Get documents about "Thursday June
Document Sample
Thursday,
June 29, 2006
Part IV
Department of
Health and Human
Services
Administration for Children and Families
45 CFR Parts 261, et al.
Reauthorization of the Temporary
Assistance for Needy Families Program;
Interim Final Rule
jlentini on PROD1PC65 with RULES2
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\29JNR2.SGM 29JNR2
37454 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
DEPARTMENT OF HEALTH AND rule. To make sure your comments are • The child poverty rate fell from 20.5
HUMAN SERVICES fully addressed, we suggest the percent in 1996 to 17.8 percent in 2004,
following: reflecting 1.4 million fewer children
Administration for Children and • Be specific; living in poverty.
Families • Address only issues raised by the • During this same period, the
rulemaking discretion exercised in the poverty rate among African American
45 CFR Parts 261, 262, 263, 265 interim final rule, not the changes to the children declined from 39.9 percent to
law itself; 33.2 percent, and the poverty rate
RIN 0970–AC27
• Explain reasons for any objections among Hispanic children declined from
Reauthorization of the Temporary or recommended changes; 40.3 percent to 28.9 percent.
Assistance for Needy Families • Propose appropriate alternatives; • Although the poverty rate has
Program and increased some since 2000 as a result of
• Reference the specific section of the the most recent recession, the surge in
AGENCY: Administration for Children job creation over the past two years
interim final rule being addressed.
and Families (ACF), Department of portends favorably for renewed
Health and Human Services (HHS). II. Background improvement in poverty rates.
ACTION: Interim final rule with request But, if we are to succeed in achieving
The Personal Responsibility and Work
for comments. the full purposes of TANF, there is still
Opportunity Reconciliation Act of 1996
much to be done. Even with the
(PRWORA) (Pub. L. 104–193) created
SUMMARY: This interim final rule dramatic results States have achieved,
the Temporary Assistance for Needy
implements the statutory changes there are still far too many clients that
Families (TANF) block grant that
enacted in the reauthorization of the are denied the opportunities of work
fundamentally transformed welfare from
Temporary Assistance for Needy and preparation for work. In FY 2005,
a cash benefits program to a program only 30 percent of those required to
Families (TANF) program in the Deficit
focused on work and temporary work were participating in work
Reduction Act of 2005. This legislation
assistance. Under TANF, adults activities for sufficient hours to count
reauthorizes the TANF program through
receiving assistance are expected to toward the work participation rate.
fiscal year (FY) 2010 with a renewed
engage in work activities and develop States have been less effective in placing
focus on work, program integrity and
the capability to support themselves clients with multiple barriers in work,
strengthening families through healthy
before their time-limited assistance runs including those with mental health
marriage promotion and responsible
out. States are required to assist issues, addiction, developmental or
fatherhood. The interim final rule
recipients in making the transition to learning disabilities, limited English
addresses the work and program
employment. Also, they are expected to proficiency, and those subject to
integrity changes of the new law.
meet work participation rates and other domestic violence. While the average
DATES: Effective Date: June 29, 2006. critical program requirements in order
Comment Date: Comments due on or wages of clients entering the workforce
to maintain their full Federal funding are above the minimum wage, they are
before August 28, 2006. and avoid penalties. still too low to ensure family well-being.
ADDRESSES: You may submit your The PRWORA legislation also More effective models of post-
comments in writing to the Office of dramatically changed intergovernmental employment supports that lead to career
Family Assistance (OFA), relationships, giving States and Tribes development and wage progression are
Administration for Children and broad flexibility to set eligibility rules needed. Our clients also need programs
Families, 5th Floor East, 370 L’Enfant and decide what types of benefits and that sustain and keep families together
Promenade, SW., Washington, DC 20447 services to provide clients. States and and programs that enable low-income,
or hand deliver to OFA/ACF, 5th Floor Tribes have used this flexibility to try non-custodial fathers to help their
East, 901 D St., SW., Washington, DC new, far-reaching initiatives that families financially.
20447. You may download an electronic effectively addressed the needs of
version of the interim final rule at families. PRWORA limited Federal Justification for Interim Final Rule
http://www.regulations.gov and may regulatory authority, but added new The Administrative Procedure Act
download a copy and transmit written responsibility for tracking State requirements for notice of proposed
comments electronically via the Internet performance and imposing penalties rulemaking do not apply to rules when
at: http://www.regulations.acf.hhs.gov. when States fail to comply with the agency finds that notice is
FOR FURTHER INFORMATION CONTACT: program requirements. impracticable, unnecessary, or contrary
Robert Shelbourne, Director, Division of TANF has been a truly remarkable to the public interest. We find proposed
State TANF Policy, Office of Family example of a successful Federal-State rulemaking impracticable and contrary
Assistance, ACF, at (202) 401–5150. partnership. Millions of parents have to the public interest because it would
SUPPLEMENTARY INFORMATION: left welfare for work, reducing the fragment the implementation of the
TANF rolls by nearly 60 percent, from Deficit Reduction Act’s (DRA) (Pub.L.
I. Comment Procedures about 4.4 million families in August 109–171) work requirements. The DRA
Instructions: All comments received, 1996 to just 1.9 million families in clearly states that implementation of
including any personal information September 2005. But the decline in the certain work requirement changes will
provided, will be posted without change caseload is just part of the story. During be effective October 1, 2006. In
to http://www.regulations.acf.hhs.gov. this period there were also great particular, the statute strengthens the
Also, comments will be available for improvements in a range of outcomes existing work requirements by
public inspection Monday through for low-income families and children: extending work participation
• The percentage of never-married
jlentini on PROD1PC65 with RULES2
Friday 8:30 a.m. to 5 p.m. at 901 D St., requirements to families with an adult
SW., 5th Floor, Washington, DC. mothers who work outside the home for receiving assistance in a separate State
We will not consider comments wages increased nearly 30 percent, from program and recalibrating the caseload
received beyond the 60-day comment 49.3 percent in 1996 to 63.1 percent in reduction credit by updating the base
period in modifying the interim final 2004. year from FY 1995 to FY 2005. The law
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37455
also directs the Secretary of Health and programs. It retains funding at $16.5 ensuring that welfare is a short-term,
Human Services to define work billion each year for block grants to transitional experience, not a way of
activities and determine who is a work- States and Tribes; $319 million a year life. The rule encourages and supports
eligible individual, and these provisions through FY 2008 for supplemental State flexibility, innovation, and
are critical to the timely implementation grants to certain States with high creativity while holding States
of work requirements. In particular, population growth and historically low accountable for moving families toward
without Federal definitions for work welfare payments; and $2 billion over self-sufficiency. In developing this
activities, States could define some five years for the Contingency Fund for interim final rule, we have sought to
activities so broadly that they render the needy States. It also creates a $150 implement the new requirements of the
new work provisions meaningless, million a year research, demonstration, Deficit Reduction Act of 2005 in a way
thereby delaying implementation of and technical assistance fund for that does not impinge on a State’s
meaningful reform. Moreover, such a competitive grants to strengthen family ability to design effective and
practice would perpetuate existing formation, promote healthy marriages, responsive programs. Indeed, most
disparities in State definitions and and support responsible fatherhood. States have demonstrated a tremendous
undermine the equitable treatment of The Deficit Reduction Act of 2005 commitment to the TANF work goals
States. In addition, States would be maintains State flexibility and many and objectives, using creativity and
required to establish work participation provisions of PRWORA, but includes ingenuity to help families succeed.
verification procedures regarding important changes to improve the Nevertheless, some observers, and the
activities that would not yet be defined effectiveness of the program. The law Government Accountability Office
in regulation. Therefore, States might strengthens work participation (GAO) in particular, have noted that the
have to revise their procedures requirements by recalibrating the flexibility provided to States to define
substantially once final regulations were caseload reduction credit so that States work activities for themselves has led to
published. Thus, issuing regulations only receive credit for additional inconsistent definitions across States as
regarding all aspects of work caseload reductions after FY 2005. well as inconsistent measurement of
requirements simultaneously is Families in separate State programs for work participation. In their 2005 report
necessary to implement the intent of the whom funds are claimed to meet the ‘‘Welfare Reform: HHS Should Exercise
law and promote the public interest. ‘‘maintenance of effort’’ (MOE) Oversight to Help Ensure TANF Work
Under an interim final rule, States requirements are now included in the Participation Is Measured Consistently
would know how to plan their programs work participation rate calculation and Across States’’ (GAO–05–821), GAO
and take necessary steps to implement other data collection requirements. The noted that the wide range of work
the new requirements. law also requires the Secretary to activity definitions used across States
Further, in the Deficit Reduction Act provide additional direction and makes it difficult to compare work
of 2005, Congress explicitly allows HHS oversight on how to count and verify participation across States. Similarly,
to issue these regulations on an interim allowable work activities, to clarify who some States have used this flexibility to
final basis. Thus, the policies reflected is a work-eligible individual and to authorize a wide variety of activities to
in this interim final rule are effective ensure that State internal control advantage themselves compared to other
immediately. We will consider all procedures will result in accurate and States. In particular, some activities
germane comments received during the consistent work participation included by some States under some
comment period. With one exception, information. The Deficit Reduction Act work activities do not appear to
States must comply with these of 2005 also creates a new penalty for effectively address barriers to work or
requirements by October 1, 2006, or be States that fail to establish and maintain enhance the job readiness of clients.
subject to potential penalties during FY procedures to verify reported work As a result of concerns about the
2007. The exception relates to the new participation data. This interim final inconsistency of work measures among
penalty created by the Deficit Reduction rule implements these statutory changes States, the Deficit Reduction Act of 2005
Act of 2005 for States that fail to and the next phase of welfare reform by requires us to issue this regulation to
establish and maintain procedures to helping more low-income families enter define each work activity category. As
verify reported work participation data. the workforce and succeed at work. we discuss in detail later, under our
While States are required by the statute Under PRWORA, we interpreted the definitions States retain the flexibility to
and this rule at § 261.63 to submit a limitation on Federal authority to allow engage clients in appropriate activities,
Work Verification Plan by September us to regulate in two situations: (1) tailored to their needs. But we restrict
30, 2006, we will hold States Where Congress explicitly directed the certain practices that some States have
accountable for failure to maintain Secretary to regulate; and (2) where used under our prior rules, particularly
adequate internal controls and work Congress charged HHS with enforcing those activities that do not improve job
verification procedures only for conduct penalties. In the latter situation, we skills or enhance an individual’s
that occurs after October 1, 2007. promulgated regulations to set out the employability.
criteria we would use in carrying out We also provide guidance to States on
III. The Deficit Reduction Act of 2005 our authority to assess penalties. The our expectations for verifying and
On February 8, 2006, the President Deficit Reduction Act of 2005 does not documenting actual hours of
signed the Deficit Reduction Act of 2005 alter the general restriction on Federal participation. We do this through
(Pub. L. 109–171). It includes provisions regulatory authority at Section 417 of preamble language with examples, as
to reauthorize TANF and build on this the Social Security Act, and so we are well as through general regulatory
program’s success. The new law continuing this overall policy. However, language that outlines internal control
addresses the needs of families by the law did explicitly direct HHS to principles that derive from government
maintaining the program’s overall regulate on certain aspects of the work auditing standards. The basic premise of
jlentini on PROD1PC65 with RULES2
funding and basic structure, while participation requirements. this approach is that public officials are
focusing increased efforts on building The TANF final rule (64 FR 17720, accountable for establishing and
stronger families through work, job April 12, 1999) reflects PRWORA’s maintaining effective internal control
advancement, and research on healthy strong focus on moving recipients to systems to ensure that laws and
marriage and responsible fatherhood work and self-sufficiency, and on regulations are followed; that program
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37456 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
goals and objectives are met; that New hires information contained in also referenced in the regulations at 45
resources are safeguarded; and that the National Directory of New Hires CFR 260.35. For information about the
reliable data are obtained, maintained, (NDNH) may help solve these problems. application of civil rights laws in the
and fairly disclosed. Under this The NDNH information can help context of TANF, visit the Office for
principle, when a State reports hours of identify those who are employed but Civil Rights (OCR) Web site at http://
participation for a family, it is whose employment is unknown to the www.hhs.gov/ocr. Among other things,
reasonable to expect that there is TANF agency. We will continue to work the Web site contains OCR guidance
supporting documentation that the with State agencies to provide the entitled Civil Rights Laws and Welfare
reported activities are real and were NDNH information and to identify Reform—An Overview and Technical
actually performed for the hours effective verification and documentation Assistance for Caseworkers on Civil
claimed. We also recognize the need to practices. If State TANF agencies use Rights Law and Welfare Reform and
be careful in establishing the NDNH regularly and base their Prohibition Against Discrimination on
documentation requirements so that we participation rate data on verified the Basis of Disability in the
do not return to an eligibility-focused employment matches, they will improve Administration of TANF and other
culture, where paperwork receives more the accuracy and consistency of information on how to contact OCR
attention than moving individuals into information on which work headquarters and regional offices for
self-sufficiency. participation rates are calculated. further information and technical
Unsubsidized employment is the In keeping with the President’s New assistance. Additional information,
primary goal of TANF. A growing body Freedom Initiative, we encourage States including fact sheets and discrimination
of evidence suggests that more TANF to make every effort to engage complaint forms, is also located on the
recipients may be working than many individuals with disabilities in work OCR Web site or may be obtained by
believe, and that State-reported TANF activities. Disabled individuals on calling OCR toll free at 800–368–1019,
data on reasons for case closure may be TANF caseloads are capable of TDD 800–537–7697.
persistently understating the role of participating in productive work
activities and deserve an opportunity to IV. Regulatory Provisions
employment. More specifically, States
become self-sufficient through work. The Deficit Reduction Act of 2005
report that less than 20 percent of case
Under the TANF statute, such families requires relatively modest changes to
closures are due to employment, while
are included in the work participation existing TANF regulations at 45 CFR
nearly half of all cases are closed due to Parts 261, 262, 263 and 265. Thus, this
rate calculation. It is important that
reasons such as ‘‘failure to cooperate,’’ interim final rule reflects primarily the
every effort is made to serve the full
‘‘voluntary closure,’’ or ‘‘other’’ changes to the original TANF rules
range of TANF recipients that can work
unspecified reasons. In contrast, an required by the new statutory
and benefit from work activities and
HHS-funded synthesis report of welfare provisions. In the preamble, we discuss
supports. States are encouraged to
leaver studies conducted by the Urban only the regulatory sections that are
explore the capabilities of all TANF
Institute found that somewhat over half being revised or newly established. We
recipients to learn what they can do
of families leaving welfare do so as a do not make any changes to either 45
rather than focusing on their limitations.
result of employment (Final Synthesis CFR part 260, General TANF Provisions
States may explore new ways to
Report of Findings from ASPE ‘‘Leavers’’ or to 45 CFR part 264, Other
implement work activities like
Grants, November, 2001). Many closures specialized work experience sites that Accountability Provisions.
that are, in fact, due to employment are help families attain the necessary work Note that we use the term ‘‘we’’
coded by the States as ‘‘failure to skills to improve their ability to obtain throughout the regulatory text and
cooperate’’ or as some other category employment. In fact, in the definition of preamble. The term ‘‘we’’ means the
because at the point of closure, the State ‘‘work-eligible individual’’ in § 261.2, Secretary of the Department of Health
agency often is unaware that the client we encourage States to work with and Human Services or any of the
became employed. This undercount in parents who receive Supplemental following individuals or agencies acting
administrative data may occur because Security Income (SSI) and whose on his behalf: the Assistant Secretary for
some recipients obtain employment, but children are TANF recipients by giving Children and Families, the Regional
do not immediately notify the TANF them the option to include such families Administrators for Children and
agency. As a result, individuals miss out when they meet participation Families, the Department of Health and
on other employment-supporting requirements. We are hopeful this Human Services, and the
benefits for which they may be eligible increased State flexibility will give Administration for Children and
and States miss families that they could States the incentive to broaden their Families. Likewise, the term ‘‘Act’’
count toward the participation rates. efforts in working with disabled refers to the Social Security Act, as
Part of the success of State efforts is individuals to give them every amended. We use the term ‘‘The Deficit
that many recipients want to work and opportunity to enter the workforce. Reduction Act of 2005’’ (Pub. L. 109–
get jobs on their own. The new Of course, States must continue to 171) when we refer to the new law.
requirements set forth in the Deficit comply with the civil rights laws, States, the Territories, and the District of
Reduction Act of 2005 will ensure that including those enumerated at 408(d) of Columbia are all subject to the TANF
TANF agencies know whether their the Social Security Act, when requirements, but for the ease of the
clients are employed so that they can implementing the new work reader, hereinafter, a reference to States
properly address the needs of families requirements. Section 408(d) expressly means this entire group. Tribal TANF
moving to self-sufficiency and count states that any program or activity programs are not affected by this rule;
them in the work participation rates. receiving Federal TANF funds is subject the Deficit Reduction Act of 2005 does
The new requirements will also help to: (1) The Age Discrimination Act of not amend section 412 of the Social
jlentini on PROD1PC65 with RULES2
ensure that TANF agencies know 1975; (2) Section 504 of the Security Act that authorizes Tribal
whether families that left welfare were Rehabilitation Act of 1973 (Section 504); TANF programs.
employed prior to case closure so that (3) the Americans with Disabilities Act For the convenience of readers, where
these families can be counted toward of 1990 (ADA); and (4) Title VI of the we make major changes to a regulatory
the work participation rate. Civil Rights Act of 1964. These laws are section or to a subpart, we republish the
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37457
section or subpart in its entirety, rather participation rates. The law specifically hiring a recipient from TANF or other
than just the changes. This makes the requires us to determine whether an public funds, that recipient would be
provisions easier to understand and activity of a recipient of assistance may considered to be in subsidized public or
gives context to the regulatory changes. be treated as a work activity. We are private sector employment. This
defining each of the allowable work definition does not apply to recipients
Part 261—Ensuring That Recipients activities to promote consistency in the whose employers claim a tax credit for
Work measurement of work participation rates hiring economically disadvantaged
Section 261.2 What definitions apply and thus treat States fairly. workers. While such tax credits are
to this part? Section 407(d) of the Social Security designed to foster the employment of
Act specifies 12 separate and distinct low-income workers, traditionally they
Under the original TANF rule, we
activities. Thus, we have attempted to have not been treated as ‘‘subsidized
chose not to define work activities to
draft definitions that are, as far as employment’’ in the context of welfare.
provide maximum flexibility to States
possible, mutually exclusive from one All TANF recipients in unsubsidized
so they could design and carry out the
another. Because the list of countable employment are, by definition,
welfare reform programs that best met
activities is provided by statute, we do receiving a subsidy—their TANF
the individual needs to help families not have the regulatory authority to add assistance grant. The receipt of this
find work and become self-sufficient. additional activities. Our definitions grant, however, does not constitute
We simply listed the 12 work activities follow the order that the work activities subsidized employment, as long as the
in 45 CFR 261.30 in the order they are listed in § 261.30 of this part and employer receives no direct subsidy for
appear in the Act. However, we section 407(d) of the Social Security Act employing the recipient. Recipients in
indicated in the preamble of the final for ease of reference when referring to unsubsidized employment also may
TANF rule, that we were ‘‘concerned the nine core work activities that count receive work-related subsidies, such as
that different TANF definitions [of work for the first 20 hours of required work child care, transportation, and other
activities] could affect the vulnerability and the three activities that can only support services.
of States to penalties for failure to meet count as participation after the 20-hour Self-employment may count as
the participation rate.’’ As we noted, ‘‘to requirement is met. unsubsidized employment. Self-
the extent possible, we want to ensure We would like to emphasize that employment may include, but is not
an equitable and level playing field for these definitions delineate what limited to, domestic work and the
the States.’’ We also explained that we constitutes each activity for the work provision of child care. As we explain
would ‘‘carefully assess the types of participation rate but they in no way in the preamble to § 261.60, a State may
programs and activities States develop’’ change the requirement that individuals not count more hours toward the
and ‘‘if necessary at some time in the must participate for a specified number participation rate for a self-employed
future, we will initiate further of hours to count in the participation individual than the number derived by
regulatory action.’’ rate. Generally, that requirement is for dividing the individual’s self-
We are now convinced that the an individual to participate for an employment income (gross income less
flexibility we initially allowed States to average of 30 hours per week in the business expenses) by the Federal
define work activities results in month with the exception that a single minimum wage.
