# Food Stamp Program: Employment and Training Program Provisions of the Farm Security and Rural Investment Act of 2002

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URL: https://www.frixlaw.com/law-library/documents/fr%3AE6-9001

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** June 9, 2006
- **Citation:** 71 FR 33376

## Text

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272 and 273

RIN 0584-AD32

Food Stamp Program: Employment and Training Program Provisions of
the Farm Security and Rural Investment Act of 2002

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule finalizes the proposed provisions of a rule
published on March 19, 2004 to amend Food Stamp Program regulations to
codify Food Stamp Employment and Training (E&T) Program provisions of
section 4121 of the Farm Security and Rural Investment Act of 2002 (the
Farm Bill). This final rule establishes a reasonable formula for
allocating the 100 percent Federal grant authorized under the Farm Bill
to carry out the E&T Program each fiscal year. This final rule also
codifies the Farm Bill provision that makes available up to $20 million
a year in additional unmatched Federal E&T funds for State agencies
that commit to offer an education/training or workfare opportunity to
every applicant and recipient who is an able-bodied adult without
dependents (ABAWD), limited to 3 months of food stamp eligibility in a
36-month period, who would otherwise be terminated. This final rule
eliminates the current Federal cost-sharing cap of $25 per month on the
amount State agencies may reimburse E&T participants for work expenses
other than dependent care. This final rule codifies Farm Bill
provisions that expand State flexibility in E&T Program spending by
repealing the requirements that State agencies earmark 80 percent of
their annual 100 percent Federal E&T grants to serve ABAWDs; they meet
or exceed their fiscal year 1996 State administrative spending levels
to access funds made available by the Balanced Budget Act of 1997; and
the Secretary be given the authority to establish maximum reimbursement
costs of E&T Program components. Lastly, this final rule rescinds the
balance of unobligated funds carried over from fiscal year 2001.

DATES: This final rule is effective August 8, 2006.

FOR FURTHER INFORMATION CONTACT: Micheal Atwell, Senior Program
Analyst, Program Design Branch, Program Development Division, Food
Stamp Program, Food and Nutrition Service, 3101 Park Center Drive, Room
810, Alexandria, Virginia, 703-305-2449, or via the Internet at
[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule was determined to be significant and was reviewed
by the Office of Management and Budget (OMB) in conformance with
Executive Order 12866.

Executive Order 12372

The Food Stamp Program (FSP) is listed in the Catalog of Federal
Domestic Assistance under No. 10.551. For the reasons set forth in the
final rule in 7 CFR part 3105, subpart V and related Notice (48 FR
29115, June 24, 1983), this Program is excluded from the scope of
Executive Order 12372, which requires intergovernmental consultation
with State and local officials.

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations, or policies that
conflict with its provisions or that would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the DATES paragraph of this final rule. Prior to
any judicial challenge to the provisions of this rule or the
application of its provisions, all applicable administrative procedures
must be exhausted.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR
1320) requires that OMB approve all collections of information by a
Federal agency before they can be implemented. Respondents are not
required to respond to any collection of information unless it displays
a current valid OMB control number. The information collections in this
rule were previously approved under OMB control number 0584-0339. The
rules in 7 CFR 273.7(d)(1)(i)(D) provide that, if a State Agency will
not obligate or expend all of the funds allocated to it for a fiscal
year (FY), the Food and Nutrition Service (FNS) will distribute the
unobligated, unexpended funds during the current or subsequent FY on a
first come-first served basis. State Agencies may request more funds,
as needed. Typically, FNS receives nine such requests per year. The
burden associated with OMB control number 0584-0339 has been revised by
adding 9 hours to it to account for the time it takes State Agencies to
prepare the

[[Page 33377]]

requests. The additional 9 hours were approved by OMB on August 22,
2005.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Eric M. Bost,
Under Secretary for Food, Nutrition, and Consumer Services, has
certified that this rule will not have a significant economic impact on
a substantial number of small entities. This rule does not regulate the
activities of small businesses or other small entities; instead it
regulates the administration of the FSP, which is administered only by
State or county social service agencies.

Unfunded Mandate Analysis

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of UMRA, the
Department generally must prepare a written statement, including a cost
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures to State, local, or tribal
governments, in the aggregate, or to the private sector, of $100
million or more in any one year. When such a statement is needed for a
rule, section 205 of UMRA generally requires the Department to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, more cost-effective or least burdensome alternative
that achieves the objectives of the rule.
This rule contains no Federal mandates (under the regulatory
provisions of Title II of UMRA) that impose costs on State, local, or
tribal governments or to the private sector of $100 million or more in
any one year. Thus this rule is not subject to the requirements of
section 202 and 205 of UMRA.

Executive Order 13132

Federalism Summary Impact Statement

Executive Order 13132 requires Federal agencies to consider the
impact of their regulatory actions on State and local governments.
Where such actions have ``federalism implications,'' agencies are
directed to provide a statement for inclusion in the preamble to the
regulation describing the agency's considerations in terms of the three
categories called for under section (6)(b)(2)(B) of Executive Order
13132.

Prior Consultation With State Officials

Prior to drafting the rule, we received input from State and local
agencies at various times. Since the FSP is a State administered,
federally funded program, our regional offices have formal and informal
discussions with State and local officials on an ongoing basis
regarding program implementation and policy issues. This arrangement
allows State and local agencies to provide feedback that forms the
basis for many discretionary decisions in this and other FSP rules. In
addition, we presented our ideas and received feedback on program
policy at various State, regional, national, and professional
conferences. Lastly, the comments from State and local officials on the
proposed Farm Bill rule were carefully considered in drafting this
final rule.

Nature of Concerns and the Need To Issue This Rule

State agencies generally want greater flexibility in their
implementation of FSP work requirements and in the operation of the E&T
Program. State agencies have indicated that providing them this
flexibility would greatly enhance their ability to more efficiently
administer the FSP. They also want current rules streamlined to allow
them to conform to the rules of other means tested Federal programs.

