's
welfare system. It limits Federal regulatory and approval authority,
but gives the Federal government new responsibilities for tracking
State performance. In a select number of areas, it calls for penalties
when States fail to comply with program requirements, and it provides
bonuses for States that perform well in meeting new program goals.
Under the new statute, program funding and assistance for families
both come with new expectations and responsibilities. Adults receiving
assistance are expected to engage in work activities and develop the
capability to support themselves before their time-limited assistance
runs out. States and Tribes are expected to assist recipients making
the transition to employment. They are also expected to meet work
participation rates and other critical program requirements in order to
maintain their Federal funding and avoid penalties.
Some important indicators of the change in expectations are: time
limits; higher participation rates; the elimination of numerous
exemptions from participation requirements that existed under prior
law; and the addition of a statutory option for States to require
individual responsibility plans. Taken together, these provisions
signal an expectation that we must broaden participation beyond the
``job-ready.''
In meeting these expectations, States need to examine their
caseloads, identify the causes of long-term underemployment and
dependency, and work with families, communities, businesses, and other
social service agencies in resolving employment barriers. In some
cases, States may need to provide intervention services for families in
crisis or may need to adapt program models to accommodate individuals
with disabilities or other special needs. TANF gives States the
flexibility they need to respond to such individual family needs, but,
in return, it expects States to move towards a strategy that provides
appropriate services for all needy families.

II. Regulatory Framework

A. Consultations

In the spirit of both regulatory reform and PRWORA, we implemented
a broad and far-reaching consultation strategy prior to the drafting of
this Notice of Proposed Rulemaking (NPRM). In Washington, we set up
numerous meetings with outside parties to gain information on the major
issues underlying the work, penalty, and data collection provisions of
the new law. In our ten regional offices, we used a variety of
mechanisms--including meetings, conference calls, and written
solicitations--to garner views from ``beyond the Beltway.''
The purpose of these discussions was to gain a variety of
informational perspectives about the potential benefits and pitfalls of
alternative regulatory approaches. We spoke with a number of different
audiences, including: representatives of State, Tribal and local
governments; nonprofit and community organizations; business and labor
groups; and experts from the academic, foundation, and advocacy
communities. We solicited both written and oral comments, and we worked
to ensure that information and concerns raised during this process were
shared with both the staff working on individual regulatory issues and
key policy-makers.
These consultations were very useful in helping us identify key
issues and evaluate policy options. However, we would like to emphasize
that we are publishing these regulations as a proposed rule. Thus, all
interested parties have the opportunity to voice their concerns and
react to specific policy proposals. We will review comments we receive
during the comment period and take them into consideration before
issuing a final rule.

B. Related Regulations Under Development

This NPRM addresses the work, accountability, and data collection
and reporting provisions of the new TANF program. Over the next several
months, we expect to issue a number of other related proposed rules,
covering: child poverty rates; high performance bonuses; illegitimacy
reduction bonuses; and Tribal TANF and work programs.
We will also be issuing a number of NPRMs on the child support

[[Page 62126]]

enforcement provisions found in title III of PRWORA.
This NPRM does not include the provisions for the new Welfare-to-
Work (WTW) provisions at section 403(a)(5) of the Act, as created by
section 5001(a)(1) of Pub. L. 105-33. The Secretary of Labor is
responsible for issuing regulations on these provisions and the
provisions at section 5001(c), regarding WTW grants for Tribes.
Information about this program is available on the Web at http://
wtw.doleta.gov.
This NPRM does include the conforming amendment to the definition
of ``qualified State expenditures'' required by section 5001(a)(2) of
Pub. L. 105-33, as well as the amendments to the TANF provisions at
sections 5001(d), 5001(g)(1), and 5001(h). Section 5001(d) addresses
treatment of assistance under WTW under the TANF time limits. Section
5001(g)(1) provides a new penalty that takes away WTW funds when a
State fails to meet the TANF MOE requirements. Section 5001(h)
addresses the relationship between an individual penalty and work
requirements.
This NPRM does not include the provision at section 5001(g)(2),
which requires repayment of WTW funds to the Secretary of Labor
following a finding by the Secretary of Labor of misuse of funds. Since
the Department of Labor is responsible for administering this penalty
and receives any repaid funds, it would not be appropriate for us to
issue rules on this provision.
Under section 5001(e) of Pub. L. 105-33, we have responsibility for
regulating the WTW data reporting requirements, under section 411(a) of
the Act, as amended.
We will issue a rulemaking that addresses these requirements at a
later date, following consultation with the Department of Labor, State
agencies, Private Industry Councils, and other affected parties.
We encourage States and others who are interested in these areas to
review and comment on these proposed rules when they are published in
the Federal Register.
You should be aware of the important relationships between this
regulatory package and the other packages that will be following. In
particular, we would like to point out that section 412 of the Social
Security Act (as amended by PRWORA) provides that federally recognized
Tribes may elect to operate their own TANF programs, and Tribes that
operated their own JOBS programs may continue to receive those funds to
operate Tribal work programs.
The choice Tribes make on TANF will depend on a number of factors,
including the nature of services and benefits available under the State
program. Thus, Tribes have a direct interest in the regulations
governing State programs.
Tribes also have an interest in these regulations because some of
the rules we develop for State programs could eventually apply to the
Tribal programs. In particular, we urge Tribes to note the data
collection and reporting requirements at part 275. While the statute
allows Tribes to negotiate certain program requirements, it subjects
Tribal programs to the same data collection and reporting requirements
as States.
We would also like to direct the Tribes to the maintenance-of-
effort (MOE) policies discussed at Sec. 273.1. In that section, we
propose that State contributions to a Tribal program could count toward
a State's MOE. Tribes should be aware that this proposal could have
important implications for the funding of Tribal programs and State-
Tribal relations.
In order for welfare reform to succeed in Indian country, it is
important for State and Tribal governments to work together on a number
of key issues, including data exchange and coordination of services. We
remind States that Tribes have a right under law to operate their own
programs. States should cooperate in providing the information
necessary for Tribes to implement their own programs.
Likewise, Tribes should cooperate with States in identifying Tribal
members and tracking receipt of assistance.
We are also issuing separate final rules to make conforming changes
to our existing rules in chapter II of title 45.
In the first, we will be repealing the obsolete regulations for the
EA, JOBS, and the IV-A child care programs, and some rules covering
administrative requirements of the AFDC programs. This rulemaking will
be a final rule, effective upon publication. We expect to eliminate
about 82 pages from the Code of Federal Regulations.
Later on, we will be issuing a final rule that deletes or replaces
obsolete AFDC and title IV-A references throughout chapter II. This
second rulemaking will take additional time because the AFDC provisions
are intertwined with provisions for other programs that are not
repealed. Also, it is not clear that we should repeal all the AFDC
provisions because Medicaid, foster care and other programs depend on
the AFDC rules in effect under prior law. Because of these complexities
and the non-urgent nature of the conforming changes, the second rule is
on a slower schedule.
PRWORA also makes changes to other major programs administered by
ACF, the Department, and other Federal agencies that may significantly
affect a State's success in implementing welfare reform. For example,
title VI of PRWORA repeals the child care programs that were previously
authorized under title IV-A of the Social Security Act (the Act). In
their place, it provides two new sources of child care funding for the
Lead Agency that administers the Child Care and Development Block Grant
program. A major purpose of the increases in child care funding
provided under PRWORA is to assist low-income families in their efforts
to be self-sufficient. We issued proposed rules covering this new
funding and amendments to the Child Care and Development Block Grant
program on July 23, 1997. Comments were due within 60 days of that
date.
We encourage you to look in the Federal Register for rulemaking
actions on related programs and to take the opportunity to comment.

C. Statutory Context

These proposed rules reflect PRWORA, as enacted, and amended by
Pub. L. 104-327 and Pub. L. 105-33.
The changes made by Pub. L. 104-237 are fairly limited in scope; we
discuss them in the preamble on contingency fund MOE requirements at
Secs. 274.71, 274.72, and 274.77.
Pub. L. 105-33 created the new Welfare-to-Work (WTW) program, made
a few substantive changes to the TANF program, and made numerous
technical corrections to the TANF statute. Throughout the preamble
discussion and the appendices, you will note references to the
amendments made by this legislation. However, as we previously
mentioned, this NPRM includes only a limited number of changes related
to the new WTW provisions. The Department of Labor has primary
responsibility for administering the program and issuing the WTW
regulations. We have responsibility for issuing rules on the WTW data
collection requirements, but will be doing that at a subsequent date.

D. Regulatory Reform

In its latest Document Drafting Handbook, the Office of the Federal
Register supports the efforts of the National Performance Review and
encourages Federal agencies to produce more reader-friendly
regulations. In drafting this proposed rule, we have paid close
attention to this guidance. Individuals who are familiar with our

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existing welfare regulations should notice that this package
incorporates a more readable style. This rulemaking effort gave us a
unique opportunity to change our approach because we were starting from
scratch rather than amending an existing rule.
In the spirit of facilitating understanding, we have included some
preamble discussion and regulatory text to give you a broader context
for other parts of the rulemaking document. Examples include the
provisions in subparts A and G of part 271 (which address work
provisions other than participation rates and penalties) and
Sec. 270.20 (which includes the statutory goals of the program). These
sections are primarily explanatory or restatements of the statutory
requirements. The language used and the surrounding discussion should
indicate the nature of the provision.
In the same spirit, we have included draft data collection and
reporting forms as appendices to the proposed rules even though we do
not intend to publish the forms as part of the final rule. We thought
that the inclusion of the draft forms would expand public access to
this information and make it easier to comment on our data collection
and reporting plans.

E. Scope of This Rulemaking

Our initial regulatory plan for TANF included three separate TANF
regulations--one each on work, penalties, and data collection and
reporting. However, we decided it would be better to incorporate these
into a single regulatory package. While this decision resulted in a
much larger document, it should facilitate your understanding of the
entire regulatory framework of the TANF program, as well as your review
and comment.

F. Applicability of the Rules

As we indicated in previous policy guidance to the States, a State
may operate its program under a reasonable interpretation of the
statute prior to our issuance of final rules. Thus, in determining
whether a State is subject to a penalty, we will not apply regulatory
interpretations retroactively. You can find a statement of this policy
at Sec. 270.40(b) of the proposed rules.