inconsistent work participation custodial parent of a child under six We are defining both subsidized
measurement and that disparities in must participate for an average of only private sector employment and
State definitions undermine the 20 hours per week in a month. To count subsidized public sector employment as
principle of equitable treatment. For in the two-parent rate, the parents must employment for which the employer
example, several States count job participate for a combined total of at receives a subsidy from TANF or other
search, job readiness activities, and least 35 or 55 hours, depending on public funds to offset some or all of the
vocational educational training as part whether they receive federally funded wages and costs of employing a
of a work experience or community child care. States continue to have the recipient. Subsidized employment
service program. In some instances, it flexibility to assign an individual to a differs from unsubsidized employment
appears that States integrated these combination of activities, for example in that the employer receives a subsidy.
activities into work experience or blending school and work or training It differs from work experience in that
community service to avoid various and work or job search and community the participant is paid wages and
limitations on some TANF work service, to reach the hours needed to receives the same benefits as a non-
activities, such as the statutory six-week count a family in the work participation subsidized employee who performs
limitation on counting job search and rate. Please refer to the regulations in similar work.
job readiness assistance. Some States subpart C of part 261 and the preamble There are several ways to operate a
also count participation in otherwise explanation of that subpart for more a subsidized employment program. One
unallowable educational activities as more detailed discussion of the hours approach is to use TANF funds that
part of an allowable TANF work and activities requirements. would otherwise be paid as assistance to
activity. Thus, defining work activities Below, we discuss the rationale for reimburse some or all of an employer’s
is necessary to maintain the integrity of the definitions that are included in costs for the wages, benefits, and/or the
the TANF work participation § 261.2. additional costs of employment-related
requirements. Unless we define the Unsubsidized employment means taxes and insurance. (Under the Aid to
work activities, States with narrow full- or part-time employment in the Families with Dependent Children
definitions would be at a disadvantage public or private sector that is not (AFDC) program, this approach was
in meeting the participation subsidized by TANF or any other public called ‘‘work supplementation’’ or
requirements compared to States with program. ‘‘grant diversion.’’)
jlentini on PROD1PC65 with RULES2
broader definitions. The determination of whether or not A second model is one in which a
Furthermore, the Deficit Reduction employment is subsidized depends on third party acts as the employer of
Act of 2005 requires the Secretary to whether the employer, rather than the record during the trial period, like a
promulgate regulations to ensure recipient, receives a subsidy. If an temporary staffing agency. For example,
consistent measurement of work employer receives a direct subsidy for a private, for-profit organization may
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37458 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
contract with a welfare agency and serve However, the goal of subsidized Act (FLSA). According to the
as the employer of record while the employment should be to prepare Department of Labor’s May 1997
participant works for a private-sector participants for and move them into guidance, ‘‘How Workplace Laws Apply
company for a trial period. The unsubsidized employment. to Welfare Recipients,’’ ‘‘[w]elfare
organization receives a fee from the Receipt of employment subsidies recipients in ‘workfare’ arrangements,
TANF or other public agency (and provided through the tax code, which required recipients to work in
employers) to cover the participant’s including Federal tax credits, such as return for their welfare benefits, must be
salary and support services, including the Work Opportunity Tax Credit compensated at the minimum wage if
on-site follow-up for both employers (WOTC) and the Welfare-to-Work Tax they are classified as ‘employees’ under
and employees. The total amount of the Credit (WWTC), does not make the Fair Labor Standard Act’s (FLSA)
payment to the private, for-profit subsidized employment of an otherwise broad definition.’’ The FLSA applies if
organization depends on how successful unsubsidized job for purposes of this there is an employment relationship
it is in placing and keeping employees definition. These tax credits subsidize between an employer and an employee.
in jobs. employers who hire welfare recipients But the FLSA uses a broader definition
Supported work for individuals with or other hard-to-employ groups. TANF than is often used for tax or
disabilities, as defined under the agencies, however, may not know unemployment purposes. To ‘‘employ’’
Rehabilitation Act of 1973 (29 U.S.C. whether employers use such tax credits under the FLSA, means to ‘‘suffer or
705(35)), also could be counted as and employers may not file for them permit to work.’’ If recipients engaged in
subsidized employment. Supported until well after they have hired work experience activities are
work for individuals with disabilities recipients. We consider participants ‘‘employees’’ under the FLSA
means work in an integrated setting (i.e., supported by Federal tax credits only to definition, they must be compensated at
where people with and without be in ‘‘unsubsidized employment.’’ the applicable minimum wage. The
disabilities work in the same place) for Subsidized private or public sector FLSA’s overtime pay (for over 40 hours
wages consistent with those paid to employment also does not include ‘‘on- in a work week), child labor, and
non-disabled workers with similar job the-job training’’ programs, where recordkeeping requirements also apply.
functions. The workers with disabilities employers are subsidized to offset the The TANF assistance and benefits
may receive individualized services costs of training. (See the discussion of that these work experience participants
such as, but not limited to, on-the-job training below.) receive are not considered wages for
transportation, family support, or Work experience (including work Social Security purposes, nor are they
additional supervision. To the extent associated with the refurbishing of considered taxable income for purposes
that supported work also includes publicly assisted housing) if sufficient of the Federal income tax or the Earned
intensive on-site training activities, it private sector employment is not Income Tax Credit. However, a State
may be counted as on-the-job training, available means a work activity, might consider a participant in work
discussed below. performed in return for welfare, that experience to be an employee of the
Regardless of the approach, the provides an individual with an State for purposes of workers’
employer is subject to the requirements opportunity to acquire the general skills, compensation coverage.
of the Fair Labor Standards Act (FLSA) training, knowledge, and work habits We considered whether to regulate
and, as a result, must pay the necessary to obtain employment. The the duration of a traditional work
participant wages that equal or exceed purpose of work experience is to experience position. We decided against
the applicable Federal or State improve the employability of those who specifying limits. States should have the
minimum wage. We recommend that cannot find unsubsidized employment. flexibility to design programs that meet
States generally limit the duration of This activity must be supervised by an both their needs and those of the
subsidized employment programs to six employer, work site sponsor, or other individuals they serve. However, the
to twelve months; however, longer responsible party daily. Work goal of work experience should be to
durations may be appropriate for experience programs are sometimes prepare participants for and move them
supported employment of individuals called ‘‘workfare’’ because participants into unsubsidized employment or other
with disabilities, as long as they are continue to receive their TANF grant. program activities that can help in this
justified by an individualized needs Some existing State work experience transition.
assessment. programs include activities that fall On-the-job training (OJT) means
During this trial period in which the outside this definition. For example, training in the public or private sector
costs of employment are being several States count job search, job that is given to a paid employee while
subsidized, the employer should readiness activities, and vocational he or she is engaged in productive work
provide necessary training, guidance, educational training as part of a work and that provides knowledge and skills
and direction to an employee. At the experience program. In some instances, essential to the full and adequate
end of the subsidy period, the employer it appears that States integrated these performance of the job. On-the-job
is expected to retain the participant as activities into work experience to avoid training must be supervised by an
a regular employee without receiving a various limitations, such as the six-week employer, work site sponsor, or other
subsidy. States should not allow limitation on counting job search and responsible party daily.
employers to recycle TANF recipients in job readiness assistance. We will not In this type of activity, States may
subsidized employment slots, thereby permit these practices under this subsidize the employer to offset the cost
reducing their competitive labor costs. interim final rule. of the training provided to the
We considered whether to regulate Work experience participants participant. Upon satisfactory
the rate of reimbursement to employers continue to receive their TANF grant completion of the training, we expect
and the duration of a subsidized while they are taking part in work and the employer to retain the participant as
jlentini on PROD1PC65 with RULES2
employment position. We decided training activities similar to those of a regular employee without receiving a
against specifying limits because States paid employees. They do not receive subsidy.
should have the flexibility to design a wages or compensation. Nonetheless, As noted under the discussion of
program that meets their needs and the they may be considered employees for subsidized employment, ‘‘supported
needs of the individuals they serve. the purpose of the Fair Labor Standards employment’’ as defined under the
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37459
Rehabilitation Act of 1973 (29 U.S.C. skills, instruction in work place category, such as work experience. For
705(35)), may be counted as OJT if it expectations (including instruction on example, a State may place an
includes significant on-site training in appropriate attire and behavior on the individual who is otherwise able to
the knowledge and skills essential to the job), and training in effective job work but for the need to reinforce
full and adequate performance of the seeking, as well as life skills training. substance abuse treatment into a special
job. For example, a State Vocational The second is substance abuse program in which a single provider
Rehabilitation agency may provide a treatment, mental health treatment, or coordinates work and treatment in a
client with an onsite ‘‘job coach’’ who rehabilitation activities for those who halfway house environment. As part of
teaches job skills in the context of are otherwise employable. Such that treatment program, the individual
productive work. If ‘‘supported treatment or therapy must be also fulfills assigned supervised,
employment’’ includes an employer determined to be necessary and certified documented work responsibilities for
subsidy and other supportive services by a qualified medical or mental health the benefit of all the residents, such as
but does not include on-site training, it professional. Some individuals in the preparing meals, housecleaning, or
should be counted as subsidized TANF caseload are capable of getting scheduling group activities. In that case,
employment. and keeping a job but for a substance the State may report the hours the
We defined OJT as a component of abuse, mental heath, or other condition individual was in the work portion of
employment, whether unsubsidized or that treatment or rehabilitation activities the program, i.e., performing work that
subsidized. However, some elements of would resolve. We have included these meets the requirements of these rules.
training may involve specialized services as part of our definition to help The time the individual spent in the
preparation to prepare participants for a such individuals make the transition treatment component does not count in
specific position with an employer and from welfare to work. the work category.
do not constitute employment. Such As with other work activities, a State Some States currently incorporate as
training may be more akin to vocational may only count an individual’s actual part of job search and job readiness
educational training. While we have hours of participation in substance assistance programs that would fall
tried to define work activities so that abuse treatment, mental health outside our new definition. For
they do not overlap, OJT combines some treatment, or rehabilitation activities example, at least one State incorporates
elements of subsidized employment, and must document those hours as activities ‘‘that are essential to the
vocational education and other forms of required at §§ 261.60 and 261.61. If an health, safety and welfare of families,’’
training. We are interested in receiving individual does not have sufficient including activities associated with a
comments about whether we should hours in substance abuse treatment, child’s dental checkups, immunization,
broaden the definition beyond paid mental health treatment, or and school attendance. Parenting skills
employment to include other aspects of rehabilitation activities alone to count training or participating in Head Start is
training. in the participation rate, he or she may part of the definition in more than one
Job search and job readiness still be counted in the calculation of the State. Another State includes personal
assistance means the act of seeking or State’s work participation rate by care during recovery from a medical
obtaining employment, preparation to combining them with other allowable problem, bed rest, hospitalization, and
seek or obtain employment, including activities. Individuals in substance activities that promote a healthier
life skills training, and substance abuse abuse treatment, mental health lifestyle, such as smoking cessation.
treatment, mental health treatment, or treatment, or rehabilitation activities are These are valuable and important things
rehabilitation activities for those who subject to the same hours requirements for a family to address or may be
are otherwise employable. Job search to count for participation that medically appropriate, but they do not
and job readiness assistance participants individuals in any other activities must constitute work or direct preparation for
should be supervised on an ongoing meet. Please refer to §§ 261.31 and work. Thus, these activities may not
basis no less frequently than daily. 261.32 for more details about the count as job search and job readiness
Readers should refer to § 261.34 (which number of hours needed to count a assistance. Only programs that involve
is not revised in this interim final rule) family in the participation rates. seeking and preparing for work can
for a discussion of the time limitations Our goal in incorporating substance meet this definition.
that apply to this activity. abuse treatment, mental health Current State definitions of job search
‘‘Job search and job readiness treatment, and rehabilitative activities and job readiness also include one or
assistance’’ is a single component for for those who are otherwise employable more of the other eleven countable work
Federal participation standards. The into this interim final rule is to ensure activities. For example, one State lists
‘‘job search’’ aspect of this component is that States can meet the needs of all remedial education and English as a
largely self-explanatory and we define it individuals in their caseloads struggling Second Language (ESL) as part of job
as ‘‘the act of seeking or obtaining to escape welfare dependency. We are search and job readiness. These
employment,’’ which should encompass interested in receiving comments about activities more closely fit our definition
all reasonable job search initiatives. As our approach in this area. of job skills training directly related to
such, ‘‘job search’’ includes making For substance abuse treatment, mental employment or education directly
contact with potential employers, health treatment or rehabilitation related to employment and should be
whether by telephone, in person or via activities that are not part of job search counted under those activities, as
the Internet, to learn of suitable job and job readiness assistance, States appropriate.
openings, applying for vacancies, and should be advised that a portion of Some States have asked us what
interviewing for jobs. those activities may count toward the constitutes a week for the limitations on
Our definition of ‘‘job readiness work participation rate. If a portion of counting no more than six weeks per
assistance’’ comprises two types of substance abuse treatment, mental fiscal year of job search and job
jlentini on PROD1PC65 with RULES2
activities. The first is preparation health treatment or rehabilitation readiness assistance, no more than four
necessary for an individual to seek or service meets a common-sense of which may be consecutive. We
obtain employment. This includes definition of work, then the hours believe that the most commonly
activities such as preparing a resume or associated with that work activity may understood and simplest way to answer
job application, training in interviewing count under the appropriate work this question is to use the ordinary
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37460 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
definition of a week: seven consecutive community service. Although these limited to, work performed for a school
days. Whether the State starts counting activities benefit the community, they (e.g., serving as a teacher’s aide), Head
an individual’s participation on a do not necessarily involve real Start program (e.g., helping as a parent
Monday, a Wednesday or any other day, supervision or help an individual move volunteer), church (e.g., preparing meals
a week ends seven days later, regardless toward self-sufficiency. Unlike other for the needy), or government/nonprofit
of how many hours the individual work activities, Congress added the term agency (e.g., providing clerical support),
participated in the course of those seven ‘‘programs’’ after community service, as well as participation in volunteer
days. If an individual participates for suggesting that allowable activities organizations such as Americorps,
more than four consecutive weeks or a should involve structure and Volunteers in Service to America
total of six weeks in a fiscal year, the supervision. Thus, shoveling sidewalks (VISTA), or private volunteer
State may not count those hours toward would meet this criterion only if done organizations.
the participation rate. as part of a neighborhood maintenance Vocational educational training (not
Community service programs mean program undertaken by a public or to exceed 12 months with respect to any
structured programs in which TANF nonprofit agency. In such an individual) means organized
recipients perform work for the direct environment, this activity would not educational programs that are directly
benefit of the community under the only address unmet community needs, related to the preparation of individuals
auspices of public or nonprofit but also would help participants for employment in current or emerging
organizations. We limit community develop basic works skills, improve occupations requiring training other
service programs to projects that serve a work habits, and help move participants than a baccalaureate or advanced
useful community purpose. This toward employment. degree. Vocational educational training
includes programs in fields such as In addition, community service participants should be supervised no
health, social service, environmental programs do not include activities that less frequently than daily.
protection, education, urban and rural meet the definition of another allowable Vocational educational training
redevelopment, welfare, recreation, TANF work activity. Several States, for programs should be limited to activities
public facilities, public safety, and child example, count job search and job that give individuals the knowledge and
care. Community service programs must readiness activities, and vocational skills to perform a specific occupation.
be designed to improve the educational training as part of a Under AFDC and the Job Opportunities
employability of recipients not community service program. Doing so and Basic Skills (JOBS) Training
otherwise able to obtain employment effectively avoids statutory limitations programs, basic and remedial education,
and must be supervised on an ongoing on these allowable TANF work education in English proficiency, and
basis no less frequently than daily. A activities, such as the six-week postsecondary education were
State agency shall take into account, to limitation on counting ‘‘job search and statutorily authorized activities.
the extent possible, the prior training, job readiness’’ activities, the 12-month However, PRWORA did not include
experience, and skills of a recipient in limitation on vocational educational these activities as separate work
making appropriate community service training, and the 30-percent limit on activities. Although they may help
assignments. counting individuals in vocational prepare individuals for employment,
This definition limits the activity to educational training. Some States also they are generally not considered
what many commonly think of as count participation in otherwise vocational education or training and
‘‘community service.’’ It excludes, for unallowable educational activities as Congress purposely concentrated the
example, activities such as participation community service. Under our TANF work activities on those focused
in a substance abuse treatment program, definition, States may not define on employment.
mental health and family violence countable community service programs Some existing State vocational
counseling, life skills classes, parenting so broadly as to circumvent statutorily- educational training programs allow
classes, job readiness instruction, and imposed restrictions on other TANF other educational activities such as
caring for a disabled household activities. basic skills, language training, and
member, which while important and We recognize that there may be postsecondary education leading to a
beneficial, are not primarily directed to instances in which other activities are baccalaureate or advanced degree. We
benefiting the greater community. As we embedded within the community are explicitly restricting these practices
stated in the preamble to the original service activity. For example, an to prevent the use of the term
final TANF rule (64 FR 17778, April 12, individual providing clerical support ‘‘vocational educational training’’ from
1999), ‘‘The fact that something has might attend computer training classes covering virtually any educational
value or is integral to a countable as part of the community service if the activity. In particular, the TANF
activity does not necessarily mean it can assigned activity requires it. Short-term program was not intended to be a
count as participation.’’ We reaffirm that training or similar activities may be college scholarship program for
perspective under this interim final counted as community service as long postsecondary education. Programs
rule. as such activities are of limited duration authorized by the Higher Education Act
Community service programs must and are a necessary or regular part of the of 1965 (and subsequent amendments)
include structured activities that both community service. Activities that are support these longer-term educational
provide a community service and also not an integral part of community activities. In contrast, activities such as
improve the employability of service cannot count. For example, basic education and language training
participants. Some existing State substance abuse treatment may be a qualify as education directly related to
community service programs allow and prerequisite for participation in work employment.
count unstructured activities that are activities, but it does not count under Some States count education leading
undertaken with little or no supervision. community service because it is not an to a high school diploma as vocational
jlentini on PROD1PC65 with RULES2
One State, for example, considers integral part of the community service educational training. Although
shoveling a neighbor’s sidewalk or activity. vocational education is often provided
helping a friend with errands to be Examples of programs and activities in high school, minor parents attending
community service. Another State that fit under our definition of high school, even if in a vocational
counts serving as a foster parent as a community service include, but are not education track, should be counted as
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37461
participating in ‘‘satisfactory attendance employment. This can include literacy to a certificate of general equivalence, in
at secondary school or in a course of instruction or language instruction the case of a recipient who has not
study leading to a certificate of general when such instruction is explicitly completed secondary school or received
equivalence.’’ Doing so avoids triggering focused on skills needed for such a certificate means regular
the lifetime 12-month limit on the use employment or combined in a unified attendance, in accordance with the
of vocational educational training. whole with job training. Job skills requirements of the secondary school or
We recognize that there may be training directly related to employment course of study at a secondary school,
instances in which basic skills should be supervised on an ongoing or in a course of study leading to a
education is embedded within a basis no less frequently than daily. certificate of general equivalence, in the
vocational educational training activity. Some States include barrier removal case of a recipient who has not
Such basic skills education may be activities as job skills training, such as completed secondary school or received
counted as vocational educational substance abuse counseling and such a certificate. The former is aimed
training as long as it is of limited treatment, mental health services, and primarily at minor parents still in high
duration and is a necessary or regular other rehabilitative activities. While we school, whereas the latter could apply to
part of the vocational educational encourage States to work with recipients of any age. Unlike ‘‘education
training. Basic skills education of this individuals in these areas, the definition directly related to employment,’’ this
nature may enhance preparation for the of job skills training focuses on activity need not be restricted to those
labor market by giving participants an educational or technical training that is for whom obtaining a GED is a
opportunity to apply their learning in designed specifically to help prerequisite for employment. However,
the context of their future jobs. individuals move into employment. this activity may not include other
Our definition of vocational Education directly related to related educational activities, such as
educational training narrows the scope employment, in the case of a recipient adult basic education or language
of what counts for this activity to who has not received a high school instruction unless it is linked to
programs that prepare participants for a diploma or a certificate of high school attending a secondary school or leading
specific trade, occupation, or equivalency means education related to to a GED. Participants in this activity
‘‘vocation.’’ This definition is consistent a specific occupation, job, or job offer. should be supervised on an ongoing
with definitions used in other Federal This includes courses designed to basis no less frequently than daily.
