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Proposed Rule

Temporary Assistance for Needy Families (TANF) Program, Elimination of Enhanced Caseload Reduction Credit for Excess Maintenance-of-Effort Expenditures

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AGENCY:

Administration for Children and Families (ACF), Department of Health and Human Services (HHS).

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Administration for Children and Families proposes to revise the TANF regulations to eliminate the provision that allows a State to receive additional caseload reduction credit for maintenance-of-effort (MOE) expenditures in excess of its required MOE spending. This provision is no longer necessary and not consistent with Congressional direction in the Deficit Reduction Act of 2005.

DATES:

We will consider all comments received on or before October 7, 2008.

ADDRESSES:

You may submit your comments in writing to the Office of Family Assistance (OFA), Administration for Children and Families, 5th Floor East, 370 L'Enfant Promenade, SW., Washington, DC 20447, or hand deliver to OFA/ACF, 5th Floor East, 901 D Street, SW., Washington, DC 20447. You may download an electronic copy of the proposed rule at the Federal Rulemaking Portal: http://www.regulations.gov and may download a copy and transmit electronic comments at the agency Web site: http://www.regulations.acf.hhs.gov.

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FOR FURTHER INFORMATION CONTACT:

Robert Shelbourne, Director, Division of State TANF Policy, Office of Family Assistance, ACF, at (202) 401-5150.

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SUPPLEMENTARY INFORMATION:

I. Public Inspection of Comments

All comments received, including any personal information provided, will be available for public inspection Monday through Friday 8:30 a.m. to 5 p.m. at 901 D St., SW., 5th Floor, Washington, DC.

II. Statutory Authority

We are issuing this proposed regulation under the authority granted to the Secretary of HHS by Section 1102(a) of the Social Security Act, 42 U.S.C. 1302(a). Section 1102(a) authorizes the Secretary to make and publish such rules as may be necessary for the efficient administration of functions with which he is charged under the Social Security Act.

The statute at 42 U.S.C. 617 limits the authority of the Federal government to regulate State conduct or enforce the TANF provisions of the Social Security Act, except as expressly provided. We have interpreted this provision to allow us to regulate where Congress has charged HHS with enforcing certain TANF provisions by assessing penalties. Because the caseload reduction credit directly relates to the work participation requirements to which States and the Territories are subject and the failure to meet those requirements can result in a financial penalty pursuant to 42 U.S.C. 609(a)(3), we have the authority to regulate in this instance.

III. Background

Under the TANF program, States must engage certain percentages of their caseloads in work activities or face financial penalties for failing to meet the work participation requirements. These required participation rates are 50 percent overall and 90 percent for two-parent families; however, the rates a State must actually meet for a fiscal year (FY) are reduced by the amount of a State's caseload reduction credit. Generally, the caseload reduction credit equals the number of percentage points that a State reduces its overall caseload in the prior fiscal year (the comparison year) compared to its overall caseload in the base year. For caseload reduction credits that apply to the two-parent work participation rate, States have the option of using the overall calculation or using a calculation based on the reduction in the two-parent caseload. Because of sharp State caseload declines since FY 1995, the caseload reduction credit had virtually eliminated participation requirements for most States. The Deficit Reduction Act of 2005 (DRA) updated the base year from FY 1995 to FY 2005, effectively raising the target work participation rates and Start Printed Page 46231encouraging States to help families become independent.

The original TANF rule published in 1999 (64 FR 17720, April 12, 1999) included a provision at § 261.43(a)(2) (now § 261.43(b)) that allowed a State to exclude from the caseload reduction credit calculation cases on which the State had spent what has been termed “excess MOE.” Excess MOE refers to State maintenance-of-effort (MOE) or cost-sharing expenditures in excess of the amount the State needs to meet its required MOE expenditure requirement. If a State chose to use this provision, we factored out cases funded with excess MOE from the comparison-year caseload in calculating the State's credit.

Title IV-A of the Social Security Act did not expressly provide for the concept of an allowance in the caseload reduction credit for excess MOE. Rather, we included it in the rule in response to a comment on the proposed TANF rule published in 1997. Our intent was to encourage States to spend MOE in their TANF programs above the required level. At the time, we thought it was necessary to give States an incentive to spend MOE dollars because the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) had shifted the culture of welfare and States faced new, more challenging work participation rates. In addition, there was some concern that welfare reform would reduce the prior level of State funding. Since then, States have been successful in moving large numbers of families off of the welfare rolls, and we believe States have adequate resources to devote to their TANF programs.

In an effort to continue the drive to move individuals into the workforce and to help ensure that TANF clients with barriers to employment receive the services they need, the DRA placed a renewed emphasis on work participation rates, requiring States to meet effectively higher work participation rates by recalibrating the caseload reduction credit and imposing new requirements to ensure consistent and accurate reporting of work participation data. Because the excess MOE provision allows States to reduce their target work participation rates artificially without actually moving recipients off of the rolls and into jobs, this regulatory provision is not consistent with the DRA.

IV. Discussion of Regulatory Provisions

This proposed rule would delete § 261.43(b), which allows a State to receive additional caseload reduction credit for MOE expenditures in excess of its required MOE spending.

We now propose deleting this provision for several reasons. First, we no longer think the incentive the excess MOE provision attempted to offer is necessary. While the TANF block grant amount has remained constant, State TANF caseloads have plummeted. Consequently, the amount of Federal TANF and minimum required State MOE funding available per case has grown considerably since that time and State TANF programs are operating successfully without spending large sums in excess of their required MOE levels.