Extent to Which FNS Meets Those Concerns

FNS has considered the impact on State and local agencies. This
rule deals with changes required by law, which were effective on May
13, 2002. The overall effect is to lessen the administrative burden by
providing increased State agency flexibility in E&T Program spending.

Government Paperwork Elimination Act

FNS is committed to compliance with the Government Paperwork
Elimination Act (GPEA), which requires Government agencies to provide
the public with the option of submitting information or transacting
business electronically to the maximum extent possible. State agencies
have the option of submitting the Food Stamp Employment and Training
Activity Report (FNS-583) (OMB 0584-0339 electronically via the Food
Program Reporting System. Also, State agencies may submit their
applications for additional Federal operating funds via e-mail.

Civil Rights Impact Analysis

FNS has reviewed this final rule in accordance with the Department
Regulation 4300-4, ``Civil Rights Impact Analysis,'' to identify and
address any major civil rights impacts the rule might have on
minorities, women, and persons with disabilities. After a careful
review of the rule's intent and provisions, and the characteristics of
food stamp households and individual participants, FNS has determined
that there is no way to mitigate its impact on the protected classes.
Other than how to allocate E&T funds among State agencies, FNS had no
discretion in implementing any of these changes, which were effective
upon enactment of the Farm Bill on May 13, 2002. All data available to
FNS indicate that protected individuals have the same opportunity to
participate in the FSP as non-protected individuals. FNS specifically
prohibits the State and local government agencies that administer the
Program from engaging in actions that discriminate based on race,
color, national origin, gender, age, disability, marital or family
status. (FSP nondiscrimination policy can be found at 7 CFR 272.6(a)).
Where State agencies have options, and they choose to implement a
certain provision, they must implement it in such a way that it
complies with the regulations at 7 CFR 272.6.

Regulatory Impact Analysis

Need for Action

This action is needed to implement the provisions of section 4121
of the Farm Bill, which sets forth funding directives for the E&T
program. Because the rules resulting from section 4121 will have
generally applicability, they are best accomplished through regulatory
action. The provisions of this regulation establish a reasonable
formula for allocating the 100 percent Federal grant authorized under
the Farm Bill to carry out the E&T Program each fiscal year; make
available up to $20 million a year in additional unmatched Federal E&T
funds for State agencies that commit to offer an education/training or
workfare opportunity to every ABAWD applicant and recipient who would
otherwise be terminated after 3 months of food stamp eligibility in a
36-month period (3-month time limit); eliminate the current Federal
cost-sharing cap of $25 per month on the amount State agencies may
reimburse E&T participants for work expenses other than dependent care;
repeal the requirement that State agencies earmark 80 percent of their
annual 100 percent Federal E&T grants to serve ABAWDs; and repeal the
requirement that State agencies meet or exceed their FY 1996 State
administrative spending levels to access

[[Page 33378]]

funds made available by the Balanced Budget Act of 1997.

Benefits

State agencies will benefit from the provisions of this rule
because they streamline the annual E&T Program grant allocation
process, expand State agency flexibility in serving at-risk ABAWDs and
other work registrants, and eliminate unnecessary and complex rules on
how State agencies can spend E&T Program funds.

Costs and Participation Impacts

The regulatory impact analysis associated with this rule reports
that the E&T provisions of the Farm Bill are expected to reduce Federal
outlays by $36 million in FY 2005 and by $188 million in the 5 years FY
2005 through FY 2009 (see Table 1). In accordance with OMB circular A-
4, FNS has used a pre-statutory baseline (FY2002) for this analysis.
Because these provisions have already taken effect, it was possible to
compare this pre-legislative baseline to current expectations for
spending on E&T using the President's FY 2006 budget baseline, the most
recent data available at the time of analysis. These assumptions have
also been incorporated in the President's FY 2007 budget. The annual
cost of the provisions was measured as the difference between the two
cost streams. The standard E&T outlay factor of 84 percent was applied
to the difference in expected obligations to estimate the expected
impact on E&T outlays. This methodology assumes that differences
between the pre-legislative baselines and post-reform projections are
entirely due to the impact of provisions in this rule-making. To the
extent that other outside factors have influenced E&T provision and
spending, the impacts of this provision could be over-or understated.

Table 1.--Cost Impact of E&T Provisions of the Farm Bill of 2002 (Federal Outlays)
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
2005 2006 2007 2008 2009 5-year
----------------------------------------------------------------------------------------------------------------
100% E&T Grants........................................... -36 -35 -36 -39 -42 -188
50% E&T Grants............................................ 18 19 20 21 21 99
Participant Reimbursements................................ 6 6 6 6 7 31
Participant Benefit Impact................................ -24 -27 -27 -26 -26 -130
-----------------------------------------------------
Total Impact.......................................... -36 -37 -37 -38 -40 -188
----------------------------------------------------------------------------------------------------------------

The items identified in Table 1 are described in more detail below:
* 100% E&T Grants. The cost to the government of the provisions on
100 percent Federal E&T grants was estimated based on expected 100
percent E&T obligations prior to the legislation ($130 million in FY
2002), indexed by economic projections from the Office of Management
and Budget.
* 50% E&T Grants. The cost to the Government of the provisions on
50 percent Federal E&T grants was based on expected 50 percent E&T
obligations prior to the legislation ($107 million in FY 2002), indexed
by economic projections from the Office of Management and Budget.
* Participant Reimbursements. The cost to the Government of the
provisions on E&T participant reimbursements was based on expected
obligations prior to the legislation ($31 million in FY 2002), indexed
by economic projections from the Office of Management and Budget.
Participant Benefit Impact. With new flexibility and decreased
Federal E&T funding, some States likely reduced the level of E&T
services they provide to ABAWDs, thereby making them ineligible for
food stamps. Based on data from the FNS-583 FNS estimated that 14,000
persons were made ineligible by these provisions in FY 2005. These
impacts are already incorporated in the President's FY 2007 budget
baseline. State agencies have already implemented any applicable
changes and no further impact is expected following publication of this
final rule. The savings in food stamp benefits was calculated based on
the estimated number of ABAWDs made ineligible times the average
monthly benefit per ABAWD, times 12 months. These savings were rounded
to the nearest million dollars. (For example, in FY 2005, 14,000
persons were made ineligible, times an average food stamp benefit of
$141, times 12 months to yield a savings of $24 million.) The standard
food stamp benefit outlay factor of 0.99 was used to estimate the
impact on benefit outlays.
While this regulatory impact analysis details the expected impacts
on Food Stamp Program costs and the number of participants likely to be
affected by the food stamp employment and training provisions of the
Farm Security and Rural Investment Act of 2002, it does not provide an
estimate of the overall societal costs of the provisions, nor does it
include a monetized estimate of the benefits they bring to society. We
anticipate that the provisions improve program operations by giving
flexibility to States to provide employment and training services that
better meet the needs of their food stamp populations. However, to the
extent that some food stamp recipients are made ineligible, the
provisions have made it more difficult for them to obtain a healthful
diet.