programs that provide vocational provide the knowledge and skills for In addition to regular school
education, such as the Carl D. Perkins specific occupations or work settings, attendance at a secondary school or in
Vocational and Applied Technology but may also include adult basic a course of study leading to a certificate
Education Act of 1990. Even so, this education and ESL. Where required as of general equivalence, participants
definition could overlap with other a prerequisite for employment by should be making ‘‘good or satisfactory
TANF work activities that provide employers or occupations, this activity progress’’ for the activity to count. This
training, including on-the-job training may also include education leading to a includes a standard of progress
and job skills training. Since we want to General Educational Development developed either by the State or by the
define work activities that are mutually (GED) or high school equivalency educational institution or program in
exclusive, we are interested in diploma. Participants in education which the recipient is enrolled. In
comments on how States currently directly related to employment should addition, it must include both a
implement this component and whether be supervised on an ongoing basis no qualitative measure of progress, such as
the definition should be broadened. less frequently than daily. grade point average, as well as a
Vocational educational training must Participants should make ‘‘good or quantitative measure, such as a time
be provided by education or training satisfactory progress’’ in order for their frame within which a participant is
organizations, which may include, but hours to count. This includes a standard expected to complete such education.
are not limited to, vocational-technical of progress developed by the We are interested in receiving
schools, community colleges, educational institution or program in comments that describe possible criteria
postsecondary institutions, proprietary which the recipient is enrolled. Good or or definitions for what constitutes
schools, non-profit organizations, and satisfactory progress should be judged making ‘‘good or satisfactory progress.’’
secondary schools that offer vocational by both a qualitative measure of As under other TANF educational
education. progress, such as grade point average, as activities, States may not count
Under vocational educational well as a quantitative measure, such as unsupervised homework time as part of
training, States may not count a time frame within which a participant the hours of participation for this
unsupervised homework time as part of is expected to complete such education. activity. We do permit hours to count
the hours of participation. We do, We are interested in receiving where a secondary school or structured
however, permit hours to count where comments that describe other possible GED program includes monitored study
a State structures a vocational criteria or definitions for what sessions and it can document the hours
educational training program to include constitutes making ‘‘good or satisfactory of participation.
monitored study sessions and it can progress.’’ Providing child care services to an
document the hours of participation. As under other TANF educational individual who is participating in a
Job skills training directly related to activities, States may not count community service program means
employment means training and unsupervised homework time as part of providing child care to enable another
education for job skills required by an the hours of participation for this TANF recipient to participate in a
employer to provide an individual with activity. We do permit hours to count community service program.
the ability to obtain employment or to where a State structures a program of Participants in this activity should be
advance or adapt to the changing education directly related to supervised on an ongoing basis no less
jlentini on PROD1PC65 with RULES2
demands of the workplace. Job skills employment to include monitored study frequently than daily.
training can include customized sessions and it can document the hours It does not include providing child
training to meet the needs of a specific of participation. care to enable a TANF recipient to
employer or it can be general training Satisfactory attendance at secondary participate in any of the other eleven
that prepares an individual for school or in a course of study leading allowable work activities. Child care
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37462 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
provided to TANF recipients (and status; and, at State option on a case-by- would not be appropriate to require
others) in other activities typically case basis, a recipient of Supplemental inclusion of their families in the rates.
involves payment for services rendered Security Income (SSI) benefits. We have However, the Social Security
and would be classified as unsubsidized excluded these groups because they Administration is working to remove
employment. Indeed, providing child either cannot receive TANF-funded disincentives to work from the SSI
care for TANF recipients in community services or it would be inappropriate to program, and we would like to
service could also be considered under require them to work. For example, encourage States to support these efforts
other TANF work activities, such as many immigrant families lack a work through their TANF programs.
unsubsidized employment, work authorization or permit and requiring Therefore, we will allow States to
experience, or community service. We these adults to work would be a
receive credit toward the TANF
are interested in comments that describe violation of their immigration status. In
participation rates for any parents that
how this activity differs and might be the case of non-recipient minor parents,
distinguished from other work we want to encourage them to stay in are able to participate in these efforts by
activities. school and complete their education. including their families in both the
We caution States to implement this Unless otherwise excluded above, we numerator and the denominator of the
activity responsibly. Because assistance chose to include all other non-recipient calculation of the participation rate on
is time-limited, States should ensure parents living with a child receiving a case-by-case basis.
that the activity is effective in helping assistance as work-eligible individuals. We also chose to exclude from the
move the provider toward self- This new language primarily adds child- definition of a work-eligible individual
sufficiency. Training, certification or only cases to the work participation a parent providing care for a disabled
mentoring will help make the activity rates, but could include some two- family member living in the home who
meaningful and could be a first step parent cases where both parents live in does not attend school on a full-time
toward the provider’s employment in the household but one is not part of the basis. The State must provide medical
the child care field. assistance unit. In particular, it adds
documentation to support the need for
The Deficit Reduction Act of 2005 families in which non-recipient parents
also requires us to include families the parent to remain in the home to care
were removed from a case due to a
receiving assistance under a separate sanction or a State time limit. We have for the disabled family member. We
State program that is funded with included these groups because recognize that parents responsible for
money counted towards the State’s MOE expecting parents to participate in work disabled family members often
requirement and to specify the activities is consistent with the goal of encounter problems finding affordable
circumstances under which a parent reducing dependency by promoting and appropriate care and may not be
who resides with a child who is a work. Further, such a policy improves able to participate in TANF work
recipient of assistance should be the consistency of the work activities to the same extent as other
included in the work participation rates. participation rate calculation across adults. We therefore exclude them from
The simplest way for us to do this was States, specifically called for in the the participation rate calculation. We
to use a new term, ‘‘work-eligible Deficit Reduction Act of 2005. chose not to count their participation as
individual’’ to describe anyone whose To illustrate the importance of one of TANF’s work activities, as
participation in work activities including these families, consider the several States did under prior rules,
contributes to determining whether the situation of a parent whose needs have because this activity cannot be easily
family counts in the calculation of the been removed from the case due to a supervised and is not focused on
work participation rate. We drew the work-related penalty. The effect on a preparing individuals for unsubsidized
term from the heading to the statutory family’s grant of removing a parent’s employment.
section with this new requirement. needs from the assistance unit is often
Thus we define a work-eligible no different from the effect of a sanction In drafting this interim final rule, it
individual as one of two types of adults. that uses a fixed percentage or dollar has been our goal to ensure that States
The first is an adult (or minor child amount. Yet, under the original TANF can meet the needs of all individuals in
head-of-household) receiving assistance rules, cases with a parent’s needs their caseloads. We are interested in
under TANF or a separate State removed were excluded from the receiving comments about our approach
program, unless excluded. The second calculation of work participation rates in this area, particularly with respect to
is a non-recipient parent living with a because they became child-only cases, a State’s ability to serve families
child receiving assistance, unless the whereas those subject to fixed struggling to escape welfare dependency
parent is a member of one of three percentage or dollar amount sanction in which there is an individual with a
excluded groups of parents described methods were, by law, excluded for a disability.
below. maximum of only three months in a 12-
In drafting this provision of the Finally, readers should note that the
month period. Under the interim final
regulations, we considered in turn each rule, we bring consistency to how we definition of ‘‘work-eligible individual’’
type of family in which a parent resides treat all sanction methods in the does not include individuals in families
with a child recipient of assistance to participation rates. Similarly, families in served under an approved Tribal TANF
determine whether it was appropriate to which non-recipient parents whose program, even if those families receive
include that group of families in the needs have been removed from the case State MOE funding, unless the State
calculation of the work participation for other types of sanctions will now be includes those Tribal families in
rates. We chose to exclude the following included in the calculation of work calculating work participation rates, as
non-recipient parents living with a child participation rates. permitted under § 261.25.
receiving assistance from the definition We give States the option of including
Subpart A—What Are the Provisions
jlentini on PROD1PC65 with RULES2
of work-eligible individual: a minor on a case-by-case basis families in
parent who is not a head-of-household which a non-recipient parent receives Addressing Individual Responsibility?
(or a spouse of head-of-household); an SSI. SSI recipients are not eligible for We made no changes to this subpart.
alien who is ineligible to receive TANF benefits and we recognize that
assistance due to his or her immigration many are unable to work. Therefore it
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37463
Subpart B—What Are the Provisions Section 261.22 How will we determine consider the family to be receiving
Addressing State Accountability? a State’s overall work rate? assistance during the period of
To determine a State’s participation retroactivity under § 261.22(d)(2).
Section 261.20 How will we hold a
State accountable for achieving the rate, PRWORA called for dividing the Section 261.23 What two-parent work
work objectives of TANF? number of families receiving TANF rate must a State meet?
assistance that include an adult or a Under PRWORA, the overall
At the heart of PRWORA was the minor child head-of-household engaged participation rate for two-parent
expectation that we hold States in work activities by the total number of families started at 75 percent in FY 1997
accountable for moving families from such families, excluding families and increased to 90 percent in FY 1999
welfare to self-sufficiency through work. sanctioned that month for refusal to and thereafter. Under prior TANF rules,
Each State had to meet two separate participate in work activities, as long as this section of the regulation included a
work participation rates that reflected they had not been penalized for more chart of the minimum participation
how well it succeeded in engaging than three months in the preceding 12- rates required by fiscal year. The Deficit
adults in work activities. The minimum month period. A State could also Reduction Act of 2005 continues the
participation rate for adults in all exclude from the denominator single- two-parent work participation rate at 90
families (the overall rate) started at 25 parent families with a child under the percent in FY 2006 and thereafter.
age of one for not more than a total of Under the interim final rule, we have
percent in FY 1997 and rose to 50
12 months or include or exclude deleted the former phased in
percent in FY 2002 and thereafter. The
families receiving assistance under a participation rate chart and updated the
minimum participation rate for adults in
tribal family assistance plan or under a language to reflect these ongoing
two-parent families (the two-parent rate) tribal Native Employment Works (NEW)
was 75 percent in fiscal years 1997 and statutory requirements and dates.
program.
1998, increasing to 90 percent The Deficit Reduction Act of 2005 Section 261.24 How will we determine
afterward. A State that failed to meet the modifies the work participation rate a State’s two-parent work rate?
required participation rates was subject calculation to include families with an The Deficit Reduction Act of 2005
to a monetary penalty. The Deficit adult or minor child head-of-household modifies the statute to include in the
Reduction Act of 2005 retains the 50 under State programs funded with two-parent work participation rate
percent participation requirement for all qualified State expenditures and other calculation two-parent families in ‘‘State
families and the 90 percent requirement work-eligible individuals, which we programs funded with qualified State
for two-parent families, but includes have defined in § 261.2. In expenditures.’’ It also gave us the
families in separate State programs in §§ 261.22(a)(2) and (b)(1), we simply authority to include other two-parent
the calculation of the respective work modify the prior language to reflect this families with work-eligible individuals,
participation rates. new calculation. which we have defined in § 261.2. In
Our original TANF rule included In general terms, the original §§ 261.24(a)(2), (b)(1) and (b)(2) we
participation rate calculation excluded modify the language to reflect the new
similar but separate regulatory
two categories of families. First, it statutory participation rate calculation.
provisions for the ‘‘overall’’ and ‘‘two-
excluded families subject to a work The original two-parent participation
parent’’ participation rates. These same sanction for not more than three months rate calculation also excluded families
distinctions and provisions are in the preceding twelve months. subject to a work sanction for not more
continued in this interim final rule, but Second, it excluded (for a maximum of than 3 months in the preceding 12
we extend the calculation of work 12 months) families in which a single months. We modify this exclusion at
participation rates to include families custodial parent is caring for a child less § 261.24(b)(2) to apply to two-parent
with a work-eligible individual in order than one year old. In this interim final families with work-eligible individuals.
to conform to our new wording on rule, we clarify that States may apply Additionally, under § 261.24(d) we
calculating the work participation rates. both of these exclusions on a case-by- clarify two provisions of current policy:
We also added a reference to the years case basis for families with a work- (1) We count toward the participation
that the participation rates apply. eligible individual §§ 261.22(b)(3) and rate those families receiving assistance
(c)(2). for a partial month if a work-eligible
Section 261.21 What overall work rate
As we note in the preamble to individual is engaged in work for the
must a State meet? § 261.24, we do not consider a two- minimum average number of hours in
Under PRWORA, the overall parent family with a disabled work- each full week that the family receives
participation rate for adults in families eligible individual to be a two-parent assistance; and (2) States that pay
started at 25 percent in FY 1997 and family for work participation rate benefits retroactively also have the
increased by five percentage points each purposes. The statute directs us to option to consider the family to be
exclude these families from the two- receiving assistance during the period of
year to 50 percent in FY 2002 and
parent work participation rate retroactivity.
thereafter. Under our prior TANF rules, Unchanged by the Deficit Reduction
calculation, but not from the overall
this section of the regulation included a Act of 2005, we will continue to sum
work participation rate calculation.
chart of the minimum participation Similar to the policy we allowed the participation hours of both parents
rates required by fiscal year. The Deficit under the original TANF rule, States in the assistance unit when calculating
Reduction Act of 2005 continues the may now count families for a partial the two-parent rate. This differs from
overall work participation rate at 50 month if a work-eligible individual is the way two-parent families are treated
percent in FY 2006 and thereafter. engaged in work for the minimum in the overall work rate, which requires
jlentini on PROD1PC65 with RULES2
Under the interim final rule, we have average number of hours in each full that all of the participation requirements
deleted the former phased-in week that the family receives assistance. be met by one of the adults in the
participation rate chart and updated the This policy is now added to the rule assistance unit. Also, as under
language to reflect these statutory at § 261.22(d)(1). States that pay benefits PRWORA and the original rule in
requirements. retroactively also have the option to paragraph (e) of this section, we do not
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37464 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
consider a two-parent family with a grant in about 30 States is less than $446 Families that need additional hours
disabled work-eligible individual to be per month; however, the FLSA beyond the core activity requirement
a two-parent family for work calculation is not limited to the TANF must satisfy them in some other TANF
participation rate purposes. grant. work activity.
According to the Department of This policy respects the protections
Section 261.25 Do we count Tribal Labor’s guidance entitled ‘‘How
families in calculating the work that the FLSA affords to individuals in
Workplace Laws Apply to Welfare positions subject to the minimum wage
participation rate? Recipients’’ (May 1997), a State may requirement. At the same time, it gives
This section of the prior rule permits count the cash value of food stamps added flexibility in the work
a State to include families that are toward participation requirements if the participation rate for States that
receiving assistance under an approved State adopts a food stamp workfare maximize the hours they can require of
Tribal family assistance plan or under a program. In addition, a State could individuals in such positions.
Tribal work program in calculating the adopt a Simplified Food Stamp We considered remaining silent on
State’s participation rate. We have made Program, which would allow it to match FLSA; however, given the challenge of
a slight change to this section in the its food stamp exemptions to those of its meeting the work participation rates
interim final rule by adding the term TANF program. For example, the Food under the Deficit Reduction Act of 2005,
‘‘with a work-eligible individual’’ after Stamp Program exempts single parents we thought it important to address this
family to be consistent with our revised with a child under age 6 from issue in a consistent and fair manner.
calculation methods and the definition participation. Adopting a Simplified Nearly all States have some cases that
of a work-eligible individual in § 261.2. Food Stamp Program would allow a cannot meet the 20-hour minimum
State to count food stamp benefits required in core work activities to count
Subpart C—What Are the Work
toward the hours of required toward the work participation rate. The
Activities and How Do They Count?
participation for this otherwise exempt FLSA clarification provides States with
We revised only two sections of group. By adding the value of food
subpart C. increased flexibility to assign work
stamps, recipients in most States could
activities and meet work participation
Section 261.31 How many hours must meet current TANF’s requirement for
rates while treating participants subject
a work-eligible individual participate for 20-hour per week of core activities.
to the FLSA requirements fairly. We
the family to count in the numerator of Indeed, the combined TANF/Food
also considered establishing a maximum
the overall rate? Stamp benefit in all States for a family
number of hours that a State could use
of three or more exceeds the $446
As we explained in § 261.2, we added to meet the core hour requirement, such
threshold.
a new definition of a work-eligible Even after counting the value of food as 5 hours per week. While this would
individual for purposes of calculating stamps, in some States TANF families be an improvement over existing rules,
the work participation rates. The only with just one or two people in the a 5-hour cap would only address a
changes we have made to § 261.31 are assistance unit may still not have a large portion of the affected cases and would
to incorporate this phrase into the enough combined TANF/food stamp be administratively complex; therefore
heading and to substitute the phrase grant to generate the 20 hours per week we decided against this approach.
‘‘work-eligible individual’’ for the word of participation needed to satisfy Section 261.32 How many hours must
‘‘individual’’ where it is appropriate. TANF’s core activity requirement. The a work-eligible individual participate for
We would like to emphasize that combined benefits also may not be the family to count in the numerator of
under these rules States retain the enough for families that have unearned the two-parent rate?
flexibility to assign an individual to a income, such as Social Security and
combination of activities, for example child support, and do not receive the In similar fashion to § 261.31 above,
blending school and work or training maximum TANF grant. Moreover, some we substituted the phrase ‘‘work-eligible
and work or job search and community TANF families do not receive food individual’’ for the word ‘‘individual’’
service, to reach the hours needed to stamps, so there is no food stamp in the heading and in the section as
count a family in the rate. We encourage benefit to add to the calculation. needed to clarify how States can count
States to use this approach where it best Under this interim final rule, we hours and the calculation of the two-
serves the needs of their clients. allow States to count any family that parent work participation rate. Again,
A work-eligible individual who participates the maximum hours it is we stress that States may combine the
participates in a work experience or allowed under the minimum wage activities to which it assigns
community service program that is requirement of the FLSA as having individuals, blending, for example,
subject to FLSA requirements cannot be satisfied the 20-hour per week core school and work or training and work or
required to participate in that work activity requirement if actual job search and community service, to
activity for more hours than the welfare participation falls short of 20 hours per reach the hours needed to count a
grant divided by the minimum wage. week. We are limiting this policy to family in the work participation rate.