III. Principles Governing Regulatory Development

A. Regulatory Restraint

Under the new section 417 of the Act, the Federal government may
not regulate State conduct or enforce any TANF provision except to the
extent expressly provided by law. This limitation on Federal authority
is consistent with the philosophy of State flexibility and the general
State and Congressional interest in shifting more responsibility for
program policy and procedures to the States.
We are interpreting this provision to allow us to regulate in two
different kinds of situations: (1) where Congress has explicitly
directed the Secretary to regulate (for example, under the caseload
reduction provisions, described below); and (2) where Congress has
charged HHS with enforcing penalties, even if there is no explicit
mention of regulation. In this latter case, we believe we have an
obligation to States to set out, in regulations, the criteria we will
use in carrying out our express authority to enforce certain TANF
provisions by assessing penalties.
Throughout the proposed rule, we have endeavored to regulate in a
manner that does not impinge on a State's ability to design an
effective and responsive program.
You will also note that this rulemaking does not cover the non-
discrimination provisions at section 408(c). This subsection specifies
that any program or activity receiving TANF funds is subject to the:
(1) Age Discrimination Act of 1975; (2) section 504 of the
Rehabilitation Act of 1973; (3) the Americans with Disabilities Act of
1990; and (4) title VI of the Civil Rights Act of 1964. Since ACF is
not responsible for administering these provisions of law, and they are
not TANF provisions, this rulemaking does not include them.
Individuals with questions about the requirements of the non-
discrimination laws, or concerns about compliance of individual TANF
programs with them, should address their comments or concerns to the
Director, Office of Civil Rights, Department of Health and Human
Services, 200 Independence Ave, SW, Room 522A, Washington, DC 20201.

B. State Flexibility

In the Conference Report to PRWORA, Congress stated that the best
welfare solutions come from those closest to the problems, not from the
Federal government. Thus, the legislation creates a broad block grant
to each State to reform welfare in ways that work best. It gives States
the flexibility to design their own programs, define who will be
eligible, establish what benefits and services will be available, and
develop their own strategies for achieving program goals, including how
to help recipients move into the work force.
Under the law and under these proposed rules, States may implement
innovative and creative strategies for supporting the critical goals of
work and responsibility. For example, they may choose to expend funds
on earned income tax credits or transportation assistance that would
help low-wage workers keep their jobs. They could also extend
employment services to non-custodial parents, by including them within
the definition of ``eligible families.''
To ensure that our rules support the legislative goals of PRWORA,
we are committed to gathering information on how States are responding
to the new opportunities available to them. We reserve the right to
revisit some issues, either through legislative or regulatory
proposals, if we identify situations where State actions are not
furthering the objectives of the Act.

C. Accountability for Meeting Program Requirements and Goals

The new law gives States enormous flexibility to design their TANF
programs in ways that strengthen families and promote work,
responsibility, and self-sufficiency. At the same time, however, it
reflects a bipartisan commitment to ensuring that State programs
support the goals of welfare reform. To this end, the statutory
provisions on data collection, bonuses, and penalties are crucial
because they allow us to track what is happening to needy families and
children under the new law, measure program outcomes, and promote key
program objectives.
Work
We believe the central goal of the new law is to move welfare
recipients into work. The law reflects this important goal in a number
of ways:
Work receives prominent mention in the statutory goals at
section 401 and the plan provisions in section 402;
Section 407 establishes specific work participation rates
each State must achieve;
Section 409 provides significant financial penalties
against any State that fails to achieve the required participation
rates;
Section 411 provides specific authority for the Secretary
to establish data reporting requirements to capture necessary data on
work participation rates; and
Section 413 calls for ranking of States based on the
effectiveness of their work programs.
These proposed rules reflect a similar, special focus on promoting
the work objectives of the Act. We are proposing

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specific rules under sections 407, 409, and 411 designed to ensure that
States meet the statutory requirements. You should look at the proposed
rules in part 271, and the related preamble discussion, for specific
details.
This Administration has already shown its commitment to promoting
the work objectives of this new law in several ways. Before the
legislation was passed, we worked very hard to ensure that Congress
passed strong work provisions and provided adequate child care funding
and other program supports.
Since enactment, the President has announced a number of additional
welfare-to-work initiatives designed to promote work. These include
implementation of a new ``Work Opportunity Tax Credit'' that provides
incentives for employers to hire welfare recipients and proposals to:
Extend and expand this credit;
Increase investments in distressed communities; and
Provide $3 billion in additional funding to help
communities move hard-to-serve recipients into jobs.
As part of budget reconciliation, Congress increased the Work
Opportunity Tax Credit, available to employers who hire long-term
welfare recipients, and funded a new Welfare-to-Work (WTW) program.
States, localities, and Indian Tribes will receive the additional $3
billion in WTW funds in FYs 1998 and 1999.
The President has also challenged America's businesses, its large
non-profit sector and the executive branch of the Federal government to
make job opportunities available to welfare recipients. On March 8,
1997, he directed all Federal agencies to submit plans describing the
efforts they would make to respond to this challenge. In response to
this directive, Federal agencies identified more than 10,000 jobs that
would be available for welfare recipients over the next four years.
(You can find additional information on this initiative on the Web at
http://w2w.fed.gov.)
Meeting the Needs of Low-Income Families and Children
In a number of different ways, the new law works to ensure that the
needs of low-income children and families are met. First, it provides a
guaranteed base level of Federal funding for the TANF programs. Then,
in times of special financial need, it makes additional funding
available through a $2 billion Contingency Fund and through a Federal
loan fund. It also authorizes several studies to monitor changes in the
situations of needy children and families that occur after enactment.
For example, it requires us to report on how certain children are
affected by the provisions of the new law, and to track State child
poverty rates, and initiate corrective actions by States when such
rates rise.
Domestic Violence
We wish to bring one particular provision--known as the Family
Violence Option (FVO)--to your attention. This provision, at section
402(a)(7), gives States the option to waive certain program
requirements for certain victims of domestic violence. It thus provides
a valuable framework for identifying victims of domestic violence and
developing appropriate service strategies for them.
This Administration is strongly committed to reducing domestic
violence, and we encourage all States to consider adopting the Family
Violence Option. In working with domestic violence cases, we also
encourage States to pay special attention to the need for maintaining
the confidentiality of case-record information and the victims' own
assessments of their safety needs and their abilities to meet program
requirements.
During our consultations, we heard numerous questions about the
relationship between State policies on domestic violence and the
determination of State work and time-limit penalties. Congress
considered this issue in its budget resolution, but decided to study
the issue further rather than to amend the statute during budget
reconciliation. Our regulations seek to implement the statute in a way
that is consistent with both the language of the statute and our
national interest in fostering appropriate State responses to domestic
violence.
The FVO provides States with a specific vehicle for addressing
domestic violence among recipients of TANF assistance. The provision
envisions that States would screen and identify victims of violence,
conduct individual assessments, and develop temporary safety and
service plans that would protect victims from any immediate dangers,
stabilize their living situations, and explore avenues for overcoming
dependency.
The family's individual circumstances or service plans may require
that certain program requirements (e.g., regarding time limits and
child support cooperation) be temporarily waived in cases where
compliance with such requirements would make it difficult for
individuals to escape domestic violence, unfairly penalize victims, or
put individuals at further risk of domestic violence. In these cases,
the FVO allows States to grant such waivers.
Under TANF, States must meet numerical standards for work
participation and the percentage of families that may receive
federally-funded assistance for more than five years. The statutory
language on calculating work participation rates makes no reference to
domestic violence cases or to a State's good cause waivers of work
requirements under the Family Violence Option. Thus, we think that the
clearest reading of this statutory provision includes victims of
domestic violence in the calculation of the work participation rates.
The statutory language on time limits refers to victims of domestic
violence, but not to the good cause waivers provided under the Family
Violence Option. The statutory language suggests that victims of
domestic violence would be included in the 20 percent limit on
exceptions to the time limit.
However, there is legitimate concern among States and others that
election of the FVO might put States at special risk of incurring
financial penalties. In granting good cause waivers of program
requirements under the FVO, they may make it more difficult for
themselves to meet the numerical requirements on time limits and the
work participation rates.
Our proposed rules attempt to remain true to the statutory
provisions on work and time limits and to ensure that election of the
FVO is an authentic choice for States. In deciding to address these
waiver cases under ``reasonable cause'' rather than through direct
changes in the penalty calculations, we are reflecting the statutory
language and maintaining the focus on moving families to self-
sufficiency. At the same time, we are giving States some protection
from penalties when their failures to meet the standard rates are
attributable to the granting of good cause domestic violence waivers
that are based on individual assessments, are temporary, and include
individualized service and safety plans. We hope our proposal will
alleviate concern among States that attention to the needs of victims
of domestic violence might place them at special risk of a financial
penalty.
Our proposed rules recognize that, through the FVO, Congress gave
unique status to victims of domestic violence under the TANF program.
Likewise, under our proposed rules, this group of recipients receives
special recognition under the ``reasonable cause'' provisions for the
work and time-limit penalties.
At Sec. 270.30, the proposed rules reflect our expectation that
good cause waivers

