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HIGHLIGHTS OF THE FINAL TANF RULE

Sheri Steisel, Lee Posey, and Jack Tweedie

Since June 29, 2006, state Temporary Assistance to Needy Families (TANF) programs have been subject to an interim final rule.  In late January, 2008, HHS issued a revised final rule. This regulation is HHS's final word on the TANF regulation.   

http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/08-455.pdf 

The final rules goes into effect on October 1, 2008 and states can use the current definitions of maintenance of effort (some MOE definitions are changed under the final rule) to get credit for the caseload reduction credit through 2009. 

The final regulation does the following:

Gives states more flexibility to offer post-secondary and vocational education 
States are limited in how they count postsecondary education because the federal TANF law restricts counting vocational or postsecondary education beyond one year.  The Final TANF Rule eases some of the regulatory restrictions on postsecondary education:

• Allows states to count coursework toward a B.A. or advanced degree
• Allows states to count one hour of unsupervised study time for every hour of class time. This means that many participants can meet their entire work requirement though vocational education, rather than having to squeeze in other activities to meet it.
• For most degree programs and longer programs, states would still need to allow parents to pursue postsecondary education in state-funded, non-MOE programs or allow them to continue their coursework even though they will count against the state’s work participation rate.

Confirms states' use of "excess MOE claims" to increase caseload reduction credit 
Federal officials had signaled a resistance to the use of excess MOE claims to increase states' caseload reduction credits.  The Final TANF Rule explicitly accepts the use of excess MOE claims and approves a methodology to calculate the resulting caseload reduction.  This removes many questions that states have about using the strategy and gives states more flexibility and time to meet the federal work participation rates.   The use of excess MOE claims will assist some states in meeting the federal work rates and avoiding penalties for noncompliance. 

Gives states flexibility by allowing them to count holidays and "excused absences" from unpaid activities
Holidays and excused absences apply to unpaid activities including work experience and  community service.  States can provide for 10 holidays and can grant up to 80 hours of excused absences.  This will help states meet their work rates and allow flexibility to enable parents to take care of family responsibilities such as taking care of sick children and school conferences without falling short of their work requirements.  States can also use excused absences to provide continuing barrier reduction activities  (services such as mental health treatment or vocational rehabilitation when clients are engaged in other primary activities such as vocational education or community service )  without it counting against the time limits on job search and job readiness.

Helps states meet participation rates  when there is a conflict with labor laws limiting how many hours they can require parents to participate
The Fair Labor Standards Act (FLSA) limits how many hours that states can require parents to participate in activities such as community service or work experience (the family's benefits divided by the federal minimum wage).  For states with low benefits, these limits may be less than the hours they need to meet the work participation rate.  For parents working the maximum number of hours under FLSA, the Final TANF Rule allows states to deem the additional hours needed to meet the 20 hour core requirement, reducing the number of hours needed for additional activities to meet the rates (with zero hours for parents with children under 6).

Recognizes that states may use state-funded, non-MOE programs (also called solely-state funded (SSF) programs) to remove non-working families from the work participation rate

Recognizes the use of post-employment programs that provide assistance to families who earn too much to be eligible for regular TANF payments so that those working families remain in the work participation rate.

Gives states more flexibility to provide barrier reduction activities: 
Job search and job readiness can be counted in hours rather than weeks.  This is significant because the Interim Rule stated that any hour of job search or job readiness activity during a week would be considered using a full week of the six week limit.  Now states have 120 or 180 hours a year (depending on whether the parent has a 20 or 30-hour work requirement) to provide barrier removal, job search and job preparation activities.  This will help states combine these activities with other work activities such as unsubsidized work or job skills training. 

Other provisions of the Final TANF Rule provide some help, but don't go very far in helping states run their programs effectively and meet the federal work rates.

Makes limited accommodations for serving recipients with disabilities
HHS did make the following changes in response to concerns raised about the Interim Final Rule:

• States will be able to exclude individuals receiving SSI and Social Security Disability Insurance (SSDI) from the work participation rate on a case-by-case basis (counting them if they meet the work hours requirement and not including them if they don't). 
• Applicants for SSI and SSDI are not excluded from the work participation rate, but states are allowed to revise work participation data to exclude for the whole year individuals whose SSI or SSDI applications are approved within the reporting year. 
• States can exclude from the work participation rate parents needed in the home to care for a family member with a disability who lives in the home.  The Final TANF rule eliminated the restriction that required that the family member not be enrolled in school full time.  
• The preamble emphasizes the critical importance of offering effective services to parents with disabilities.  It also acknowledges that appropriate services to these parents will often involve activities that may not count as federal work activities or that they will not participate enough hours to count toward the rate.  It cautions states that failing to offer services to parents with disabilities may violate the Americans with disabilities Act and Section 504 of the Civil Rights Act.   It also expresses strong concerns that states will not offer effective services to parents with disabilities,

Limits the counting of key services such as basic education, English as a Second Language (ESL) and basic skills training to where they are offered as an integral component of other work-related activities
While the Final TANF Rule acknowledges the necessity of these services to prepare many parents for work, it does not allow them to count as stand-alone activities because they are not closely enough related to work. 

The Final TANF Rule also contains new provisions that would affect how states can claim spending toward their MOE requirements.
The rules governing how states can claim MOE spending is important because it can be used to claim increases in the state’s caseload reduction credit and it can be used in creating state-funded, non-MOE programs without have to increase state general fund spending.

The DRA included language that removed the need for state TANF MOE used for "pro-family activities" to be spent for or on behalf of "eligible families".  Several states interpreted “pro-family activities” to include all state spending for purpose three—reducing out-of-wedlock pregnancy and purpose four—supporting the formation and maintenance of two-parent families. These purposes are very broad, so states have justified a broad range of spending under them: afterschool and pre-kindergarten programs, juvenile justice services, and college scholarships.  These broad definitions  allowed states to count a broad set of existing state programs and spending.  Many states were able to substantially increase their MOE claims (by 25 and even 50%), using those claims for excess MOE claims to increase the caseload reduction credit (often by more than 20%).  Some states also used the additional claims so they could run state-funded, non-MOE assistance programs to take two-parent families, parents in postsecondary education, or parents with disabilities out of the work participation rate.

The Final TANF Rule restricts the DRA "pro-family activities" provision to apply only to healthy marriage and responsible fatherhood activities (specified in the DRA).  It restricts state MOE claims outside of those to benefits and services provided to or on behalf of eligible families.  This will eliminate states' ability to claim some spending and reduce how much funding states can claim to support state-funded, non-MOE programs and excess MOE claims.

The preamble discussion does acknowledge the broader claiming for state MOE  as a reasonable interpretation of the DRA and interim final rule.  This enables states to claim purpose 3 and 4 spending without having to link it to an eligible family through FFY2008 (after which the Final TANF Rule takes effect), so that they can still use excess MOE claims to receive substantial caseload reduction creits for the third year of the new requirements—FFY2009.

The Final TANF Rule also puts into regulations previous policy guidance allowing states to count spending by other levels of government and community organizations if the spending meets a TANF purpose and they have a written agreement with the agency.  This will help states identify higher levels of MOE spending.

Please send us your questions, comments and state concerns about the regulations to Sheri Steisel or Lee Posey in NCSL's DC office at (202) 624-5400, or Jack Tweedie in NCSL's Denver office at (303) 856-1546.