Methodology for Determining Whether an Increase in a State's Child Poverty Rate Is the Result of the TANF Program

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 284

RIN 0970-AB65

Methodology for Determining Whether an Increase in a State's

Child Poverty Rate Is the Result of the TANF Program

AGENCY: Administration for Children and Families, HHS.

ACTION: Proposed rule.

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SUMMARY: The Administration for Children and Families is proposing a

methodology to determine the child poverty rate in each State. If a

State experiences an increase in its child poverty rate of 5 percent or

more as a result of its Temporary Assistance for Needy Families (TANF)

program, the State must submit and implement a corrective action plan.

This requirement is a part of the new welfare reform block grant

program enacted in 1996.

DATES: You must submit comments by November 23, 1998. We will not

consider comments received after this date in developing the final

rule.

ADDRESSES: You may mail or hand-deliver comments to the Administration

for Children and Families, Office of Planning, Research and Evaluation,

370 L'Enfant Promenade SW, 7th Floor West, Washington, DC 20447. You

may also transmit 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 the instructions

provided.

We will make all comments available for public inspection at the

Office of Planning, Research and Evaluation, 7th Floor West, 901 D

Street, SW, Washington, DC 20024, from Monday through Friday between

the hours of 9 a.m. and 4 p.m. (This is the street address as opposed

to the mailing address above.)

We will only accept written comments. In addition, all your

comments should:

Be specific;

Address only issues raised by the proposed rule;

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 individual comments. However, we will

review and consider all comments that are germane and received during

the comment period.

FOR FURTHER INFORMATION, CONTACT: Dennis Poe at 202-401-4053.

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:

Table of Contents

I. The Personal Responsibility and Work Opportunity Reconciliation

Act

II. The Child Poverty Rate Provision

A. Legislative History

B. Summary of the Statutory Provisions

III. Regulatory Framework

A. External Consultation

B. Related Regulations under Development

C. Regulatory Reform

IV. Discussion of the NPRM

A. Issues in the Development of the NPRM

B. Summary of the Provisions of the Proposed Rule

C. Section-By-Section Discussion

V. Regulatory Impact Analyses

A. Executive Order 12866

B. Regulatory Flexibility Analysis

C. Paperwork Reduction Act

D. Unfunded Mandates Reform Act of 1995

E. Congressional Review

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, ``Block Grants for

Temporary Assistance for Needy Families,'' (section 103, Pub. L. 104-

193) established a comprehensive welfare reform program designed to

change dramatically the nation's welfare system. The new program is

called Temporary Assistance for Needy Families, or TANF, in recognition

of its focus on time-limiting assistance and moving recipients into

work.

PRWORA repealed 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 repealed the related

programs known as the Job Opportunities and Basic Skills Training

(JOBS) program 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.

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.

This new legislation also gives States and 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, and it offers States and Tribes an opportunity to try new,

far-reaching ideas so they can respond more effectively to the needs of

families within their own unique environments.

II. The Child Poverty Rate Provision

A. Legislative History

One of the concerns of Congress in passing PRWORA was potential

harm to children that might result from the loss of Federal entitlement

to benefits or the unsuccessful efforts of their caretakers to achieve

self-sufficiency within the five-year time limit for receipt of

federally-funded TANF assistance.

To address this concern, Congress amended the Social Security Act

to add section 413(i) (42 USC 613(i)). This section requires each State

to submit an annual statement of the child poverty rate in the State

and a corrective action plan if the rate exceeds a certain threshold as

a result of the State's TANF program.

Section 413(i)(5) directs the Secretary to issue regulations

establishing a methodology for States to determine the child poverty

rate and sets out a non-exclusive list of factors the methodology must

take into account.

The Balanced Budget Act of 1997 amended section 413(i) to delay the

due date for the initial report on a State's child poverty rate from 90

days after enactment to May 31, 1998. It also modified the factors to

be used in the methodology by making the county-by-county estimates of

children in poverty, as determined by the Census Bureau, subject to the

availability of the data.

(Note: ACF issued a Program Instruction on May 29, 1998,

clarifying that we, not the State, will send each State the Census

Bureau estimate of the number of children in poverty and that the

State need not submit a statement of its child poverty rate to us by

May 31, 1998, as specified in the statute. We further explained that

we would be publishing an NPRM to propose a methodology for

determining whether an increase in the State's child poverty rate is

the result of the TANF program in the near future. See TANF-ACF-PI-

98-4.)

[[Page 50838]]

B. Summary of the Statutory Provisions

Section 413(i)(1) of the Social Security Act (the Act) requires the

chief executive officer of each State to submit annually to the

Secretary a statement of the child poverty rate in the State. The first

statement, due May 31, 1998, must report on the child poverty rate at

the time of enactment of PRWORA, or August 22, 1996.

Section 413(i)(2) specifies that, in subsequent years, if the child

poverty rate in a State increases by 5 percent or more from the

previous year as a result of the State's TANF program, the State shall

prepare and submit a corrective action plan to the Secretary.

Section 413(i)(3) provides that the corrective action plan shall

outline the manner in which the State will reduce the child poverty

rate in the State and include a description of the actions to be taken

by the State under the plan.

Section 413(i)(4) specifies that the State shall implement the

corrective action plan until the State determines that the child

poverty rate in the State is less than the lowest child poverty rate on

the basis of which the State was required to submit the corrective

action plan.

Section 413(i)(5) requires the Secretary to establish the

methodology by which a State would determine the child poverty rate and

specifies three factors that the Department must take into account in

developing the methodology: the number of children who receive free or

reduced-price lunches; the number of Food Stamp households; and, to the

extent available, the county-by-county estimates of children in poverty

as determined by the Census Bureau.

III. Regulatory Framework

A. External Consultation

In the spirit of both regulatory reform and PRWORA, we implemented

a broad and far-reaching consultation strategy prior to publication of

the NPRM for the TANF program. This proposed rule was published

November 20, 1997 (62 FR 62124). We continued our commitment to

external consultation in developing this NPRM.

We held two types of external consultations. First, we raised

issues related to this provision in the general TANF consultation

meetings with representatives of State and local government; non-

profit, advocacy, and community organizations; foundations; and others.

Second, we held consultations focused specifically on this provision

with State groups and technical, statistical, and policy experts. We

also spoke with representatives from the Federal statistical community,

including the U.S. Bureau of the Census; the Office of Management and

Budget; the U.S. Department of Agriculture for the Food Stamp program;

and numerous representatives from advocacy, public interest, and

research organizations that focus on child economic well-being.

The purpose of these discussions was to gain a variety of

informational perspectives about the potential benefits and pitfalls of

alternative regulatory approaches. We solicited comments, and we worked

to ensure that 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 issuing these regulations as a proposed rule. Thus, all

interested parties have the opportunity to voice their concerns and to

react to specific policy proposals. We will review comments we receive

during the comment period and will take them into consideration before

issuing a final rule.

B. Related Regulations under Development

We published the NPRM to address the work, accountability, and data

collection and reporting provisions of the new State TANF program in

the Federal Register on November 20, 1997 (62 FR 62124).

On March 2, 1998, we published in the Federal Register (63 FR

10264) the NPRM to address the provision in PRWORA entitled Bonus to

Reward Decrease in Illegitimacy which would reward decreases in out-of-

wedlock childbearing.