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will be bona fide waivers provided within the framework of the FVO.
Under this framework: (1) State policies would provide for
individualized responses and service strategies, consistent with the
needs of individual victims; (2) waivers of program requirements would
be temporary in nature (e.g., would not be granted for longer than six
months); and (3) in lieu of program requirements, victims of domestic
violence would be served in alternative ways, consistent with their
individualized safety and service plans.
In specifying that good cause waivers should not exceed six months
in length, we have attempted to balance two distinct objectives: (1)
giving States the flexibility they need to respond appropriately to the
individual circumstances of domestic violence victims; and (2) assuring
that the work objectives of the Act are not undermined.
We do not intend that all good cause waivers should last six
months. The length of the waiver should reflect the State's
individualized determination of what length of time a client needs. We
expect that the length of the waiver could be substantially shorter in
some cases. Also, we expect that, in some cases, States might have to
renew a waiver or issue a second waiver (i.e., because a victim of
domestic violence suffered from continued abuse that required further
protection and response).
We welcome comments on whether our proposed approach and language
achieve the balance we are seeking.
We want to ensure that our rules work to foster, not undermine, the
objectives of the Act. Our goal is to promote the provision of
appropriate alternative services for victims of domestic violence that
foster both safety and self-sufficiency.
To ensure that these policies have the desired effect, we limit the
availability of ``reasonable cause'' to States that have adopted the
FVO. In addition, in the definitions section of the proposed rule (at
Sec. 270.30), we specify criteria that will apply in deciding whether a
good cause domestic violence waiver exists. Also, we reserve the right
to audit States claiming ``reasonable cause'' to ensure that good cause
domestic violence waivers that States include in their ``reasonable
cause'' documentation meet the specified criteria.
In addition, we intend to monitor the number of good cause waivers
granted by States and their effect on work and time limits. We want to
ensure that States identify victims of domestic violence so that they
may be appropriately served, rather than exempted and denied services
that lead to independence. We also want to ensure that the provision of
good cause waivers does not affect a State's overall effort in moving
families towards self-sufficiency. Thus, we will be looking at
information on program expenditures and participation levels to see if
States granting good cause domestic violence waivers are making
commitments to assist all families in moving toward work.
If we find that good cause waivers are not having the desired
effects, we may propose regulatory or legislative remedies to address
the problems we identify.
For additional discussion of our proposals, see Secs. 270.30,
271.52 and 274.3 of the preamble and proposed rule.
Use of Funds
The new law imposes several restrictions on the use of both Federal
and State funds to help ensure that program expenditures serve program
goals. More specifically, the statute: (1) places a cap on the
percentage of funds spent on administrative costs; (2) authorizes
audits and penalties to protect against the misuse of funds; (3)
establishes a number of limitations on the use of Federal funds; and
(4) defines the conditions under which expenditures of State funds may
count for MOE purposes. In general, States must expend both their
Federal funds and their own State monies on activities that are
consistent with the purposes of the TANF program. (For additional
information on allowable uses of Federal TANF and State MOE funds, see
ACF's guidance, TANF-ACF-PA-97-1, dated January 31, 1997, and the
preamble discussion for part 273.)
Maintenance-of-Effort (MOE)
One of the most important provisions in the new law designed to
protect needy families and children is the TANF maintenance-of-effort
(MOE) requirement. This provision requires States to maintain a certain
level of spending on welfare, based on historic (i.e., fiscal year (FY)
1994) expenditure levels. Because this provision is critical to the
successful implementation of the law, Congress gave us the authority to
enforce State compliance in meeting this requirement, and it receives
significant attention in this proposed rule.
Under the data collection, work, and penalty provisions of the
proposed rule, at parts 271-275, we took care to propose rules that:
(1) ensure that States continue to make the required investments in
meeting the needs of low-income children and families; (2) prevent
States from either supplanting State funds with Federal funds or using
their MOE funds to meet extraneous program or fiscal needs; (3) give us
adequate information to meet our statutory responsibility to determine
what is happening in State programs; and (4) take a broad view of work
effort, caseload reduction, and program performance.
We recognize that States have more flexibility in spending State
MOE funds than Federal funds, especially when they expend their MOE
funds in separate State programs. However, the proposed rules also
recognize and try to protect against actions that might undermine
important goals of welfare reform. This is the same concern that we
voiced in policy guidance we issued on MOE in January (TANF-ACF-PA-97-
1). In particular, we noted that States could design their programs so
as to avoid the work requirements of the new law or to avoid returning
a share of their child support collections to the Federal government.
To mitigate these potential negative consequences, we indicated our
intent to both take administrative actions and seek legislative
remedies. As part of our commitment to taking administrative action, we
are proposing to require States, under certain circumstances, to report
information about the families served by States under separate State
programs. Only through this additional reporting will we be able to
determine the full nature and scope of State efforts to move needy
families into work and the actual caseload reductions States are
achieving. (See the preamble discussion and regulation under part 272,
subpart D, and part 275.)
In TANF-ACF-PA-97-1, we indicated that States not making a good-
faith effort on work in their separate State programs would not be
eligible for a reasonable cause exception from the penalty for failing
to achieve their work rate. The proposed rule incorporates and expands
that proposal.
More specifically, it indicates that States would not be eligible
for a reasonable cause exception from the time-limit penalty or any of
the three work-related penalties if we detect a significant pattern of
diversion of families to separate State programs that has the effect of
undermining the work participation requirements of the Act. In general,
diverting States would not be eligible for reductions in the work
penalty amounts. Finally, they would be ineligible for a penalty
reduction under corrective compliance if they did not correct the
diversion and meet the other

[[Page 62130]]

conditions for reduction specified in these proposed rules.
In the January guidance we expressed similar concerns about the
effect of separate State programs on the Federal share of child support
collections. Therefore, our proposal in this area is similar to our
proposal to prevent undermining of the work participation provisions.
More specifically, we would deny States reasonable cause for the time-
limit, work participation, child support cooperation, and work sanction
penalties if we detect a significant pattern of diversion of families
into separate State programs that results in the diversion of the
Federal share of child support collections to State coffers. States
undertaking such diversions would also be ineligible for reductions in
the amounts of any of these four penalties under corrective compliance
unless they also corrected the diversion during the corrective
compliance process.
In making these proposals, we note that the Secretary has
considerable discretion in determining whether to reduce penalties or
grant a good cause exception.
Getting recipients to work is the most critical component to
achieving the purposes of TANF--making welfare a program of temporary
assistance for families moving to self-sufficiency. The Secretary has
determined that, to prevent circumvention of this purpose, it is
appropriate to limit the availability of the reasonable cause exception
and penalty reduction if a State attempts to avoid the work
participation requirements. Congress has reinforced the importance of
appropriate work for recipients in four of the established penalties in
section 409 of the Act--work participation rates, continuing assistance
when child care is not available, sanctioning families that fail to
participate in work, and continuation of assistance beyond 60 months.
To carry out the intent of Congress that work be a central part of the
TANF program, if we detect that a State is avoiding the work
requirements by diverting a significant number of families to separate
State programs, we will not grant this State a reasonable cause
exception from any of the four penalties most closely tied to the work
requirements, either in the form of a reduction in its work penalty
based on degree of non-compliance or as a reduction in any of the four
penalties as the result of achieving substantial (but not full)
compliance.
The other key component to achieving self-sufficiency is
implementation of the child support enforcement provisions. The Federal
government has a major role to play in such enforcement (particularly
with regard to the operation of the New Hire Directory and the Federal
Parent Locator Service). It also has a continuing interest in the
effectiveness of these programs and, under TANF, maintains its
commitment to the funding of needy families whose children have been
deprived of parental support and care.
We are concerned that a State's diverting cases to separate State
programs would not only have unintended, negative consequences for the
Federal budget and the Federal government's ability to ensure an
effective child support program; it would also diminish the State's
accountability for ensuring that needy families take appropriate steps
towards achieving self-sufficiency. The Secretary has determined that,
in the interest of protecting the key goals of TANF, it is appropriate
to exercise her discretion to set penalty amounts and forgive penalties
in a manner that will ensure that States do not divert cases
inappropriately. Thus, if we detect a significant pattern of diversion
of families to separate State programs that has the effect of diverting
the Federal share of child support collections, we will not grant a
reasonable cause exception or reduced penalty through corrective
compliance for the following four penalties: work participation, time
limits, failure to cooperate with paternity establishment and child
support enforcement requirements, or failure to impose work sanctions.
We plan to monitor States' actions to determine if they constitute
a significant pattern of diversion. For example, if, based on an
examination of statistical or other evidence, we came to the conclusion
that a State was assigning people to a separate State program in order
to divert the Federal share of child support collections, or in order
to evade the work requirements, we would conclude that this is a
significant pattern of diversion and would deny the State certain types
of penalty relief.
A State would be permitted the opportunity to prove that this
pattern was actually the result of State policies and objectives that
were entirely unrelated to the goal of diversion, but we would make the
final judgment as to what constitutes a significant pattern of
diversion.
For the specific regulatory changes associated with these policies,
see Secs. 271.51, 272.5 (c) and (d), and 272.6(i)(2).
We will also propose to require States seeking to receive high
performance bonuses to report on families served by separate State
programs. We will address this issue more fully in the coming NPRM on
high performance bonuses.
In the policy announcement, we advised States to think carefully
about the risks to the long-term viability of their TANF programs if
they rely too extensively on separate State MOE programs. In general,
States cannot receive contingency funds unless their expenditures
within the TANF program are at 100 percent of historic State
expenditures. Thus, excessive State reliance on expenditures outside
the TANF program to meet MOE requirements could make access to
contingency funds difficult during economic downturns.
Child-Only Cases
Since the January guidance came out, we have also become concerned
that States might be able to avoid the work participation rates and
time limits by excluding adults (particularly parents) from their
eligible cases. Given the flexibility available to States under the
statute and regulations, it appears possible that States could protect
themselves from the requirement and the associated penalty risk by
converting regular welfare cases into child-only cases. Such
conversions would seriously undermine these critical provisions of
welfare reform.
To protect against these negative consequences, in the work and
time-limit sections of this proposed rule, we would prohibit States
from converting cases to child-only cases for the purpose of avoiding
penalties and require annual reporting of any such exclusions (with
explanations). We are also proposing to recalculate a State's work
participation rates and time limit exemptions if we determine that a
State has excluded cases from its calculations for the purpose of
avoiding penalties in these areas. See Secs. 271.22, 271.24, and 274.1
for the specific proposals.

IV. Discussion of Individual Regulatory Provisions

Following is a discussion of all the regulatory provisions we have
included in this package. The discussion follows the order of the
regulatory text, addressing each part and section in turn.