For some families, the TANF grant States that have adopted a food stamp As we do for single-parent families,
divided by the minimum wage does not workfare program and a Simplified when two-parent families have work-
result in enough hours to satisfy TANF’s Food Stamp Program to ensure that eligible individuals in work activities
minimum hourly requirements. In recipients participate to the fullest subject to the minimum wage
general, a TANF grant of less than $446 extent possible and that the calculation requirement of the FLSA, we will count
would result in fewer than 20 hours of of the work participation rate is based any family that participates the
countable participation per week on uniform standards across all States. maximum hours allowable as having
through an activity that is subject to the The Simplified Food Stamp Program satisfied the 30-hour per week (or 50-
jlentini on PROD1PC65 with RULES2
FLSA requirements. (This amount is must be structured to match food stamp hour per week, if the family receives
based on the Federal minimum wage; it exemptions to those of the TANF federally-funded child care) core
would be smaller in States that have a program so that work requirements activity requirement, even if actual
higher State minimum wage.) For a could be applied to as many work- participation falls short of 30 (or 50)
family of three, the maximum TANF eligible individuals as possible. hours per week. For a more detailed
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37465
discussion of this policy, please refer to calculate a net impact of eligibility estimates and methodology and
the preamble to § 261.31. changes (i.e., caseload decreases minus incorporated all net reductions resulting
increases) if the State provides from Federal and State eligibility
Subpart D—How Will We Determine
information on changes that increase the changes. We have, however, dropped
Caseload Reduction Credit for
caseload. A State is under no obligation the prior requirement that States submit
Minimum Participation Rates?
to provide the impacts of changes that a summary of public comments received
Under PRWORA, the caseload increase the caseload. Such impacts about the proposed methodology, as we
reduction credit reduces the required merely serve to offset the effects of have not found this helpful to the
work participation rate that a State must eligibility changes that decrease the process of calculating the credits.
meet for a fiscal year by the percentage caseload and as such are to a State’s The interim final rule also clarifies at
that a State reduces its overall caseload advantage because they may make for a § 261.41(c)(2) the language permitting a
in the prior fiscal year compared to its larger credit. State requesting a caseload reduction
caseload under the title IV–A State plan We will continue to base the caseload credit for its two-parent caseload to base
in effect in FY 1995, excluding decline on the combined TANF and its estimate on either the change in its
reductions due to Federal law or to State Separate State Program caseload figures two-parent caseload or on the decline in
changes in eligibility criteria. The for families receiving assistance. As its overall caseload. We made no
Deficit Reduction Act of 2005 indicated at § 261.40(c), we will use the changes to paragraphs (d), (e) or (f) of
recalibrates the caseload reduction year ACF–199, TANF Data Report, and the the prior rule.
by establishing a new FY 2005 base ACF–209, SSP–MOE Data Report, to
year, which is reflected in this interim Section 261.42 Which reductions
establish both the FY 2005 base-year
final rule in §§ 261.40, 261.41 and count in determining the caseload
and the comparison-year caseloads. We
261.42. reduction credit?
have deleted references to earlier data
Because of the sharp caseload decline reports needed for the FY 1995 base We revised language in § 261.42(a) to
since FY 1995, the caseload reduction year. This rule continues to allow States clarify that the caseload reduction credit
credit had virtually eliminated to correct erroneous data and make calculation must disregard caseload
participation requirements for most adjustments to include unduplicated reductions due either to Federal law or
States. By recalibrating the base year for data. to changes in State eligibility criteria in
the caseload reduction credit, this comparison to the criteria in effect in FY
provision encourages States to help Section 261.41 How will we determine 2005; however, a State may also reduce
families become independent. the caseload reduction credit? the disregard for caseload reductions
Again in this section, we have due to changes in eligibility criteria that
Section 261.40 Is there a way for a substituted FY 2005 for any prior increase caseloads. As we explained in
State to reduce the work participation reference to FY 1995, as required by the the preamble to § 261.40, this change
rates? Deficit Reduction Act of 2005. Our only clarifies our ongoing policy of
In this section, we have eliminated interim final rule maintains the same calculating the net impact of eligibility
the obsolete reference to FY 1995 and general caseload reduction changes (i.e., caseload decreases minus
replaced it with the new base year of FY methodology, while simplifying some of increases) where a State provides
2005, as required by the Deficit the reporting requirements. information on the impacts of policies
Reduction Act of 2005. The caseload In particular, we have eliminated the that expanded eligibility. In addition,
reduction credit for a fiscal year equals requirement formerly located at we also incorporated into the regulation
the percentage point decline in the § 261.41(a)(1), (b)(5) and (b)(6) that at § 261.42(a)(3) our existing policy that
caseload, net of eligibility changes, States report caseload closure and a State may not receive a caseload
between FY 2005 and the prior-year application denial information because reduction credit that exceeds the actual
caseload. To simplify the language at we have found that this information is caseload decline between FY 2005 and
§ 261.40(a)(3), we have also created a not always relevant or helpful in the comparison year.
new term—‘‘comparison year’’—to refer estimating the impact of an eligibility At § 261.42(b), we also clarified in the
to the fiscal year that precedes the fiscal change. Instead, a State should submit regulatory language that a State include
year to which the credit applies. whatever data or analyses are most Separate State Program cases in both its
For the two-parent participation rate, relevant for estimating the average base-year and its comparison year
our interim final rule continues to allow monthly impact of individual policy caseloads. We have eliminated the
a State to use the caseload decline, net changes on the comparison-year reference to ‘‘cases made ineligible for
of eligibility changes, of either the two- caseload and include that information Federal benefits by Pub. L. 104–93.’’ It
parent caseload or the overall caseload. as an attachment to its ACF 202—TANF is no longer relevant due to the change
As under current policy, Caseload Reduction Report. Those in the base year to FY 2005, required by
§ 261.40(b)(1) of the interim final rule materials should clearly show the step- the Deficit Reduction Act of 2005.
clarifies that the calculation of the by-step processes the State uses to arrive Indeed, the new base year also means
caseload reduction credit must at each impact and should demonstrate many caseload reductions due to State
disregard caseload reductions due either how the State took into account the changes in eligibility criteria no longer
to changes in Federal law or to changes effect of the change over time. In apply because such policies were in
that a State has made in its eligibility conjunction with this interim final rule, effect in the new, recalibrated base year
criteria in comparison to the criteria in we are revising the Caseload Reduction of FY 2005.
effect in the new base year of FY 2005. Report form to accommodate the
However at § 261.40(b)(2) we clarify that revisions to the credit calculations and Section 261.43 What is the definition
a State may reduce or offset the to reduce the reporting burden on of a ‘‘case receiving assistance’’ in
calculating the caseload reduction
jlentini on PROD1PC65 with RULES2
disregard for caseload reductions due to States.
changes in eligibility criteria that The interim final rule continues to credit?
increase caseloads. In other words, the require under § 261.41(b)(6) that a State Our interim final rule does not make
revised regulatory language simply certify that it has provided the public an any changes to the definition of a ‘‘case
clarifies our continuing policy: We will opportunity to comment on the receiving assistance’’ in calculating the
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37466 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
caseload reduction credit. The only and in the counting of work hours. To the activity in which they participate,
change we have made in this section is help achieve this goal, we defined a may miss work or training because of a
the elimination of the reference to a work-eligible individual and each of the holiday or a temporary illness.
State’s implementation date formerly in work activities in § 261.2 and created Thus, our interim final rule permits
§ 261.43(b) which is no longer new sections describing methods for States to count limited excused
applicable, with the statutory change in reporting and the types of absences for individuals in unpaid
the base year to FY 2005. documentation needed to verify a work- allowable work activities. A State may
eligible individual’s hours of define and count reasonable short-term,
Section 261.44 When must a State excused absences for hours missed due
participation. To verify work
report the required data on the caseload to holidays and a maximum of 10
participation information under these
reduction credit? additional days of excused absences in
rules, each State must establish and
Our interim final rule continues to maintain the procedures and internal any 12-month period, no more than two
require that a State report the necessary controls outlined below. The following of which may occur in a month. In order
documentation on caseload reductions provides the specific new verification to count an excused absence as actual
for the preceding fiscal year by requirements we added and the hours of participation, the individual
December 31. We have removed the statutory authority for these must have been scheduled to participate
reference to our intent to notify a State requirements. in an allowable work activity for the
of its caseload reduction credit no later period of the absence that the State
than March 31. Discussions with States Section 261.60 What methods may a reports as participation.
about their caseload reduction State use to report a work-eligible We believe the 10-day limitation for
methodology, negotiations about individual’s hours of participation? additional days beyond holidays is an
necessary changes, and requesting and Under the prior TANF rule, some appropriate accommodation that takes
receiving additional data and States asked whether they were required into consideration varying work-site and
documentation have often gone beyond to report actual hours of participation or educational practices as well as
the prior notification date of March 31. whether they could report required or unexpected events that cause a work-
This in no way represents a change in scheduled hours. We replied that ‘‘The site to close or an individual to miss
our intention to issue caseload State must report the actual hours of scheduled hours. Each State must
reduction credits as early in a fiscal year participation for each work activity. describe its ‘‘excused absence’’ policies
as possible. Reporting required (or scheduled) hours and practice as part of its Work
of participation is inconsistent with the Verification Plan described below in
Subpart F—How Do We Ensure the
‘complete and accurate’ standard and is § 261.62. We considered not addressing
Accuracy of Work Participation
not acceptable.’’ (See the answer to excused absences for unpaid
Information?
question #42 under TANF Reporting participants but rejected this alternative
Under our prior rules, subpart F was Questions under TANF Program Policy in order to treat recipients in all
entitled ‘‘How Do Welfare Reform Questions and Answers, which can be activities equitably. We also considered
Waivers Affect State Penalties?’’ found on our Web site at: http:// permitting more days of excused
Because this subpart now only applies www.acf.dhhs.gov/programs/ofa/ absences but decided on 10 based on a
to one State, we moved the subpart to polquest/sectone.htm.) typical accrued leave scenario for
subpart H, with appropriate re- Our interim final rule at § 261.60(a) working families. For example, many
designation and renumbering changes. makes the existing policy of counting places of employment allow employees
We also think the new work verification only actual and not scheduled hours to accrue one half day of leave per two-
provisions of the Deficit Reduction Act explicit in the regulations. The new week pay period, which accounts for
of 2005 more logically follow the legislative language in the Deficit about 13 days over a calendar year.
discussion of participation requirements Reduction Act of 2005 makes clear that These individuals often work 40 hours
and the caseload reduction credit, so we Congress intended that only actual per week. Our decision to allow 10 days
have added them under a new subpart hours of work activities should count is based on required hours of 20 or 30
F. toward the participation rates. Allowing hours per week in non-paid work.
Under the Deficit Reduction Act of scheduled hours would both introduce We want to emphasize that this
2005, HHS is required to promulgate inconsistencies among States and ‘‘excused absence’’ policy applies to
regulations to ensure consistent reduce the incentive for States to ensure what may be counted in the Federal
measurement of work participation that recipients actually participate for participation rate. The policy in no way
rates. The statute directs the Secretary to the hours they are assigned. Thus, each limits a State’s flexibility to excuse
include information with respect to (1) State must have in place a system for absences or otherwise make
determining whether the activities of a determining whether the hours they accommodations in the participation
recipient of assistance may be treated as report toward the participation rates requirements it imposes on individuals.
a work activity; (2) establishing uniform correspond to hours in which work- That is why the participation
methods for reporting hours of work of eligible individuals actually participate requirement is only 50 percent. An
a recipient of assistance; (3) identifying in work activities. The State must individual’s requirements are set by the
the types of documentation needed by describe this system as part of its Work State balancing the goals of the program,
the State to verify reported hours of Verification Plan, which we explain in the needs of the family, and obligations
work; and (4) specifying the detail at § 261.62. under the Americans with Disabilities
circumstances under which a parent Under § 261.60(b) of these interim Act (ADA) and Section 504 of the
who resides with a child who is a final rules, we continue to permit States Rehabilitation Act of 1973. Thus, the
recipient of assistance should be to follow ordinary practice for counting State may require more or fewer hours
jlentini on PROD1PC65 with RULES2
included in the work participation rates. work time by basing it on the hours for of the individual than needed to count
A reliable and consistent work which the individual was paid, thus the family toward the Federal
participation measurement system allowing for occasional absences due to participation rate. States may also have
requires uniformity among States in paid holidays and sick leave. We a more expansive or a more restrictive
identifying work-eligible individuals recognize that all clients, regardless of list of allowable activities than those
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37467
that count to meet the Federal employer has great incentives to ensure For non-employment activities, as
participation rate. accuracy, and it minimizes reporting outlined in § 261.61(d), we believe
Under § 261.60(c) of the interim final burden. Other possibilities include States should require service providers
rule, we make clear that, in the case of timecards, sign-in/sign-out sheets, and to document the hours of their clients’
self-employment, as we noted in our rosters with recorded hours of work. participation. Documentation could
discussion of the definition of We encourage States to develop include time sheets, service provider
unsubsidized employment in § 261.2, systems that minimize requests for attendance records and school
we will not permit a State to count more documentation from an employer of an attendance records. If there are other
hours toward the participation rate for employee’s hours of participation. We documents that would substantiate the
a self-employed individual than the want to ensure that our documentation hours an individual participates in these
number derived by dividing the and verification requirements do not activities, the State should specify them
individual’s self-employment income discourage work by placing an undue in its plan. Contractual arrangement
(gross income less business expenses) burden on the employer because a with service providers of work activities
by the Federal minimum wage. A State primary goal of TANF is to help clients should require documentation of the
may propose an alternative method of achieve self-sufficiency through hours in which an assigned recipient
determining self-employment hours as unsubsidized work. participates.
part of its Work Verification Plan. Under § 261.61(c) of the interim final Section 261.61(e) relates to reporting
Finally as a reminder of current rule, we permit States to report self-employment hours. In such cases,
policy, because some weeks fall across projected actual hours of unsubsidized there is neither an employer to issue a
more than one month, we allow States or subsidized employment or OJT for up pay stub nor a supervisor or teacher to
to choose one of three methods to to six months at a time on the basis of monitor participation. Therefore, the
calculate the average hours per week for prior, documented actual hours of work. State needs another approach to
such a month. A State may decide that This rule is similar to the ‘‘prospective documenting the hours it reports for the
the week falls in the month that budgeting’’ that was used to calculate participation rate. Under these
includes the majority of the days of that earned income and grant amounts under circumstances, we will allow States to
week; it may include the week in the the former AFDC program. If a State count the number of hours derived by
month in which the Friday falls; or it chooses to project actual hours of work, dividing the individual’s self-
may count each month of the fiscal year the State must provide its policies and employment income (gross income less
as having 4.33 weeks. We considered practices in its Work Verification Plan business expenses) by the Federal
establishing a single method to promote required under § 261.62(b). minimum wage. A State may propose an
consistent work participation An example will illustrate what we alternative method of determining self-
measurement but ultimately decided envision. Based on valid documentation employment hours as part of its Work
against regulating in this area. Any such as pay stubs, or employer reports, Verification Plan. We will not approve
differences in State approaches average a State knows that a client averages 32 plans that provide for an individual’s
out over the fiscal year and thus do not hours of work per week. As long as the self-reporting of participation without
result in inconsistent measurement. In State receives no conflicting additional verification.
our view, the appeal of a single method information, the State may report 32
does not justify the administrative hours of participation a week in Section 261.62 What must a State do
burden on States that would need to employment for a maximum of the next to verify the accuracy of its work
change their data reporting systems. six months. At the end of this six-month participation information?
period, the State must obtain new valid The Deficit Reduction Act of 2005
Section 261.61 How must a State documentation or re-verify the client’s requires the Secretary to issue rules on
document a work-eligible individual’s current, actual average hours and these determining whether activities may be
hours of participation? hours may be reported for another six- counted as work activities, verifying
To clarify recordkeeping requirements month period. If, at any time, the State countable hours of work, and
with respect to participation, the becomes aware of a change in the determining who is a work-eligible
interim final rule at § 261.61(a) adds an client’s work situation, the new actual individual. Under § 261.62(a), a State
explicit requirement that a State must hours must be documented and may be must establish and employ procedures
verify through documentation in the prospectively reported for six months. for: (1) Determining whether its work
case file all hours of participation that For example, if a client requests a grant activities may count for participation
it reports. The Work Verification Plan adjustment due to either increased or rate purposes; (2) determining how to
required at § 261.62 must describe the decreased wages, this report would count and verify reported hours of work;
forms of documentation that the State require documentation and a (3) identifying who is a work-eligible
will use. Under this requirement, a State restatement of the actual hours of individual; and (4) internal controls to
may not report data to us on the basis participation. ensure compliance with the procedures;
of ‘‘exception reporting’’ where States In developing this option, we and (5) submit a complete Work
assume that clients participate in all considered whether the timeframe Verification Plan to the Secretary for
scheduled hours unless it receives a should be shorter, for example three approval. We outline our expectations
report to the contrary from a service months. However, we believe that a six- and guidelines for these requirements
provider. month period appropriately balances below.
As explained at § 261.61(b), we expect the administrative burden with the Procedures for determining whether
that many States will continue to use Deficit Reduction Act’s new emphasis work activities may count for
pay stubs as the basis for documenting on verification and documentation. We participation: Under § 261.62(b)(1)(i) for
hours of participation in unsubsidized want to emphasize that this method of each of its work activities, a State must
jlentini on PROD1PC65 with RULES2
employment, provided by either the reporting projected actual hours is only establish procedures to ensure that the
employee or employer at State-specified permitted for paid employment under activity is consistent with one of the
periods. This approach has significant the activities of unsubsidized work definitions in § 261.2. Hours of
advantages: It uses an existing system of employment, subsidized employment or participation must be reported for the
valid documents for which the OJT. proper countable work activity. For
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37468 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
example, our definition of a community documentation needed to count and documentation requirements outlined
service program excludes activities that verify reported hours of work and above. In addition, under § 261.62(b)(3)
do not directly benefit the community. identify who is a work-eligible a State must include a description of
Therefore, family- and self-improvement individual. We would be interested in how it: Accurately inputs into its
activities can no longer be counted as a suggestions or approaches as to how to automated data processing system;
community service work activity in the minimize the documentation burden for properly tracks the hours; and
participation rate. For each work the States that report the entire universe accurately reports the hours. Paragraph
activity, the State’s procedures should of population data. (b)(4) requires a description of the
specify the types of situations and range Procedures for identifying who is a procedures for ensuring that only hours
of activities which will be included. work-eligible individual: [§§ 261.62(b)(2) of participation in an activity that meets
Procedures for determining how to and (3)] The Deficit Reduction Act of a Federal definition are transmitted as
count and verify reported hours of work: 2005 requires the Secretary to identify countable work activities and paragraph
Under § 261.62(b)(1)(ii), for each the circumstances under which a parent (b)(5) requires a description of the
countable work activity in which a who resides with a child who is a internal controls to ensure a consistent
work-eligible individual participates, recipient of assistance should be measurement of the work participation
States must report the actual hours of included in the work participation rates. rates, including any quality assurance
participation in the report month and Thus, we have defined a work-eligible processes and sampling specifications.
calculate and report the average hours of individual in § 261.2 and have added a Under paragraph (c) we state that we
participation per week for each month data element ‘‘Work-eligible Individual will review a State’s plan for
in the quarter. Acceptable Indicator’’ to the quarterly data reports. completeness and approve it if we
documentation for the reported hours This definition includes all adults and believe it will result in accurate
must be based on affirmative reports minor child heads-of-household reporting of work participation
that the individual actually participated receiving assistance and some non- information.
for the reported hours, rather than an recipient parents. States may develop internal control
exception reporting system. Identifying adult and minor child
and verification systems that match
Under § 261.62(b)(1)(iii), for each of head-of-household recipients as work-
their unique program resources and
the work activities, a State must eligible individuals should not be
operational requirements. Some States
describe in its Work Verification Plan difficult—they have been included in
rely on client information systems and/
the documentation it uses to monitor the work participation rates since the
or use integrated data warehouses to
participation and ensure that it reports inception of the TANF program.
collect and process work participation
actual hours of participation. While all However, we now require that some
information. These States are able to
activities must be supervised no less non-recipient parents be included to
than daily to count in the work ensure consistent work participation compile electronically all or most of the
participation rate, we are establishing a rates. For example, a parent whose work participation data items, control
range of documentation guidelines that needs have been removed from the grant for the special rules and conditions that
vary by type of activity. Job search and due to a work-related sanction is apply to the Federal work activities,
job readiness assistance should be included in the definition of a work- compute the average hours across all
documented daily due to the short-term eligible individual and in the work activities for the month, perform item-
nature of this activity. Other unpaid participation rate. (Please refer to the by-item edit checks, and control for
work activities, including work discussion in the preamble to § 261.2 for internal consistency and completeness
experience, community service more detail about the definition of a of the work participation data. Some
programs, vocational educational work-eligible individual.) State systems can validate the work data
training, and providing child care to procedures must be able to identify all against the National Directory of New
participants in community service individuals in TANF and separate State Hires database or State Employment
programs, require documentation of programs claimed for MOE (SSP–MOE) Security files. Other States may rely on
hours of participation no less than every families who meet the definition of a TANF case managers to accurately track
two weeks. For paid employment, as we work-eligible individual. the participation data, including the
explain in the preamble to § 261.61(c), Internal controls to ensure participation hours and application of
States may report projected actual hours compliance with the procedures: Each the special rules and conditions.
for up to six months at a time. Readers State, under § 261.62(b)(5) must develop Some current systems may be
should refer to § 261.61 for additional internal controls and procedures that inadequate to meet the new verification
detail about documentation are sufficient to verify and validate the and validation requirements of the
requirements. work participation rates. Internal statute and this rule. States may need to
Currently, States may report the controls include the State’s mechanism develop and conduct quality assurance
family and individual-level data that for monitoring the quality of its work systems and tests. Using these
HHS uses to calculate work participation data and may entail such procedures, States could: (1) Perform
participation rates on either a sample or approaches as a secondary-stage case reviews to validate the accuracy of
population basis. To minimize the supervisory review, special studies, the data reported; (2) examine
documentation verification burden on regularly scheduled audits or ongoing documentation for the reported hours of
States that report using a sample, we sampling and quality assurance work; (3) test how the hours of
expect to focus audits and reviews on processes that are used to monitor participation were calculated; (4) check
the sample cases used to calculate adherence to established policies and how data is tracked through the system;
participation rates. These sample cases work verification procedures by staff (5) review the verification procedures to
should contain all the documentation and contractors. ensure they are doing what was
jlentini on PROD1PC65 with RULES2
needed to count and verify reported Work Verification Plan: Paragraph (b) intended; and (6) check what
hours of work and identify who is a of § 261.62 describes what must be procedures State staff, local staffs, and
work-eligible individual. It is important included in a State’s Work Verification contractors are actually using to
for States using population data to Plan. The plan must include a document, count and report hours of
ensure that all cases contain all the description of the procedures and participation.