On July 22, 1998, we published an NPRM on the Tribal Work and TANF

Programs (63 FR 39366). Over the next several months, we expect to

issue an NPRM on high performance bonus awards and an interim final

rule on Welfare To Work data collection.

C. 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 prior

welfare regulations should notice that this package incorporates a

distinctly different, more readable style.

IV. Discussion of the NPRM

A. Issues in the Development of the NPRM

The percentage of children in poverty in the United States is a

frequently used indicator of child well-being and many, both within

Congress and without, are concerned about the impact of the TANF

program on children. The child poverty rate in the United States is

among the highest in the developed world.

The best source of data on child poverty is the Census Bureau.

Historically, the Census Bureau has been tracking family and individual

poverty rates in the United States for approximately three decades. In

1963-64, Mollie Orshansky of the Social Security Administration

developed a set of poverty thresholds for families of different sizes

based on the economy food plan (a minimum-cost diet developed by the

Department of Agriculture.) Orshansky's thresholds were adopted as a

quasi-official Federal definition of poverty in 1965 and as the Federal

Government's official statistical definition of poverty in 1969. (Since

1969, the thresholds have been updated for price changes, using the

Consumer Price Index.)

The most reliable source of data for calculating State level child

poverty is the Decennial Census. The Bureau of the Census produces an

annual series of national and State poverty rates during the

intercensus years based upon data from the March Current Population

Survey. Unfortunately, the small sample sizes for individual States

result in significant uncertainty in these estimates, making them

unsatisfactory for State reporting of child poverty.

The Census Bureau has a program to develop more reliable

intercensus estimates of child poverty at the State and local level.

This effort was given further impetus with the passage of the Improving

America's Schools Act of 1994, which required the Department of

Education to work with the National Academy of Sciences and the Bureau

of the Census to develop State and local estimates of children in

poverty, ages 5 through 17. With funding from DHHS, this work has been

expanded to include estimates for children in poverty, ages 0 through

4.

Based on our analysis of the statute and information on Census

Bureau data, Food Stamp data, and school lunch data, we identified

several general, data, and methodological issues. These issues are

discussed in greater detail below. Our consultations with external

groups were particularly helpful in clarifying

[[Page 50839]]

data issues and evaluating alternative approaches and options.

The general issues we identified included:

How should we use the three factors identified in the law

in developing State child poverty rates?

What additional factors, if any, should we use?

How should these factors be weighted?

What flexibility and options should a State have in

determining the child poverty rate for its State?

Some of the data and methodological issues included:

How should we account for limitations in Census Bureau

data, e.g., until recently, measuring only children ages 5-17 and

excluding certain sources of income such as taxes and in-kind

transfers?

What factors should we propose in order to identify the

effect of the TANF program on any increases in child poverty?

Other than Census Bureau data, what are the alternative

sources of data related to child poverty and how might they be used?

Given that some of the potential data sources have

confidence intervals around their estimates, what confidence interval

would be appropriate for each State's child poverty rate?

We discuss specific issues as follows

1. Measurement of Child Poverty and the Census Bureau Data

The Census Bureau develops estimates of child poverty, by State,

based on the Current Population Survey (CPS) and a sampling size of

approximately 55,000 households. The Bureau considers these State

estimates to be moderately reliable and releases three-year averages

for States, along with standard error rates, to reduce the chances that

these estimates will be misinterpreted. The most recent data available

on State child poverty estimates are for calendar year 1996.

In response to demand for sub-state data, the Census Bureau

recently launched a program called Small Area Income and Poverty

Estimates. It is a new program that will provide estimates of income

and poverty for States and counties between decennial censuses. In

January, 1998, the Bureau made available county income and poverty

estimates for 1993. It plans to provide estimates for years 1995

through 1998, and periodically thereafter. From a program perspective,

county-level data will be available only every other year, and the

available data will be at least two years old.

Many external consultants expressed concern about the limitations

in the Census Bureau child poverty data and its reliance on the

official definition of poverty, particularly the exclusion of important

types of income and the failure to deduct certain types of expenses

when determining family income. For example, in-kind assistance such as

housing assistance and Food Stamp benefits are not counted as income

even though such assistance is clearly available to meet basic needs.

Similarly, expenses such as work expenses and child support paid are

not available to meet such needs.

Initially, some external groups were also concerned about the lack

of Census Bureau poverty data on children 0 through 4 years, as child

poverty is more acute for children in this age group. Since DHHS is

funding the Census Bureau estimates for children in poverty for this

age group, this information will be incorporated into the child poverty

estimates we get from the Census Bureau.

We considered these concerns carefully in our development of this

NPRM. We believe that Congress, by including in the statute two non-

exclusive factors beyond the Census Bureau poverty measure, intended

that we develop a methodology that will take into account and adjust

for some of the limitations in the Census Bureau data.

However, we approached the drafting of this regulation with a

desire not to deviate too far from the official Census measure. The

official measure is the most widely-used measure of poverty, and

significant deviations from this measure could limit the credibility

and acceptance of estimates of child poverty rates developed for this

provision. As data collection capabilities improve, we believe it may

be possible to amend our proposed methodology to take advantage of such

improvements. We welcome public comments on these issues.

Also related to the Census Bureau measure of child poverty was the

recommendation by some external groups that our methodology focus on

more extreme poverty. That is, in addition to, or instead of,

considering the percent of children in families with incomes at or

below 100 percent of poverty, we should consider the percent of

children in families with incomes at or below a lower threshold, such

as 50 percent of poverty. Additional research and model development by

the Census Bureau would be necessary, however, before we would be able

to consider such an approach. The current Census Bureau model for

estimating State level child poverty exploits the strengths of

additional databases, such as IRS tax data and Food Stamp data, to

supplement the Current Population data. The value of these additional

data for estimating extreme poverty is unknown, but experts believe

that it would be less than the current model of 100 percent of the

poverty level. We welcome public comment about the desirability and

feasibility of pursuing this alternative. More information on the

Census methodology is available on the Internet at the Census Bureau's

poverty page.

2. Use of County-by-County Estimates of Children in Poverty in the

Methodology

The legislation requires us to use, to the extent available,

county-by-county estimates of children in poverty as determined by the

Census Bureau. However, section 413(i) requires States to report on

child poverty at the State level, and State-level estimates are more

relevant to the purpose of this provision. Furthermore, county-by-

county estimates are only available biennially.

Most external consultants recommended that we use the State

estimates of children in poverty as determined by the Census Bureau,

rather than the specific county-by-county estimates. The State

estimates represent the first step in calculating the county by county

estimates and reflect the same data and factors as the county-by-county

estimates; the data are also compatible because the Census Bureau

reconciles its county-by-county and State estimates so that the total

is the same for each State; i.e., the county-by-county estimates are

adjusted so that the total for all the counties in a State is the same

as in the State estimates calculated in the first step. We believe this

approach is consistent with Congressional expectations and represents

the most prudent use of the Census Bureau county-by-county estimating

procedure.

3. Use of Food Stamp Data in the Methodology

The legislation requires us to take into account the number of Food

Stamp households. Nationally, trends in Food Stamp caseloads generally

track closely with trends in poverty. Further, Food Stamp data are

available on a more timely basis than estimates based on the Census

methodology.

However, nearly 40 percent of Food Stamp households contain no

children.

After considering the focus of the law in relation to child poverty

and reflecting on the discussion with external consultants, we

concluded that we should propose the use of data on

[[Page 50840]]

Food Stamp households with children rather than the total number of

Food Stamp households.

