ID/No: WD 27-00

                                                              Date: March 14, 2000

                                                              Key Word: TANF/Choices

To:            Local Workforce Development Board Executive Directors
               LWDA Coordinators
               Commission Executive Staff
               Commission Local Offices

From:          Jean Mitchell, Director of Workforce Development

Subject:       New Earned Income Deduction Requirements for Temporary Assistance
               for Needy Families/Choices Participants

    To provide information to Local Workforce Development Boards (Boards) on the
    new Earned Income Deduction (EID) requirements for Temporary Assistance for
    Needy Families (TANF)/Choices participants.

     General Appropriations Act, 76 th Legislature, Regular Session, Rider 31,
       Article II, Texas Department of Human Services

    In May 1999, House Bill 1, the General Appropriations Act, was passed by the
    76th Texas Legislature. It required the Texas Department of Human Services
    (TDHS) to increase EIDs for TANF clients. Under EID, clients‟ earnings are
    disregarded for four months following employment. The new deduction is
    designed to ease the transition from welfare to work by allowing clients to retain
    additional money to help them cover new expenses related to employment.

     All TANF recipients who enter employment can elect to use the EID. To promote
     access to needed post-employment services, all TANF recipients who receive the
     EID must participate in the Choices program, even if not enrolled in the Choices
     program at the time of employment. The participation requirement for clients who
     are working at least 30 hours per week and earning at least $700/month is limited
     to reporting the hours of employment to Choices staff.

        Clients working at least 30 hours per week but earning less than $700/month are
        also required to participate in Choices services. Their participation is not limited
       to reporting employment hours; other Choices activities must be assigned as
       required to meet the client's required hours of participation.

       All recipients who receive an EID are included in the denominator in calculating
       Choices work participation rates.

       Requiring participation in Choices presents new opportunities for Boards to offer
       post-employment services to clients receiving the EID and to their families.
       These services may be funded with TANF dollars or with Welfare-to-Work
       (WtW) dollars if the clients are WtW eligible. A connection to the Texas
       Workforce Centers can provide families with resources to assist them in
       maintaining and enhancing their careers, particularly those who did not enter
       employment through the Choices program.

    All clients are assigned a work code by TDHS. This work code is used by Boards
    to identify (among other things) clients who are mandatory Choices participants.
    Clients with a “M” work code are mandatory Choices participants and should be
    outreached for services. Historically, clients who were assigned a work code "M"
    were nonexempt clients age 16 through 59 who worked less than 30 hours per
    week (or not at all) and lived in a mid- or full-service county.

       Effective March 1, 2000 clients who work 30 hours (or more) per week but earn
       less than $700/month are no longer exempt. They will be assigned work code
       "M" and will be mandatory Choices participants in mid- or full-service counties.

    Under previous TANF policy, clients who obtained employment 30 hours per
    week or received earnings equal to 30 hours (multiplied by the federal minimum
    wage) were assigned a work code "P". These clients were exempt from
    participation, but were eligible to volunteer for Choices services. However, in
    many cases, a client's voluntary participation was impacted by a denial of TANF
    benefits due to earnings.

       Effective March 1, 2000, the “P” work code was redefined to include clients who
       earn $700 or more per month. The “P” work code has been modified in The
       Workforce Information System of Texas (TWIST) as follows:

       Old Definition of “P”                       New Definition of “P”
       Effective Through 2/29/00                   Effective as of 3/1/00

       Employed 30+ hours/wk (or                   Mandatory Employed
       Earning the equivalent of                   30+ hours/week@$700+/month
       30 hours x federal minimum

WD Letter 27-00                            2
       With the implementation of the new EID policies, clients with a "P" work code
       are included in the Texas TANF/Choices participation rate and subsequently, in
       each Board's participation rate.

    Although all clients with a “P” work code are mandatory Choices participants
    (effective March 1, 2000), not all of these clients may have been enrolled in the
    Choices program prior to their employment. For clients who were already
    participating in Choices activities, Boards should continue to track their
    participation (now in unsubsidized employment) and determine if clients are in
    need of additional education, training, or support services. Boards should track
    these additional services in TWIST.

