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Welfare Reform Reauthorization: NCSL bill summary of the " The Next Step in Reforming Welfare Act", H.R. 3625, as introduced by Representative Wally Herger (R-CA), Chair, Human Resources Subcommittee House Ways and Means Committee and amended in subcommittee (Adobe Acrobat Required to access pdf version of bill summary)

Human Services Committee Bill Summary H.R. 4090

This legislation to reauthorize the Temporary Assistance to Needy Families (TANF) program reflects the President Bush's reauthorization proposal, with certain changes. Like the President's proposal, the bill increases the required hours of recipient participation from 30 to 40, and increases the work participation rate states must meet from 50% to 70%. States face fiscal sanctions under current law of loss of 5% of their grant, having to "back fill" grant funding with state funds, and an MOE increase of 5%. However, unlike the President's plan, the bill also modifies, not eliminates, the caseload reduction credit and allows states to transfer up to 50% of their TANF block grant into the child care block grant. The bill keeps TANF funding at current levels, continues the supplemental grants and contingency fund, and does not increase child care funding.

The bill makes three changes to the four current purposes of the TANF program. All TANF or MOE spending must meet one of the purposes. The overarching purpose of the TANF program would be to improve child well-being by increasing the flexibility of states to operate it. Purpose one is changed to read: "Provide assistance and services to needy families so that children can be cared for in their own homes..." and purpose two is changed to read: "encourage the formation and maintenance of healthy, two parent married families and encourage responsible fatherhood."

The bill reauthorizes the TANF block grant through FY 2007 in the amount of $16.5 billion a year.

The bill requires that a state include in its state plan information showing how it will encourage "equitable treatment" of married two parent families in its TANF program.

The bill funds Healthy Marriage Promotion grants by eliminating the existing $100,000,000 bonus for reducing out-of-wedlock births. These grants are competitive grants to states, territories and tribes. They have a 50% match. The grants can be used to support the following activities:

• public awareness campaigns on the value of marriage and the skills needed to increase marital stability;
• high school education on the value of marriage, relationship skills, and budgeting;
• marriage education/marriage skills programs and communication skills programs for unmarried pregnant women and unmarried expectant fathers;
• premarital education and marriage skills counseling for couple planning to marry;
• marriage enhancement and marriage skills for married couples;
• divorce reduction programs;
• marriage mentoring programs using married couples as models in at-risk communities; and
• programs to reduce disincentives to marriage in means-tested aid programs, if offered in conjunction with other activities described above.

The bill also makes it simpler for states to get maintenance of effort (MOE) credit for services they provide under purposes three and four of the TANF program, which related to marriage and family formation, and preventing out-of-wedlock births and births to teenagers. States would not have to establish an income eligibility for recipients of such services.

The bill continues supplemental grants-- which go to states with historically low welfare spending and high population growth-- for four years. Funding is kept at the existing level.

The bill establishes a new bonus fund with the money in the existing high performance bonus fund averaging $100,000,000 a year over the five years of the reauthorized program. These funds would reward states for state performance in achieving the goals of employment entry, job retention, and increased earnings for families under TANF, as measured on an absolute basis and on the basis of state performance. A formula for measuring state performance will be developed by the Secretary of Health and Human Services in consultation with the National Conference of State Legislatures, the National Governors Association and the American Public Human Services Association.

The bill reestablishes the contingency fund in the amount of $2,000,000,000 for FYs 2003-2007. The trigger mechanisms that allow states to access the contingency fund are unchanged. States can use their child care spending toward the 100% MOE requirement.

The bill raises the amount that states can transfer from their TANF block grant to their child care block grant from 30% to 50%. The bill increases the statutory amount that states can transfer from TANF into the Social Services Block Grant (SSBG, Title XX) from 4.25% to 10%. The bill also allows states to use TANF funds carried over from prior years to provide TANF benefits and services. Presently, such funds can only be spent on cash assistance. In addition, the bill permits states to reserve TANF funds for future contingencies (rainy day funds), and states a credit for such action. It also repeals the TANF loan program.