A. Part 270--General Temporary Assistance for Needy Families (TANF)
Provisions

This part of the proposed rules helps set the framework for the
rest of the proposed rule. For the convenience of the reader, it
reiterates the goals stated in the new section 401. It also includes

[[Page 62131]]

a set of definitions that are common to the different parts of the
proposed rule.
What does this part cover? (Sec. 270.10)
This section of the proposed rules indicates that part 270 includes
provisions that are applicable across all the TANF regulations in this
rulemaking.
What is the purpose of the TANF program? (Sec. 270.20)
This section of the proposed rules repeats the statutory goals of
the TANF program. In brief, they include reducing dependency and out-
of-wedlock pregnancies; developing employment opportunities and more
effective work programs; and promoting family stability.
While we do not elaborate on the statutory language, we would like
to point out that, in a number of ways, the new law speaks to the need
to protect needy and vulnerable children. States should keep this
implicit goal in mind as they implement their new programs.
What definitions apply under the TANF regulations? (Sec. 270.30)
This section of the proposed rule includes definitions of the terms
used in parts 270 through 275. It does not include definitions that
pertain only to individual provisions. You should look to the
appropriate individual parts of the proposed rules for definitions that
are provision-specific.
In drafting this section of the proposed rule, we defined only a
limited number of terms used in the statute and regulations. We
understood that excessive definition of terms could unduly and
unintentionally limit State flexibility in designing programs that best
serve their needs. For example, we did not define ``family'' or ``head-
of-household.'' States are thus free to define what types of families
would be eligible for TANF assistance. (However, we suggest that you
look at the sections of this rule covering work participation rates
(Secs. 271.22 and 271.24), MOE requirements (subpart A of part 273),
time limits (Sec. 274.1), and data collection definitions (Sec. 275.2);
none of these sections creates a definition of family, but all address
the definition of the term ``family'' in describing key requirements on
States.)
We also decided not to define the individual work activities that
count for the purpose of calculating a State's participation rates. You
should look to the preamble discussion for Sec. 273.13 and subpart C of
part 271, respectively, for additional discussion of these decisions.
You will note that we use the term ``we'' throughout the regulatory
text and preamble. The term ``we'' means the Secretary of the
Department of Health and Human Services or any of the following
individuals or agencies acting on her 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.
Likewise, you should note that we use the term ``Act'' to refer to
the Social Security Act, as amended by the new welfare law. We use the
term ``PRWORA'' when we refer to the new law itself. A section
reference is a Social Security Act reference if we use neither term.
Some of the definitions in this section incorporate the statutory
definitions in PRWORA. We included these definitions largely for the
reader's convenience. These statutory definitions include: ``adult,''
``minor child,'' ``eligible State,'' ``Indian, Indian Tribe and Tribal
organization,'' ``State,'' and ``Territories.''
We also propose some clarifying definitions. These include
explanations of commonly used acronyms (such as ACF, AFDC, EA, IEVS,
JOBS, MOE, PRWORA and TANF, as well as the new WTW) and commonly used
terms and phrases (such as the Act and the Secretary). While the
meaning of many of these is generally understood, we included them to
ensure a common understanding.
We are also proposing a number of definitions that have substantial
policy significance, for clarification purposes. For example, the
definitions distinguish among several types of expenditures. These
distinctions are critical because the applicability of the TANF
requirements vary depending on the source of funds for the
expenditures. In particular, it is important to distinguish between
expenditures from the Federal TANF grant and from the State funds
expended to meet MOE requirements (either within the TANF program or in
separate State programs).
Federal expenditures. This is short-hand for the State expenditure
of Federal TANF funds.
Qualified State Expenditures. This term refers to expenditures that
count for TANF MOE purposes (at section 409(a)(7)). By regulation, we
are proposing that most of the requirements that apply for countable
TANF MOE expenditures also apply for Contingency Fund MOE purposes.
TANF MOE. This term refers to the expenditure of State funds that a
State must make in order to meet the MOE requirement at section
409(a)(7).
Contingency Fund MOE. This term refers to expenditures of State
funds that a State must make in order to meet the Contingency Fund MOE
requirements under sections 403(b) and 409(a)(10). States must meet
this MOE level in order to retain contingency funds made available to
them for the fiscal year. Note that this term is more limited in scope
than the term ``TANF MOE.'' See discussion at subpart B of part 274 for
additional details.
State MOE expenditures. This term refers to any expenditure of
State funds that may count for TANF MOE or Contingency Fund purposes.
It includes both State TANF expenditures and expenditures under
separate State programs.
State TANF expenditures. This term encompasses the expenditure of
State funds within the State's TANF program. It identifies the only
expenditures that can be counted toward the Contingency Fund MOE,
except for expenditures made under the Child Care and Development Fund.
It includes both commingled and segregated State TANF expenditures.
Commingled State TANF expenditures. This term identifies the
expenditure of State funds, within the TANF program, that are
commingled with Federal funds. Such expenditures may count toward both
the State's TANF MOE and Contingency Fund MOE. To the extent that
expended State funds are commingled with Federal funds, they are
subject to the Federal rules.
Segregated State TANF expenditures. This term identifies State
funds expended within the TANF program that are not commingled with
Federal funds. Such expenditures count for both TANF MOE and
Contingency Fund MOE purposes. They are not subject to many of the TANF
requirements that apply only to Federal funds (including time limits).
Separate State program. This term identifies programs operated
outside of TANF in which the expenditure of State funds count toward
TANF MOE, but generally does not count for Contingency Fund MOE. With
one exception (for CCDF expenditures), expenditure of State funds must
be made within the TANF program in order to count as MOE for
Contingency Fund purposes.
The definitions also distinguish among different categories and
amounts of TANF grant funds. These distinctions are important because
they affect the size of grant adjustments and total funding available
to the State. In some

[[Page 62132]]

cases, different spending rules apply to different categories of funds.
State Family Assistance Grant (or SFAG). This term refers to the
annual allocation of Federal funds to a State under the formula at
section 403(a)(1).
Adjusted State Family Assistance Grant, or ``Adjusted SFAG.'' This
term refers to the grant awarded to a State through the formula and
annual allocation at section 403(a)(1), minus any reductions due to the
implementation of a Tribal TANF program to serve Indians residing in
the State. You should note the distinction between this term and the
``SFAG,'' because of their significance in determining spending
limitations and the amount of penalties that might be assessed against
a State under parts 271-275.
TANF funds. This term includes not just amounts made available to a
State through the SFAG, but also other amounts available under section
403, including bonuses, supplemental grants, and contingency funds.
Federal funds. This has the same meaning as ``TANF funds.'' In
expending Federal funds, States are subject to more restrictions than
they are in expending State MOE as discussed in this NPRM under subpart
B of part 273.
You should also note the definition of ``assistance'' proposed in
this section.
Assistance. The terms ``assistance'' and ``families receiving
assistance'' are used in the PRWORA in many critical places, including:
(1) in most of the prohibitions and requirements at section 408, which
limit the provision of assistance; (2) in the numerator and denominator
of the work participation rates in section 407(b); and (3) the data
collection requirements of section 411(a). Largely through reference,
the term also affects the scope of the penalty provisions in section
409. Thus, it is important that States have a definition of
``assistance.'' At the same time, because TANF replaces AFDC, EA and
JOBS, and provides much greater flexibility than these programs, what
constitutes assistance is less clear than it was in the past.
Because PRWORA is a block grant, and it incorporates three
different programs, a State may provide some forms of support under
TANF that would not commonly be considered public assistance. Some of
this support might resemble the types of short-term, crisis-oriented
support that was previously provided under the EA program. Other forms
might be more directly related to the work objectives of the Act and
not have a direct monetary value to the family. We are proposing to
exclude some of these forms of support from the definition of
assistance.
The general legislative history for this title indicates that
Congress meant that this term encompass more than cash assistance;
beyond that, it is not very informative (H.R. Rep. No. 725, 104 Cong.,
2d Sess (1996)). Our consultations did not produce clear guidance in
this area either. However, they did identify some areas where
clarification would be helpful. Therefore, this proposed rule contains
essentially the same definition as we suggested in our January policy
announcement (TANF-ACF-PA-97-1), with some additional clarifications.
In our January proposal, we took the view that the definition of
assistance should encompass most forms of support. However, we
recognized two basic forms of support that would not be considered
welfare and proposed to exclude them from the definition. In brief, the
two exclusions were: (1) services that had no direct monetary value and
did not involve direct or indirect income support; and (2) one-time,
short-term assistance.
In the proposed rule, we are clarifying that child care, work
subsidies, and allowances that cover living expenses for individuals in
education or training are included within the definition of assistance.
For this purpose, child care includes payments or vouchers for direct
child care services, as well as the value of direct child care services
provided under contract or a similar arrangement. It does not include
child care services such as information and referral or counseling, or
child care provided on a short-term, ad hoc basis. Work subsidies
includes payments to employers to help cover the costs of employment or
on-the-job training.
We are also proposing to define one-time, short-term assistance as
assistance that is paid no more than once in any twelve-month period,
is paid within a 30-day period, and covers needs that do not extend
beyond a 90-day period. In response to the policy announcement, we
received a number of questions about what the term ``one-time, short-
term'' meant. Based on our experience with the EA program, we realized
that a wide range of interpretations was possible, and we were
concerned that States might try to define as ``short-term'' or ``one-
time'' many situations where assistance was of a significant and
ongoing nature. We hope our proposal will give States the flexibility
to meet short-term and emergency needs (such as an automobile repair),
without invoking too many administrative requirements and undermining
the objectives of the Act. We welcome comments on whether the proposed
policy achieves this end.
Under the policy announcement and proposed rule, we define the
minimum types of services and benefits that must be included. Based on
comments we received, we considered allowing States to include
additional kinds of benefits and services, at their option. However, we
were concerned that varying State definitions would create additional
comparability problems with respect to data collection and penalty
determinations. Also, we were concerned that an expanded definition
might have undesirable program effects. For example, it could extend
child support assignment to cases where it would not be appropriate.
If States expanded their definitions of assistance, they would have
to apply that same definition under all provisions of the regulations.
Thus, if something fell within the definition of assistance, the family
receiving that type of benefit would be subject to data collection and
reporting, child support assignment and cooperation requirements, work
requirements, and Federal time limits. In response to the policy
announcement, we have also received a number of questions about the
treatment of TANF assistance under the child support enforcement
program. The Office of Child Support Enforcement will be issuing
guidance on the distribution of child collections under PRWORA; this
guidance will explain the treatment of TANF assistance under the new
distribution rules.
For those concerned about the inclusion of child care in the
definition of assistance, we would point out the child care
expenditures made under the CCDBG program are not subject to TANF
requirements, and States have the authority to transfer up to 30
percent of their TANF grant to the CCDBG program.
We are proposing to collect data on how much of the program
expenditures are being spent on different kinds of ``assistance'' and
``non-assistance.'' See the discussion of the TANF Financial Report at
part 275 for additional details.
If the data show that large portions of the program resources are
being spent on ``non-assistance,'' we would have concerns that the
flexibility in our definition of ``assistance'' is undermining the
goals of the legislation. We would then look more closely at the ``non-
assistance'' being provided and try to assess whether work
requirements, time limits, case-record data and child support
assignment would be appropriate for those cases. If necessary, we would
consider a change to the