       Clients who were not previously enrolled in the Choices program will have to be
       outreached and notified of their responsibility to report hours of employment.
       The type of outreach should be determined locally, but must be flexible to
       accommodate clients‟ employment schedules. Outreach and contact may be
       conducted via the telephone, a letter, a home visit, or any other locally developed

       All clients with a “P” work code should be given the opportunity to access
       Choices post-employment services to enhance their employability. A
       comprehensive career enhancing employment plan should be discussed with
       clients during the initial contact. Discussions with clients should include not only
       their requirement to report employment hours but also address any additional
       education, training, or support services clients need to maintain and succeed in the

       Most clients with a “P” work code, without an open Choices case, will appear in
       the TWIST Outreach Pool. As mandatory Choices eligibles, they must be
       outreached in the Choices program and their hours of employment recorded in
       TWIST. Boards have the option of determining the procedure for documenting
       employment hours and retaining the information in case files.

       The Texas Workforce Commission (Commission) recommends that clients fill out
       a weekly timesheet indicating the number of hours worked, sign this timesheet
       and submit it to their caseworkers each week for maintenance in the clients‟ case
       files. The Commission also recommends that Boards conduct a random sample of
       these timesheets and verify with employers that the hours were reported
       accurately. This procedure will provide a documented basis for the validity of
       this self-reported client employment information.

       In some cases, clients will not appear in the TWIST Outreach Pool. Currently
       when cases are closed for any reason, eligible clients are „recycled‟ in TWIST and
       reappear in the TWIST Outreach Pool within one to three months (as designated
       by the Board). Clients with a “P” work code who are not enrolled in activities
       will need to be outreached as quickly as possible because they are in the
       participation rate denominator.

WD Letter 27-00                             3
       In order to identify any mandatory clients with a “P” work code who do not
       appear in the TWIST Outreach Pool, Boards should use the automated TANF
       Performance Report, that identifies the total eligible universe. This report will
       identify all clients with a “P” work code.

       After all clients with a “P” work code are identified, they can be sorted into three
       general categories:

       1. Cases in TWIST (either open cases or cases with no activity): These clients
          should continue to be contacted to report hours of employment.
       2. In the TWIST Outreach Pool (and can be automatically outreached via
          TWIST): These clients should be outreached and notified of their
          participation requirements and other available services.
       3. Neither an open case in TWIST nor in the TWIST Outreach Pool: These
          clients should be manually outreached because they do not appear in the
          automated TWIST Outreach Pool. They are mandatory Choices participants
          and should be notified of their participation requirements and other available
          Choices services. Once clients have responded, staff can „force open‟ or
          'recycle' a case in TWIST to track the client's employment (participation)

    If clients do not respond to outreach or report hours of participation, they are in
    violation of their required participation. A sanction should be initiated at once. If
    a sanction is not initiated, the clients will remain in the Board‟s participation rate

       Although participation of clients coded "P" is limited to reporting their hours of
       employment, other Choices services (work activities, support services, etc.)
       should be offered to clients to support their employment. However, clients‟
       participation in other work activities is not subject to sanction because it is

     Effective immediately, Boards will need to do the following:

          Establish procedures for identifying all clients with a “P” work code.
          Determine the method of contact (i.e., written correspondence, telephone
           contact, extended office hours, etc.) that will be used to interact with clients
           with a “P” work code.
          Notify all clients with a “P” work code of their new participation
          Offer additional Choices services to clients to enhance their employability and
           to have those services reflected in career enhancing employment plans.

WD Letter 27-00                              4
          Establish procedures for verifying weekly hours of employment (e.g., provide
           clients with a locally developed form, require at least four consecutive pay
           stubs if clients are paid weekly, two if clients are paid biweekly, etc.)
          Continue to verify eligibility monthly (TANF grants could potentially be
           denied before or after the four-month EID period expires).
          Sanction clients who fail to respond to outreach or fail to report hours of
          Provide a list of other services available at the Texas Workforce Centers for
           clients and their families.

       Boards should ensure that information about the new EID requirements are shared
       with appropriate staff members.

     Direct inquiries to Sharon Roland via e-mail at sharon.roland@twc.state.tx.us or
     at (512) 936-3161.

Rescissions: None                                        Expiration: Continuing

WD Letter 27-00                            5

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