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37469
The State’s Work Verification Plan as provided in paragraphs (a) and (b), participation rates over the course of a
also should describe the State’s the State will be liable for a penalty if fiscal year we will base the penalty on
procedures for controlling for data it fails to establish its work verification the number of times the State fails to
errors in inputting work participation procedures by submitting its interim meet the requirements. We will impose
items to the TANF report file. These Work Verification Plan by September a penalty based on the number of years
include transcription and coding errors, 30, 2006, or it fails to have its complete that a State fails to comply, i.e., one
data omissions, computational errors, plan approved by September 30, 2007. percent of the adjusted SFAG for the
and compilation errors. The plan should A complete Work Verification Plan first year, two percent for the second
document the checks used to isolate includes all the information required by year, three percent for the third year
electronic systems and programming § 261.62(b) and a certification that it until a maximum of five percent is
errors and the steps to ensure that all accurately reflects State operating reached. If a State subsequently
work participation report items are procedures. complies with its work verification
internally consistent. If sampling is used Second, as set forth in paragraph (c), procedures for two consecutive years
to perform quality assurance tasks to beginning in FY 2008, we will use the after any failure, we will consider a
test the validity of the participation single audit under OMB Circular A–133 subsequent failure to be the first
information, the State should include in conjunction with other reviews, occurrence again.
the sampling specifications in its audits, and data sources to assess the If a penalty is assessed, we will
verification plan. validity of a State’s internal control impose it in the immediately succeeding
procedures and the accuracy of the data fiscal year. States that are subject to a
Section 261.63 When is the State’s filed by States to calculate the work
Work Verification Plan Due? penalty for failure to comply with work
participation rates. We will determine verification procedures may claim
In accordance with the Deficit whether a State is penalty-liable based reasonable cause as specified at § 262.5.
Reduction Act of 2005, paragraph (a) on the findings drawn from a sample of They may also submit a corrective
requires that each State submit its cases during the single audit or via compliance plan to remedy the
interim verification procedures for another Federal review. Therefore, deficiency as described at § 262.6. States
validating work activities reported in States must maintain case that elect to enter into a corrective
the TANF Data Report and, if documentation and pertinent findings compliance plan will have the same
applicable, the SSP–MOE Data Report to produced through its verification time frame for correcting this violation
the Secretary no later than September process for use by the single State audit that applies to the penalty for failing to
30, 2006. In addition, under paragraph or ACF in its review of the State’s work satisfy the minimum work participation
(b), a State must submit revisions participation verification system. rates and the penalty for failing to
requested by the Department within 60 comply with the five-year limit on the
days of receipt of our notice, and must Section 261.65 Under what
circumstances will we impose a work receipt of Federal assistance under
submit and operate under an approved § 262.6(e)(1). Thus, any State that is
Work Verification Plan no later than verification penalty for failure to submit
a work verification plan or for failure to subject to a penalty for failing to
September 30, 2007. establish or comply with the work
Paragraph (c) describes the time frame maintain adequate internal controls to
ensure a consistent measurement of the participation verification procedures
for submitting a revised verification
work participation rates? must fully correct the violation by the
plan to the Secretary for approval. A
end of the first fiscal year ending at least
State must submit its revised Work The new statutory penalty language at
section 409(a)(15)(B) of the Social six months after our receipt of the
Verification Plan by the end of the
Security Act requires us to base the State’s corrective compliance plan. We
quarter in which the State modifies its
penalty on the State’s degree of may also require an amendment to the
procedures or internal controls.
noncompliance with its work State Verification Plan as one of the
Validating work activities is an ongoing
verification procedures, and that it steps the State must take to correct or
process that uses internal controls to
equal an amount of not less than one discontinue the violation. We have
check that staff is properly applying the
percent and not more than five percent added this requirement to § 262.6(f).
verification procedures, to ensure that
computer systems have been accurately of the State’s adjusted SFAG. Under Part 262—Accountability Provisions—
programmed to implement the paragraph (a) of this section, we will General
verification procedures, and to ensure take action to impose a penalty if the
State has not met the requirements of Section 262.1 What penalties apply to
the verification procedures are working
§ 261.64. Under paragraph (b), if a State States?
properly. As problems are identified, a
State may need to modify its verification fails to submit its interim Work The Deficit Reduction Act of 2005
procedures and/or internal controls. Verification Plan by the due date of adds an additional penalty at section
September 30, 2006, or fails to revise its 409(a)(15) of the Social Security Act for
Section 261.64 How will we determine procedures based on Federal guidance States that fail to establish or comply
if the State is meeting the requirement and submit the complete plan by with work participation verification
to establish and maintain work September 30, 2007, that we approve, procedures. If we determine that this
verification procedures that ensure an we will impose a penalty of five penalty applies, then we must reduce
accurate measurement of work percent, because the State will not have the adjusted SFAG payable for the
participation? complied with the fundamental immediately succeeding fiscal year by
The Deficit Reduction Act of 2005 requirements of the law. not less than one percent and not more
adds a new penalty provision to the Under paragraph (c), if, beginning in than five percent. (See the discussion in
Social Security Act at section 409(a)(15) FY 2008, we determine, through audits the preamble discussion for subpart F of
jlentini on PROD1PC65 with RULES2
for a State’s failure to establish or or special reviews, that the State has not part 261 of this chapter.) States may
comply with its work participation maintained adequate documentation, avail themselves of the penalty
verification procedures. We will verification and internal control resolution process provided in §§ 262.4
determine whether to impose this procedures to ensure the accuracy of the through 262.7, which may enable the
penalty based on two conditions. First, data used in calculating the work State to avoid this penalty. We added
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37470 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
this new penalty at (a)(15) and (c)(2) of States subject to this penalty that elect activities. Similarly, we clarified
this section. to enter into a corrective compliance existing matching policy under a new
plan must fully correct the violation by § 263.2(e) and renumbered the former
Section 262.2 When do the TANF
the end of the first fiscal year ending at section (e) as section (f). We also added
penalty provisions apply?
least six months after our receipt of the a new paragraph (g) to clarify that State
The penalty for States that fail to State’s corrective compliance plan. We funds used to meet any matching
establish work participation verification have added this penalty to § 262.6(e)(1). requirement under the Healthy Marriage
procedures takes effect on October 1, Also, we may require, on a case-by-case Promotion and Responsible Fatherhood
2006. If a State does not comply with basis, an amendment to the State’s Grant may count to meet the MOE
these new work participation verification procedures/plan as one of requirement in § 263.1.
verification procedures by October 1, the steps the State must take to correct As provided under PRWORA, States
2007, it will be subject to the penalty. or discontinue the violation. We are subject to a cost-sharing amount
We have added this provision as included this requirement at § 262.6(f). known as the maintenance-of-effort
paragraph (d) of this section. Postponing States that are subject to a penalty for (MOE) requirement. If a State fails to
penalty action until the beginning of FY failure to meet one of the required meet the required minimum all-family
2008 for compliance will provide States minimum work participation rates also or two-parent work participation rate for
with sufficient time to implement fully have the opportunity to claim a fiscal year, then the State must spend
the changes associated with the reasonable cause, as specified at § 262.5. at least 80 percent of its FY 1994
development of work verification As a reminder, under the current historic State expenditures in that fiscal
procedures. process, States would not typically learn year. If the State meets both minimum
Section 262.3 How will we determine if the results of the work participation work program participation rate
a State is subject to a penalty? rates for a fiscal year until the third or requirements, then the required
fourth quarter of the following year. For spending level decreases to 75 percent
In the preamble to §§ 261.64 and example, for FY 2007, after we receive of its FY 1994 historic State
261.65, we noted that we will impose the final quarter of State work expenditures.
the penalty for failure to establish or participation data at the end of the first Before the Deficit Reduction Act of
comply with work participation quarter of FY 2008, it will take several 2005, States could only count toward
verification procedures based on two months to analyze the data and their MOE requirement, expenditures to
conditions. The first condition will determine which States failed to meet provide assistance, benefits, and/or
depend on whether or not the State has the FY 2007 work participation rates services to or on behalf of eligible
submitted acceptable work participation and therefore are liable for a penalty. families, regardless of the TANF
verification procedures to us. The Any State that failed to meet one of the purpose that the expenditure is
second condition will depend on the required rates then would receive a reasonably calculated to accomplish.
findings drawn from a sample of cases notice with several options, including, Under our original rule, an ‘‘eligible
during the single audit or via another as noted above, requesting a reasonable family’’ must meet two fundamental
federal review. We will use the single cause exception from the penalty and criteria. First, the family must, at a
audit under OMB Circular A–133 as entering into a corrective compliance minimum, consist of a child living with
well as other avenues (e.g., other plan to correct the violation fully. Please a custodial parent or other caretaker
reviews, audits, and data sources) as refer to the regulations at 45 CFR 262.4 relative, or consist of a pregnant woman.
appropriate to determine whether the et seq. for a complete explanation of that Second, to receive benefits, the family
penalty applies. We have added these process. must be financially needy according to
procedures to paragraph (a)(1) of this We recognize that this interim final the quantified income and resource (if
section. rule imposes new requirements on applicable) criteria established by the
States, which, in some States, will State and contained in the State’s TANF
Section 262.6 What happens if a State
require legislative action. We invite plan.
does not demonstrate reasonable cause? The Deficit Reduction Act of 2005
States that believe that it will be
States that are subject to a penalty for impossible to meet the work maintains the same MOE spending
failure to establish or comply with work participation rates without State levels. However, the new law adds a
participation verification procedures legislative action to submit comments provision ‘‘Counting of Spending on
will have the opportunity to claim explaining why it will be impossible to Certain Pro-Family Activities’’ at
reasonable cause as specified at § 262.5 meet the required rates and how we 409(a)(7)(B)(i)(V) of the Social Security
and/or submit a corrective compliance should use the reasonable cause Act. This provision allows States to
plan to remedy the deficiency as exception to provide relief from the count expenditures on pro-family
described in this section. work participation penalty. activities, if the expenditure is
In order for a State to avoid a penalty, reasonably calculated to prevent and
the State must fully correct or Part 263—Expenditures of State and reduce the incidence of out-of-wedlock
discontinue the violation within the Federal TANF Funds births (TANF purpose three), or
time frame specified in the corrective Subpart A—What Rules Apply to a encourage the formation and
compliance plan. In paragraph (e)(1) of State’s Maintenance of Effort? maintenance of healthy two-parent
this section, we specified the fixed time married families (TANF purpose four).
frame in which a State must fully Section 263.2 What kinds of State This new provision allows States to
correct or discontinue the violation for expenditures count toward meeting a claim for MOE all qualified pro-family
two penalties: Failure to meet the State’s basic MOE expenditure expenditures for non-assistance benefits
minimum work participation rates and requirement? and services provided to or on behalf of
jlentini on PROD1PC65 with RULES2
failure to comply with the five-year We made changes to the maintenance an individual or family, regardless of
limit on the receipt of Federal TANF of effort regulations in § 263.2(a)(4) to financial need or family composition, if
assistance. We have determined that the reflect the impact of the provision in the the activity is reasonably calculated to
same fixed time frame should apply to Deficit Reduction Act of 2005 on accomplish either TANF purpose three
this new penalty as well. Therefore, counting spending for certain pro-family or TANF purpose four. We reflect this
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37471
new provision in the MOE regulation at Section 263.6 What kinds of therefore reflects the importance of
§ 263.2(a)(4). However, States must expenditures do not count? collecting comparable data.
continue to limit the provision of The data requirements of section
Federal TANF and MOE-funded The Deficit Reduction Act of 2005 411(a) reflect particular features of the
does not change the prohibition at program which are important for
‘‘assistance,’’ as defined in § 260.31(a)
section 409(a)(7)(B)(iv)(IV) of the Act. measuring the success of TANF. States
to eligible families, regardless of the
Under this prohibition, States may not have collected and reported similar data
TANF purpose.
count expenditures made ‘‘as a on the characteristics, financial
Congress also created a new TANF condition of receiving Federal funds circumstances, and assistance received
discretionary funding stream (Grants for other than under this part’’ toward its by families for many years. These data
Healthy Marriage Promotion and TANF MOE requirement. However, enable Congress and the public to
Responsible Fatherhood) in the Deficit paragraph (c) of our original rule does observe how changes in welfare policies
Reduction Act of 2005. Because not accurately reflect this provision, as affect the demographic characteristics
Congress placed these funds in title IV– it stipulates that ‘‘Expenditures that a and the financial circumstances of
A of the Social Security Act, all State state makes as a condition of receiving families receiving assistance, as well as
expenditures for allowable activities Federal funds under another program the self-sufficiency services provided by
under the Healthy Marriage Promotion * * *’’ may not count toward the States. Similar data facilitate
and Promoting Responsible Fatherhood State’s MOE requirement. Therefore, we comparisons across States and over time
programs specified in sections have corrected paragraph (c) to say that and promotes better understanding of
403(a)(2)(A)(iii) and 403(a)(2)(C)(ii) of the prohibition applies to expenditures what is happening nationwide—how
the Act may count toward the State’s that a State makes as a condition of States are assisting needy families; how
MOE requirement, unless a limitation, receiving Federal funds under another they are promoting job preparation,
restriction or prohibition under this program that is not in Part IV–A of the work, and marriage; what is happening
subpart applies. Act. This should avoid any to out-of-wedlock birth trends among
Section 409(a)(7)(B)(iv)(IV) of the Act misunderstanding and ensure that assisted families; and what kinds of
States know that they may count the support two-parent families are
allows States to count expenditures
non-Federal share of expenditures on receiving.
made as a condition of receiving Federal
allowable activities under the healthy Section 411(a)(1)(A)(xii) of the Act
funds under title IV, part A of the Social
marriage promotion or promoting specifically requires States to report on
Security Act toward their MOE ‘‘information necessary to calculate
responsible fatherhood programs in
requirement. The Healthy Marriage participation rates under section 407.’’
sections 403(a)(2)(A)(iii) or
Promotion Grants are under title IV, part 403(a)(2)(C)(ii) of the Act. Given the significance of the work rates
A of the Social Security Act. Therefore, for achieving the objectives of TANF
if grantees are required to contribute a Part 265—Data Collection and and for determining whether States face
matching share of the total approved Reporting Requirements penalties, this is an area where accurate
costs of Healthy Marriage Promotion and timely measurement is particularly
Under the TANF program, States must
and Responsible Fatherhood projects important.
meet a number of specific data reporting
under subsections 403(a)(2)(A)(iii) and Our primary goal in implementing the
requirements. Some of these reporting
403(a)(2)(C)(ii) of the Act, then State requirements are explicit, primarily in data collection and reporting
expenditures made to meet any required section 411(a) of the Social Security Act, requirements of the Act is to collect the
non-Federal share may count toward the while others are implicit. For example, data necessary to monitor program
State’s MOE requirement, provided the States are the source of information for performance or required by statute. A
expenditure also meets all applicable reports that the Secretary must submit secondary goal of this interim final rule
MOE requirements, restrictions, and to Congress and also for the is to give States clear guidance about
limitations. This provision is outlined accountability provisions and what these requirements entail and the
in § 263.2(g). determination of penalties. consequences of failing to meet the
The regulations at 45 CFR Part 92, requirements. At the same time,
These data requirements support two however, we are sensitive to the issue of
which apply to the TANF program, complementary purposes: (1) They paperwork burden and are committed to
cover matching or cost-sharing provide information about the minimizing the reporting burden on
requirements. These rules permit States effectiveness and success of States in States, consistent with the TANF
to count toward their MOE requirement meeting the TANF purposes; and (2) statutory framework.
non-Federal cash or in-kind qualified they assure State accountability for key As an aid to States, we will continue
expenditures on allowable activities by programmatic requirements. In to support personal computer-based
a third party, provided there is an particular, they ensure measurement of software packages to facilitate data entry
agreement to do so in writing by the two State performance in achieving the work and to create transmission files for each
parties. We previously clarified this participation rates in section 407 and quarterly data report. These system
point in TANF Policy Announcement other objectives of the Social Security supports also provide some edits to
TANF–ACF–PA–2004–01, dated Act. ensure data consistency. The
December 1, 2004. This may include These purposes can only be achieved transmission files use a standard file
Healthy Marriage and Responsible if data are comparable across States and format for electronic submission to ACF.
Fatherhood providers in a State to meet over time. Section 411(a)(7) of the Social For the aggregated sections of the
any required non-Federal share. In the Security Act permits the Secretary to quarterly reports, we have created web-
interest of clarity, we have added a prescribe such regulations as may be based reporting systems that permit easy
jlentini on PROD1PC65 with RULES2
paragraph discussing the counting of necessary to define the data elements access to States for adding and
third-party expenditures towards the required in the reports mandated by modifying their aggregated quarterly
MOE requirement at § 263.2(e). This section 411(a). This is one of the few data reports on-line.
amendment does not reflect a change in places in which the TANF law requires As discussed under the Paperwork
policy. regulation by the Secretary and Reduction Act of 1995 (PRA) provisions
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37472 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
of this preamble, we have submitted authorities for all newly required data implements the Deficit Reduction Act of
copies of this interim final rule and data elements of the TANF Data Report. 2005 changes to section 411(a)(1)(A) of
reporting requirements to the Executive However, for ease of understanding, we the Act.
Office of Management and Budget have included § 265.3 in the interim The data elements we are requiring
(OMB) for its review of the information rule in its entirety. States to collect on separate State
collection requirements. We encourage programs are identical in content to, but
Section 265.3(b)(1) TANF Data Report:
States, organizations, individuals, and fewer in number than the demographic
Disaggregated Data—Section One
others to submit comments regarding and work activity data we are requiring
the information collection requirements Paragraph (b)(1) of this section in paragraph (b) of this section and are
to ACF (at the address above) and to the requires that each State file the unchanged except as explained under
Office of Information and Regulatory disaggregated case record information, the revised individual SSP–MOE Data
Affairs, OMB, Room 3208, New as specified in section 411(a) of the Act, Report sections below.
Executive Office Building, Washington, on families receiving TANF assistance.
The information we require to be Section 265.3(d)(1) SSP–MOE Data
DC 20503, ATTN: ACF/HHS Desk Report: Disaggregated Data—Section
Officer. We will make necessary collected is, for the most part, the same
information that was collected under One
revisions in these instruments following
the comment period and will issue them the prior TANF regulations. However, Paragraph (d)(1) requires that each
to States through the ACF policy we have made several changes to the State that claims MOE expenditures for
issuance system. prior data collection instrument. We a separate State program(s) file the
The following discussion provides added a data element to identify work- disaggregated case record information,
information on the changes we have eligible individuals for calculating the as specified in section 411(a) of the Act,
made in part 265. We discuss the work participation rates. The statutory on families receiving SSP–MOE
specific new data elements and the authority for the new data element assistance.
statutory authority for the new data comes from Sections 407(i) and Generally, the information we require
elements. 411(a)(1)(A)(xii) of the Social Security to be reported is the same information
Act. We modified the definition of a that was collected under the prior TANF
Section 265.1 What does this part two-parent family for work participation regulations. There are several changes to
cover? rate purposes and the instructions to the the prior data collection instrument. We
Paragraph (c) specifies the quarterly data element, Type of Family for Work have added a data element to identify
report that must be filed by States that Participation, to reflect the work-eligible work-eligible individuals for calculating
claim MOE expenditures for separate individual concept. As clarification, we the work participation rates. The
State program(s). Under the prior TANF have also included the definitions of statutory authority for the new data
regulation, the quarterly report for each work activity as defined at § 261.2. element comes from sections 407(i) and
separate State programs was required Section 265.3(b)(4) TANF Data Report: 411(a)(1)(A)(xii) of the Social Security
only if a State wanted to qualify for a Aggregated Data—Section Four Act. We modified the definition of a
caseload reduction credit or receive a two-parent family for work participation
high performance bonus. Now, this Paragraph (b)(4) of this section rate purposes and the instructions to the
report is mandatory as required by requires that each State that opts to data element, Type of Family for Work
section 411(a)(1)(A) of the Act as report data for sections one and/or two Participation, to reflect the work-eligible
modified by the Deficit Reduction Act of based on a stratified sample must file individual concept. As clarification, we
2005. We discuss this report and the quarterly aggregated caseload data by have also included the definitions of
specific data elements in the report stratum for each month of the quarter. each work activity as defined at § 261.2.
more fully in § 265.3 below. We did not explicitly regulate on
submitting section four of the TANF Section 265.3(d)(2) SSP–MOE Data
Section 265.2 What definitions apply Data Report under prior TANF Report: Disaggregated Data—Section
to this part? regulation. However, it was implicit in Two
In addition to the definition contained prior TANF regulations as we did Paragraph (d)(2) of this section
in this provision, the data collection and require States to follow the procedures requires that each State that claims MOE
reporting regulations rely on the general in the TANF Sampling Manual in expenditures for a separate State
TANF definitions in §§ 260.30 through reporting data based on samples. The program(s) file the disaggregated case
33 and the definitions of a work-eligible TANF Sampling Manual required States record information, as specified in
individual and the work activities in that used stratified sampling to report section 411(a) of the Act, on families no
§ 261.2. the information in section four of the longer receiving SSP–MOE assistance.