Background

On March 19, 2004, FNS published a rule at 69 FR 12981 in which we
proposed to revise food stamp regulations at 7 CFR 273.7 regarding
funding for the E&T Program. Comments on this proposed revision were
solicited through May 18, 2004. A total of 24 comments were received.
This final rule addresses the commenters' concerns. Readers are
referred to the proposed rule for a more complete description of the
basis for the rule. Following is a discussion of the provisions of the
proposed rule, the comments received, and changes made in the final
rule.

Funding for Food Stamp Employment and Training Programs

Allocation of E&T Grants

FNS proposed to allocate one-half of the annual 100 percent Federal
grant based on our estimate of the numbers of ``at-risk'' ABAWDs in
each State (those who do not reside in an area subject to a waiver of
the time limit or who are not included in each State agency's 15
percent ABAWD exemption allowance) calculated using ABAWD data
collected by Mathematica Policy Research, Incorporated (MPR) for its
September 2001 report, ``Imposing a Time Limit on Food Stamp Receipt:
Implementation of the Provisions and Effects on Food Stamp Program
Participation.'' Based on the MPR study data, FNS established
percentages for the numbers of waived and/or exempted ABAWDs in each
State

[[Page 33379]]

and applied those percentages to Quality Control (QC) survey data to
estimate each State agency's at-risk ABAWD population. FNS believed
this to be the most accurate and reliable data available. FNS proposed
to allocate the balance of the annual 100 percent E&T grant based on
the number of work registrants reported by each State agency on the
FNS-583, E&T Program Activity Report from the most recent complete FY.
FNS received 22 comments regarding our proposed allocation
methodology. Twenty commenters objected to our reliance on at-risk
ABAWDs. They were concerned that this reliance would discourage States
from using the two measures available to protect the eligibility of
ABAWDs who are unable to obtain employment. The first measure is to
request that FNS waive the time limit for a group of ABAWDs in a State
if we determine that the area in which the individuals reside has an
unemployment rate of over 10 percent or does not have a sufficient
number of jobs to provide employment for the individuals. The second
measure is the State option to exempt up to 15 percent of its ABAWD
population that does not reside in waived areas each FY. The commenters
point out that, by utilizing these measures, States will receive
smaller E&T grants than if they had not used them. Several commenters
pointed out that more than a few States have statewide waivers of the
time limit due to high unemployment or a lack of jobs and these States
will lose half of their potential annual E&T grants as a result.
Several State agencies pointed out that the formula ignores the fact
that waived and exempted ABAWDs are work registrants subject to E&T
participation and, although they currently provide E&T services to
exempt ABAWDs and to ABAWDs in waived areas, they will have to curtail
or terminate these services because of reduced grants.
Two commenters argued that FNS has flexibility under the law to
adopt a formula that better serves the ABAWD population. They believe
that the concept of ``at-risk ABAWDs'' should be significantly revised
or dropped and that FNS should adopt a more practical approach to the
requirement that it take into account the numbers of individuals not
exempt from the work requirement under section 6(o) of the Food Stamp
Act. They believe that FNS should consider other factors and apply
necessarily inexact measures of those numbers.
Eight commenters recommended that the ABAWD allocation be based on
the total number of ABAWDs, not just at-risk ones. Three recommended
that the entire grant be based on total ABAWDs. Several recommended
that FNS use the most recent QC household characteristics data (OMB
0584-0299) that reflects each State's share of the nation's food stamp
recipients who are age 18 through 49, not disabled, and who do not live
with children.
One State agency recommended using a funding ratio of 10 to 20
percent based on at-risk ABAWDs, 80 to 90 percent on work registrants.
One State agency recommended using a multi-part formula that
averages the number of ABAWDs determined from the QC sample and the
number of ABAWDs participating in components that meet the ABAWD work
requirement as reported on the FNS-583, E&T Program Activity Report. It
also urged that State agencies be informed of the numbers to be used
and given the opportunity to challenge them if they disagree.
One State agency recommended that all 100 percent Federal E&T funds
be allocated based on a point system that favors at-risk ABAWDs. It
proposes assigning a value of 1.0 to all mandatory work registrants,
excluding ABAWDs, and assigning a value of 1.3 to all ABAWDs.
One State agency recommended using an allocation formula based one-
half on the number of E&T work registrants and one-half on the number
of ABAWD E&T participants.
FNS agrees with those commenters concerned that adhering to the
proposed 50/50 split of the 100 percent Federal grant places too much
emphasis on ABAWDs. The E&T program has two constituencies--ABAWDs
subject to the time limit who need services that qualify them to remain
eligible for benefits until they are able to find employment; and all
other work registrants who also need services to improve their ability
to become self-sufficient. Under the proposed split, a State's ABAWD
population would determine half its grant amount; and, since all ABAWDs
are work registrants, they would be counted again in determining the
other half. For the FY 2005 $90 million grant allocation, FNS allocated
$80 million based on work registrants and $10 million on at-risk
ABAWDs. In addition, to lessen the negative impact on those State
agencies with a large waived and exempted ABAWD population, FNS limited
the cut in grant funding to no more than 20 percent of the FY 2004
grant allocations. Our experience with the FY 2005 E&T grant allocation
convinced us that the appropriate share to be allocated based on
numbers of ABAWDs is 10 percent of the grant, with 90 percent allocated
based on the overall universe of work registrants. We have incorporated
this ratio into the final rule.
FNS also agrees with the commenters who urged us to take a
different approach to how we accomplish the annual allocation. FNS
carefully considered each comment and weighed the suggested funding
strategies against the statutory requirement that we take into account
at-risk ABAWDs. FNS examined several alternatives for using data to
capture the most reliable estimate of the numbers of ABAWDs in each
State. The use of at-risk ABAWD estimates for each State was, of
course, most desirable. However, after careful review FNS determined
that these numbers were difficult to obtain and unreliable, due both to
technical considerations and to continual shifts in the numbers of
waived and exempted ABAWDs in most States. To ensure a reasonably
accurate count of at-risk ABAWDs, State agencies would most likely have
to create new computer programming and reporting requirements for at-
risk ABAWDs. FNS does not believe that such an additional State agency
reporting burden is desirable or necessary. For the FY 2006 $90 million
grant allocation, FNS used food stamp QC data for the most recently
available completed FY (FY 2004) which reflected total ABAWD numbers
instead of at-risk ABAWD estimates. The data, which is state-compiled
and federally reviewed, provide a breakdown of each State's population
of adults age 18 through 49, who are not disabled, and who do not live
with children. These data mirror ABAWD characteristics, are readily and
widely available, are consistent with commenters' requests, and, when
compared to the less current percentages established by the September
2001 MPR study, provide a more reliable estimate of the numbers of all
ABAWDs in each State. Our experience indicates that using total ABAWD
numbers is the most efficient, equitable way to allocate the ABAWD
portion of the annual E&T grant, with currently available data-while
still adhering to the statutory requirement to take into account at-
risk ABAWDs. This approach has the advantage over our earlier proposal
in that it does not reduce funding for States that rely on waivers and
exemptions, thus does not serve as a disincentive to use those tools.
While some commenters questioned the validity of work registrant
data from the FNS-583, E&T Program Activity Report, FNS remains
convinced that it provides the most reliable work registration
information available. State