4. Use of Free and Reduced-Price School Lunch Data in the Methodology

The third factor specified in the Act is ``the number of children

receiving free or reduced-price lunches.'' Over the past several years

both the proportion of lunches served free or at a reduced price and

the proportion of student enrollment approved for free or reduced-price

meals have risen steadily. During the same time period, poverty rates

have fallen. There are several likely reasons that free and reduced-

price school lunch trends have not tracked poverty rates. Free and

reduced-price lunch benefits are available to children in families with

incomes up to 185 percent of the poverty level. Income trends in this

eligible population will not necessarily mirror trends in the poverty

population. In addition, changes in policy and procedures in the school

lunch program during the past several years have likely influenced the

rates at which children are certified for and/or participate in the

program.

Given the lack of correspondence between school lunch data and

poverty trends in recent years, these data received the least weight in

our methodology. We have not required that States submit it, but we

propose that States may provide it, at their option.

We are proposing that, if a State chooses to provide school lunch

data, it must report the proportion of students certified for free and

reduced-price meals. The Department of Agriculture indicates that

changes in certification data primarily reflect changes in eligibility

rates and in the propensity to apply for the program. Meal counts also

reflect these two factors but are further affected by changes in the

propensity to actually obtain a school meal on a given day such as

school attendance rates or the number of serving days in a school year.

Therefore, we believe that data on the proportion of students certified

for free or reduced-price school lunches represent more useful data

than the number of meals served.

5. Relative Importance of Various Factors in the Methodology

We did not give equal consideration to the three statutory factors.

Rather, we give the greatest consideration to the Census Bureau

methodology because it provides the most objective estimates of child

poverty rates by States. However, given the limitations in the Census

Bureau data, we propose that States provide supplemental information,

in certain circumstances, that may adjust for these limitations, i.e.,

if the estimate of the State's child poverty rate increased five

percent or more over the two year period.

6. Clarification of the Term ``Five Percent Increase''

The statute speaks to an increase in the child poverty rate of 5

percent. We want to clarify that a 5 percent increase does not mean a 5

percentage point increase in poverty. Rather, it means that the most

recent child poverty rate is at least 5 percent higher than (i.e., 1.05

times) the previous year's rate. For example, an increase of 5 percent

would mean an increase in the poverty rate of 20 percent to 21 percent.

We are taking this interpretation because it is the clearest

reading of the statute and the one interpretation that will give the

statute meaning; that is, it would be very unlikely that we would ever

see an increase of 5 percentage points in a State's child poverty rate

from one year to the next. In addition, we believe Congress would want

to know about and have States take corrective action long before that

occurred.

B. Summary of the Provisions of the Proposed Rule

Section 413(i) of the Act requires the Secretary to establish a

methodology by which each State would determine the child poverty rate

in the State. It specifies three factors that we must take into account

in developing the methodology: The number of Food Stamp households; the

number of children who receive free or reduced-price lunches; and, to

the extent available, county-by-county estimates of children in poverty

as determined by the Census Bureau.

Section 413(i) also specifies a deadline which requires the chief

executive officer of each State to submit to DHHS by May 31, 1998, and

annually thereafter, a statement of the State's child poverty rate. As

noted earlier, we issued a Program Instruction to States explaining

that we would provide to each State the Census Bureau's estimate of

child poverty in each State as a first step in a proposed methodology

and that no action by the State was required in relation to this

deadline. (See TANF-ACF-PI-98-4.)

We are proposing a sequential methodology to implement the statute.

There are five major steps in the proposed methodology. Not all States

or Territories will need to participate in all steps. The methodology

for the Territories is similar but includes some necessary

modifications.

Step 1

Annually, when we receive the data from the Census Bureau,

we will provide each State with an estimate of the number and

percentage of children living at or below 100 percent of the Federal

poverty threshold within the State. This estimate will be for the

calendar year that is two years prior to the current calendar year,

e.g., in 1998, we will provide an estimate for calendar year 1996. The

estimates we provide will be the Census Bureau estimates incorporating

county level estimates of poverty.

In 1999, and annually thereafter, we will determine for

each State, at the 80 percent confidence level, the change in the

percent of children in poverty for the most recent two year period for

which the data are available, e.g., in 1999, we will provide data

comparing calendar years 1996 and 1997; and provide this information to

the State.

Step 2

If the child poverty rate in a State did not increase by

five percent or more, we will conclude that the State has met the

requirements of section 413(i) of the Act, and the State will not be

required to submit supplemental information.

If the child poverty rate in a State increased by 5

percent or more, we propose to require that the State provide

supplemental information to adjust, explain, or account for this

increase. We propose that the State, within 60 days--

1--Must provide data on the average monthly number of households

with children that receive Food Stamp benefits for each of the two most

recent calendar years for which data are available. (We expect that the

data submitted in 1999 will cover calendar years 1997 and 1998.);

2--Must provide data on any changes in legislation, policy, or

program procedures that have had a substantial impact on the number of

households with children receiving Food Stamp benefits during the same

two year period, including data on sub-populations affected; and

3--May provide, at State option, other information such as the

proportion of students certified for free or reduced-price school

lunches or estimates of child poverty derived from an independent

source. These data may cover any pertinent time period, e.g., the two-

year period for which the child poverty rate was determined or the most

recent two year period for which data are available. An independent

source may include studies by research or advocacy organizations,

universities, or independent evaluation and analysis

[[Page 50841]]

offices associated with State executive branch agencies or State

legislatures.

If the Food Stamp data are based on population counts,

States may simply report the average monthly number for each of the two

calendar years and the simple difference between them. If the Food

Stamp data are based on monthly samples, States must include the

calculated standard errors of each annual estimate.

Note: Alternatively, if a State chooses to accept the increase

in child poverty as indicated by the Census data, it may skip steps

two and three and move directly to step four--the assessment of the

impact of the State's TANF program on child poverty.

Step 3

We will review the Food Stamp and other data provided by

the State, including data on substantive legislative, policy, and

program changes affecting the number of households with children

receiving Food Stamp benefits. If we determine that these data indicate

a subsequent improvement, commensurate with the poverty increase in the

Census data, it would not be necessary for the State to proceed to Step

4 because the more recent data indicate child poverty is already

improving.

Step 4

If we determine that the Food Stamp and other data

provided by the State do not indicate a subsequent commensurate

decrease in child poverty as addressed in Step 3, we propose to notify

the State that it must, within 60 days, provide an assessment (and the

information and evidence on which the assessment was based) of the

impact of the State's TANF program on the child poverty rate. In this

instance, we propose to give the States and Territories broad latitude

in the information they provide.

Step 5

We will review the information provided by the State,

along with other data available such as the State's TANF plan and

eligibility criteria, other supportive services and assistance

programs, and the State's economic circumstances. If we determine that

the increase in the child poverty rate is the result of the State's

TANF program, we will notify the State that it is required to submit a

corrective action plan within 90 days.

To the extent that data are available and the procedures

applicable, the Territories are subject to the same methodology as

described for the States. One modification, however, is necessary.

Since the Census Bureau does not estimate a child poverty rate for the

Territories, ACF will compute an estimate of the percentage of children

in poverty and the estimated child poverty rate for the Territory,

based on information submitted by the Territory. Subsequent procedural

steps are the same as for States, i.e., as applicable, we will review

supplemental data to determine whether the child poverty rate increased

by 5 percent or more; review the Territory's assessment of whether the

increase in the child poverty rate was a result of the TANF program;

and require the development of a corrective action plan, as necessary.