[[Page 62133]]

definition of ``assistance'' or other remedies.
You should also note the definitions of ``waiver'' and
``inconsistency'' in this part.
Waiver and Inconsistency. Under the new section 415, States that
received approval for welfare reform waivers under section 1115 before
July 1, 1997, have the option to operate their cash assistance programs
under some or all of these waivers. For States electing this option,
provisions of the new law that are inconsistent with the waivers do not
take effect until the expiration of the applicable waivers. States have
raised numerous questions about how we will interpret this provision,
particularly with regard to what is a waiver and an inconsistency.
Since a waiver extension might affect the application of certain of
the penalty provisions within a State, we are defining both terms. Part
of our responsibility in administering the penalty provisions is to
provide notice concerning the rules we will utilize in applying the
penalties.
The issue in defining waiver concerns the scope of the provision,
specifically how much of the current or underlying law (i.e., the
provisions of title IV-A as in effect on August 21, 1996) are properly
considered to be part of the waiver. Three possible interpretations
were suggested. The first is a very limited definition in which a
waiver is only the specific change to the AFDC statute as articulated
in the waiver list that was included in the terms and conditions for
each demonstration project. The second possible interpretation is that
a waiver includes all the underlying law; that, in effect, the AFDC
statute, as modified by the waiver terms and conditions, would continue
to apply in a State continuing a demonstration project. The third
interpretation is that the waiver includes only some parts of the
unwaived underlying law.
We believe the third option is the best. It seems most consistent
with the Congressional intent to allow States to finish testing the
welfare reform policies they had initiated through waivers by allowing
sufficient flexibility to continue relevant aspects of those policies.
It recognizes that, although some requirements may not have
specifically been part of the waiver (as there was no need for a waiver
under AFDC), the requirements are an integral part of the demonstration
embodied in the waiver.
The first interpretation option is too narrow to allow continuation
of many demonstration objectives; thus, it seems inconsistent with the
Congressional intent. Similarly, to allow a State to continue the AFDC
program in its entirety, even when a particular AFDC provision was not
necessary to the demonstration, would seem to frustrate the intent of
Congress in enacting TANF. Rather, we believe section 415 was intended
to allow States to continue their reform policies, but not the AFDC
program in its entirety.
The definition of ``waiver'' we are proposing allows a State the
flexibility to include applicable provisions of prior law, but only if
their inclusion were necessary to achieve the objective of the approved
waiver.
At Sec. 271.60, we provide an example of the application of the
definitions of waiver and inconsistent to the work requirements and
explain their implications. We also discuss the application of the
definitions to control and experimental groups.
After extensive deliberations, we have also defined what makes the
new law ``inconsistent'' with a waiver. We propose that a provision of
TANF is inconsistent with a waiver only if the State must change its
waiver policy in order to comply with the TANF requirement. A TANF
provision is not inconsistent if it is possible for the TANF
requirement and the waiver policy to operate concurrently.
For example, if the State has a time limit that runs for two years
and then has extensions if the recipient is ``playing by the rules,''
that time limit can run in tandem with the Federal time limit until the
five-year limit on Federal assistance is reached. At that point, the
TANF restriction would be inconsistent with providing further
assistance under the demonstration's extension. However, since there is
an inconsistency at that point, section 415 would allow a State to
continue such assistance until the demonstration ended.
We considered two alternative definitions of inconsistency. The
first was that just having a waiver that differs in any respect from
the TANF requirement creates an immediate inconsistency. For example,
under this definition, the State time limit and the Federal time limit
would run sequentially. However, this definition seems to create an
artificial inconsistency where one does not exist in fact; thus, it
seems contrary to the statute.
The second alternative was to find that a waiver was not
inconsistent with the TANF provisions of the law if TANF restrictions
related only to the expenditure of Federal funds and did not prohibit
States from continuing their waiver policies with their own funds.
However, application of this theory could lead to a finding of no
inconsistency for all waiver provisions, including those in the major
areas of work and time limits. It would thus render section 415
meaningless.
At Sec. 274.1, we provide additional discussion regarding the
implications of our definition of inconsistency.
You should also note the definitions of ``Family Violence Option,''
``good cause domestic violence waiver,'' and ``victim of domestic
violence.''
Family Violence Option, Good Cause Domestic Violence Waivers, and
Victims of Domestic Violence. These definitions are relevant to State
claims of ``reasonable cause'' for failing to meet the work
participation rate and time-limit requirements of the Act. Under parts
271 and 274, a State's decision to implement the Family Violence Option
and its provision of good cause waivers to victims of domestic violence
under that provision create a special-case situation that may affect a
State's eligibility for a reasonable cause exception from these two
penalties.
Finally, we would like you to note that Sec. 273.0(b) contains a
definition of ``administrative costs.'' This definition is important
because States are subject to 15 percent caps on the amount of Federal
TANF and State MOE funds they may spend on administrative activities.
When are these provisions in effect? (Sec. 270.40)
This section of the proposed rules provides only the general time
frames for the effective dates of the TANF provisions. Many of the
penalty and funding provisions have delayed effective dates. For
example, most penalties would not be assessed against States in the
first year of the program, and reductions in grants due to penalties
would not occur before FY 1998 because reductions take place in the
year following the failure. You should look to the discussion on the
individual regulatory sections for specific information on effective
dates.
This section also makes the important point that we will not
retroactively apply rules against States. With respect to any actions
or behavior that occurs before we issue final rules, we will judge
State actions and behavior only against a reasonable interpretation of
the statute.

B. Part 271--Ensuring That Recipients Work

What does this part cover? (Sec. 271.1)
This section identifies the scope of part 271: the mandatory work
requirements of TANF.

[[Page 62134]]

What definitions apply to this part? (Sec. 271.2)
This section cross-references the general definitions for the TANF
regulations established under part 270.
Supart A--Individual Responsibility
During our extensive consultations, a number of groups and
individuals asked how the requirements on individuals relate to the
State participation requirements and penalties. To help clarify what
the law expects of individuals as opposed to the requirements it places
on States, we have decided to outline a recipient's statutory
responsibilities as part of the proposed rules. In so doing, we only
paraphrase the statute, without interpreting these provisions.
Inclusion of these provisions in the regulation does not indicate our
intent to enforce these statutory provisions, but our expectation is
that States will meet these requirements. We have included the
requirements in the regulation for informational and contextual
reasons.
What work requirements must an individual meet? (Sec. 271.10)
PRWORA promotes self-sufficiency and independence by expanding work
opportunities for welfare recipients while holding individuals to a
higher standard of personal responsibility for the support of their
children. The legislation expands the concept of mutual responsibility,
introduced under the Family Support Act of 1988. It espouses the view
that income assistance to families with able-bodied adults should be
transitional and conditioned upon their efforts to become self-
sufficient. As States and communities assume new responsibilities for
helping adults get work and earn paychecks quickly, parents face new,
tougher work requirements.
Readers should understand that the law imposes a requirement on
each parent or caretaker to work (see section 402(a)(1)(A)(ii)). That
requirement applies when the State determines the individual is ready
to work, or after (s)he has received assistance for 24 months,
whichever happens first. For this requirement, the State defines what
work activities meet the requirement.
In addition, there is a requirement that each parent or caretaker
participate in community service employment if s(he) has received
assistance for two months and is not either engaged in work in
accordance with section 407(c) or exempt from work requirements. The
State must establish minimum hours of work and the tasks involved. A
State may opt out of this provision if it chooses. A State may impose
other work requirements on individuals, but there is no further Federal
requirement to work.
These individual requirements are different from the work
requirements described at section 407. Section 407 applies a
requirement on each State to engage a certain percentage of its total
caseload and a certain percentage of its two-parent caseload in
specified work activities. For the State requirement, the law lists
what activities meet the requirement. A State could chose to use this
statutory list for the first requirement on individuals, but is not
required to do so. Subpart B below explains more fully what the
required work participation rates are for States and how they are
calculated. Subpart C explains the work activities and when an
individual is considered ``engaged in work'' for those rates.
Which recipients must have an assessment under TANF? (Sec. 271.11)
Each State must make an initial assessment of the skills, prior
work experience and employability of each recipient who is at least 18
years old, or has not completed high school (or equivalent) and is not
attending secondary school.
With respect to the timing of assessments, within 90 days of the
effective date of the State's TANF program (or up to 180 days, at State
option), the State may assess an individual who is already receiving
benefits as of that date. For any other recipient, the State may make
the assessment within 30 days of the date on which the individual is
determined to be eligible for assistance, but may increase this period
to as much as 90 days. For example, if a State begins operating its
TANF program on July 1, 1997, it may assess all individuals in its
existing caseload by September 30, 1997 (or, at State option, December
31, 1997). For any individual applying after July 1, 1997, the State
may do an assessment within 30 days (or 90 days, at State option).
What is an individual responsibility plan? (Sec. 271.12)
A State may require individuals to adhere to the requirements of an
individual responsibility plan. Developed in consultation with the
individual on the basis of the initial assessment described above, the
plan should set forth the obligations of both the individual and the
State. It should include an employment goal for the individual and a
plan to move him/her into private-sector employment as quickly as
possible. The proposed regulation includes more detailed suggestions
for the content of an individual responsibility plan.
May an individual be penalized for not following an individual
responsibility plan? (Sec. 271.13)
If the individual does not have good cause, (s)he may be penalized
for not following the individual responsibility plan that (s)he signed.
The State has the flexibility to establish good cause criteria, as well
as to determine what is an appropriate penalty to impose on the family.
This penalty is in addition to any other penalties the individual may
have incurred.
What is the penalty if an individual refuses to engage in work?
(Sec. 271.14)
If an individual refuses to engage in work in accordance with
section 407, the State must reduce the amount of assistance otherwise
payable to the family pro rata (or more, at State option) for the
period during the month in which the individual refused, subject to
good cause and other exceptions determined by the State. The State also
has the option to terminate the case.
Each State may establish its own criteria for determining when not
to impose a penalty on an individual. States may also establish other
rules governing penalties as needed.
Under the Family Violence Option, a State may waive work
requirements in cases where compliance would make it difficult for an
individual to escape domestic violence or would unfairly penalize
individuals who are or have been victimized by such violence or
individuals who are at risk of further domestic violence. The State
must determine that the individual receiving the program waiver has
good cause for failing to comply with the standard work requirements.
Can a family be penalized if a parent refuses to work because (s)he
cannot find child care? (Sec. 271.15)
A State may not reduce or terminate assistance to a single
custodial parent caring for a child under age six for refusing to
engage in required work, if the parent demonstrates an inability (as
determined by the State) to obtain needed child care. This exception
applies to penalties the State imposes for refusal to engage in work in
accordance with either section 407 or section 402(a)(1)(A)(ii) of the
Act. The parent's demonstrated inability must be for one of the
following reasons:
Appropriate child care within a reasonable distance from
the