[[Page 33380]]

agencies have been collecting and reporting work registrant data on the
FNS-583 for many years and they are proficient in accurately counting
their work registrants. Prior to 1996, the annual E&T grants were
allocated based primarily on FNS-583 work registrant data. In addition,
the universal use of computers and the development of sophisticated
software to track program participation and compliance with eligibility
requirements make the accurate calculation of the number of work
registrants a relatively simple procedure. Finally, FNS has been
working closely with states over the last few years to correct
instances of misreporting E&T data.
Thus, in response to comments and based on our experience, FNS is
amending the final rule at 7 CFR 273.7(d)(1)(i)(B) to establish that 10
percent of the annual 100 percent Federal E&T grant will be allocated
among the 53 State agencies based on food stamp QC data for the most
recently available completed FY that reflects each State's share of the
nation's food stamp recipients who are age 18 through 49, not disabled,
and who do not live with children, as a percentage of such individuals
nationwide.
The remaining 90 percent will be allocated based on the numbers of
work registrants in each State as a percentage of work registrants
nationwide. FNS will use work registrant data reported by each State
agency on the FNS-583, Employment and Training Program Activity Report,
from the most recent Federal FY.

Additional Funding for States That Serve ABAWDs

The proposed rule contained the provision of an additional $20
million in 100 percent Federal E&T funds each FY to be allocated among
eligible State agencies to serve all ABAWDs subject to the time limit.
To be eligible for a share of the additional $20 million, the
Department proposed that a State agency must make and comply with a
commitment, or pledge, to offer a qualifying education/training
activity or workfare position to each ABAWD applicant or recipient who
is ``at risk,'' i.e., one who is in the last month of the 3-month time
limit; does not live in an area covered by a waiver of the time limit;
and is not part of a State agency's 15 percent ABAWD exemption
allowance. FNS proposed to allocate among them the $20 million based on
the 2001 MPR study's estimate of the numbers of ABAWDs in each
participating pledge State who do not reside in an area subject to a
waiver granted in accordance with 7 CFR 273.24(f) or who are not
included in each State agency's 15 percent ABAWD exemption allowance
under 7 CFR 273.24(g), as a percentage of such ABAWDs in all the
participating pledge States. Eligible State agencies must use their
shares of the $20 million allocation to defray costs incurred in
serving at-risk ABAWDs.
Three commenters objected to our methodology. Two recommended that
the allocation formula include all ABAWDs. One recommended that the
money be allocated based on actual services provided and not just on
the population eligible for service.
For the reasons cited in the above discussion concerning the
regular Federal E&T allocation, the Department agrees that the
allocation formula should include all ABAWDs. While making it clear
that the first priority of a participating State agency is to guarantee
that all its at-risk ABAWDs are provided the opportunity to remain
eligible while they acquire the skills and experience necessary to
obtain employment, the Department, in the proposed rule, provided the
option of allowing the State agency to use a portion of its additional
funding to provide E&T services to ABAWDs who are not at risk. However,
if a State agency uses waivers and/or its exemption allowance to
protect all of its ABAWDs from the time limit, it is not eligible to
share in the $20 million. Therefore, the formula included in this final
rule bases the allocation of a participating pledge state's share of
the $20 million on the total number of ABAWDs in the State as a
percentage of ABAWDs in all participating States. For the reasons
discussed in the previous section, the number of ABAWDs will be derived
from QC data and not from the MPR study. One commenter urged that FNS
revise this final regulation to properly reflect what it is that a
State must pledge to do in order to be eligible for its share of the
$20 million ABAWD allocation. The cost of serving at-risk ABAWDs is not
an acceptable reason to fail to live up to the pledge. In other words,
a slot must be available and the ABAWD must be served even if the State
exhausts all of its 100 percent E&T funds and must use 50 percent State
matching funds to serve all at-risk ABAWDs. This commenter believes
that the language of the proposed regulation implied that to meet the
pledge States have to pledge only to use their share of the $20 million
to serve these individuals.
The Department agrees. FNS has added language to the final rule to
clarify that a participating pledge State must serve all its at-risk
ABAWDs, and it must be prepared to use its own money to fulfill its
commitment.