Note: We call to the Territories' attention that this NPRM

proposes to require the retention and availability of 1996 calendar

year data on households with children that received Food Stamp

benefits.

We believe this approach will begin with and use the most

reliable, objective data on child poverty available for all States

and Territories; help assure that the child poverty rate for each

jurisdiction accurately reflects its economic and other

circumstances; and require that States and Territories provide only

those data necessary, readily available, and most appropriately

provided by them. States have more timely access to Food Stamp and

other data to supplement the Census Bureau estimates, and both

States and Territories are in a better position to explain any

relationship to the TANF program. We anticipate, however, that only

a small number of States and Territories will need to provide these

data and an even smaller number will be required to submit a

corrective action plan.

C. Section-By-Section Discussion

What Does This Part Cover? (Sec. 284.10)

This section of the proposed rule provides a summary of 45 CFR part

284. Part 284 proposes a methodology for determining State child

poverty rates, including a determination of whether the child poverty

rate increased as a result of the TANF program. It also covers the

content and duration of the corrective action plan.

In Sec. 284.10(b), we indicate that any Territory that has never

operated a TANF program would not be subject to these rules. We

included this provision to address American Samoa's situation. American

Samoa did not operate an AFDC program, and it has not yet elected to

operate a TANF program. Unless its status changes, we would exempt

American Samoa from the requirements of this part.

What Definitions Apply to This Part? (Sec. 284.11)

This section proposes definitions of the terms used in part 284. It

includes key technical terms used in the methodology for clarity.

The statute requires States to submit a ``statement of the child

poverty rate'' using various factors, including ``county-by-county

estimates of children in poverty as determined by the Census Bureau.''

These two references to the term ``poverty'' need further

clarification. We refer to estimates provided by the Census Bureau of

the percentage of children in a State in families with incomes below

100% of the poverty threshold as ``children in poverty.'' The term

``Census methodology'' means the methods developed by the Census Bureau

for estimating the number and percentage of children in poverty in each

State.

We use the term ``child poverty rate'' when referring to the

sequential methodology proposed in this part for determining whether a

State will be required to submit a corrective action plan.

We propose to define ``date of enactment'' to mean calendar year

1996. Although the statute requires the State to provide to DHHS a

statement of the child poverty rate in the State as of the date of

enactment of PRWORA (August 22 1996), these data are available only on

a calendar year basis. We believe that using the available calendar

year data is the most feasible way to determine child poverty rates and

consider the impact of the TANF program on these rates.

Although section 419(5) of the Act, as amended, defines ``State''

as the 50 States of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, the United States Virgin Islands, Guam and

American Samoa, we have proposed, for this part, to define

``Territory'' in a separate definition to mean the Commonwealth of

Puerto Rico, the United States Virgin Islands, Guam, and American

Samoa.

We have done this for clarity as some data limitations and some

procedural steps in the proposed methodology do not apply to the

Territories. We have outlined the steps for determining the child

poverty rate for States in Secs. 284.20 through 284.30 and specified

how the process differs for Territories in Sec. 284.35.

You will note that we use the term ``we'' throughout the regulation

and preamble. We have defined ``We (and any other first person plural

pronouns)'' to mean the Secretary of the Department of Health and Human

Services or any of the following individuals or organizations acting in

an official capacity on the Secretary's behalf: the Assistant Secretary

for Children and Families, the Regional Administrators for Children and

Families, the Department of Health and Human

[[Page 50842]]

Services, and the Administration for Children and Families.

Who Must Submit Information to ACF to Carry out the Requirements of

this Part? (Sec. 285.15)

Section 413(i)(1) of the Act specifies that the chief executive

officer of the State (or Territory) shall submit to the Secretary the

annual statement of the State's (Territory's) child poverty rate. Other

subsections require action by the ``State.''

Given the widespread concern for the needs and circumstances of

children, we believe it is appropriate that the chief executive officer

of a State (Territory) carry out these responsibilities. We have

proposed in Sec. 284.15 that the chief executive officer, or his or her

designee, submit the information required by this part. For editorial

simplicity, however, we have used the term ``State'' or ``Territory''

throughout part 284 rather than the more cumbersome term ``chief

executive officer of the State.''

What information will we provide to each State to estimate the number

of children in poverty? (Sec. 284.20)

Annually, we propose to provide each State with an estimate of the

number and percentage of children in poverty within the State. The

estimates we provide will be those determined by the Census Bureau and

will incorporate calculations by the Census Bureau using the

methodology it has developed for small-area (e.g., county-level)

estimates of poverty.

The first annual estimate will be an estimate of the number and

percentage of children in poverty for calendar year 1996. Subsequent

year estimates will also be for the calendar year two years preceding,

e.g., the second annual estimate will be for calendar year 1997. The

two-year time differential reflects the amount of time it takes for the

Census Bureau to collect and analyze the data sources used in its

model.

Although the law states that ``the chief executive officer of each

State shall submit to the Secretary a statement of the child poverty

rate in the State* * *,'' we are proposing to provide this information

to the States in order to reduce burden on States and others. Because

the Census Bureau data are collected at the Federal level, we are in a

position to obtain and distribute these data more efficiently to

States. (It did not seem reasonable to require each State to contact

the Census Bureau for child poverty information and forward it back to

us.)

We have not referenced or incorporated the May 31st date specified

in the statute in this NPRM. We will, however, send to the States the

annual child poverty estimates as soon as they are available from the

Census Bureau.

In Sec. 284.20(b), we propose that annually we will determine for

each State, at the 80 percent confidence level, the change in the

percentage of children in poverty for the applicable two year period

and provide each State with its percentage of change. (The 1999

percentage change will cover the change between calendar years 1996 and

1997.)

We are proposing the use of the 80 percent confidence level

because, while the Census methodology will provide us a point estimate

of the poverty rate, there is a high probability that the actual

poverty rate will not be exactly the same as the point estimate.

Rather, the actual poverty rate likely will lie somewhere near the

estimate. Statistical procedures will allow us to determine the range

around which the actual estimate lies, with varying degrees of

confidence.

This range is important because year-to-year changes in State-level

child poverty rates may simply reflect points within the confidence

interval. The estimate may indicate that the child poverty rate has

changed when in fact it has not.

We will require a particular level of statistical certainty in

determining a State's poverty rate in order to avoid erroneously

concluding that a State's poverty rate has increased by 5 percent or

more.

We propose to require States to submit additional data only when we

conclude, with 80 percent confidence, that the rate has increased by 5

percent or more. While an 80 percent confidence level is not considered

to be a high level of confidence in a scientific context of hypothesis

testing, a four-fifths likelihood is certainly high enough in a

practical context to justify concern that the child poverty rate may

have in fact increased sufficiently to warrant attention.

More importantly, we believe the 80 percent confidence level offers

greater protection to children. We have proposed the 80 percent

confidence level (instead of the commonly used 95 percent confidence

level) in order to ascertain more sensitively any percentage change in

the child poverty rate. The choice of a particular confidence level

affects the quality of statistical information.

For example, the risk of choosing a narrower confidence band is

that it may provide a false indication of change in the poverty rate

when no significant change has occurred. However, the consequences of

choosing a higher percent confidence level are far more serious, in a

programmatic sense, as they may lead us to conclude that the child

poverty rate has not changed significantly when, in fact, it has.