Second, the DRA expanded the range of expenditures that a State may claim as MOE. As a result, a State could feasibly claim as “excess MOE” existing State and third-party spending that is not claimed as MOE but that would qualify if a State chose to report such expenditures. This would allow a State to increase the amount of excess MOE without truly investing new resources in programs to serve needy families.

Finally, we look again to the intent of the DRA to support eliminating the excess MOE credit in the caseload reduction credit calculation. Congress included the new calculation of work participation rates and program integrity provisions of the DRA in large part to restore State accountability for the TANF program and to ensure real progress in moving families from welfare to self-sufficiency. It did this through recalibration of the caseload reduction credit, expansion of the universe of families counted in calculating participation rates, and improved verification and oversight of work participation activities. Meaningful work participation rates help ensure effective programs and keep States accountable for the funds they expend and the programs they operate. Higher caseload reduction credits that do not reflect families actually leaving the caseload for work only hurt those goals.

V. Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995 (Pub. L. 104-13) (PRA), no persons are required to respond to a collection of information unless it displays a valid OMB control number. As required by this Act, we have submitted the proposed data collection requirements to OMB for review and approval. We are concurrently using this NPRM as a vehicle for seeking comment from the public on this information collection.

This NPRM proposes to delete a provision in the regulation concerning the TANF caseload reduction credit that permits a State not to report caseloads funded with “excess MOE.” Excess MOE refers to State maintenance-of-effort (MOE) expenditures in excess of the amount the State needs to meet its required MOE expenditures. The reporting burden on States would decrease as a result of this proposed change because they would no longer have the option to compute how many cases they funded with excess MOE in submitting the Caseload Reduction Report, Form ACF-202. We have recomputed the burden of completing the ACF-202, factoring out the computation of excess MOE.

We estimate that the 50 States, the District of Columbia, Guam, Puerto Rico, and the United States Virgin Islands will be respondents. Currently, American Samoa has not applied to implement the TANF program.

The estimated burden associated with preparing the Caseload Reduction Credit Report, Form ACFF-202 is:

Instrument or requirementNumber of respondentsYearly submittalsAverage burden hours per responseAverage reduction in burden hours per responseTotal burden hoursReduction in total burden hours
Caseload Reduction Documentation Process, ACF-202—§§ 261.41-261.4454111556,210270

We are submitting this information collection to OMB for approval. These requirements will not become effective until approved by OMB. Copies of the proposed collection may be obtained by writing to the Administration for Children and Families, Office of Administration, Office of Information Services, 370 L'Enfant Promenade, SW., Washington, DC 20447, Attn: ACF Reports Clearance Officer. All requests should be identified by the title of the information collection. E-mail address: rsargis@acf.hhs.gov. Written comments to OMB concerning the proposed Start Printed Page 46232information collection should be sent directly to: Office of Management and Budget, Paperwork Reduction Project, 725 17th Street, NW., Washington, DC 20503, Attention: Desk Officer for the Administration for Children and Families. OMB is required to make a decision concerning the collection of information contained in this regulation between 30 and 60 days after its publication in the Federal Register. Therefore, a comment is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment to the Department on the proposed regulation.

VI. Regulatory Flexibility Analysis

The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not result in a significant impact on a substantial number of small entities. The primary impact is on State governments. State governments are not considered small entities under the Regulatory Flexibility Act.

VII. Regulatory Impact Analysis

Executive Order 12866 requires that regulations be reviewed to ensure that they are consistent with the priorities and principles set forth in the Executive Order. The Department has determined that this rule is consistent with these priorities and principles.

VIII. Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires that a covered agency prepare a budgetary impact statement before promulgating a rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year.

The Department has determined that this rule would not impose a mandate that will result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year.

The proposed rule has no direct budgetary implications. The TANF program has been unaffected in budgetary terms by the existing excess MOE provision.

IX. Congressional Review

This regulation is not a major rule as defined in 5 U.S.C. Chapter 8.

X. Assessment of Federal Regulation and Policies on Families

Section 654 of The Treasury and General Government Appropriations Act of 1999 requires Federal agencies to determine whether a proposed policy or regulation may affect family well-being. If the agency's determination is affirmative, then the agency must prepare an impact assessment addressing seven criteria specified in the law. This regulation will not have an impact on family well-being as defined in the legislation.

XI. Executive Order 13132

Executive Order 13132 “Federalism” requires that Federal agencies consult with State and local government officials in the development of regulatory policies with Federalism implications. We solicit and welcome comments from State and local government officials on this proposed rule, consistent with Executive Order 13132.

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List of Subjects in 45 CFR Part 261

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Dated: October 24, 2007.

Daniel C. Schneider,

Acting Assistant Secretary for Children and Families.

Approved: May 6, 2008.

Michael O. Leavitt,

Secretary of Health and Human Services.

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Editorial Note:

This document was received at the Office of the Federal Register on August 4, 2008.

For the reasons set forth in the preamble, the Administration for Children and Families proposes to amend 45 CFR chapter II by amending part 261 as set forth below:

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PART 261—ENSURING THAT RECIPIENTS WORK

1. The authority citation for 45 CFR part 261 continues to read as follows:

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Authority: 42 U.S.C. 601, 602, 607, and 609; Public Law 109-171.

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2. Revise § 261.43 to read as follows:

What is the definition of a “case receiving assistance” in calculating the caseload reduction credit?

The caseload reduction credit is based on decreases in caseloads receiving TANF- or SSP-MOE-funded assistance (other than those excluded pursuant to § 261.42).

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[FR Doc. E8-18208 Filed 8-7-08; 8:45 am]

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