Allocation of Carryover Funding

The Department, in the proposed rule, provided for the first come-
first served reallocation of unspent 100 percent Federal E&T grant
funds carried over into the subsequent FY. FNS would notify all State
Agencies of the availability of the funds each year.
One commenter pointed out that State Agencies that may benefit from
an allocation of carryover funds to augment their annual grants will
not be aware of the availability of such funds until after critical
program adjustments must be made.
FNS agrees that State Agencies may find it difficult to rely on
carryover funding because they are notified of its availability well
into the annual budget and spending cycle. However, FNS does not know
how much carryover funding remains until completion of the close-out of
financial accounts for the preceding year, which is not normally
accomplished until the second quarter of the current year. Thus, FNS is
unable to allocate available carryover funding until that time.
FNS urges interested State Agencies to submit their requests for
carryover funding, with accompanying justification, as early as
possible in the FY. FNS will act upon the requests as quickly as
possible.

Participant Reimbursements

The Farm Bill eliminated the $25 per month per participant
limitation on Federal cost sharing for reimbursement for the costs of
transportation and other actual costs other than dependent care.
One commenter believes that the language of the proposed rule
related to the E&T State plan suggests that there is only one
reimbursement rate for participant expenses other than dependent care.
States may desire to have different reimbursement policies for
households that experience different types of expenses, or they may
want to establish different levels of reimbursement for different areas
of the State where, for example, costs of transportation are higher.
The commenter recommends that FNS revise the language to allow for more
than one reimbursement rate for transportation and other expenses.
The Department agrees that the language of the E&T State plan
provision relating to participant reimbursements should be revised to
allow for varying rates of reimbursements. This final rule will include
language in 7 CFR 273.7(c)(6)(xv) to clarify that, if the State

[[Page 33381]]

agency proposes to provide different reimbursement amounts to account
for varying levels of expenses, for instance, for greater or lesser
costs for transportation in different areas of the State, it must
include them here.
One commenter encourages FNS to consider allowing E&T reimbursement
for participants for up to 30 days following placement into
unsubsidized employment. Mandatory participants may not receive their
first paycheck for up to four weeks. This causes hardships for E&T
participants who need to get back and forth to work until they receive
a paycheck. Also, the participant may have a need for employment-
related items such as clothing, work boots, bonding, tools, etc. once a
job is accepted.
FNS believes that expanding the range of possible covered costs
eligible for a Federal match for reimbursement is desirable because
doing so supports the goal of the E&T Program to help food stamp
applicants and recipients obtain employment and achieve self-
sufficiency. In our discussion of expanded reimbursements in the
proposed rule we stated that expenses such as license and bonding fees
required for employment, for which the E&T participant is liable, could
also be considered for reimbursement by State agencies. However, after
reviewing comments on the proposed rule and reconsidering the scope of
the E&T Program, FNS wants to take this opportunity to amend that
statement. While we understand wanting to support employed persons, the
use of Federal funds to provide services associated with starting and
keeping a job is beyond the scope of the E&T Program and must be
disallowed.
Congress established the E&T Program to assist members of
households participating in the FSP in gaining skills, training, work,
or experience that will increase their ability to obtain regular
employment. It defined an E&T program as one that contains one or more
components providing job search; job search training; workfare; actual
work experience or training, or both; educational programs or
activities; self-employment activities; and, as approved by the
Secretary, other employment, education and training programs, projects,
and experiments. Lastly, Congress required that Federal funds provided
to a State agency may be used only for operating an E&T program as
defined. It required that States may be reimbursed 50 percent of their
costs incurred in connection with transportation costs and other
expenses reasonably necessary and directly related to participation in
an E&T program as defined.
Based on this language in the Food Stamp Act and on the legislative
history of the E&T Program, Congress clearly intended to limit the
scope of the Program to preparing for and obtaining employment. Post-
employment services were never part of the Program's mandate.
One reason for this limitation is the relatively small Federal
grant authorized by Congress to fund the Program. With limited
resources, along with the requirement to provide qualifying education
and training opportunities that allow ABAWDs to remain eligible beyond
the 3-month time limit, the Program must focus on relatively
inexpensive components designed to provide basic services.
Further, although some States may desire more flexibility to align
their E&T policies on participant reimbursements with those for
Temporary Assistance for Needy Families (TANF) work supportive
services, the significant differences that exist between the E&T and
TANF work programs preclude FNS from allowing States to cover the
entire array of expenditures considered suitable under TANF guidelines.
These differences involve the nature of the authorizing legislation and
funding mechanisms (block grant with time-limits versus Federal
entitlement with limited education and training funds), the range of
purposes served, the degree to which exemptions are available, and the
sizes of the populations receiving benefits.
Since the E&T Program is defined by its components and all the
components are designed to enable participants to obtain jobs,
reimbursing the costs of goods and services associated with employment
retention are beyond the scope of what can be allowed. Thus, FNS must
limit participation reimbursements to those costs involved in
successful component participation and disallow costs associated with
starting and keeping a job once one has been offered.
Keep in mind, however, that employed individuals may participate in
regular, approved E&T program components and receive participant
reimbursements to cover their expenses. For example, an individual
works less than 30 hours a week, or earns less than the Federal minimum
wage equivalent of 30 hours. The individual--who is otherwise eligible
for food stamps and is subject to all program work requirements,
including E&T--is assigned to and participates in a General Equivalency
Diploma (GED) preparation component. The State agency is authorized to
claim reimbursement for any administrative costs associated with the
individual's participation, as well as half of the costs of participant
expenses, such as transportation, course materials, etc.