In determining the 80 percent confidence interval, we will use a

one-tailed (rather than two-tailed) statistical test because we want to

ensure that we have determined the point estimate of any increase in

the child poverty rate with 80 percent certainty. We would use a two-

tailed statistical test only if we wanted to determine the point

estimates of both increases and decreases in the child poverty rate

with 80 percent probability. Therefore, the one-tailed test is the

appropriate test to use to ensure that the real increase is at least 5

percent. (A test is one-tailed when the alternative hypothesis states a

direction such as the mean (average) increase in the child poverty rate

for a given year is GREATER THAN zero.)

The Census Bureau may update the assumptions and features of its

methodology occasionally. Further, estimates may need to be refined

after initial publication. Should the Census Bureau alter its

methodology or subsequently update previously published estimates, we

will base the estimates of change in poverty on the most updated

methods and estimates. If, for example, the Census Bureau changes a

model assumption from one reporting period to the next, we will re-

estimate the number of children in poverty for that year. This re-

estimate will be solely for the purpose of calculating the change; it

will help ensure that any estimated changes do not result from changes

in the methodology.

What Information Must the State Provide if the Estimate of a State's

Child Poverty Rate Has Increased Five Percent or More Over the Two Year

Period? (Sec. 284.25)

If we have determined, with 80 percent confidence, that the child

poverty rate in a State did increase by 5 percent or more, we propose

in paragraph (b) to require that the State must submit data within 60

days on Food Stamp participation. The State may also submit other

information.

We propose, in paragraph (c), to require that the State provide

data on the average monthly number of households with children

receiving Food Stamp benefits for each of the two most recent calendar

years for which data are available. For example, we expect that the

Food Stamp data submitted in 1999 will cover calendar years 1997 and

1998.

We also propose that the State, at its option, may submit other

information in

[[Page 50843]]

relation to the child poverty rate for the same most recent two year

period. This information could include changes in the proportion of

students certified for free or reduced-price school lunches or

estimates of child poverty derived from an independent source. As noted

earlier, studies of child poverty are being conducted by a variety of

entities including, research and advocacy organizations, universities,

and evaluation and analysis offices associated with State executive

branch agencies or State legislatures.

We propose, in paragraphs (c)(1) and (c)(2) that States submitting

the average monthly number of Food Stamp households with children under

age 18 may elect to calculate such number based upon either:

Population counts (e.g., from its administrative data

system); or

Monthly samples of Food Stamp recipient households based

on generally accepted scientific sampling methods, i.e., each recipient

household has a known, non-zero probability of being drawn into the

sample.

A State submitting the average monthly number of Food Stamp

recipient households with children under 18 based upon population data

for each month would then calculate the simple difference between

yearly averages.

If a State chooses to use monthly samples of its Food Stamp

recipient caseload for each of the twelve months to develop an estimate

of the average monthly number of Food Stamp households with children

under 18, such State would be required to submit:

The estimated average monthly number of households; and

Estimated sampling errors (standard errors).

We expect that a State using the sampling method will have its

sampling plan available for review and submission as needed. A State

using its Food Stamp Quality Control sampling plan will not be asked to

submit its plan.

In paragraph (c)(3), we propose that the State must submit

information on any changes in legislation, policy, or program

procedures that have had, during the same period for which Food Stamp

data are provided, a substantial impact on the number of households

with children receiving Food Stamp benefits. Specifically, the State

must submit data relative to determining how such changes affected the

Food Stamp population as a whole or any sub-population.

We will review the Food Stamp information provided by the State

under paragraph (c). The purpose of our review will be to determine

whether the average monthly number of households with children

receiving Food Stamps indicates a subsequent improvement commensurate

with the poverty increase in the Census data, taking into account any

additional information provided by the State.

If we determine that the number of households with children

receiving Food Stamp benefits did not indicate an improvement

commensurate with the poverty increase in the Census data, we will

review any additional data the State has provided. Unless we determine

that this additional data provides sufficient documentation that either

child poverty did not go up in the State or that there was a subsequent

improvement, commensurate with the poverty increase in the Census data,

we will notify the State that information on the impact of TANF on the

child poverty rate must be submitted.

How Will We Determine the Impact of TANF on the Increase in the State

Child Poverty Rate? (Sec. 284.30)

Section 413(i) of the Act requires States to submit corrective

action plans only if the State's child poverty rate has increased by 5

percent or more as a result of TANF.

In Sec. 284.30, we propose that those States identified, based on

the determination made in Sec. 284.25, must make an assessment of the

impact of the TANF program on its child poverty rate. The State's

assessment, and the information on which the assessment was based, must

be provided to us within 60 days.

The State's assessment of the impact of the TANF program will be

based on the same two-year time period used to determine State's child

poverty rate. For example, the poverty rate for 1996-1997 will be

compared to the TANF (or prior program) in effect for the same years.

Paragraph (a) of this section includes examples of information or

evidence that a State may submit as a part of its assessment. States

may identify and provide other pertinent information as well.

In assessing the impact of the TANF program, the State, for

example, might review its TANF program and policies, the percentage of

eligible persons receiving TANF, the TANF application disapproval

rates, and numbers of cases sanctioned or closed; and the economic and

other circumstances in the State, e.g., factory and base closings, rise

in unemployment rates; and participation rates of other assistance

programs. A State should review the evidence to form a broad picture of

contributing circumstances and not consider factors in isolation. An

increase in State unemployment, for example, cannot by itself be put

forward to account for the increase in the child poverty rate if

restrictive TANF eligibility policies are also in place.

During the consultation process, some experts expressed doubt that

a single methodology could be used by all States to statistically

attribute changes in child poverty rates. Many factors contribute to

such changes in ways that may vary from State to State and from year to

year.

It is the Department's responsibility to determine whether a State

or Territory's child poverty rate has increased as a result of the TANF

program in the State or Territory, and this is a responsibility we take

seriously. We will thoroughly examine the assessment provided by the

State as well as a range of other available information. At the same

time, however, we propose to give States flexibility in reviewing their

programs, policies, and economic and other circumstances; assessing the

effect of the TANF program on child poverty rates; and providing

evidence of alternative factors they believe may have contributed to

the increase.

We expect that a State or Territory will also take this

responsibility seriously and will provide an assessment in sufficient

detail to enable us to make our determination. However, if a State

submits only a conclusory statement--with no information, evidence, or

assessment--we will conclude that a corrective action plan is required.

Paragraph (b) of this section proposes that we will review the

information provided by the State, in addition to other available

information (such as the State's TANF plan and eligibility criteria,

other supportive service or assistance plans, and a State's economic

circumstances); make a determination; and notify the State if a

corrective action plan is required.

How Will the Methodology for the Territories Differ? (Sec. 284.35)

Not all of the steps proposed for States in the previous sections

are applicable to Territories. For example, ``estimates of children in

poverty as determined by the Census Bureau'' are calculated only for

the 50 States and the District of Columbia, but not for the

Territories. Further, the Food Stamp Program does not operate in the

Commonwealth of Puerto Rico and American Samoa.

Therefore, we are proposing a modified but similar process for the

Territories. In Sec. 284.35, we propose that, in the absence of Census

Bureau

[[Page 50844]]

estimates, ACF will compute the estimated percentage of children in

poverty for each Territory. We will base our computations on the

information submitted by the Territory as specified in paragraph (b) or

(c) of this section. This information must include Food Stamp data, if

available. If the Territory does not have a Food Stamp program, it must

provide other information such as the proportion of students certified

for free or reduced-price school lunches or other estimates of child

poverty derived from independent sources.