TANF Data Report. Section four of the The second section of the SSP–MOE
Section 265.3 What reports must the TANF Data Report was issued on Data Report contains 28 data elements
State file on a quarterly basis? January 19, 2000 in TANF–ACF–PI– applicable to families no longer
Each State must file two reports on a 2000–1 along with the TANF Sampling receiving assistance. The data elements
quarterly basis—the TANF Data Report Manual. The only change we are making in section two are identical to those in
and the TANF Financial Report. Also, to section four is one additional code to section one and are unchanged from the
each State that claims MOE designate whether the caseload data for data elements collected in this section
expenditures for a separate State a stratum is for section one or for under prior TANF regulations.
program(s) must file an additional section two of the TANF Data Report.
report on a quarterly basis—the SSP– Section 265.3(d)(3) SSP–MOE Data
MOE Data Report. Section 265.3(d) SSP–MOE Data Report: Aggregated Data—Section Three
Report
jlentini on PROD1PC65 with RULES2
Under prior TANF regulations, we Paragraph (d)(3) of this section
discussed the statutory authorities for Paragraph (d) requires a State that requires that each State that claims MOE
the TANF Data Report data elements claims MOE expenditures for a separate expenditures for a separate State
that States will continue to collect. State program(s) to report case record program(s) file quarterly aggregated
Below, we discuss the statutory data on separate MOE programs. This information.
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37473
This third section of the SSP–MOE be subject to a penalty. Under the prior requirements, please submit them to
Data Report contains twelve data regulations, the quarterly SSP–MOE OMB within 30 days. The address is:
elements. These data elements are Data Report was required only if a State Office of Management and Budget,
unchanged from what we collected wanted to qualify for a caseload Paperwork Reduction Project, 725 17th
under prior TANF regulations. reduction credit or receive a high Street, NW., Washington, DC 20503,
performance bonus. Under the Deficit Attn: ACF/HHS Desk Officer.
Section 265.3(d)(4) SSP–MOE Data
Reduction Act of 2005, section This interim final rule imposes some
Report: Aggregated Data—Section Four
411(a)(1)(A) of the Social Security Act new requirements and modifies others.
Paragraph (d)(4) of this section now requires that States report quarterly They are:
requires that each State that claims MOE on their separate State program(s) for
expenditures for a separate State • A new requirement that States
which they claim MOE expenditures.
program(s) and that opts to report data establish documentation, verification
for sections one and/or two of the SSP– Section 265.8 Under what and internal control procedures to
MOE Data Report based on a stratified circumstances will a State be subject to ensure valid work participation rates,
sample file quarterly aggregated a reporting penalty for failure to submit based on regulatory specifications.
caseload data by stratum for each month quarterly reports? States will be required to submit the
in the quarter. We did not explicitly Under the interim final rule, the SSP– procedures to HHS no later than
regulate on submitting section four of MOE Data Report is now included as a September 30, 2006. We will review the
the SSP–MOE Data Report under prior required quarterly report. Failure to procedures and approve them if they
TANF regulation. However, it was submit this report by the due dates may meet the requirements. If the procedures
implicit in prior regulations as we did subject the State to a reporting penalty fail to address or meet the requirements,
require States to follow the procedures as required by section 409(a)(2) of the States will be given 60 days to revise
in the TANF Sampling Manual in Act and revised section 411(a)(1)(A) of and correct them. If a State fails to
reporting data based on samples. The the Act. This change is reflected in establish, submit, or correct the
TANF Sampling Manual required States § 265.8(a)(1) and § 265.8(b). We also procedures within specified timeframes,
that used stratified sampling to report changed this section to remove the the State will be liable for a full five
the information in section four of the penalty trigger previously located at percent penalty for the year.
SSP–MOE Data Report. Section four of § 265.8(c) if a State fails to include the • A modification and reduction in
the SSP–MOE Data Report was issued definitions of work activities in its burden of the caseload reduction credit
on January 19, 2000 in TANF–ACF–PI– annual report. This information is now information collection based on the
2000–1 along with the TANF Sampling required as part of the Work Verification recalibration of the caseload reduction
Manual. The only change to section four Plan. For ease of understanding, we credit.
is one additional code to designate have included the revised section in its • A modification of the reasonable
whether the caseload data for a stratum entirety. cause/corrective compliance
is for section one or for section two of information collection burden based on
IV. Paperwork Reduction Act
the SSP–MOE Data Report. the requirements of the participation
This rule contains information
Section 265.4 When are quarterly rate verification procedures.
collection requirements that have been
reports due? submitted to the Office of Management • A modification of the TANF Data
For States that claim MOE and Budget (OMB) under the Paperwork Report and the SSP–MOE Data Report
expenditures for separate State Reduction Act of 1995 (PRA). Under based on how we define work-eligible
program(s), revised paragraph (b) of this this Act, no persons are required to individuals, especially with regard to
section implements section 409(a)(2) of respond to a collection of information child-only cases.
the Act which requires that States file unless it displays a valid OMB control The estimated burdens for these data
quarterly reports within 45 days number. If you have any comments on collections (existing burden plus
following the end of the fiscal quarter or these information collection additional burden) are:
Average bur-
Number of re- Yearly submit- Total burden Original total
Instrument or requirement den hours per
spondents tals hours burden hours
response
Preparation and Submission of Data Verification Proce- 54 1 640 34,560 Not Applicable.
dures—§§ 261.60–261.63.
Caseload Reduction Documentation Process, ACF– 54 1 120 6,480 8,640.
202—§§ 261.41 & 261.44.
Reasonable Cause/Corrective Compliance Documenta- 54 2 240 25,920 17,280.
tion Process—§§ 262.4, 262.6, & 262.7; § 261.51.
TANF Data Report—Part 265 ........................................... 54 4 2,193 473,688 465,169.
SSP–MOE Data Report—Part 265 ................................... 29 4 714 82,824 78,213.
We are submitting this information Washington, DC 20447, Attn: ACF Washington, DC 20503, Attn: Desk
collection to OMB for approval. These Reports Clearance Officer. All requests Officer for the Administration for
requirements will not become effective should be identified by the title of the Children and Families.
until approved by OMB. Copies of the information collection. E-mail address: V. Regulatory Flexibility Analysis
jlentini on PROD1PC65 with RULES2
proposed collection may be obtained by rsargis@acf.hhs.gov Written comments
writing to the Administration for to OMB for the information collection The Secretary certifies, under 5 U.S.C.
Children and Families, Office of should be sent directly to: Office of 605(b), as enacted by the Regulatory
Administration, Office of Information Management and Budget, Paperwork Flexibility Act (Pub. L. 96–354), that
Services, 370 L’Enfant Promenade, SW., Reduction Project, 725 17th Street, NW., this interim final rule will not result in
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37474 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
a significant impact on a substantial rates as envisioned under the Deficit provisions of the Deficit Reduction Act,
number of small entities. The primary Reduction Act and State flexibility. the Congress maintained the basic
impact of these rules is on State As an alternative to our regulatory funding structure and flexibility of the
governments and on the operation of the approach to monitoring State internal TANF program. Over each of the next
Federal Government. Neither is control procedures for verifying work five years, the TANF block grant will
considered a small entity under the participation information, we provide States with $16.5 billion in
Regulatory Flexibility Act. considered developing a system in Federal funds and a total of over $27
In developing this interim final rule, which we would regularly draw one or billion annually when including State
we sought to implement the new more samples of cases and validate Maintenance of Effort (MOE) funding.
requirements of the Deficit Reduction critical data needed to calculate the With the continued commitment of full
Act of 2005 in a way that does not work participation rates, using an error funding for TANF, along with $2.1
impinge on a State’s ability to design percentage as a means of determining billion in reported unobligated TANF
effective and responsive programs. At whether a State might be liable for a balances at the end of FY 2005, States
the same time, we sought to address work verification penalty. Ultimately, will have the resources to successfully
concerns about inconsistency of work we decided this alternative would be meet the requirements of the Deficit
measures among States and to focus too burdensome, reminiscent of quality Reduction Act. The funding level for
renewed attention on strengthening control systems of the past. We States remains fixed and is based on
efforts to help more low-income families determined that the best approach was historic levels of welfare spending when
enter the workforce and succeed at to describe in detail what we expect states used to serve a cash-dependent
work. We considered alternatives along States to include in the Work welfare caseload of more than twice its
the spectrum of these goals and believe Verification Plan and then to use the current size. States retain significant
the policies adopted in this interim final existing audit process as the principal flexibility in the use of their TANF
rule achieve a balance between the aims means of assessing the accuracy of work dollars to design their programs and
of the DRA to improve effectiveness of participation data. We discuss this have wide flexibility to determine
the program and preserving States’ approach to regulating in greater detail eligibility criteria, benefit levels and the
ability to continue using creativity and throughout the preamble to these rules. type of services and benefits available to
ingenuity to help families succeed TANF recipients.
VI. Regulatory Impact Analysis In addition, over five years (FYs
under the TANF work goals and
Executive Order 12866 requires that 2007–2011), the Department estimates
objectives. The balance we strove to
regulations be reviewed to ensure that that the States will pay penalties of $51
attain encompassed such issues as: how
they are consistent with the priorities million due to failure to meet work
to count and verify allowable work
and principles set forth in the Executive requirements. In general, our estimate
activities; who is a work-eligible
Order. The Department has determined assumes that most States will meet the
individual; and how to ensure that State
that this interim final rule is consistent work participation rates, because States
internal control procedures will result
with these priorities and principles. retain considerable programmatic
in accurate and consistent work
These regulations primarily implement flexibility, along with increased
participation information.
statutory changes to TANF included in motivation to develop a stronger focus
In determining how to count and the Deficit Reduction Act of 2005. on moving people to work and more
verify allowable work activities, we
VII. Unfunded Mandates Reform Act of accurate reporting systems. For those
considered establishing a single
1995 States that fail to meet work
documentation standard in which States
participation requirements, we do not
would verify an individual’s Section 202 of the Unfunded anticipate assessing penalties until FY
participation in work activities each Mandates Reform Act of 1995 requires 2009. Once penalty liability is identified
day. We rejected this alternative as that a covered agency prepare a States will have an opportunity to
excessive and cumbersome for States to budgetary impact statement before correct the problem prior to the
implement; moreover we feared it might promulgating a rule that includes any assessment of a penalty. We estimate
discourage employers from hiring TANF Federal mandate that may result in the issuing penalties amounting to $7
recipients, thus undermining the expenditure by State, local, and Tribal million in FY 2009, $16 million in FY
program. Instead, as we describe above, governments, in the aggregate, or by the 2010 and $28 million in FY 2011. Our
we chose a set of guidelines that allows private sector, of $100 million or more estimated penalty assessment level
variation in documentation by the type in any one year. increases during this period, in part,
of work activity in question. Not only If an agency must prepare a budgetary because the penalty percentage rate is
does this let a State tailor its impact statement, section 205 requires progressive. Accordingly, we have not
documentation procedures to the nature that it select the most cost-effective and prepared a budgetary impact statement
of the activity, but also it approximates least burdensome alternative that or prepared a plan for informing
the standards in the working world. achieves the objectives of the rule impacted small governments.
With regard to the definition of a consistent with the statutory
work-eligible individual, we considered requirements. Section 203 requires a VIII. Congressional Review
a range of alternatives looking at each plan for informing and advising any This regulation is not a major rule as
type of family in which a parent resides small government that may be defined in 5 U.S.C. Chapter 8.
with a child recipient of assistance to significantly or uniquely impacted.
determine whether it was appropriate to The Department has determined that IX. Assessment of Federal Regulation
include that group of families in the this interim final rule, in implementing and Policies on Families
calculation of the work participation the new statutory requirements, would Section 654 of the Treasury and
jlentini on PROD1PC65 with RULES2
rates. As we examined each of these not impose a mandate that will result in General Government Appropriations
types of families, we considered the the expenditure by State, local, and Act of 1999 requires Federal agencies to
ability of each to work and sought to tribal governments, in the aggregate, or determine whether a proposed policy or
balance this ability to work with the by the private sector, of more than $100 regulation may negatively affect family
need for consistent work participation million in any one year. In enacting the well being. If the agency’s determination
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37475
is affirmative, then the agency must work requirements of TANF and State supervised by the TANF agency or other
prepare an impact assessment work participation data verification responsible party on an ongoing basis
addressing seven criteria specified in requirements. no less frequently than daily.
the law. The Department has conducted I 3. Revise § 261.2 to read as follows: (h) Community service programs
a Family Policymaking Assessment in mean structured programs and
accordance with this requirement and § 261.2 What definitions apply to this part? embedded activities in which TANF
determined that these regulations will (a) The general TANF definitions at recipients perform work for the direct
not have a negative impact on family §§ 260.30 through 260.33 of this chapter benefit of the community under the
well being as defined in the legislation. apply to this part. auspices of public or nonprofit
(b) Unsubsidized employment means organizations. Community service
X. Executive Order 13132 full-or part-time employment in the programs must be limited to projects
Executive Order 13132, Federalism, public or private sector that is not that serve a useful community purpose
requires that Federal agencies consult subsidized by TANF or any other public in fields such as health, social service,
with State and local government program. environmental protection, education,
officials in the development of (c) Subsidized private sector urban and rural redevelopment, welfare,
regulatory policies with federalism employment means employment in the recreation, public facilities, public
implications. Consistent with Executive private sector for which the employer safety, and child care. Community
Order 13132, we specifically solicit receives a subsidy from TANF or other service programs are designed to
comment from State and local public funds to offset some or all of the improve the employability of recipients
government officials on this interim wages and costs of employing a not otherwise able to obtain
final rule. We will seriously consider recipient. employment, and must be supervised on
these comments in developing the final (d) Subsidized public sector an ongoing basis no less frequently than
rule. employment means employment in the daily. A State agency shall take into
public sector for which the employer account, to the extent possible, the prior
List of Subjects receives a subsidy from TANF or other training, experience, and skills of a
45 CFR Parts 261 and 262 public funds to offset some or all of the recipient in making appropriate
wages and costs of employing a community service assignments.
Administrative practice and recipient. (i) Vocational educational training
procedure, Day care, Employment, (e) Work experience (including work (not to exceed 12 months with respect
Grant programs-social programs, associated with the refurbishing of to any individual) means organized
Penalties, Public assistance programs, publicly assisted housing) if sufficient educational programs that are directly
Reporting and recordkeeping private sector employment is not related to the preparation of individuals
requirements, Vocational education. available means a work activity, for employment in current or emerging
45 CFR Part 263 performed in return for welfare, that occupations requiring training other
provides an individual with an than a baccalaureate or advanced
Administrative practice and opportunity to acquire the general skills, degree. Vocational educational training
procedure, Day care, Employment, training, knowledge, and work habits must be supervised on an ongoing basis
Grant programs-social programs, Loan necessary to obtain employment. The no less frequently than daily.
programs-social programs, Penalties, purpose of work experience is to (j) Job skills training directly related to
Public assistance programs. improve the employability of those who employment means training or
45 CFR Part 265 cannot find unsubsidized employment. education for job skills required by an
This activity must be supervised by an employer to provide an individual with
Administrative practice and employer, work site sponsor, or other the ability to obtain employment or to
procedure, Day care, Employment, responsible party on an ongoing basis advance or adapt to the changing
Grant programs-social programs, no less frequently than daily. demands of the workplace. Job skills
Penalties, Public assistance programs, (f) On-the-job training means training training directly related to employment
Reporting and recordkeeping in the public or private sector that is must be supervised on an ongoing basis
requirements. given to a paid employee while he or no less frequently than daily.
Dated: March 23, 2006. she is engaged in productive work and (k) Education directly related to
Wade F. Horn, that provides knowledge and skills employment, in the case of a recipient
Assistant Secretary for Children and Families. essential to the full and adequate who has not received a high school
Approved: May 25, 2006. performance of the job. On-the-job diploma or a certificate of high school
Michael O. Leavitt,
training must be supervised by an equivalency means education related to
employer, work site sponsor, or other a specific occupation, job, or job offer.
Secretary of Health and Human Services.
responsible party on an ongoing basis Education directly related to
For the reasons stated in the no less frequently than daily. employment must be supervised on an
preamble, we are amending 45 CFR (g) Job search and job readiness ongoing basis no less frequently than
chapter II by revising part 261, part 262, assistance means the act of seeking or daily.
part 263, and part 265 as set forth obtaining employment, preparation to (l) Satisfactory school attendance at
below: seek or obtain employment, including secondary school or in a course of study
I 1. The authority citation for part 261 life skills training, and substance abuse leading to a certificate of general
is revised to read as follows: treatment, mental health treatment, or equivalence, in the case of a recipient
Authority: 42 U.S.C. 601, 602, 607, and rehabilitation activities for those who who has not completed secondary
609; Pub. L. 109–171. are otherwise employable. Such school or received such a certificate
jlentini on PROD1PC65 with RULES2
I 2. Revise § 261.1 to read as follows: treatment or therapy must be means regular attendance, in accordance
determined to be necessary and certified with the requirements of the secondary
§ 261.1 What does this part cover? by a qualified medical or mental health school or course of study, at a secondary
This part includes the regulatory professional. Job search and job school or in a course of study leading
provisions relating to the mandatory readiness assistance activities must be to a certificate of general equivalence, in
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37476 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
the case of a recipient who has not two-parent families find work activities families with a work-eligible individual
completed secondary school or received described at § 261.30, the other—the that have been penalized for refusing to
such a certificate. This activity must be overall rate based on how well it work no more than three of the last 12
supervised on an ongoing basis no less succeeds in finding those activities for months.
frequently than daily. work-eligible individuals in all the (c)(1) A State has the option of not
(m) Providing child care services to an families that it serves. requiring a single custodial parent
individual who is participating in a (b) Each State must submit data, as caring for a child under age one to
community service program means specified at § 265.3 of this chapter, that engage in work.
providing child care to enable another allows us to measure its success in (2) At State option, we will disregard
TANF recipient to participate in a requiring work-eligible individuals to a family with such a parent from the
community service program. This participate in work activities. participation rate calculation for a
activity must be supervised on an (c) If the data show that a State met maximum of 12 months.
ongoing basis no less frequently than both participation rates in a fiscal year, (d)(1) If a family receives assistance
daily. then the percentage of historic State for only part of a month, we will count
(n)(1) Work-eligible individual means expenditures that it must expend under it as a month of participation if a work-
an adult (or minor child head-of- TANF, pursuant to § 263.1 of this eligible individual is engaged in work
household) receiving assistance under chapter, decreases from 80 percent to 75 for the minimum average number of
TANF or a separate State program or a percent for that fiscal year. This is also hours in each full week that the family
non-recipient parent living with a child known as the State’s TANF receives assistance in that month.
receiving such assistance unless the ‘‘maintenance-of-effort’’ (MOE) (2) If a State pays benefits
parent is: requirement. retroactively (i.e., for the period
(i) A minor parent and not the head- (d) If the data show that a State did between application and approval of
of-household or spouse of the head-of- not meet a minimum work participation benefits), it has the option to consider
household; rate for a fiscal year, a State could be the family to be receiving assistance
(ii) An alien who is ineligible to subject to a financial penalty. during the period of retroactivity.
receive assistance due to his or her (e) Before we impose a penalty, a
immigration status; or State will have the opportunity to claim § 261.23 What two-parent work rate must a
(iii) At State option on a case-by-case reasonable cause or enter into a State meet?