Reduction in Work Effort

In the proposed rule FNS clarified its policy concerning reduction
in work effort. We proposed to amend the regulations to state that an
individual exempt from FSP work requirements because he or she is
working a minimum of 30 hours a week who reduces his or her work hours
to less than 30, but who continues to earn more in weekly wages than
the Federal minimum wage multiplied by 30 hours, remains exempt from
FSP work requirements and is not subject to disqualification.
One commenter supports the clarification of the minimum wage
equivalency as it applies to the reduction in work effort. The
commenter does, however, recommend that the final rule clarify when
States should and should not apply the minimum wage equivalency
analysis. The commenter points out that the work hours of low-skill
workers typically fluctuate considerably from month to month. Many
small reductions in work hours occur either involuntarily or for good
cause. The commenter believes that FNS can reduce administrative
burdens on State agencies and households alike by specifying in the
final rule that reductions of 5 hours or less do not trigger a
sanction.
The Department agrees that such situations sometimes occur,
resulting in a work week less than 30 hours or weekly earnings less
than the minimum wage equivalency. State agencies must take such
situations into account when determining whether a disqualification for
reduction in work effort should apply. However, FNS disagrees that
provision for a 5-hour leeway is appropriate. By initiating such a
policy, FNS would, in effect, alter the federally mandated 30-hour
minimum.
The Department has, in this final rule, included a reminder to
State agencies that minor variations in the number of hours worked or
in the weekly minimum wage equivalent wages are inevitable and must be
taken into consideration when assessing a recipient's compliance with
Program work rules.

State E&T Plans

FNS is taking this opportunity to make a technical correction to
the language at 7 CFR 273.7(c)(7), which requires that State agencies
submit their

[[Page 33382]]

State E&T Plans biennially. FNS is revising this to annual submissions.
While the basics of E&T plans, such as components offered and program
reporting and coordination methodologies, may remain constant, the
requirement for annual participation, budget, and funding estimates,
along with a discussion of program changes, and other pertinent
information demands a yearly submission, which State agencies do. This
correction acknowledges that requirement. Although we did not address
this issue in the preamble to the proposed rule, FNS did inadvertently
include the revised regulatory language. FNS did not receive any
comments concerning the change.

List of Subjects

7 CFR Part 272

Administrative practice and procedures, Food stamps, Grant
programs-social programs.

7 CFR Part 273

Administrative practice and procedures, Food stamps, Grant
programs-social programs, Penalties, Reporting and recordkeeping.

0
Accordingly, 7 CFR parts 272 and 273 are amended as follows:
0
1. The authority citation for parts 272 and 273 continues to read as
follows:

Authority: 7 U.S.C. 2011-2036.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

0
2. In Sec. 272.1, add paragraph (g)(172) to read as follows:

Sec. 272.1 General terms and conditions.

* * * * *
(g) * * *
(172) Amendment No. 400. The provisions of Amendment No. 400,
regarding the Employment and Training Program Provisions of the Farm
Security and Rural Investment Act of 2002 are effective August 8, 2006.

Sec. 272.2 [Amended]

0
3. In Sec. 272.2, paragraph (e)(9) is amended by removing the
reference to ``Sec. 273.7(c)(7)'' and adding in its place a reference
to ``Sec. 273.7(c)(8)''.

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

0
4. In Sec. 273.7:
0
a. paragraph (c)(6)(ii) is amended by removing the period at the end of
sentence three and adding in its place a semi-colon, and by removing
the last sentence
0
b. paragraph (c)(6)(vii) is revised;
0
c. new paragraphs (c)(6)(xv) and (c)(6)(xvi) are added;
0
d. paragraphs (c)(7), (c)(8), (c)(9), (c)(10), (c)(11), (c)(12),
(c)(13), and (c)(14) are redesignated as paragraphs (c)(8), (c)(9),
(c)(10), (c)(11), (c)(12), (c)(13), (c)(14), and (c)(15), respectively,
and new paragraph (c)(7) is added;
0
e. newly redesignated paragraph (c)(8) is amended by removing the word
``biennially'' in the first sentence and adding in its place the word
``annually'';
0
f. newly redesignated paragraphs (c)(9), (c)(10), and (c)(11) are
revised;
0
g. paragraph (d)(1)(i) is revised;
0
h. paragraph (d)(1)(ii) is amended by removing paragraphs
(d)(1)(ii)(A), (d)(1)(ii)(B), (d)(1)(ii)(C), and (d)(1)(ii)(D), and
redesignating paragraphs (d)(1)(ii)(E), (d)(1)(ii)(F), (d)(1)(ii)(G),
and (d)(1)(ii)(H) as paragraphs (d)(1)(ii)(A), (d)(1)(ii)(B),
(d)(1)(ii)(C), and (d)(1)(ii)(D), respectively;
0
i. paragraphs (d)(1)(iii) and (d)(1)(iv) are removed;
0
j. paragraphs (d)(3), (d)(4), (d)(5), and (d)(6) are redesignated as
(d)(4), (d)(5), (d)(6), and (d)(7), respectively, and new paragraph
(d)(3) is added;
0
k. newly redesignated paragraph (d)(4) introductory text is amended by
adding a new second sentence after the first sentence of the
introductory text, removing the references ``paragraphs (d)(3)(i) and
(d)(3)(ii)'' in sentences four and seven and adding in their place the
references ``paragraphs (d)(4)(i) and (d)(4)(ii)'', and by removing the
references ``paragraphs (d)(3)(i) and (d)(3)(ii)'' in sentence eight
and adding in its place the reference ``paragraph (d)(4)(i)'';
0
l. newly redesignated paragraph (d)(4)(i) is amended by removing the
last sentence;
0
m. newly redesignated paragraph (d)(4)(ii) is amended by removing the
last sentence;
0
n. newly redesignated paragraph (d)(4)(v) is amended by removing the
reference ``paragraphs (d)(3)(i) and (d)(3)(ii)'' in the second
sentence and adding in its place the reference ``paragraphs (d)(4)(i)
and (d)(4)(ii)'', and removing the reference ``paragraph (d)(3)(i)'' in
the last sentence and adding in its place the ``paragraph (d)(4)(i)'';
0
o. paragraph (f)(7)(ii) is amended by removing the reference
``paragraphs (b)(1)(iii) and (b)(1)(v)'' in the second sentence and
adding in its place the reference ``paragraphs (b)(1)(iii) or
(b)(1)(v)'';
0
p. paragraph (f)(7)(iv) is amended by removing words ``exemptions
provided in paragraphs (b)(1)(iii) and (b)(1)(v)'' in the first
sentence and adding in their place the words ``exemption in paragraph
(b)(1)(iii)'';
0
q. paragraph (j)(3)(iii) is amended by removing the last sentence and
adding two new sentences in its place.
The revisions and additions read as follows:

Sec. 273.7 Work provisions.