For example, in 1998, we will compute the estimated percentage of

children in poverty for each Territory for calendar year 1996. In 1999,

we will compute the estimated percentage of children in poverty for

calendar year 1997. We will also determine, at the 80 percent

confidence level (if the data are sample data), the percentage change

between calendar years 1996 and 1997. We will perform these

computations annually for the applicable two year period, based on the

annual information submitted by the Territory.

If the child poverty rate in the Territory did not increase between

one year and the next, we will conclude that the Territory has met the

requirements of section 413(i) and notify it that no further

information from or action by the Territory is required for that two

year period.

If the estimate of the child poverty rate increased by 5 percent or

more from one year to the next, we propose in paragraph (g) to require

that the Territory submit data for calendar year 1998. This data would

be the Food Stamp data, if available, as specified in paragraph (b) or

other data as specified in paragraph (c).

This proposed action parallels the proposed action required from

States in Sec. 284.25(c). We believe that these more recent data will

help illustrate, for both States and Territories, any positive trends

and show the current effect of a State or Territory's program and

policies.

Based on the data submitted in paragraph (g), we will determine

whether the child poverty rate has increased 5 percent or more. If it

has, we will notify the Territory that it must submit an assessment

(and the information and evidence on which the assessment was based) of

whether the child poverty rate increased as a result of the Territory's

TANF program. We reference the examples of information and evidence

described in Sec. 284.30(a).

We will review the assessment submitted by the Territory, along

with other available information; make a determination whether the

increase in the child poverty rate is a result of the Territory's TANF

program; and notify the Territory whether it is or is not required to

submit a corrective action plan as specified in Secs. 284.40 and

284.45.

When is a Corrective Action Plan Required? (Sec. 284.40)

This section proposes that only those States and Territories for

which we have concluded that the child poverty rate has increased by 5

percent or more as a result of TANF are required to submit corrective

action plans. The State and the Territory must submit the plan within

90 days of the date we notify it of our determination under

Secs. 284.30 or 284.35.

What is the Content and Duration of the Corrective Action Plan?

(Sec. 284.45)

The Act does not provide express authority for us to prescribe

regulations regarding the content and duration of corrective action

plans. Therefore, this section restates the statutory provisions.

However, we want to provide additional explanation of the statutory

language on the duration of the corrective action plan. Paragraph (b)

of this section re-states section 413(i)(4) of the Act. This section

requires that the State implement the corrective action plan ``until

the State determines that the child poverty rate in the State is less

than the lowest child poverty rate on the basis of which the State was

required to submit the corrective action plan.''

The ``lowest child poverty rate'' means the five percent threshold

above the first year in the two year comparison period. For example, a

State with a 20 percent child poverty rate in the first year of the two

year comparison period would have a five percent threshold of 21

percent and would be required to implement its corrective action plan

until its child poverty rate dropped below 21 percent.

V . Regulatory Impact Analyses

A. Executive Order 12866

Executive Order 12866 requires that regulations be drafted to

ensure that they are consistent with the priorities and principles set

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

proposed rule is consistent with these priorities and principles. This

proposed rulemaking implements statutory authority based on broad

consultation and coordination.

The Executive Order encourages agencies, as appropriate, to provide

the public with meaningful participation in the regulatory process. As

described elsewhere in the preamble, ACF consulted with State and local

officials, their representative organizations, and a broad range of

technical and interest group representatives.

We discuss the input received during the consultation process in

previous sections of the preamble. To a considerable degree, this NPRM

reflects the information provided by, and the recommendations of, the

groups with whom we consulted.

B. Regulatory Flexibility Analysis

The Regulatory Flexibility Act (5 U.S.C. 603, 605) requires the

Federal government to anticipate and reduce the impact of rules and

paperwork requirements on small businesses and other small entities.

Small entities are defined in the Regulatory Flexibility Act to include

small businesses, small non-profit organizations, and small

governmental agencies. This rule will affect only States, the District

of Columbia, and certain Territories. Therefore, the Secretary

certifies that this rule will not have a significant impact on small

entities.

C. Paperwork Reduction Act

In developing this proposed rule, we had very little discretion

with respect to the kinds of data States and Territories must report to

the Secretary. Thus, the burden of reporting data on the Food Stamp

program is mandated by the statute. We have estimated the burden in

this section and do not view it as significant. We have exercised

discretion by developing an approach that will help States and

Territories meet the statutory requirements with the least burden.

We will send to the States the Census Bureau data on the number and

percentage of children reported to have fallen below the poverty level

and will compute for the Territories the percentage of children in

poverty based on the information provided by the Territory. Only those

States and Territories whose child poverty rate increased 5 percent or

more will be required to submit further information. This approach is

designed to lessen the burden on these jurisdictions. However, we

invite comments on this approach and the possible impact it may have on

States and Territories.

To the extent possible, this proposed rule relies on existing data

sources. The Census methodology is based on available data from the

Bureau of the Census, the U.S. Department of Agriculture, and the U.S.

Department of the Treasury. Sample or universe data on the number of

households with children that receive Food Stamp benefits are reported

by the States to the

[[Page 50845]]

U.S. Department of Agriculture (USDA) and are available from the States

or the USDA. Also, States report to USDA data on the number of students

certified to receive free and reduced-price school lunches.

However, this proposed rule does contain information collection

activities that are subject to review and approval by the Office of

Management and Budget (OMB) under the Paperwork Reduction Act of 1995

(the PRA). Under the PRA, no persons are required to respond to a

collection of information unless it displays a valid OMB control

number. As required by the PRA, we have submitted the proposed data

collection requirements to OMB for review and approval. We are using

this NPRM as a vehicle for seeking comment from the public on these

information collection activities.

There are four circumstances in the proposed rule that will create

a reporting burden:

A Territory provides data to us on which we will base our

computation of an estimate of the percentage of children in poverty and

the change in the percentage (Sec. 284.35);

A State or Territory provides evidence that the estimated

increase in poverty was less than 5 percent (Sec. 284.25(c) and

Sec. 284.35(g));

A State or Territory provides evidence that the increase

in the child poverty rate was not the result of the TANF program

(Sec. 284.30 and Sec. 284.35(h)); and

A State or Territory submits a corrective action plan

(Sec. 284.40 and Sec. 284.45).

The annual burden estimates include any time involved compiling and

abstracting information, assembling any other material necessary to

provide the requested information, and transmitting the information.

Prior to the development of this estimate, we researched the burden

estimates for similar OMB-approved data collections in our inventory,

and those pending OMB approval, and consulted with knowledgeable

Federal officials.

All 50 States, the District of Columbia, and the Territories of

Guam, Puerto Rico, and the United States Virgin Islands are potential

respondents to all of the proposed data collections. The annual burden

estimates for these data collections are:

----------------------------------------------------------------------------------------------------------------

Number of Average burden

Instrument or requirement Number of responses per hours per Total burden

respondents respondent response hours

----------------------------------------------------------------------------------------------------------------

Submission of Data by Territory for Computation

of an Estimate of the Percentage of Children in

Poverty and the Change in the Percentage (Sec.