basis, a recipient of Supplemental corrective compliance plan, pursuant to Each State must achieve a 90 percent
Security Income (SSI) benefits. §§ 262.5 and 262.6 of this chapter. minimum two-parent participation rate
(2) The term also excludes: § 261.21 What overall work rate must a
in FY 2006 and thereafter, minus any
(i) A parent providing care for a State meet? caseload reduction credit to which it is
disabled family member living in the entitled as provided in subpart D of this
Each State must achieve a 50 percent
home who does not attend school on a part.
minimum overall participation rate in
full-time basis, provided that the need
FY 2006 and thereafter, minus any § 261.24 How will we determine a State’s
for such care is supported by medical
caseload reduction credit to which it is two-parent work rate?
documentation; and
(ii) An individual in a family entitled as provided in subpart D of this (a)(1) The two-parent participation
receiving MOE-funded assistance under part. rate for a fiscal year is the average of the
an approved Tribal TANF program, § 261.22 How will we determine a State’s State’s two-parent participation rates for
unless the State includes the Tribal overall work rate? each month in the fiscal year.
family in calculating work participation (a)(1) The overall participation rate for (2) The rate applies to two-parent
rates, as permitted under section 261.25. a fiscal year is the average of the State’s families with two work-eligible
I 4. Revise Subpart B to read as follows: overall participation rates for each individuals. However, if one of the
month in the fiscal year. parents is a disabled work-eligible
Subpart B—What Are the Provisions (2) The rate applies to families with individual, we will not consider the
Addressing State Accountability? a work-eligible individual. family to be a two-parent family; i.e., we
(b) We determine a State’s overall will not include such a family in either
Sec. the numerator or denominator of the
261.20 How will we hold a State
participation rate for a month as
follows: two-parent rate.
accountable for achieving the work
objectives of TANF? (1) The number of TANF and SSP– (b) We determine a State’s two-parent
261.21 What overall work rate must a State MOE families that include a work- participation rate for the month as
meet? eligible individual who meet the follows:
261.22 How will we determine a State’s requirements set forth in § 261.31 for the (1) The number of two-parent TANF
overall work rate? month (i.e., the numerator), divided by, and SSP–MOE families in which both
261.23 What two-parent work rate must a (2) The number of TANF and SSP– parents are work-eligible individuals
State meet? MOE families that include a work- and together they meet the requirements
261.24 How will we determine a State’s eligible individual, minus the number of set forth in § 261.32 for the month (i.e.,
two-parent work rate? the numerator), divided by,
such families that are subject to a
261.25 Does a State include Tribal families
penalty for refusing to work in that (2) The number of two-parent TANF
in calculating these rates?
month (i.e., the denominator). However, and SSP–MOE families in which both
§ 261.20 How will we hold a State if a family with a work-eligible parents are work-eligible individuals
accountable for achieving the work individual has been penalized for during the month, minus the number of
objectives of TANF? refusal to participate in work activities such two-parent families that are subject
jlentini on PROD1PC65 with RULES2
(a) Each State must meet two separate for more than three of the last 12 to a penalty for refusing to work in that
work participation rates in FY 2006 and months, we will not exclude it from the month (the denominator). However, if a
thereafter, one—the two-parent rate participation rate calculation. family with a work-eligible individual
based on how well it succeeds in (3) At State option, we will include in has been penalized for more than three
helping work-eligible individuals in the participation rate calculation months of the last 12 months, we will
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37477
not exclude it from the participation services to an individual who is course of study leading to a certificate
rate calculation. participating in a community service of general equivalence.
(3) At State option, we will include in program. (d) We will consider a family with
the participation rate calculation (c) Above 20 hours per week, the two work-eligible parents in which one
families with a work-eligible individual following three activities may also count or both parents participate in a work
that have been penalized for refusing to as participation: Job skills training experience or community service
work no more than three of the last 12 directly related to employment; program for the maximum number of
months. education directly related to hours per week that a State may require
(c) For purposes of the calculation in employment; and satisfactory by dividing their combined monthly
paragraph (b) of this section, a two- attendance at secondary school or in a TANF grant and food stamp allotment
parent family includes, at a minimum, course of study leading to a certificate by the appropriate minimum wage
all families with two natural or adoptive of general equivalence. under the minimum wage requirement
parents (of the same minor child) who (d) We will consider a work-eligible of the Fair Labor Standards Act (FLSA)
are work-eligible individuals and living individual who participates in a work to have participated 30 hours per week
in the home, unless both are minors and experience or community service if actual participation falls short of 30
neither is a head-of-household. program for the maximum number of hours per week. This policy is limited
(d)(1) If the family receives assistance hours per week that a State may require to States that have adopted a food stamp
for only part of a month, we will count by dividing the combined monthly workfare program and a Simplified
it as a month of participation if a work- TANF grant and food stamp allotment Food Stamp Program. For families that
eligible individual in the family (or both by the appropriate minimum wage need additional hours beyond the core
work-eligible individuals, if they are under the minimum wage requirement activity requirement, these hours must
both required to work) is engaged in of the Fair Labor Standards Act (FLSA) be satisfied in some other TANF work
work for the minimum average number to have participated 20 hours per week activity.
of hours in each full week that the if actual participation falls short of 20 (e)(1) If the family receives federally
family receives assistance in that month. hours per week. This policy is limited funded child care assistance and an
(2) If a State pays benefits to States that have adopted a food stamp adult in the family is not disabled or
retroactively (i.e., for the period workfare program and a Simplified caring for a severely disabled child, then
between application and approval of Food Stamp Program. For families that the work-eligible individuals must be
benefits), it has the option to consider need additional hours beyond the core participating in work activities for an
the family to be receiving assistance activity requirement, these hours must average of at least 55 hours per week to
during the period of retroactivity. be satisfied in some other TANF work count as a two-parent family engaged in
activity. work for the month.
§ 261.25 Does a State include Tribal (2) At least 50 of the 55 hours per
I 6. Revise § 261.32 to read as follows:
families in calculating the work week must come from participation in
participation rate? § 261.32 How many hours must work- the activities listed in paragraph (b) of
At State option, we will include eligible individuals participate for the family this section.
families with a work-eligible individual to count in the numerator of the two-parent (3) Above 50 hours per week, the
that are receiving assistance under an rate?
three activities listed in paragraph (c) of
approved Tribal family assistance plan (a) Subject to paragraph (d) of this this section may also count as
or under a Tribal work program in section, a family with two work-eligible participation.
calculating the State’s participation parents counts as engaged in work for (4) We will consider family with two
rates under §§ 261.22 and 261.24. the month for the two-parent rate if: work-eligible parents receiving federally
I 5. Revise § 261.31 to read as follows:
(1) Work-eligible parents in the family funded child care in which one or both
are participating in work activities for a parents participate in a work experience
§ 261.31 How many hours must a work- combined average of at least 35 hours or community service program for the
eligible individual participate for the family per week during the month, and maximum number of hours per week
to count in the numerator of the overall (2) At least 30 of the 35 hours per
rate? that a State may require by dividing
week come from participation in the their combined monthly TANF grant
(a) A work-eligible individual counts activities listed in paragraph (b) of this and food stamp allotment by the
as engaged in work for a month for the section. appropriate minimum wage under the
overall rate if: (b) The following nine activities count minimum wage requirement of the Fair
(1) He or she participates in work for the first 30 hours of participation: Labor Standards Act (FLSA) to have
activities during the month for at least Unsubsidized employment; subsidized participated 50 hours per week if actual
a minimum average of 30 hours per private-sector employment; subsidized participation falls short of 50 hours per
week; and public-sector employment; work week. This policy is limited to States
(2) At least 20 of the above hours per experience; on-the-job training; job that have adopted a food stamp
week come from participation in the search and job readiness assistance; workfare program and a Simplified
activities listed in paragraph (b) of this community service programs; vocational Food Stamp Program. For families that
section. educational training; and providing need additional hours beyond the core
(b) The following nine activities count child care services to an individual who activity requirement, these hours must
toward the first 20 hours of is participating in a community service be satisfied in some other TANF work
participation: Unsubsidized program. activity.
employment; subsidized private-sector (c) Above 30 hours per week, the
I 7. Revise Subpart D to read as follows:
employment; subsidized public-sector following three activities may also count
jlentini on PROD1PC65 with RULES2
employment; work experience; on-the- for participation: Job skills training Subpart D—How Will We Determine
job training; job search and job directly related to employment; Caseload Reduction Credit for
readiness assistance; community service education directly related to Minimum Participation Rates?
programs; vocational educational employment; and satisfactory
training; and providing child care attendance at secondary school or in a Sec.
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37478 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
261.40 Is there a way for a State to reduce comparison-year caseload, we will use used to calculate its caseload reduction
the work participation rates? the combined TANF and Separate State estimates; and
261.41 How will we determine the caseload Program caseload figures reported on (6) A certification that it has provided
reduction credit?
the Form ACF–199, TANF Data Report, the public an appropriate opportunity to
261.42 Which reductions count in
determining the caseload reduction and Form ACF–209, SSP–MOE Data comment on the estimates and
credit? Report, respectively. methodology, considered their
261.43 What is the definition of a ‘‘case (2) To qualify for a caseload comments, and incorporated all net
receiving assistance’’ in calculating the reduction, a State must have reported reductions resulting from Federal and
caseload reduction credit? monthly caseload information, State eligibility changes.
261.44 When must a State report the including cases in separate State (c)(1) A State requesting a caseload
required data on the caseload reduction programs, for FY 2005 and the
credit? reduction credit for the overall
comparison year for cases receiving participation rate must base its
§ 261.40 Is there a way for a State to assistance as defined at § 261.43. estimates of the impact of eligibility
reduce the work participation rates? (d)(1) A State may correct erroneous changes on decreases in its comparison-
(a)(1) If the average monthly number data or submit accurate data to adjust year overall caseload compared to the
of cases receiving assistance, including program data or to include unduplicated FY 2005 overall caseload baseline
assistance under a separate State cases within the fiscal year. established in accordance with
program (as provided at § 261.42(b)), in (2) We will adjust both the FY 2005
§ 261.40(d).
a State in the preceding fiscal year was baseline and the comparison-year
caseload information, as appropriate, (2) A State requesting a caseload
lower than the average monthly number reduction credit for its two-parent rate
of cases that received assistance, based on these State submissions.
(e) We refer to the number of must base its estimates of the impact of
including assistance under a separate eligibility changes on decreases in
percentage points by which a caseload
State program in that State in FY 2005, either:
falls, disregarding the cases described in
the minimum overall participation rate (i) Its two-parent caseload compared
paragraph (b), as a caseload reduction
the State must meet for the fiscal year to the FY 2005 comparison-year two-
credit.
(as provided at § 261.21) decreases by parent caseload baseline established in
the number of percentage points the § 261.41 How will we determine the accordance with § 261.40(d); or
prior-year caseload fell in comparison to caseload reduction credit? (ii) Its overall caseload compared to
the FY 2005 caseload. (a)(1) We will determine the overall the FY 2005 comparison-year overall
(2) The minimum two-parent and two-parent caseload reduction caseload baseline established in
participation rate the State must meet credits that apply to each State based on accordance with § 261.40(d).
for the fiscal year (as provided at the information and estimates reported (d)(1) For each State, we will assess
§ 261.23) decreases, at State option, by to us by the State on eligibility policy the adequacy of information and
either: changes using application denials, case
(i) The number of percentage points estimates using the following criteria: its
closures, or other administrative data methodology; its estimates of impact
the prior-year two-parent caseload, sources and analyses.
including two-parent cases receiving compared to other States; the quality of
(2) We will accept the information its data; and the completeness and
assistance under a separate State and estimates provided by a State,
program (as provided at § 261.42(b)), fell adequacy of its documentation.
unless they are implausible based on the (2) If we request additional
in comparison to the FY 2005 two- criteria listed in paragraph (d) of this
parent caseload, including two-parent information to develop or validate
section.
cases receiving assistance under a estimates, the State may negotiate an
(3) We may conduct on-site reviews
separate State program; or and inspect administrative records on appropriate deadline or provide the
(ii) The number of percentage points applications, case closures, or other information within 30 days of the date
the prior-year overall caseload, administrative data sources to validate of our request.
including assistance under a separate the accuracy of the State estimates. (3) The State must provide sufficient
State program (as provided at (b) In order to receive a caseload data to document the information
§ 261.42(b)), fell in comparison to the reduction credit, a State must submit a submitted under paragraph (b) of this
FY 2005 overall caseload, including Caseload Reduction Report to us section.
cases receiving assistance under a containing the following information: (e) We will not calculate a caseload
separate State program. (1) A listing of, and implementation reduction credit unless the State reports
(3) For the credit calculation, we will dates for, all State and Federal eligibility case-record data on individuals and
refer to the fiscal year that precedes the changes, as defined at § 261.42, made by families served by any separate State
fiscal year to which the credit applies as the State since the beginning of FY program, as required under § 265.3(d) of
the ‘‘comparison year.’’ 2006; this chapter.
(b)(1) The calculations in paragraph (2) A numerical estimate of the (f) A State may only apply to the
(a) of this section must disregard positive or negative average monthly participation rate a caseload reduction
caseload reductions due to requirements impact on the comparison-year caseload credit that we have calculated. If a State
of Federal law and to changes that a of each eligibility change (based, as disagrees with the caseload reduction
State has made in its eligibility criteria appropriate, on application denials, case credit, it may appeal the decision as an
in comparison to its criteria in effect in closures or other analyses); adverse action in accordance with
FY 2005. (3) An overall estimate of the total net § 262.7 of this chapter.
(2) At State option, the calculation positive or negative impact on the
may offset the disregard of caseload applicable caseload as a result of all § 261.42 Which reductions count in
jlentini on PROD1PC65 with RULES2
reductions in paragraph (b)(1) of this such eligibility changes; determining the caseload reduction credit?
section by changes in eligibility criteria (4) An estimate of the State’s caseload (a)(1) A State’s caseload reduction
that increase caseloads. reduction credit; credit must not include caseload
(c)(1) To establish the caseload base (5) A description of the methodology decreases due to Federal requirements
for FY 2005 and to determine the and the supporting data that a State or State changes in eligibility rules since
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37479
FY 2005 that directly affect a family’s Subpart F—How Do We Ensure the § 261.61 How must a State document a
eligibility for assistance. Accuracy of Work Participation work-eligible individual’s hours of
Information? participation?
(2) At State option, a State’s caseload
reduction credit may include caseload (a) A State must support each
Sec. individual’s hours of participation
increases due to Federal requirements or 261.60 What methods may a State use to
State change in eligibility rules since FY through documentation in the case file.
report a work-eligible individual’s hours In accordance with § 261.62, a State
2005 if used to offset caseload decreases of participation?
in paragraph (a)(1) of this section. must describe in its Work Verification
261.61 How must a State document a work-
eligible individual’s hours of Plan the documentation it uses to verify
(3) A State may not receive a caseload hours of participation in each activity.
reduction credit that exceeds the actual participation?
261.62 What must a State do to verify the (b) For an employed individual, the
caseload decline between FY 2005 and documentation may consist of, but is
accuracy of its work participation
the comparison year. not limited to pay stubs, employer
information?
(4) A State may count the reductions 261.63 When is the State’s Work reports, or time and attendance records
attributable to enforcement mechanisms Verification Plan due? substantiating hours of participation. A
or procedural requirements that are 261.64 How will we determine if the State State may presume that an employed
used to enforce existing eligibility is meeting the requirement to establish individual participated in unsubsidized
criteria (e.g., fingerprinting or other and maintain work verification employment for the total number of
verification techniques) to the extent procedures that ensure an accurate
measurement of work participation?
hours for which that individual was
that such mechanisms or requirements paid.
261.65 Under what circumstances will we
identify or deter families otherwise impose a work verification penalty for (c) For unsubsidized employment,
ineligible under existing rules. failure to submit a work verification plan subsidized employment, and OJT, a
(b) A State must include cases or for failure to maintain adequate State may report projected actual hours
receiving assistance in separate State internal controls to ensure consistent of employment participation for up to
programs as part of its FY 2005 caseload measurement of the work participation six months based on current,
and comparison-year caseload. rate? documented actual hours of work. Any
However, if a State provides § 261.60 What methods may a State use to
time a State receives information that
documentation that separate State report a work-eligible individual’s hours of the client’s actual hours of work have
program cases overlap with or duplicate participation? changed, or no later than the end of any
cases in the TANF caseload, we will six-month period, the State must re-
exclude them from the caseload count. (a) A State must report the actual verify the client’s current actual average
hours that an individual participates in hours of work, and may report these
§ 261.43 What is the definition of a ‘‘case an activity, subject to the qualifications projected actual hours of participation
receiving assistance’’ in calculating the in paragraphs (b) and (c) and for another six-month period.
caseload reduction credit? § 261.61(c). It is not sufficient to report (d) For an individual who is not
(a) The caseload reduction credit is the hours an individual is scheduled to employed, the documentation for
based on decreases in caseloads participate in an activity. substantiating hours of participation
receiving assistance (other than those (b) For the purposes of calculating the may consist of, but is not limited to,
excluded pursuant to § 261.42) both in work participation rates, actual hours time sheets, service provider attendance
a State’s TANF program and in separate may include the hours for which an records, or school attendance records.
State programs that address basic needs individual was paid, including paid (e) For an individual who is self-
and are used to meet the MOE holidays and sick leave. For employed, the documentation must
requirement. participation in unpaid work activities, comport with standards set forth in the
(b) A State that is investing State MOE it may also include excused absences for State’s approved Work Verification
funds in eligible families in excess of hours missed due to holidays and a Plan. Self-reporting by a participant
the required 80 percent or 75 percent maximum of an additional 10 days of without additional verification is not
basic MOE amount need only include excused absences in any 12-month sufficient documentation.
the pro rata share of caseloads receiving period, no more than two of which may
§ 261.62 What must a State do to verify the
assistance that is required to meet basic occur in a month. In order to count an accuracy of its work participation
MOE requirements. excused absence as actual hours of information?
participation, the individual must have (a) To ensure accuracy in the
§ 261.44 When must a State report the been scheduled to participate in an
required data on the caseload reduction reporting of work activities by work-
credit?
allowable work activity for the period of eligible individuals on the TANF Data
the absence that the State reports as Report and, if applicable, the SSP–MOE
A State must report the necessary participation. A State must describe its
documentation on caseload reductions Data Report, each State must:
excused absence policies and (1) Establish and employ procedures
for the preceding fiscal year by definitions as part of its Work for determining whether its work
December 31. Verification Plan, specified at § 261.62. activities may count for participation
Subpart F—[Redesignated as Subpart (c) A State may not count more hours rate purposes;
H] toward the participation rate for a self- (2) Establish and employ procedures
employed individual than the number for determining how to count and verify
I 8. Redesignate Subpart F as subpart H. derived by dividing the individual’s reported hours of work;
self-employment income (gross income (3) Establish and employ procedures
jlentini on PROD1PC65 with RULES2
§ 261.60 [Redesignated as § 261.80.] less business expenses) by the Federal for identifying who is a work-eligible
minimum wage. A State may propose an individual;
I 9. Redesignate § 261.60 as § 261.80. alternative method of determining self- (4) Establish and employ internal
I 10. Add a new subpart F to read as employment hours as part of its Work controls to ensure compliance with the
follows: Verification Plan. procedures; and
VerDate Aug<31>2005 18:27 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37480 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
(5) Submit to the Secretary for activities or its internal controls for (4) Four percent for the fourth year;
approval the State’s Work Verification ensuring a consistent measurement of and
Plan in accordance with paragraph (b) of the work participation rate, the State (5) Five percent for the fifth and
this section. must submit for approval an amended subsequent years.
(b) A State’s Work Verification Plan verification plan by the end of the (d) If a State complies with the
must include the following: quarter in which the State modifies the requirements in this subpart for two
(1) For each countable work activity: procedures or internal controls. consecutive years, then any penalty
(i) A description demonstrating how imposed for subsequent failures will
the activity meets the relevant definition § 261.64 How will we determine if the State begin anew, as described in paragraph
at § 261.2; is meeting the requirement to establish and
(c) of this section.
(ii) A description of how the State maintain work verification procedures that
ensure an accurate measurement of work (e) If we take action to impose a
determines the number of countable penalty under §§ 261.64(b) or (c), we
hours of participation for self-employed participation?