* * * * *
(c) * * *
(6) * * *
(vii) The method the State agency uses to count all work
registrants as of the first day of the new fiscal year;
* * * * *
(xv) The combined (Federal/State) State agency reimbursement rate
for transportation costs and other expenses reasonably necessary and
directly related to participation incurred by E&T participants. If the
State agency proposes to provide different reimbursement amounts to
account for varying levels of expenses, for instance for greater or
lesser costs of transportation in different areas of the State, it must
include them here.
(xvi) Information about expenses the State agency proposes to
reimburse. FNS must be afforded the opportunity to review and comment
on the proposed reimbursements before they are implemented.
(7) A State agency interested in receiving additional funding for
serving able-bodied adults without dependents (ABAWDs) subject to the
3-month time limit, in accordance with paragraph (d)(3) of this
section, must include in its annual E&T plan:
(i) Its pledge to offer a qualifying activity to all at-risk ABAWD
applicants and recipients;
(ii) Estimated costs of fulfilling its pledge;
(iii) A description of management controls in place to meet pledge
requirements;
(iv) A discussion of its capacity and ability to serve at-risk
ABAWDs;
(v) Information about the size and special needs of its ABAWD
population; and
(vi) Information about the education, training, and workfare
components it will offer to meet the ABAWD work requirement.
* * * * *
(9) The State agency will submit an E&T Program Activity Report to
FNS no later than 45 days after the end of each Federal fiscal quarter.
The report will contain monthly figures for:
(i) Participants newly work registered;
(ii) Number of ABAWD applicants and recipients participating in
qualifying components;

[[Page 33383]]

(iii) Number of all other applicants and recipients (including
ABAWDs involved in non-qualifying activities) participating in
components; and
(iv) ABAWDs subject to the 3-month time limit imposed in accordance
with Sec. 273.24(b) who are exempt under the State agency's 15 percent
exemption allowance under Sec. 273.24(g).
(10) The State agency will submit annually, on its first quarterly
report, the number of work registrants in the State on October 1 of the
new fiscal year.
(11) The State agency will submit annually, on its final quarterly
report:
(i) A list of E&T components it offered during the fiscal year and
the number of ABAWDs and non-ABAWDs who participated in each; and
(ii) The number of ABAWDs and non-ABAWDs who participated in the
E&T Program during the fiscal year. Each individual must be counted
only once.
* * * * *
(d) * * *
(1) * * *
(i) Allocation of grants. Each State agency will receive a 100
percent Federal grant each fiscal year to operate an E&T program in
accordance with paragraph (e) of this section. The grant requires no
State matching.
(A) In determining each State agency's 100 percent Federal E&T
grant, FNS will apply the percentage determined in accordance with
paragraph (d)(1)(i)(B) of this section to the total amount of 100
percent Federal funds authorized under section 16(h)(1)(A) of the Act
for each fiscal year.
(B) FNS will allocate the funding available each fiscal year for
E&T grants using a formula designed to ensure that each State agency
receives its appropriate share.
(1) Ninety percent of the annual 100 percent Federal E&T grant will
be allocated based on the number of work registrants in each State as a
percentage of work registrants nationwide. FNS will use work registrant
data reported by each State agency on the FNS-583, Employment and
Training Program Activity Report, from the most recent Federal fiscal
year.
(2) Ten percent of the annual 100 percent Federal E&T grant will be
allocated based on the number of ABAWDs in each State, as determined by
food stamp QC data for the most recently available completed fiscal
year, which provide a breakdown of each State's population of adults
age 18 through 49 who are not disabled and who do not live with
children.
(C) No State agency will receive less than $50,000 in Federal E&T
funds. To ensure this, FNS will, if necessary, reduce the grant of each
State agency allocated more than $50,000. In order to guarantee an
equitable reduction, FNS will calculate grants as follows. First,
disregarding those State agencies scheduled to receive less than
$50,000, FNS will calculate each remaining State agency's percentage
share of the fiscal year's E&T grant. Next, FNS will multiply the
grant--less $50,000 for every State agency under the minimum--by each
remaining State agency's same percentage share to arrive at the revised
amount. The difference between the original and the revised amounts
will represent each State agency's contribution. FNS will distribute
the funds from the reduction to State agencies initially allocated less
than $50,000.
(D) If a State agency will not obligate or expend all of the funds
allocated to it for a fiscal year under paragraph (d)(1)(i)(B) of this
section, FNS will reallocate the unobligated, unexpended funds to other
State agencies during the fiscal year or the subsequent fiscal year on
a first come-first served basis. Each year FNS will notify all State
agencies of the availability of carryover funding. Interested State
agencies must submit their requests for carryover funding to FNS. If
the requests are determined reasonable and necessary, FNS will allocate
carryover funding to meet some or all of the State agencies' requests,
as it considers appropriate and equitable. The factors that FNS will
consider when reviewing a State agency's request will include the size
of the request relative to the level of the State agency's E&T spending
in prior years, the specificity of the State agency's plan for spending
carryover funds, and the quality of program and scope of impact for the
State's E&T program and proposed use of carryover funds.
* * * * *
(3) Additional allocations. In addition to the E&T program grants
discussed in paragraph (d)(1) of this section, FNS will allocate $20
million in Federal funds each fiscal year to State agencies that ensure
availability of education, training, or workfare opportunities that
permit ABAWDs to remain eligible beyond the 3-month time limit.
(i) To be eligible, a State agency must make and comply with a
commitment, or ``pledge,'' to use these additional funds to defray the
cost of offering a position in an education, training, or workfare
component that fulfills the ABAWD work requirement, as defined in Sec.
273.24(a), to each applicant and recipient who is:
(A) In the last month of the 3-month time limit described in Sec.
273.24(b);
(B) Not eligible for an exception to the 3-month time limit under
Sec. 273.24(c);
(C) Not a resident of an area of the State granted a waiver of the
3-month time limit under Sec. 273.24(f); and
(D) Not included in each State agency's 15 percent ABAWD exemption
allotment under Sec. 273.24(g).
(ii) While a participating pledge State may use a portion of the
additional funding to provide E&T services to ABAWDs who do not meet
the criteria discussed in paragraph (d)(3)(i) of this section, it must
guarantee that the ABAWDs who do meet the criteria are provided the
opportunity to remain eligible.
(iii) State agencies will have one opportunity each fiscal year to
take the pledge described in paragraph (d)(3)(i) of this section. An
interested State agency, in its E&T Plan for the upcoming fiscal year,
must include the following:
(A) A request to be considered as a pledge State, along with its
commitment to comply with the requirements of paragraph (d)(3)(i) of
this section;
(B) The estimated costs of complying with its pledge;
(C) A description of management controls it has established to meet
the requirements of the pledge;
(D) A discussion of its capacity and ability to serve vulnerable
ABAWDs;
(E) Information about the size and special needs of the State's
ABAWD population; and
(F) Information about the education, training, and workfare
components that it will offer to allow ABAWDs to remain eligible.
(iv) If the information provided in accordance with paragraph
(d)(3)(iii) of this section clearly indicates that the State agency
will be unable to fulfill its commitment, FNS may require the State
agency to address its deficiencies before it is allowed to participate
as a pledge State.
(v) If the State agency does not address its deficiencies by the
beginning of the new fiscal year on October 1, it will not be allowed
to participate as a pledge State.
(vi) No pledges will be accepted after the beginning of the fiscal
year.
(vii)(A) Once FNS determines how many State agencies will
participate as pledge States in the upcoming fiscal year, it will, as
early in the fiscal year as possible, allocate among them the $20
million based on the number of ABAWDs in each participating State, as a
percentage of ABAWDs in all the participating States. FNS will
determine the number of ABAWDs in each