284.35)........................................ 3 1 40 120

Submission of Food Stamp Data and/or Alternative

Evidence That Child Poverty Level Did Not

Increase by 5% or More (Sec. 284.25(c) and

Sec. 284.35(g))............................... 54 1 40 2,160

Documentation for Relationship of TANF to the

Increase in Child Poverty Level (Sec. 284.30

and Sec. 284.35(h))........................... 54 1 80 4,320

Corrective Action Plan (Sec. 284.40 and Sec.

284.45)........................................ 54 1 160 8,640

----------------------------------------------------------------------------------------------------------------

Estimated Total Annual Burden Hours: 15,240.

We have over-estimated the burden hours for part 284 for ease of

discussion and public review of the burden. We expect that only a few

States will experience an increase of 5 percent or more in their child

poverty rate and will need to provide Food Stamp or additional data;

even fewer will need to submit information in relation to the TANF

program; and a very few will be required to submit a corrective action

plan.

We encourage States, organizations, individuals, and other parties

to submit comments regarding the information collection requirements to

ACF (at the address above) and to the Office of Information and

Regulatory Affairs, OMB, Room 3208, New Executive Office Building, 725

17th Street, Washington, DC 20503, ATTN: Desk Officer for ACF.

To ensure that public comments have maximum effect in developing

the final regulations and the data collection requirements, we urge

that each comment clearly identify the specific section or sections of

the proposed rule that the comment addresses and follow the same order

as the regulations.

We will consider comments by the public on these proposed

collections of information in:

Evaluating whether the proposed collections are necessary

for the proper performance of our functions, including whether the

information will have practical utility;

Evaluating the accuracy of our estimate of the burden of

the proposed collections of information, including the validity of the

methodology and assumptions used, and the frequency of collection;

Enhancing the quality, usefulness, and clarity of the

information to be collected; and

minimizing the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technology, e.g., the

electronic submission of responses.

OMB is required to make a decision concerning the collections of

information contained in these proposed rules between 30 and 60 days

after publication of this document in the Federal Register. Therefore,

a comment is assured of having its full effect if OMB receives it

within 30 days of publication. This OMB review schedule does not affect

the deadline for the public to comment to ACF on the proposed rules.

D. Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 requires

that a covered agency prepare a budgetary impact statement before

promulgating a rule that includes any Federal mandate that may result

in the expenditure by State, local, and Tribal governments, in the

aggregate, or by the private sector, of $100 million or more in any one

year.

If a covered agency must prepare a budgetary impact statement,

section 205 further requires that it select the most cost-effective and

least burdensome alternative that achieves the objectives of the rule

and is consistent with the statutory requirements. In addition, section

205 requires a plan for informing and advising any small government

that may be significantly or uniquely impacted by the proposed rule.

We have determined that this proposed rule would not impose a

mandate that will result in the

[[Page 50846]]

expenditure by State, local, and Tribal governments, in the aggregate,

or by the private sector, of more than $100 million in any one year.

Accordingly, we have not prepared a budgetary impact statement,

specifically addressed the regulatory alternatives considered, or

prepared a plan for informing and advising any significantly or

uniquely impacted small government.

E. Congressional Review

This proposed rule is not a ``major'' rule as defined in 5 U.S.C.,

Chapter 8.

List of Subjects in 45 CFR Part 284

Grant programs--Social programs, Public Assistance programs;

Reporting and recordkeeping requirements; Poverty.

(Catalogue of Federal Domestic Assistance Programs: 93.558 TANF

programs--State Family Assistance Grants, Assistance grants to

Territories, Matching grants to Territories, Supplemental Grants for

Population Increases and Contingency Fund; 93.595 Welfare Reform

Research, Evaluations and National Studies.)

Dated: May 13, 1998.

Olivia A. Golden,

Assistant Secretary for Children and Families.

Approved: June 9, 1998.

Donna E. Shalala,

Secretary, Department of Health and Human Services.

For the reasons set forth in the preamble, we propose to amend 45

CFR Ch. II by adding part 284 to read as follows:

PART 284--CHILD POVERTY RATES

Sec.

284.10 What does this part cover?

284.11 What definitions apply to this part?

284.15 Who must submit information to ACF to carry out the

requirements of this part?

284.20 What information will we provide to each State to estimate

the number of children in poverty?

284.25 What information must the State provide if the estimate of a

State's child poverty rate has increased by five percent or more

over the two year period?

284.30 What information must the State provide to explain the impact

of TANF on the increase in child poverty?

284.35 How will the methodology for the Territories differ?

284.40 When is a corrective action plan due?

284.45 What is the content and duration of a corrective action plan?

Authority: 42 U.S.C. 613(i)

Sec. 284.10 What does this part cover?

(a) This part describes the methodology to be used to determine

State child poverty rates, as required by section 413(i) of the Social

Security Act, including determining whether the child poverty rate

increased by 5 percent or more as a result of TANF. It also describes

the content and duration of the corrective action plan.

(b) The requirements of this part do not apply to any Territory

that has never operated a TANF program.

Sec. 284.11 What definitions apply to this part?

The definitions that apply to this part are:

ACF means the Administration for Children and Families.

Act means the Social Security Act, unless otherwise specified.

Census methodology means the methods developed by the Census Bureau

for estimating the number and percentage of children in poverty in each

State.

Child poverty rate means the result of the methodology described in

this part to determine the percentage of children in poverty in each

State and Territory. The State child poverty rate will be based on the

Census methodology and may also include the number of households with

children receiving Food Stamp benefits and additional data submitted by

a State. The child poverty rate for a Territory will be computed by ACF

based on data submitted by the Territory.

Children in poverty means estimates resulting from the Census

methodology of the percentage of children in a State that live in

families with income below 100 percent of the federal poverty level.

Date of enactment means calendar year 1996.

State means each of the 50 States of the United States and the

District of Columbia.

TANF means the Temporary Assistance for Needy Families program, as

enacted by section 103 of Pub. L. 104-193 (42 U.S.C. 601-619).

Territories means American Samoa, Guam, the Commonwealth of Puerto

Rico, and the United States Virgin Islands.

We (and any other first person plural pronouns) means the Secretary

of Health and Human Services or any of the following individuals and

organizations acting in an official capacity on the Secretary's 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.

Sec. 284.15 Who must submit information to ACF to carry out the

requirements of this part?

The chief executive officer of the State or Territory, or his or

her designee, is responsible for submitting the information required by

this part to us.

Sec. 284.20 What information will we provide to each State to estimate

the number of children in poverty?

(a) Annually, we will provide each State with an estimate of the

number and percentage of children in poverty within the State, as

determined by the Census Bureau using the Census methodology. The

annual estimate will be for the calendar year two years previous. (The

first annual estimate in 1998 will be an estimate of children in

poverty for calendar year 1996.)

(b) In 1999, and annually thereafter, we will determine for each

State, at the 80 percent confidence level, the change in the percentage

of children in poverty for the applicable two calendar year period

based on the Census Bureau data, and provide each State with its

percentage of change. (The first determination of percentage change

will cover the change between calendar years 1996 and 1997.)

Sec. 284.25 What information must the State provide if the estimate of

a State's child poverty rate has increased five percent or more over

the two year period?

(a) If the estimate of a State's child poverty rate did not

increase by 5 percent or more, at an 80 percent confidence interval,

from one year to the next, we will conclude that a State has satisfied

the statutory requirements of section 413(i) of the Act, and notify the

State that no further information from or action by the State is

required for the applicable two calendar year period.

(b) If the estimate of a State's child poverty rate increased by 5

percent or more from one year to the next, we will notify the State

that it has 60 days to submit the data required in paragraph (c) of

this section.