[[Page 62135]]

individual's home or work site is unavailable;
Informal child care by a relative or under other
arrangements is unavailable or unsuitable; or
Appropriate and affordable formal child care arrangements
are unavailable.
This penalty exception underscores the pivotal role of child care
in supporting work and also recognizes that the lack of appropriate,
affordable child care can create unacceptable hardships on children and
families. To keep families moving toward self-sufficiency, and to
assess the State's compliance with this penalty exception, we have
described in the preamble to Sec. 274.20 our expectation that States
will have a process or procedure that: (1) Enables a family to
demonstrate its inability to obtain needed child care; (2) informs
parents that the family's benefits cannot be reduced or terminated when
they demonstrate that they are unable to work due to the lack of child
care for a child under the age of six; and (3) advises parents that the
time during which they are excepted from the penalty will still count
toward the time limit on benefits at section 408(a)(7).
Because the State has the authority to determine whether the
individual has demonstrated adequately an inability to obtain needed
child care, as the regulations indicate, we expect the State to define
the terms ``appropriate child care,'' ``reasonable distance,''
``unsuitability of informal care,'' and ``affordable child care
arrangements.'' The State should also provide families with the
criteria, including the definitions, that it will use to implement the
exception and the means by which a parent can demonstrate an inability
to obtain needed child care.
The proposed regulations for the Child Care and Development Fund
(CCDF) reinforce the importance of providing this vital information to
parents by requiring the child care Lead Agency, as part of its
consumer education efforts, to inform parents about: (1) The penalty
exception to the TANF work requirement; (2) the State's process or
procedure for determining a family's inability to obtain needed child
care; and (3) the fact that the exception does not extend the time
limit for receiving assistance. The information must also include the
definitions or criteria that the State employs to implement the State's
determination process.
Under the proposed CCDF rule, we would require the Lead Agency for
child care to coordinate with the TANF agency in order to understand
how the TANF agency defines and applies the terms of the statute
regarding the penalty exception and to include the definitions (listed
above) and criteria in the CCDF plan.
Thus, the proposed CCDF rule requires that the Lead Agency would
submit the definitions and criteria used by the State in determining
whether child care is available. We took this child care proposal into
consideration in drafting our proposed rule. Under Sec. 271.15, we
would require that the definitions and criteria be submitted, but would
not require that the TANF agency submit them directly. Our goal is to
ensure that these items are made available for audit and penalty
purposes and that they be part of the public record.
If, based on the child care final rule, we would not expect to
receive the criteria and definitions from the Lead Agency, we would add
a data element to one of the proposed TANF reporting forms (such as the
annual addendum) to incorporate them.
Does the imposition of a penalty affect an individual's work
requirement? (Sec. 271.16)
Section 408(c) of the Act, as amended by section 5001(h) of Pub. L.
105-33, clarifies that sanctions against recipients under TANF ``shall
not be construed to be a reduction in any wage paid to the
individual.'' This means that imposition of such penalties would not
result in a reduction in the number of hours of work required.
Subpart B--State Accountability
How will we hold a State accountable for achieving the work objectives
of TANF? (Sec. 271.20)
Work is the cornerstone of welfare reform. Research has
demonstrated that early connection to the labor force helps welfare
recipients make important steps toward self-sufficiency. The rigorous
work participation requirements embodied in the legislation provide
strong incentives to States to concentrate their resources in this
crucial area. This summary section makes the legislation's focus on
work and the requirements for work clear, while other sections address
each of these areas in more detail.
This section of the proposed regulations describes what a State
must do to meet the overall and two-parent work participation rates. It
explains that a State must submit data to allow us to measure each
State's success with the work participation rates. It notes that a
State meeting the minimum rates will have a reduced MOE requirement but
that a State failing to meet them risks a financial penalty.
What overall work rate must a State meet? (Sec. 271.21)
Section 407(a) establishes two minimum participation rates that a
State must meet for FYs 1997 through 2002 and thereafter. The first,
the overall work rate, is the percentage of all families receiving
assistance who must participate in work activities by fiscal year. This
section lists the statutory overall participation rate by fiscal year.
The second is the work rate for two-parent families, addressed below at
Secs. 271.23 and 271.24.
How will we determine a State's overall work rate? (Sec. 271.22)
This section of the proposed regulation restates in clear terms the
participation rate calculation specified in the statute. In particular,
without changing its meaning, we have phrased the denominator in a way
that we think is easier to understand than the statutory language.
We received many requests for guidance concerning how, for purposes
of the participation rates, a State should treat a family that it
exempts from work requirements. A State has the flexibility to
establish any exemptions it chooses; however, with two exceptions
(discussed below), the legislation offers no room to remove categories
of recipients from the denominator. PRWORA embodies the views that: (1)
Work is the best way to achieve independence; and (2) each individual
should participate to his or her greatest ability. As waiver projects
have demonstrated, innovative State programs can often find meaningful
ways for nearly every recipient to participate in work-related
activities. Therefore, the statute and the proposed regulation require
nearly all families to be included in the calculation of the
participation rates.
The proposed regulation makes clear that a State may count as a
month of participation any partial months of assistance, if an adult in
the family is engaged in work for the minimum average number of hours
in each full week that the family receives assistance in that month.
These families are already included in the denominator since they are
recipients of assistance in that month.
This provision ensures that a State receives credit for its efforts
in the first and last months that a family receives assistance. Without
it, a State would have an inadvertent incentive to start and end
assistance as close as possible to the beginning of the month, rather
than as families need it. We think that measuring work in full weeks of

[[Page 62136]]

assistance during a partial month is consistent with the spirit of
PRWORA. We have proposed the same policy for partial months of
assistance under the two-parent rate at Sec. 271.24.
During the development of the proposed regulation and in
consultation with stakeholders, one important topic of discussion was
how to treat victims of domestic violence whom the State is helping
under the Family Violence Option (FVO), under section 402(a)(7). We
recognize that there are circumstances in which a State should and will
temporarily waive work requirements for some domestic violence victims.
One question we considered was how such waivers would affect the
calculation of the participation rates.
Many commenters urged us to remove all victims of domestic violence
from the denominator of a State's participation rate so that the State
would not be penalized for choosing to develop appropriate responses to
their problems. Instead of changing the basic calculation of the work
participation rates, we chose to address this situation under the
definition of ``reasonable cause'' for States failing to meet their
rates. Our approach is targeted, so as not to provide blanket
exemptions for those who have ever suffered domestic violence, but
instead to provide appropriate protections and supports for TANF
recipients who need them.
We believe that keeping recipients who are being assisted under the
FVO in the calculation is the better reading of the statute. In the
calculation of work participation rates, the statute provides only two
exemptions from the denominator: one for a single custodial parent of a
child under 12 months old; the other for a recipient who is being
sanctioned but has not been so for more than three of the last 12
months. The law is very specific concerning these exemptions and does
not provide for others.
We believe victims of domestic violence and the objectives of the
Act will be best served if we maintain the integrity of the work
requirements and promote appropriate services to the victims of
domestic violence. Service providers who work closely with victims of
domestic violence attest that work is often a key part of the solution
to domestic violence problems; it may provide both emotional support
and a path to financial independence. Thus, we do not want to create an
incentive for States to waive work requirements routinely for a
recipient who does not need such a waiver.
However, we also hear that, in some cases, going to work may
aggravate tensions with a batterer and place the victim at risk of
further danger. Under our proposed rules, States should feel free to
provide temporary waivers of work requirements in such cases.
Given the pressure States are under to meet the work participation
rates, and the individualized circumstances that domestic violence
victims face, we have concerns that automatically removing victims of
domestic violence from the calculations could result in inappropriate
exemptions or deferrals of work requirements for victims of domestic
violence. We also have concerns that it could result in diversion of
resources away from these families to other categories of recipients.
We believe our ``reasonable cause'' proposal and our strategy for
monitoring the effect of these provisions will protect against these
possible negative effects.
You will also note that this section of the regulation addresses
our concern that States could use the flexibility inherent in the
statute and these regulations to avoid the work participation rates for
certain families in the TANF program. Because the participation rates
include only those families receiving assistance that include an adult,
the possibility exists that States could try to keep cases out of the
calculation by converting them to child-only cases. Under our proposal,
States would continue to have discretion in defining ``families
receiving assistance'' and deciding the circumstances under which
adults and children receive assistance in the State. However, we would
reserve the right to add cases back into the calculation if we
determine that a State was defining families solely for the purpose of
avoiding a work penalty. Also, we are proposing to require that States
submit annual reports to us specifying how many families were excluded
from the overall work participation rate, together with the basis for
any exclusions.
Please see Sec. 271.52 of the proposed regulations for further
discussion of the reasonable cause criteria.
What two-parent work rate must a State meet? (Sec. 271.23)
As with Sec. 271.21, this section restates the minimum work
participation rates for two-parent families established in the statute.
States should note the sharp increases in the two-parent
participation rate. Congress has high expectations that States will
help the vast majority of adults in two-parent families find jobs or
participate in other work activities. We note that most States had
difficulty meeting the less ambitious JOBS participation rates for
unemployed parent families (UPs), the primary two-parent cases under
AFDC. For several reasons, the new rates under TANF are much more
demanding than they were under JOBS. First, the TANF rate is a ``two-
parent'' rate, not a rate just for UPs. Secondly, the denominator
includes much more of the caseload; it recognizes many fewer
exemptions. Finally, PRWORA lifted the restrictions on providing
assistance to two-parent families. Thus, in some States, many more two-
parent families could be eligible for assistance and subject to the
work requirements than under prior law.
We strongly encourage each State to consider carefully what it must
do to get two-parent families working. In some cases, States may need
to make substantial changes to their program designs over time. In the
first few years of operating TANF, the participation rates are at their
lowest and pro rata reductions may significantly reduce the minimum
required rates. We think it is important for States to capitalize on
this initial period to invest in program designs that will allow them
to achieve the higher participation rates in effect in later years. We
intend to assist States in this endeavor through technical assistance
and by sharing promising models as they emerge.
Finally, we would like to make it clear that providing a non-
custodial parent with TANF services need not cause a State to consider
the family a two-parent family for the purposes of the participation
rate. States could define two-parent families as those with two parents
living in the same household.
How will we determine a State's two-parent work rate? (Sec. 271.24)
The proposed regulations express the two-parent work participation
rate in terms very similar to those we used for the overall rate.
States should note that any family that includes a disabled parent is
not considered a two-parent family for purposes of the participation
rate and, thus, is not included in the numerator or denominator of the
two-parent rate. They should also note the prohibition against defining
families receiving assistance for the purpose of excluding cases from
two-parent participation rate. (See Sec. 271.22 for additional
discussion.)
It is important to note that, in accordance with the statute, we
calculate both participation rates in terms of families, not
individuals. Whether we include the family in the numerator depends on
the actions of individuals, but an entire family either