[[Page 33384]]

participating State using food stamp QC data for the most recently
available completed fiscal year, which provide a breakdown of each
State's population of adults age 18 through 49 who are not disabled and
who do not live with children.
(B) Each participating State agency's share of the $20 million will
be disbursed in accordance with paragraph (d)(6) of this section.
(C) Each participating State agency must meet the fiscal
recordkeeping and reporting requirements of paragraph (d)(7) of this
section.
(viii) If a participating State agency notifies FNS that it will
not obligate or expend its entire share of the additional funding
allocated to it for a fiscal year, FNS will reallocate the unobligated,
unexpended funds to other participating State agencies during the
fiscal year, as it considers appropriate and equitable, on a first
come-first served basis. FNS will notify other pledge States of the
availability of additional funding. To qualify, a pledge State must
have already obligated its entire annual 100 percent Federal E&T grant,
excluding an amount that is proportionate to the number of months
remaining in the fiscal year, and it must guarantee in writing that it
intends to obligate its entire grant by the end of the fiscal year. A
State's annual 100 percent Federal E&T grant is its share of the
regular 100 percent Federal E&T allocation plus its share of the
additional $20 million (if applicable). Interested pledge States must
submit their requests for additional funding to FNS. FNS will review
the requests and, if they are determined reasonable and necessary, will
reallocate some or all of the unobligated, unspent ABAWD funds.
(ix) Unlike the funds allocated in accordance with paragraph (d)(1)
of this section, the additional pledge funding will not remain
available until obligated or expended. Unobligated funds from this
grant must be returned to the U.S. Treasury at the end of each fiscal
year.
(x) The cost of serving at-risk ABAWDs is not an acceptable reason
to fail to live up to the pledge. A slot must be made available and the
ABAWD must be served even if the State agency exhausts all of its 100
percent Federal E&T funds and must use State funds to guarantee an
opportunity for all at-risk ABAWDs to remain eligible beyond the 3-
month time limit. State funds expended in accordance with the approved
State E&T Plan are eligible for 50 percent Federal match. If a
participating State agency fails, without good cause, to meet its
commitment, it may be disqualified from participating in the subsequent
fiscal year or years.
(4) * * * The Federal government will fund 50 percent of State
agency payments for allowable expenses, except that Federal matching
for dependent care expenses is limited to the maximum amount specified
in paragraph (d)(4)(i) of this section. * * *
* * * * *
(j) * * *
(3) * * *
(iii) * * * If the individual reduces his or her work hours to less
than 30 a week, but continues to earn weekly wages that exceed the
Federal minimum wage multiplied by 30 hours, the individual remains
exempt from Program work requirements, in accordance with paragraph
(b)(1)(vii) of this section, and the reduction in work effort provision
does not apply. Minor variations in the number of hours worked or in
the weekly minimum wage equivalent wages are inevitable and must be
taken into consideration when assessing a recipient's compliance with
Program work rules.
* * * * *

Sec. 273.24 [Amended]

0
5. In Sec. 273.24, paragraph (a)(4)(i) is amended by removing the
reference ``Sec. 273.22'' and adding in its place the reference
``Sec. 273.7(m)''.

Dated: June 1, 2006.
Kate Coler,
Deputy Under Secretary, Food, Nutrition and Consumer Services.
FR Doc. E6-9001 Filed 6-8-06; 8:45 am]
BILLING CODE 3410-30-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3AE6-9001. Public record. Not legal advice.