(c) If required under paragraph (b) of this section, the State must

submit data on the average monthly number of households with children

that received Food Stamp benefits for each of the two most recent years

for which data are available. (We expect that the data submitted in

1999 will cover calendar years 1997 and 1998.) The State may also

submit other evidence covering any pertinent time-period, including the

proportion of students certified for free or reduced-price school

lunches or estimates of child poverty that were derived from an

independent source.

(1) If a State reports Food Stamp data based on population counts,

it must

[[Page 50847]]

report the average monthly number for each of the two calendar years

and the difference between them.

(2) If a State reports Food Stamp data based on monthly samples, it

must include the calculated standard errors of each annual estimate.

(3) If there has been a change in legislation, policy, or program

procedures that have had a substantial impact on the number of

households with children receiving Food Stamps during the period for

which we are requesting Food Stamp data, the State must submit data

relevant to determining how that change(s) affected the number of Food

Stamp households with children, including data on sub-populations

affected by the change.

(d) Based on the information submitted by the State under paragraph

(c) of this section, if the average monthly number of households with

children receiving Food Stamp benefits within the State indicates a

subsequent improvement, commensurate with the poverty increase in the

Census data, we will conclude that the State has satisfied the

statutory requirements of section 413(i) of the Act, and that no

further information from or action by the State is required.

(e) If the average monthly number of households with children

receiving Food Stamp benefits within the State did not indicate a

subsequent decrease in child poverty commensurate with the increase

shown by the Census data, we will review any additional data the State

has provided. Unless this additional data provides sufficient

documentation that either child poverty did not go up in the State or

there was a subsequent commensurate decline, we will notify the State

that it must provide the information described in Sec. 284.30.

Sec. 284.30 What information must the State provide to explain the

impact of TANF on the increase in child poverty?

(a) If we have determined under Sec. 284.25, that the State must

submit its assessment (and the information and evidence on which the

assessment is based) of whether the child poverty rate has increased as

a result of the State's TANF program, the State's assessment, and the

information on which the assessment is based, must cover the two year

period for which the child poverty rate is determined, and must be

submitted to us within 60 days. Examples of such information may

include--

(1) Evidence that TANF program rules did not economically

disadvantage children from one calendar year to the next to the extent

that such policies could account for a 5 percent or more increase in

the child poverty rate. For example, if TANF income eligibility rules

did not limit program participation and program cash benefits did not

decrease substantially, a State could assert that increases in the

child poverty rate occurred independently of TANF. A State could also

provide other TANF program evidence, such as the percentage of eligible

individuals receiving TANF, the number of applicants disapproved,

sanction rates, numbers of cases terminated as a result of time limits,

and numbers of cases terminated as a result of failing to meet work

requirements;

(2) Evidence that other factors account for the increase in the

child poverty rate, such as changes in economic or social conditions,

e.g., an increase in the State's unemployment rate. For example, a

State that met the definition of a ``needy State'' under section

403(b)(6) of the Act for an extended period of time within the

applicable two year period could assert that increases in the child

poverty rate resulted from non-TANF factors; or

(3) An alternate justification that demonstrates that changes in

the child poverty rate within the State did not result from TANF. For

example, a State could submit data from other assistance programs that

provide evidence that increases in the child poverty rate did not

result from TANF.

(b) We will review the State's assessment, along with other

available information such as the State's TANF plan and eligibility

criteria, other supportive services and assistance programs, and the

State's economic circumstances; make a determination whether the child

poverty rate has or has not increased by 5 percent or more as a result

of the State's TANF program; and notify the State whether it must

submit a corrective action plan as described in Secs. 284.40 and

284.45.

(c) If we determine that the child poverty rate has not increased

by 5 percent or more as a result of the State's TANF program, we will

conclude that the State has met the requirements of section 413(i) and

notify the State that no further information from or action by the

State is required for the applicable two calendar year period.

Sec. 284.35 How will the methodology for the Territories differ?

(a) To the extent that data are available and the procedures

applicable, the Territories are subject to the same methodology used to

determine the child poverty rate in the 50 States and the District of

Columbia.

(b) Since the Census Bureau methodology does not estimate a child

poverty rate for the Territories, each Territory must, beginning in

1998, and annually thereafter, submit to ACF the Food Stamp data

described in Sec. 284.25(c).

(c) If the Food Stamp data are not available for a Territory

because it did not operate a Food Stamp program for the applicable

year, it must, beginning in 1998, and annually thereafter, submit other

information on which the child poverty rate may be determined, such as

the proportion of students certified for free or reduced-price school

lunches or estimates of child poverty derived from independent sources.

(In 1998, the Territory must submit data for calendar year 1996; in

1999, the Territory must submit data for calendar year 1997.)

(d) Based on the data specified in paragraph (b) or (c) of this

section submitted for calendar year 1996, we will compute an estimate

of the percentage of children in poverty for the Territory for calendar

1996.

(e) Based on the data specified in paragraph (b) or (c) submitted

for calendar year 1997, we will compute an estimate of the percentage

of children in poverty for calendar year 1997. We will also determine,

at the 80 percent confidence level (if the data are sample data), the

change in the percentage of children in poverty between calendar years

1996 and 1997. We will do this annually thereafter for the applicable

two year period.

(f) If the estimate of the child poverty rate in the Territory did

not increase by 5 percent of more, at an 80 percent confidence level,

we will conclude that the Territory has satisfied the requirements of

section 413(i) of the Act. We will notify the Territory that no further

information from or action by the Territory is required for the

applicable two year period.

(g) If the estimate of the child poverty rate in the Territory

increased by 5 percent or more from one year to the next, the Territory

must submit the information in paragraph (b) or (c) of this section for

the subsequent calendar year. For example, if the child poverty rate

increased between calendar years 1996 and 1997, the Territory must

submit data for calendar year 1998. We will review these data and

determine whether the child poverty rate has or has not increased by 5

percent or more.

(h) If we determine that the child poverty rate has increased 5

percent or more, we will notify the Territory that it must submit an

assessment (and the information and evidence on which the assessment

was based) of whether the child poverty rate increased as a result of

the TANF program in the Territory.

[[Page 50848]]

Examples of such information and evidence are found in Sec. 284.30(a).

(i) We will review the assessment provided by the Territory, along

with other available data on the Territory's TANF plan and eligibility

criteria, other supportive services and assistance plans, and economic

circumstances; make a determination whether the increase in the child

poverty rate is due to the Territory's TANF program; and notify the

Territory whether a corrective action plan is required as specified in

Sec. 284.40 and Sec. 284.45.

Sec. 284.40 When is a corrective action plan due?

Each State and Territory must submit a corrective action plan to

ACF within 90 days of the date we notify it that, as a result of TANF,

its child poverty rate increased by 5 percent or more for the

applicable two calendar year period.

Sec. 284.45 What is the content and duration of the corrective action

plan?

(a) The corrective action plan must outline the manner in which the

State or Territory will reduce the child poverty rate in the State and

include a description of the actions to be taken by the State or the

Territory under such a plan.

(b) A State or Territory shall implement the corrective action plan

until the State or Territory determines that the child poverty rate in

the State is less than the lowest child poverty rate on the basis of

which the State was required to submit the corrective action plan.

[FR Doc. 98-25384 Filed 9-22-98; 8:45 am]

BILLING CODE 4184-01-P