[[Page 62137]]

counts toward the rate or does not. In the case of a two-parent family,
whether a family counts may depend on the actions of both parents.
Section 408(a)(7) limits the receipt of Federal TANF assistance to
60 months for any family, unless the family qualifies for a hardship
exception or disregard of a month of assistance. (In our discussion of
Sec. 274.1, we explain that months of receipt are disregarded when the
assistance was received either: (1) by a minor child who was not the
head of a household or married to the head of a household; or (2) while
an adult lived in Indian country or in an Alaska Native Village with 50
percent or greater unemployment.) We have received inquiries concerning
the effect of a time-limit exception or disregard on the participation
rates. In fact, the time limit does not have a bearing on the
calculation of the participation rate. All families must be included in
the participation rate, unless they have been removed from the rate for
one of the two work-related exemptions (i.e., the family is subject to
a penalty but has not been sanctioned for more than three of the last
12 months, or the parent is a single custodial parent of a child under
one year of age and the State has opted to remove the family from the
rate).
Does a State include Tribal families in calculating these rates?
(Sec. 271.25)
States have the option of including in the participation rates
families in the State that are receiving assistance under an approved
Tribal family assistance plan or under a tribal work program. If the
State opts to include such families, they must be included in the
denominator, as well as the numerator where appropriate. We are
particularly interested in receiving comments relating to the
implementation of this option, such as Tribal reporting of
participation information to the State.
Subpart C--Work Activities and How To Count Them
What are ``work activities?'' (Sec. 271.30)
Section 407(d) specifies the twelve work, training, and education
activities in which individuals may participate in order to be
``engaged in work'' for the purpose of counting toward the work
participation rate requirements. Congress did not define these
activities further. Some have commonly understood meanings from their
use over time or from operational definitions adopted by prior
employment and training programs. But several of the permissible
activities, such as ``vocational educational training'' and ``job
readiness assistance,'' do not have commonly understood meanings and
are subject to interpretation. Because these terms lack a common
definition or understanding, we began receiving questions soon after
the enactment of PRWORA about whether we would define them in the
rules.
To address this problem, we first examined legislative intent. In
enacting TANF, Congress wanted to give States significant flexibility
in administering TANF and limit Federal authority to regulate. At the
same time, Congress wanted to create a work-focused program of time-
limited assistance. In addition, it established significant data
reporting requirements for States, including information about the
activities in which individuals participate. As discussed below, these
three purposes do not clearly point in the direction of more or less
definition. Thus, the statute itself did not clearly resolve the
matter.
Secondly, we engaged in wide and extensive consultation with a
variety of groups to determine what others thought about the definition
issue. Most groups, particularly States and their organizational
representatives, overwhelmingly urged us not to define the work
activities further and recommended that definitions be left to States.
They suggested that we could use this preamble to underscore the
flexibility and latitude intended by the statute, especially in
vocational education. A few individuals asked whether a State would be
subject to a penalty if it did not define activities in a way we
thought appropriate. They suggested providing illustrative examples or
including guidance in the preamble on activities that could not count
as work. Several participants thought that we should offer general
guidance on the definition of activities to ensure uniform data
reporting across States.
Representatives of the education community and some from the labor
community expressed concerns about how work-focused activities will
affect programs that have been operating under the Job Opportunities
and Basic Skills Training (JOBS) program. They emphasized the positive
correlation between educational attainment and job acquisition and
advancement, as well as the importance of parental education levels and
involvement in the education of their children. They also expressed
concern that, without additional education and training, many families
will find it difficult to hold meaningful employment, much less to
advance. They wanted us to take this opportunity to define work
activities in ways that fostered education while promoting work.
In this regulation, we are proposing not to define the individual
work activities. In making our decision, we considered the following.
Congress did not define the terms and clearly gave States overall
flexibility to design their programs. Certainly, one element of that
flexibility could be to allow each State to define the work activities
in order to address its unique needs and circumstances.
We recognize that definitions of terms could help clarify the
parameters of a work-focused program design. For example, without
Federal definitions, States could conceivably include a range of
activities that may not enhance work skills or might not be considered
``work experience'' by potential employers. However, in light of the
five-year time limit, we expect that States will be very careful to
establish programs that do not work to prolong a family's use of
assistance.
After considering the extensive input we received, we think that
the goals and objectives of the legislation will be better served by
having each State define the work activities. We believe States will
use the flexibility of the statute to formulate a variety of reasonable
interpretations leading to greater innovation, experimentation, and
success in helping families become self-sufficient quickly.
Because the flexibility could also be used in ways that do not
further Congressional intent, we are requiring each State to provide us
with its definitions of work activities for both TANF and separate
State programs under the data collection requirements at Secs. 275.9
and 273.7. We are concerned that different TANF definitions could
affect the vulnerability of States to penalties for failure to meet the
participation rate. This data collection will help us determine whether
this is in fact a serious problem; to the extent possible, we want to
ensure an equitable and level playing field for the States. Over the
next several years, we will carefully assess the types of programs and
activities States develop and will actively publicize and share the
results of our findings. If necessary at some time in the future, we
will initiate further regulatory action.
Before leaving the subject of work activities and program design,
we would like to remind States about some key research findings from
prior welfare-to-work programs. According to the Manpower Demonstration
Research Corporation's publication, Work First:

The most successful work first programs have shared some
characteristics: a mixed

[[Page 62138]]

strategy including job search, education and training, and other
activities and services; an emphasis on employment in all
activities; a strong, consistent message; a commitment of adequate
resources to serve the full mandatory population; enforcement of
participation requirements; and a cost-conscious management style.

While the most successful programs consistently and strongly
emphasize work, the actual program designs recognize and address the
critical role education plays in preparing adults for work. As more and
more recipients engage in work, State caseloads may reflect higher
proportions of the educationally disadvantaged. In combination with
other work activities, education may become more important in improving
basic communication, analytical and work-readiness skills of
recipients. Thus, States may need to integrate adult basic skills,
secondary education, and language training within high-quality
vocational education programs. Such program designs encourage
recipients to continue acquiring necessary educational skills and
foster programs that prepare recipients for higher-skill, higher-wage
jobs.
In his most recent ``State of the Union'' address, President
Clinton identified education as his number one priority. He Issued a
call to action for American education based on principles necessary to
prepare people for the 21st century. One principle was to make sure
that learning is available for a lifetime.
We encourage States to adopt program designs that take advantage of
existing educational opportunities. States may use the statutory
flexibility to design programs that promote educational principles by:
Actively encouraging adults and children to finish high
school or its equivalent;
Expecting family members to attain basic levels of
literacy and to supplement their education in order to enhance
employment opportunities;
Encouraging family literacy; and
Promoting community-based work-related vocational
education classes, created in collaboration with employers.
States could also make it easier for individuals to combine school
and work. For example, they could develop on-campus community work
experience program positions, where child care is also available. They
could also encourage schools to use work-study funds for students on
welfare and then count the hours worked in those programs toward work
requirements.
While we have not regulated the definition of work activities, we
want to ensure that recipients and children both experience positive
outcomes. This is a particularly significant issue when child care is
the work activity. For this to happen, child care arrangements should
be well developed, implemented and supported.
Research has found that quality child care is critical to the
healthy development of children and that providers who choose to care
for children create more nurturing environments than those who feel
they have no choice and are providing care only out of necessity. Thus,
States should assess whether recipients have an interest in providing
child care before assigning them to this activity.
In addition, States should provide training, supervision and other
supports to enhance caregiving skills if they wish recipients to attain
self-sufficiency. Such supports would assist the development of both
the caregivers and the children in care.
A State that assesses the individual's commitment to child care and
provides opportunities for training in health and safety (e.g., first
aid and CPR), nutrition, and child development, should see successful
outcomes for both the adults and children in care.
Finally, the stability of child care arrangements affects outcomes
for both parents and the children in care. When parents feel
comfortable with their child care arrangements, their own participation
in the work force becomes more stable. Stability fosters emotional
security for children. Thus, stability should be one of the factors
States take into account when assigning participants to child care as a
work activity.
How many hours must an individual participate to count in the numerator
of the overall rate? (Sec. 271.31)
Section 407(c) specifies the minimum hours an individual must
participate to count in the State's participation rate calculation.
There are two related requirements. First, there is a minimum average
number of hours per week for which a recipient must be engaged in work
activities. The average weekly hours are reflected in the following
table:

------------------------------------------------------------------------
All families
-------------------------
and the
If the fiscal year is: Then the average
participation weekly
rate is: hours of
(percent) work are:
------------------------------------------------------------------------
1997.......................................... 25 20
1998.......................................... 30 20
1999.......................................... 35 25
2000.......................................... 40 30
2001.......................................... 45 30
2002.......................................... 50 30
------------------------------------------------------------------------

Second, the law requires that at least an average of 20 hours per
week of the minimum average must be attributable to certain specific
activities. These activities are:
Unsubsidized employment;
Subsidized private sector employment;
Subsidized public sector employment;
Work experience;
On-the-job training;
Job search and job readiness assistance for no more than
four consecutive weeks and up to six weeks total in a year;
Community service programs;
Vocational educational training not to exceed 12 months;
Provision of child care services to an individual who is
participating in a community service program.