As part of the state plan, states will be required to address how they intend to require a parent or caretaker receiving assistance to engage in work or alternative self-sufficiency activities, or require families receiving assistance to engage in activities in accordance with a family self-sufficiency plan. The present work requirement is effective after 24 months of assistance.

States would be required to establish a self-sufficiency plan that specifies appropriate activities, including direct work activities as appropriate. Each member of the family who is work-eligible would be required to participate in activities that are part of the self-sufficiency plan. Universal engagement does not apply to child only cases. States would be required to monitor the participation of family members and the progress of the family toward self-sufficiency, to review regularly review the plan, and to revise the plan as appropriate. The state would have to have a plan in place for a family coming onto the rolls after October 1, 2002 within 60 days of their first receiving assistance. For families already on the rolls, the states would have 12 months from the enactment of this requirement to complete the self-sufficiency plan. Failure to establish a self-sufficiency plan results in a state losing 5% of its TANF grant. The state also has to "back fill" the amount of the reduction and its MOE increases by 5%.

The bill increases the work participation rate that states must meet as follows:

1. 50% for FY 2003;
2. 55% for FY 2004;
3. 60% for FY 2005;
4. 65% for FY 2006; and
5. 70% for FY 2007.

(Note: This represents a slower increase in the rate than the Administration proposed.)

The work rate calculation in the current law is based on number of people meeting the work requirement, not number of hours per week. The work rate calculation would be based on an average computed on a 160 hours a month (four weeks of forty hour weeks). Over the course of the year, this builds in a "cushion" for sick leave and holidays of four weeks.

A family counted in the work rate is defined in the bill as a family receiving TANF that includes a work-eligible individual. States have the option of not counting certain families. States may elect not to count a family in the first month in which they are receiving assistance. States may elect not to count families in which the youngest child is under 12 years of age. States may count individuals receiving assistance as part of a tribal family assistance plan or work plan. A work eligible individual is defined in the bill as someone who is a married or single head of household whose needs are included in determining the amount of TANF assistance given to the family.

The Herger bill retains but modifies the caseload reduction credit by changing the base year by which the credit is calculated. For FY 2003, the credit would be based on the caseload in 1996. For FY 2004, the credit would be based on the caseload in 1998. For FY 2005, the credit would be based on the caseload in 2001. For FY 2006, the credit would be based on FY 2002. For FY 2007, the credit would be based on the caseload in FY 2007.

The bill requires recipients to be in "direct work activities" for 24 hours a week. Those activities are defined as:

• unsubsidized employment;
• subsidized private sector employment;
• subsidized public sector employment;
• on-the-job training;
• supervised work experience; or
• supervised community service.

Recipients would also participate in 16 hours of additional activities that address a purpose of the TANF program. (This requirement is a family requirement.) States would decide on the activities that qualify to meet the 16 hour requirement. Those would include substance abuse counseling or treatment; rehabilitation treatment and services; work-related education or training directed at enabling the family member to work; or job search or job readiness assistance.

States would have the option of counting individuals engaged in qualified activities for at least 24 hours a week as meeting the direct work requirement for no more than three consecutive months in any 24 consecutive months. Teen heads of household with satisfactory school attendance or in vocational education for at least 20 hours a month are considered engaged in a direct work activity. If a family does meet at least the 24 hour threshold, states will get partial credit toward the work participation rate. This credit will be pro rata credit based on the number of hours between 24 and 40. But the 24 hour core work requirement must be met before partial credit is available.

The state MOE requirement remains the same. However, federal TANF funds used for marriage promotion would be disregarded for purposes of the state's maintenance of effort requirement.