(a) We will determine that a State has will reduce the SFAG payable for the
individuals; and immediately succeeding fiscal year.
(iii) A description of the met the requirement to establish work
documentation it uses to monitor verification procedures if it submits an PART 262—ACCOUNTABILITY
participation and ensure that the actual interim Work Verification Plan by PROVISIONS—GENERAL
hours of participation are reported; September 30, 2006 and a complete
(2) A description of the State’s Work Verification Plan that we approve I 1. The authority citation for part 262
procedures for identifying all work- by September 30, 2007. is revised to read as follows:
eligible individuals, as defined at (b) A ‘‘complete’’ Work Verification
Authority: 31 U.S.C. 7501 et seq.; 42 U.S.C.
§ 261.2; Plan means that: 606, 609, and 610; Pub. L. 109–171.
(3) A description of how the State (1) The plan includes all the
ensures that, for each work-eligible information required by § 261.62(b); and I 2. In § 262.1, revise paragraphs (a)(13)
individual, it: (2) The State certifies that the plan and paragraph (a)(14), add paragraph
(i) Accurately inputs data into the includes all the information required by (a)(15), and revise paragraph (c) to read
State’s automated data processing § 261.62(b) and that it accurately reflect as follows:
system; the procedures under which the State is
(ii) Properly tracks the hours though operating. § 262.1 What penalties apply to States?
the automated data processing system; (c) For conduct occurring after (a) * * *
and October 1, 2007, we will use the single (13) A penalty equal to the amount of
(iii) Accurately reports the hours to audit under OMB Circular A–133 in the State’s Welfare-to-Work formula
the Department; conjunction with other reviews, audits, grant for failure to meet its basic MOE
(4) A description of the procedures for and data sources, as appropriate, to requirement during a year in which it
ensuring it does not transmit to the assess the accuracy of the data filed by receives the formula grant;
Department a work-eligible individual’s States for use in calculating the work (14) A penalty of not less than one
hours of participation in an activity that participation rates. percent and not more than five percent
does not meet a Federal definition of a of the adjusted SFAG for failure to
countable work activity; and § 261.65 Under what circumstances will we impose penalties properly against
(5) A description of the internal impose a work verification penalty for individuals who refuse to engage in
controls that the State has implemented failure to submit a work verification plan or required work in accordance with
to ensure a consistent measurement of for failure to maintain adequate procedures
to ensure a consistent measurement of the
section 407 of the Act; and
the work participation rates, including (15) A penalty of not less than one
work participation rate?
the quality assurance processes and percent and not more than five percent
sampling specifications it uses to (a) We will take action to impose a
of the adjusted SFAG for failure to
monitor adherence to the established penalty under § 262.1(a)(15) of this
establish or comply with work
work verification procedures by State chapter if:
(1) The requirements under participation verification procedures.
staff, local staff, and contractors. * * * * *
(c) We will review a State’s Work §§ 261.64(a) and (b) have not been met;
or (c)(1) We will take the penalties
Verification Plan for completeness and specified in paragraphs (a)(1), (a)(2), and
approve it if we believe that it will (2) We determine that the State has
not maintained adequate (a)(7) of this section by reducing the
result in accurate reporting of work SFAG payable for the quarter that
participation information. documentation, verification, or internal
control procedures to ensure the immediately follows our final decision.
§ 261.63 When is a State’s Work accuracy of the data used in calculating (2) We will take the penalties
Verification Plan Due? the work participation rates. specified in paragraphs (a)(3), (a)(4),
(a) Each State must submit its interim (b) If a State fails to submit an interim (a)(5), (a)(6), (a)(8), (a)(9), (a)(10), (a)(11),
Work Verification Plan for validating or complete Work Verification Plan by (a)(12), (a)(13), (a)(14), and (a)(15) of this
work activities reported in the TANF the due dates in § 261.64(a), we will section by reducing the SFAG payable
Data Report and, if applicable, the SSP– reduce the SFAG payable for the for the fiscal year that immediately
MOE Data Report no later than immediately succeeding fiscal year by follows our final decision.
September 30, 2006. five percent of the adjusted SFAG. * * * * *
(b) If HHS requires changes, a State (c) If a State fails to maintain adequate I 3. Amend § 262.2 by adding a new
must submit them within 60 days of internal controls to ensure a consistent paragraph (d) as follows:
receipt of our notice and include all measurement of work participation, we
jlentini on PROD1PC65 with RULES2
necessary changes as part of a final will reduce the adjusted SFAG by the § 262.2 When do the TANF penalty
approved Work Verification Plan no following percentages for a fiscal year: provisions apply?
later than September 30, 2007. (1) One percent for the first year; * * * * *
(c) If a State modifies its verification (2) Two percent for the second year; (d) The penalty specified in
procedures for TANF or SSP–MOE work (3) Three percent for the third year; § 262.1(a)(15) takes effect on October 1,
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37481
2006, for failure to establish work Authority: 42 U.S.C. 604, 607, 609, and (i) Are eligible for TANF assistance;
participation verification procedures 862a; Pub. L. 109–171. (ii) Would be eligible for TANF
and on October 1, 2007, for failure to I 2. Revise § 263.2 to read as follows: assistance, but for the time limit on the
comply with those procedures. receipt of federally funded assistance; or
I 4. Amend § 262.3 by revising § 263.2 What kinds of State expenditures (iii) Are lawfully present in the
count toward meeting a State’s basic MOE United States and would be eligible for
paragraph (a)(1) to read as follows:
expenditure requirement?
assistance, but for the application of
§ 262.3 How will we determine if a State is (a) Expenditures of State funds in title IV of PRWORA;
subject to a penalty? TANF or separate State programs may (2) Include a child living with a
(a)(1) We will use the single audit count if they are made for the following custodial parent or other adult caretaker
under OMB Circular A–133, in types of benefits or services: relative (or consist of a pregnant
conjunction with other reviews, audits, (1) Cash assistance, including the individual); and
and data sources, as appropriate, to State’s share of the assigned child
(3) Be financially eligible according to
determine if a State is subject to a support collection that is distributed to
the appropriate income and resource
penalty for misusing Federal TANF the family, and disregarded in
(when applicable) standards established
funds (§ 263.10 of this chapter), determining eligibility for, and amount
by the State and contained in its TANF
intentionally misusing Federal TANF of the TANF assistance payment;
plan.
funds (§ 263.12 of this chapter), failing (2) Child care assistance (see § 263.3);
(3) Education activities designed to (c) Benefits or services listed under
to participate in IEVS (§ 264.10 of this paragraph (a) of this section provided to
chapter), failing to comply with increase self-sufficiency, job training,
and work (see § 263.4); a family that meets the criteria under
paternity establishment and child paragraphs (b)(1) through (b)(3) of this
support requirements (§ 264.31 of this (4) Any other use of funds allowable
under section 404(a)(1) of the Act section, but who became ineligible
chapter), failing to maintain assistance solely due to the time limitation given
to an adult single custodial parent who including:
(i) Nonmedical treatment services for under § 264.1 of this chapter, may also
cannot obtain child care for a child count.
under 6 (§ 261.57 of this chapter), failing alcohol and drug abuse and some
medical treatment services (provided (d) Expenditures for the benefits or
to reduce assistance to a recipient who services listed under paragraph (a) of
refuses without good cause to work that the State has not commingled its
MOE funds with Federal TANF funds to this section count whether or not the
(§ 261.54 of this chapter), and after benefit or service meets the definition of
October 1, 2007 failing to comply with pay for the services), if consistent with
the goals at § 260.20 of this chapter; and assistance under § 260.31 of this
work participation verification chapter. Further, families that meet the
(ii) Pro-family activities that are
procedures (§ 261.64 of this chapter). criteria in paragraphs (b)(2) and (b)(3) of
consistent with the goals at §§ 260.20(c)
* * * * * or (d) of this chapter, but do not this section are considered to be eligible
I 5. Amend § 262.6 by revising constitute ‘‘assistance’’ as defined in for TANF assistance for the purposes of
paragraphs (e) and (f) to read as follows: § 260.31(a) of this chapter; and paragraph (b)(1)(i) of this section.
(5)(i) Administrative costs for (e) Expenditures for benefits or
§ 262.6 What happens if a State does not
activities listed in paragraphs (a)(1) services listed under paragraph (a) of
demonstrate reasonable cause?
through (a)(4) of this section, not to this section may include allowable costs
* * * * * exceed 15 percent of the total amount of borne by others in the State (e.g. local
(e) The corrective compliance plan countable expenditures for the fiscal government), including cash donations
must correct or discontinue the year. from non-Federal third parties (e.g., a
violation within the following time (ii) Costs for information technology non-profit organization) and the value of
frames: and computerization needed for third party in-kind contributions if:
(1) For a penalty under §§ 262.1(a)(4), tracking or monitoring required by or (1) The expenditure is verifiable and
(a)(9), or (a)(15), by the end of the first under part IV-A of the Act do not count meets all applicable requirements in 45
fiscal year ending at least six months towards the limit in paragraph (5)(i) of CFR 92.3 and 92.24;
after our receipt of the corrective this section, even if they fall within the (2) There is an agreement between the
compliance plan; and definition of ‘‘administrative costs.’’ State and the other party allowing the
(2) For the remaining penalties, by a (A) This exclusion covers the costs for State to count the expenditure toward
date the State proposes that reflects the salaries and benefits of staff who its MOE requirement; and
minimum period necessary to achieve develop, maintain, support, or operate (3) The State counts a cash donation
compliance. the portions of information technology only when it is actually spent.
(f) During the 60-day period following or computer systems used for tracking (f)(1) The expenditures for benefits or
our receipt of the State’s corrective and monitoring. services in State-funded programs listed
compliance plan, we may request (B) It also covers the costs of contracts
under paragraph (a) of this section count
additional information and consult with for the development, maintenance,
only if they also meet the requirements
the State on modifications to the plan support, or operation of those portions
of § 263.5.
including in the case of a penalty under of information technology or computer
systems used for tracking or monitoring. (2) Expenditures that fall within the
§ 262.1(a)(15), modifications to the
(b) With the exception of paragraph prohibitions in § 263.6 do not count.
State’s work verification procedures and
Work Verification Plan. (a)(4)(ii) of this section, the benefits or (g) State funds used to meet the
services listed under paragraph (a) of Healthy Marriage Promotion and
* * * * * Responsible Fatherhood Grant match
this section count only if they have been
requirement may count to meet the
jlentini on PROD1PC65 with RULES2
PART 263—EXPENDITURES OF STATE provided to or on behalf of eligible
AND FEDERAL TANF FUNDS families. An ‘‘eligible family’’ as defined MOE requirement in § 263.1, provided
by the State, must: the expenditure also meets all the other
I 1. The authority section for Part 263 (1) Be comprised of citizens or aliens MOE requirements in this subpart.
is revised to read as follows: who: I 3. Revise § 263.6 to read as follows:
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
37482 Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations
§ 263.6 What kinds of expenditures do not (iii) Any person whose income or (c) The TANF Financial Report (or
count? resources would be counted in Territorial Financial Report). (1) Each
The following kinds of expenditures determining the family’s eligibility for State must file quarterly expenditure
do not count: or amount of assistance. data on the State’s use of Federal TANF
(a) Expenditures of funds that I 4. Revise § 265.3 to read as follows: funds, State TANF expenditures, and
originated with the Federal government; State expenditures of MOE funds in
(b) State expenditures under the § 265.3 What reports must the State file on separate State programs.
Medicaid program under title XIX of the a quarterly basis? (2) If a State is expending Federal
Act; (a) Quarterly reports. (1) Each State TANF funds received in prior fiscal
(c) Expenditures that a State makes as must collect on a monthly basis, and file years, it must file a separate quarterly
a condition of receiving Federal funds on a quarterly basis, the data specified TANF Financial Report (or, as
under another program that is not in in the TANF Data Report and the TANF applicable, Territorial Financial Report)
Part IV-A of the Act, except as provided Financial Report (or, as applicable, the for each fiscal year that provides
in § 263.3; Territorial Financial Report). information on the expenditures of that
(d) Expenditures that a State made in (2) Each State that claims MOE year’s TANF funds.
a prior fiscal year; expenditures for a separate State (3) Territories must report their
(e) Expenditures that a State uses to program(s) must collect on a monthly expenditure and other fiscal data on the
match Federal Welfare-to-Work funds basis, and file on a quarterly basis, the Territorial Financial Report, as provided
provided under section 403(a)(5) of the data specified in the SSP–MOE Data at § 264.85 of this chapter, in lieu of the
Act; and Report. TANF Financial Report.
(f) Expenditures that a State makes in (b) TANF Data Report. The TANF (d) SSP–MOE Data Report. The SSP–
the TANF program to replace the Data Report consists of four sections. MOE Data Report consists of four
reductions in the SFAG as a result of Two sections contain disaggregated data sections. Two sections contain
penalties, pursuant to § 264.50 of this elements and two sections contain disaggregated data elements and two
chapter. aggregated data elements. sections contain aggregated data
(1) Disaggregated Data on Families elements.
PART 265—DATA COLLECTION AND Receiving TANF Assistance—Section (1) Disaggregated Data on Families
REPORTING REQUIREMENTS one. Each State must file disaggregated Receiving SSP–MOE Assistance—
information on families receiving TANF Section one. Each State that claims MOE
I 1. The authority citation for part 265 assistance. This section specifies expenditures for a separate State
is revised to read as follows: identifying and demographic data such program(s) must file disaggregated
Authority: 42 U.S.C. 603, 605, 607, 609, as the individual’s Social Security information on families receiving SSP–
611, and 613; Pub. L. 109–171. Number and information such as the MOE assistance. This section specifies
I 2. Amend § 265.1 by revising amount of assistance received, identifying and demographic data such
paragraph (c) to read as follows: educational level, employment status, as the individual’s Social Security
work participation activities, citizenship Number, the amount of assistance
§ 265.1 What does this part cover? status, and earned and unearned received, educational level, employment
* * * * * income. The data must be provided for status, work participation activities,
(c) If a State claims MOE expenditures both adults and children. citizenship status, and earned and
under a separate State program(s), this (2) Disaggregated Data on Families No unearned income. The data must be
part describes the case record Longer Receiving TANF Assistance— provided for both adults and children.
information (disaggregated and Section two. Each State must file (2) Disaggregated Data on Families No
aggregated) on individuals and families disaggregated information on families Longer Receiving SSP–MOE
in the quarterly SSP–MOE Data Report no longer receiving TANF assistance. Assistance—Section two. Each State that
that each State must file. This section specifies the reasons for claims MOE expenditures for a separate
* * * * * case closure and data similar to the data State program(s) must file disaggregated
required in section one. information on families no longer
I 3. Revise § 265.2 to read as follows:
(3) Aggregated Data—Section three. receiving SSP–MOE assistance. This
§ 265.2 What definitions apply to this part? Each State must file aggregated section specifies the reasons for case
(a) Except as provided in paragraph information on families receiving, closure and data similar to the data
(b) of this section, the general TANF applying for, and no longer receiving required in section one.
definitions at §§ 260.30 through 260.33 TANF assistance. This section of the (3) Aggregated Data—Section three.
and the definitions of a work-eligible TANF Data Report requires aggregate Each State that claims MOE
individual and the work activities in figures in such areas as: The number of expenditures for a separate State
§ 261.2 of this chapter apply to this part. applications received and their program(s) must file aggregated
(b) For data collection and reporting disposition; the number of recipient information on families receiving and
purposes only, family means: families, adult recipients, and child no longer receiving SSP–MOE
(1) All individuals receiving recipients; the number of births and out- assistance. This section of the SSP–MOE
assistance as part of a family under the of-wedlock births for families receiving Data Report requires aggregate figures in
State’s TANF or separate State program TANF assistance; the number of such areas as: The number of recipient
(including noncustodial parents, where noncustodial parents participating in families, adult recipients, and child
required under § 265.5(g)); and work activities; and the number of recipients; the total amount of
(2) The following additional persons closed cases. assistance for families receiving SSP–
living in the household, if not included (4) Aggregated Caseload Data by MOE assistance; the number of non-
jlentini on PROD1PC65 with RULES2
under paragraph (b)(1) of this section: Stratum—Section four. Each State that custodial parents participating in work
(i) Parent(s) or caretaker relative(s) of opts to use a stratified sample to report activities; and the number of closed
any minor child receiving assistance; the quarterly TANF disaggregated data cases.
(ii) Minor siblings of any child must file the monthly caseload data by (4) Aggregated Caseload Data by
receiving assistance; and stratum for each month in the quarter. Stratum—Section four. Each State that
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / Rules and Regulations 37483
claims MOE expenditures for a separate and accurate reports before the end of accurate information on total
State program(s) and that opts to use a the fiscal quarter that immediately expenditures and expenditures on
stratified sample to report the SSP–MOE succeeds the quarter for which the administrative costs and transitional
quarterly disaggregated data must file reports were required to be submitted. services; or
the monthly caseload by stratum for I 6. Revise § 265.8 to read as follows: (5) The annual report under § 265.9
each month in the quarter. does not contain the description of
(e) Optional data elements. A State § 265.8 Under what circumstances will we
transitional services provided by a State
has the option not to report on some take action to impose a reporting penalty
for failure to submit quarterly and annual to families no longer receiving
data elements for some individuals in assistance due to employment.
reports?
the TANF Data Report and the SSP– (b) If we determine that a State meets
MOE Data Report, as specified in the (a) We will take action to impose a
reporting penalty under § 262.1(a)(3) of one or more of the conditions set forth
instructions to these reports. in paragraph (a) of this section, we will
(f) Non-custodial parents. A State this chapter if:
(1) A State fails to file the quarterly notify the State that we intend to reduce
must report information on a non-
TANF Data Report, the quarterly TANF the SFAG payable for the immediately
custodial parent (as defined in § 260.30
Financial Report (or, as applicable, the succeeding fiscal year.
of this chapter) if the non-custodial
parent: Territorial Financial Report), or the (c) We will not impose the penalty at
(1) Is receiving assistance as defined quarterly SSP–MOE Data Report (if § 262.1(a)(3) of this chapter if the State
in § 260.31 of this chapter; applicable) within 45 days of the end of files the complete and accurate
(2) Is participating in work activities the quarter; quarterly report or the annual report
as defined in section 407(d) of the Act; (2) The disaggregated data in the before the end of the fiscal quarter that
or TANF Data Report or the SSP–MOE immediately succeeds the fiscal quarter
(3) Has been designated by the State Data Report are not accurate or a report for which the reports were required.
as a member of a family receiving does not include all the data required by (d) If the State does not file all reports
assistance. section 411(a) of the Act (other than as provided under paragraph (a) of this
I 5. Revise § 265.4 to read as follows: section 411(a)(1)(A)(xii) of the Act) or section by the end of the immediately
the nine additional elements necessary succeeding fiscal quarter, the penalty
§ 265.4 When are quarterly reports due? to carry out the data collection system provisions of §§ 262.4 through 262.6 of
(a) Each State must file the TANF requirements, including the social this chapter will apply.
Data Report and the TANF Financial security number; (e) Subject to paragraphs (a) through
Report (or, as applicable, the Territorial (3) The aggregated data elements in
(c) of this section and §§ 262.4 through
Financial Report) within 45 days the TANF Data Report or the SSP–MOE
262.6 of this chapter, for each quarter
following the end of the quarter or be Data Report required by section 411(a)
for which a State fails to meet the
subject to a penalty. of the Act are not accurate and the
reporting requirements, we will reduce
(b) Each State that claims MOE report does not include the data
the SFAG payable by an amount equal
expenditures for a separate State elements necessary to carry out the data
to four percent of the adjusted SFAG (or
program(s) must file the SSP–MOE Data collection system requirements and to
a lesser amount if the State achieves
Report within 45 days following the end verify and validate the disaggregated
substantial compliance under a
of the quarter or be subject to a penalty. data;
corrective compliance plan).
(c) A State that fails to submit the (4) The TANF Financial Report (or, as
reports within 45 days will be subject to applicable, the Territorial Financial [FR Doc. 06–5743 Filed 6–28–06; 8:45 am]
a penalty unless the State files complete Report) does not contain complete and BILLING CODE 4184–01–P
jlentini on PROD1PC65 with RULES2
VerDate Aug<31>2005 17:33 Jun 28, 2006 Jkt 208001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\29JNR2.SGM 29JNR2