Note: The limitation that at least 20 hours come from certain
activities does not apply to teen heads of households; however,
there are other limitations related to teen heads of households.
Please refer to Sec. 271.33 below.

After an individual meets the basic level of participation, the
following activities may count toward the total work requirement hours
of work:
Job skills training directly related to employment;
Education directly related to employment for those without
a high school diploma or equivalent;
Satisfactory attendance at a secondary school or GED
course for those without a high school diploma or equivalent.
In our consultations, several people asked whether a State may
average the hours of participation of different recipients to reach the
minimum average hours required by the work participation rate, as they
could in the JOBS program. PRWORA does not permit combining and
averaging the hours of work of different individuals. However, we have
clarified in the rules that a State may average an individual's weekly
work hours over the month to reach the minimum average number of hours
per week that the individual must engage in work.
Our consultations uniformly suggested that we did not need to
provide any further regulatory guidance or clarification in this area.
Thus, in the

[[Page 62139]]

regulatory text, we have paraphrased the statute in simple,
understandable terms.
How many hours must an individual participate to count in the numerator
of the two-parent rate? (Sec. 271.32)
For two-parent families, section 407(c) specifies that the parents
must be participating in work activities for a total of at least 35
hours per week and that a specified number of hours be attributable to
specific work activities. A State may have one parent participate for
all 35 hours, or both parents may share in the work activities. If the
family receives federally-funded child care assistance and an adult in
the family is not disabled or caring for a severely disabled child,
then the parents must be participating for a total of at least 55 hours
per week. As before, a specified number of hours must be attributable
to certain activities (listed below). We summarize the requirements for
two-parent families in the table below:

------------------------------------------------------------------------
Two-parent families
---------------------------
and the
weekly
hours of
If the fiscal year is: then the work
participation (without/
rate is: with
(percent) federal
child care)
are:
------------------------------------------------------------------------
1997........................................ 75 35/55
1998........................................ 75 35/55
1999........................................ 90 35/55
2000........................................ 90 35/55
2001........................................ 90 35/55
2002........................................ 90 35/55
------------------------------------------------------------------------

In the first situation (where the weekly total must be at least 35
hours), at least 30 hours must be attributable to the same specific
activities as in the overall rate. In the second situation (where the
weekly total must be at least 55 hours), 50 hours must be attributable
to these activities. Again, these are:
Unsubsidized employment;
Subsidized private sector employment;
Subsidized public sector employment;
Work experience;
On-the-job training;
Job search and job readiness assistance for no more than
four consecutive weeks and up to six weeks total in a year;
Community service programs;
Vocational educational training (for not more than 12
months);
The provision of child care services to an individual who
is participating in a community service program.
Therefore, no more than five of the appropriate minimum hours may
be attributable to education related to employment, high school (or
equivalent), or job skills training activities.
During our consultations, many thought it was unclear whether the
35-hour requirement is a minimum for each week or whether it is a
minimum weekly average, as is the case in the overall rate. For
example, if a parent participated 40 hours one week and 30 hours the
next, the question arises whether (s)he would meet the minimum
requirement for both weeks. To provide maximum flexibility for States
to meet the program goals, we have clarified in the proposed rule that,
as long as the parents' average total hours equal at least 35 hours per
week, the individual meets the participation requirement.
Other than this clarification, we have mirrored the statute in
simple, understandable terms.
What are the special requirements concerning educational activities in
determining monthly participation rates? (Sec. 271.33)
Section 407(c)(2)(C) provides that a teen who is married or the
single head-of-household is deemed to be engaged in work for a month if
(s)he maintains satisfactory attendance at a secondary school or the
equivalent or participates in education directly related to employment
for an average of at least 20 hours per week. Since we have heard few
comments about this provision, our proposed rule paraphrases the
statutory language.
To reinforce the emphasis on work, section 407 limits educational
activities in two ways:
(1) An individual's participation in vocational educational
training may count for participation rate purposes for a maximum of 12
months; and
(2) For each participation rate, not more than 30 percent of
individuals determined to be engaged in work for a month may count by
reason of participation in vocational educational training or, for
teens who are married or single heads of households, either by reason
of maintaining satisfactory attendance at secondary school (or the
equivalent) or participating in education directly related to
employment. Teen parents are only included in the 30 percent limitation
in fiscal year 2000 and thereafter.
When PRWORA was enacted, there was substantial controversy about
precisely how the second limitation would apply. However, Pub. L. 105-
33 modified this provision, making the limitation much clearer. The
description above and the regulation at Sec. 271.33 reflect the new
provision, as amended by Pub. L. 105-33.
Are there any limitations in counting job search and job readiness
assistance toward the participation rates? (Sec. 271.34)
Section 407(c)(2)(A)(i) limits job search and job readiness
assistance in several ways.
First, an individual generally may not be counted as engaged in
work by virtue of participation in job search and job readiness
assistance for more than six weeks. No more than four of these weeks
may be consecutive. During our consultations, we were asked whether
these limitations apply for the lifetime of the individual, per spell
of assistance, or per fiscal year.
Many people recommended treating it as a fiscal-year limit for two
policy reasons. First, since the participation rate itself is tied to
the fiscal year, it makes sense to have the limitation apply to the
same time frame. Second, a different policy could force States to place
individuals in other, less appropriate activities just to meet the
participation rate. Moreover, research indicates that job search
activities are an instrumental component in effective work program
designs.
The statutory language supports the fiscal-year interpretation. The
job search language at 407(c)(2)(A)(i) limiting the weeks of
participation states that the limit is ``notwithstanding paragraph
(1).'' Paragraph (1) refers to the determination of whether a recipient
is engaged in work for a month ``in a fiscal year.'' Thus the reference
to paragraph (1) puts the job search limitation in the context of a
calculating whether an individual is engaged in work in the fiscal
year. Based on these considerations, we have clarified in the proposed
rules that the six-week limitation applies to each fiscal year.
The legislation and our proposed rules allow the six-week limit on
job search and job readiness assistance to extend to 12 weeks if the
unemployment rate of a State exceeds the national unemployment rate by
at least 50 percent, or if the State could qualify as a needy State for
the Contingency Fund.
Finally, our rules paraphrase the statute (at section
407(c)(2)(A)(ii)) in allowing a State to count three or four days of
job search and job readiness assistance during a week as a full week of
participation on one occasion for the individual.
Are there any special work provisions for single custodial parents?
(Sec. 271.35)
Section 407(c)(2)(B) provides a special participation rule for
single parents or caretakers with young children. A single

[[Page 62140]]

parent or caretaker with a child under the age of six will be deemed to
be engaged in work for a month if s(he) participates in work activities
for an average of at least 20 hours per week.
This provision has little relevance in FYs 1997 and 1998, when, for
the overall rate, the required number of hours for all individuals is
20 hours per week. But, when the required number of hours rises to 25
hours per week in FY 1999 and to 30 hours per week thereafter, this
provision allows single parents or caretakers to spend time with
younger children. It also may enable those with young children to
fulfill their work obligations while their children are in preschool
activities.
Because our consultations yielded few comments regarding this
provision, the proposed regulations paraphrase the statute.
Do welfare reform waivers affect what activities count as engaged in
work? (Sec. 271.36)
This section is simply a cross-reference to Sec. 271.60, which
addresses welfare reform demonstration waivers. We thought it would be
helpful to include it so that readers would know to refer to this
important exception to the work activities and hours specified in
subpart C.
Subpart D--Caseload Reduction Factor for Minimum Participation Rates
Is there a way for a State to reduce the work participation rates?
(Sec. 271.40)
Section 407(b)(3) requires us to issue regulations to reduce a
State's minimum participation rate based on reductions in its welfare
caseload. Under this provision, a State's participation rate for any
fiscal year will be reduced by the same number of percentage points as
the reduction in the State's average monthly caseload since 1995. The
reduction reflects the difference between the State's caseload under
the IV-A State plan in effect in FY 1995 and the average number of
cases receiving assistance, including assistance under a separate State
program, in the prior year.
The statute specifies that the reduction must not reflect any
caseload changes that resulted from either Federal requirements or
State changes in eligibility between the previous and current IV-A
programs.
States have an inherent interest in achieving caseload reductions;
this provision increases that interest. If a State were to reduce its
caseload, under the caseload reduction provision it could qualify for
lower participation rate requirements, reduce the risk of a penalty for
failing to meet the work participation rates, and increase its chance
of qualifying for a lower TANF MOE requirement. It could also free up
resources to serve recipients in alternative ways.
How will we determine the caseload reduction factor? (Sec. 271.41)
We found it difficult to develop an appropriate methodology that
could quantify different types of caseload reductions. In our extensive
consultations, we found no straightforward methodology for estimating
the reduction factor.
We considered and rejected two alternative approaches for
calculating the caseload reduction factor.
The first alternative was to use Medicaid records to estimate the
effect of eligibility changes. Initially, we thought this might be a
viable solution because, under section 114 of PRWORA, States continue
to determine Medicaid eligibility on the basis of the AFDC eligibility
rules in effect as of July, 1996. Thus, in theory, this provision might
give us a count of how many individuals would have been eligible for
benefits in the absence of Title IV-A eligibility changes. However,
this option proved not to be feasible because Medicaid data are not
collected in a manner that is useful for this purpose. In addition, the
statute allows States to modify AFDC rules for Medicaid eligibility
purposes; adjusting for such changes would greatly complicate any
estimations.
Our second alternative was to estimate the caseload reduction
factor for each State based on a computer model. The hope was that we
might estimate the caseload effects of State and Federal policy changes
using State-reported information on policy changes and Current
Population Survey household data. However, this option also was not
feasible due to the difficulty of developing computer models that could
accurately estimate the effects on State caseloads. In particular,
using Census data would make it difficult to estimate the effects of
certain policy changes in small States. Finally, we were concerned that
this approach would run counter to our intention of creating a simple,
understandable methodology.
Because of the difficulty we had in establishing a uniform
methodology, we are proposing to determine the appropriate caseload
reductions that apply to each State based on information and estimates
reported to us by the State. The statute specifies that the
responsibility for establishing the caseload reduction factors lies
with us. We will analyze the information and estimates provided,
determine whether we think they are reasonable (based in part on State-
by-State comparisons), and con

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-30195. Public record. Not legal advice.