In their state plans, states are required to establish annual, specific numerical performance goals to improve outcomes related to the four purposes of the TANF program. The plan must describe any strategies the state may be using to address employment retention and advancement, efforts to reduce teen pregnancy, services for struggling or noncompliant families, and for clients with special problems, and program integration. The state plan document must also describe strategies to engage faith-based organizations in the delivery of the TANF services, as well as strategies to improve program management and performance. The Secretary of Health and Human Services, in consultation with the National Governor's Association and the American Public Human Services Association will develop uniform performance measures designed to assess the degree of effectiveness and degree of improvement of state TANF programs.

States are required to report on the reason that recipients get assistance for more than 60 months. States would have to report on families that become ineligible for assistance, categorizing the families according to the reason they became ineligible. Data elements are to be defined in consultation with the National Governor's Association, the American Public Human Services Association, the National Conference of State Legislatures and others. States are also required to submit an additional report on characteristics of programs funded with federal TANF and with state MOE funds. This report would include the program names, descriptions and purposes, along with eligibility criteria, sources of funding, number of beneficiaries, sanction policies, and any work requirements. This report would be due 90 days after the end of each fiscal year. Monthly reports on the caseload and annual reports on performance improvement would also be required.

This section reauthorizes Tribal Family Assistance Grants and grants for tribes that received JOBS funds through 2007.

This section authorizes an appropriation of $100,000,000 each year for FYs 2003-2007 for conducting and supporting research and technical assistance to the states, and providing technical assistance to states, Indian tribal organizations, and other entities.

The bill ends all existing TANF waivers.

The Herger bill states that child care and transportation for unemployed families are not considered assistance and that diversion payments are not assistance, thus they do not start the time clock that counts the 60 month lifetime limit on assistance.

Section 120. Fatherhood Program.

"The Promotion and Support of Responsible Fatherhood and Healthy Marriage Act of 2002."

This part of the bill has the following purposes:

• promoting responsible, caring and effective parenting, including positive involvement of non-resident fathers;
• enhancing the ability of low-income fathers to support their families through services to enhance employability;
• improving fathers' ability to effectively manage family business affairs; and
• encouraging and supporting healthy marriages and married fatherhood.

The overall goal of this act is to improve outcomes for children.

The Secretary of Health and Human Services will make grants to public and nonprofit entities (including religious organizations) and to tribes and tribal organizations. There are two different kinds of grants, full service grants and limited purpose grants. To qualify for a full service grant, applicants would have to describe how they would address issues of child abuse and neglect and domestic violence, and concerns related to substance abuse and sexual activity. They would have to show that they are coordinating with other programs including Workforce Investment Act programs.

Other "limited purpose" grants, which would be for amounts of less than $25,000 per fiscal year, have criteria relating to coordination with existing programs and the Secretary of Health and Human Service's oversight and evaluation.

In awarding these grants, the Secretary of Health and Human Services would take the diversity of the projects, and would give preference to projects serving low-income fathers. Grants would have a 20% match requirement, except for limited purpose grants, which would not have a match requirement.

The Secretary of Health and Human Services would also make grants for two multi-city, multi-state demonstration projects. One project would test the use of married couples to deliver program services. These grants would go to a national nonprofit fatherhood promotion organization that has experience with multi-city, multi-state programs and in coordinating such programs with state and local government agencies and private nonprofit agencies. Programs would have to be conducted in at least 3 major metropolitan areas and demonstrate that the project would direct a majority of its resources to activities serving low-income fathers, although services would not have to be means tested. The projects would have to assess for the presence of and intervene to resolve issues of domestic violence and child abuse and address concerns related to substance abuse and sexual activity. These grants would have a 20% match requirement; the non-federal share could be in cash or in kind.

This section also grants for projects of national significance relating to fatherhood promotion, including collecting and disseminating information regarding best practices, developing and distributing a media campaign that promotes responsible fatherhood and married fatherhood, technical assistance and research.

A total of $20,000,000 is authorized for fatherhood programs, of which not more than 15% is available for the costs of multi-city demonstration projects, evaluations, and projects of national significance.

The bill appropriates $2.7 billion for entitlement funding for child care for FYs 2002 through 2007, the current funding level.

Federal cost sharing would be provided to states that pass through $100 dollars of child support to families on TANF and who disregard the amount in determining eligibility for and the amount of TANF assistance received. This is a state option.

States would be able to pass through all child support to families that formerly received assistance; no federal cost-sharing is provided.

States would be required to review and adjust child support orders for families receiving TANF at the request of the state agency under the state's TANF plan. This amendment would take effect October 1, 2004.

States will impose an annual fee of $25 dollars for furnishing an individual that has never received TANF successful child support collection services. This fee may be paid by the individual applying for the services, or recovered from the absent parent, or paid by the state out of its own funds. This would be effective on October 1, 2003.

No more than six months after the enactment of this bill, the Secretary of Health and Human Services shall submit a report to House Ways and Means Committee on procedures that states use to locate custodial parents for whom child support has been collected by not distributed. The Secretary shall include in the report recommendations as to whether additional procedures should be established to expedite the payment of undistributed child support.

This section would allow the state agency administering the state's unemployment compensation programs access to National Directory of New Hire Information for the purpose of confirming employment. This provision would take effect on October 1, 2003.

Presently, child support arrearages of $5,000 trigger the denial of a passport. The bill reduces that amount of $2,500.

States could use the tax refund intercept program to collect past-due child support for children who are no longer minors.

This section provides for a limited garnishment of veterans' compensation to collect child support. Child support could not be withheld from the payment if the veteran was less than 60 days in arrears of support. Not more than 50% of any such payment could be withheld to collect child support, and alimony could not be withheld. These provisions would take effect on October 1, 2004.

The authority of HHS to approve demonstration projects, which expires in 2002, is extended until 2007.

The bill eliminates the presents limit of 10 waivers in the child welfare program so that more states can apply.

Currently, a state cannot get a waiver for the same purpose or for the same demonstration project for which another state has a waiver. The bill eliminates that restriction.

The bill states that the Secretary of Health and Human Services cannot limit the number of waivers a state receives or demonstration projects a state can conduct.

The bill requires the Secretary of Health and Human Services to develop a streamlined process for consideration of amendments and extensions proposed by states.

Section 406. Availability of Reports.

Under this provision, the Secretary of Health and Human Services is required to make available to any state or any interested party any evaluation or report made by HHS on a demonstration project as a way of promoting best practices and program improvements.

This section provides that the Commissioner of Social Security shall review determinations made by state agencies regarding applications for benefits on the basis of blindness or disability that individuals who have reached age 18 are blind or disabled as of a certain date. The Commission is required to review at least 15% of these determinations made in FY 2003, at least 30% of these determinations made in FY 2004, and at least 50% of these determinations made in FY 2005.

The bill provides for state program demonstration projects that integrate multiple public assistance, workforce development and other programs for the purpose of supporting working families and individuals, helping families escape welfare dependency, promoting child well-being or helping build stronger families. The following programs (which are under the jurisdiction of the House Ways and Means Committee) are qualified programs under this bill are unemployment insurance, TANF, child support, and the Social Services Block Grant. Waivers granted for such efforts must be cost neutral. Provisions of law relating to civil rights, purposes and goals of programs, maintenance of effort requirements, health and safety, the Fair Labor Standards Act or environmental protection cannot be waived. The agreement of each Secretary that administers each program under the waiver must be obtained. Projects conducted under these waivers may be approved for a term of not more than five years, and may be renewed for one or more additional terms of not more than five years.

TITLE VII-- EFFECTIVE DATE

Except as otherwise provided, the amendments made by this act take effect on October 1, 2002. If the Secretary of Health and Human Services determines that state legislation is required, the effective date of the amendments will be three months after the first day of the first calendar quarter after the end of the first legislative session after the passage of the act.