WORK AND PENALTIESWORK AND PENALTIES

General Session

Potential PenaltiesPotential Penalties Misuse of TANF funds Intentional misuse of TANF funds Failure to report required data Failure to meet work rates Failure to participate in IEVS

Penalties (cont.)Penalties (cont.) Failure to sanction for noncooperation

with child support Failure to repay loan Failure to meet basic MOE Failure to comply with 5-year limit on

Federal assistance Failure to remit contingency funds

Penalties (cont.)Penalties (cont.) Failure to maintain assistance to single

custodial parent who cannot obtain care for child under 6

Failure to replace penalty amounts Penalty equal to WtW grant for

failure to meet basic MOE Failure to impose pro rata sanctions

Penalties (cont.)Penalties (cont.) NOTE: Failure to comply with child

support enforcement program requirements is covered by separate rulemaking.

Sequential Penalty Process:Sequential Penalty Process:ACF Notifies

State of Penalty

State Submits Reasonable

Cause Claim

60

DaysState Submits

Corrective Compliance Plan

60 Days

ACF Grants Reasonable

Cause

60Days

State May Appeal

ACF Responds

ACF Accepts or Denies

60 Days

Basic StepsBasic Steps

60 Days

Reasonable CauseReasonable Cause

Determining Reasonable CauseDetermining Reasonable Cause State has burden of proof

Reasonable cause not available for:– 3 MOE penalties– Failure to repay a loan– Failure to replace penalty amounts

Consideration given to:– State’s efforts– Duration and severity of circumstances

Reasonable CauseReasonable CauseGeneral FactorsGeneral Factors

Three primary factors:– Natural disasters or other calamities– Formal Federal guidance that provided

incorrect information– Isolated problems of minimal impact not

indicative of a systemic problem

Secretarial discretion to consider others

Additional Factors for Work Additional Factors for Work Participation PenaltyParticipation Penalty

Federally recognized domestic violence waivers

Assistance to refugees in Fish-Wilson projects

Reasonable CauseReasonable Cause

Reasonable CauseReasonable Cause

Federally recognized domestic violence waivers

Additional Factor for Time Additional Factor for Time Limit PenaltyLimit Penalty

Reasonable Cause Reasonable Cause Additional Factor for Additional Factor for

Reporting PenaltyReporting Penalty

Failure due to Y2K compliance activities– Applies only to 1st two quarters of FY

2000– State submits required data by September

30, 2000*

Corrective Compliance PlanCorrective Compliance Plan

Corrective Compliance Corrective Compliance Not Available For:Not Available For:

3 MOE penalties

Failure to repay a loan

Failure to replace penalty amounts

Plan Must Include:Plan Must Include: Analysis of reasons for failure

How State will fix problem

Time frames

Milestones, including interim process and outcome goals

Certification by Governor of commitment

Corrective Compliance Plan Corrective Compliance Plan Acceptable Time FramesAcceptable Time Frames

For work rates and time limits -- by end of FY ending at least 6 months after ACF receives plan

Negotiable for other penalties

No penalty if problem completely fixed

Reduction of penalty if State Demonstrates:– Significant progress– Natural disaster or regional recession– Federally recognized domestic violence waivers

(discretionary for work & time limit penalties)

Corrective Compliance Corrective Compliance Possible OutcomesPossible Outcomes

orkork

States are accountable for moving families from welfare to self-sufficiency through work.

Work – Part 261Work – Part 261 Individual Responsibility State Accountability Work Activities Caseload Reduction Credit Work Penalties Waivers Nondisplacement

Participation RatesParticipation RatesTwo separate rates for each State

Overall rate -- success in engaging total caseload in work

2-Parent rate -- success in engaging 2-parent families in work

Overall Rate

Participation RatesParticipation Rates

25%30%

35%40%

45% 50%

1997 1998 1999 2000 2001 2002+

Fiscal Year

2-Parent Rate

Participation RatesParticipation Rates

75% 75%90% 90% 90% 90%

1997 1998 1999 2000 2001 2002+

Fiscal Year

All families with: 2 natural or adoptive parents of the

same minor child, receiving assistance, and living in the home.

Participation RatesParticipation RatesMinimum Definition of 2-Parent Family

Caseload Reduction CreditCaseload Reduction Credit

Caseload Reduction CreditCaseload Reduction Credit Reduces a State’s minimum

participation rate for a year.

Reduces the rate by:– the actual caseload decline from 1995 to

prior year minus– net caseload decline due to eligibility

changes and Federal requirements.

Caseload Reduction CreditCaseload Reduction Credit

The credit for the overall rate is based on the decline in the total caseload.

The credit for the 2-parent rate, at State option, is based on either the decline in the 2-parent caseload or in the total caseload.

Each rate (overall & 2-parent) is subject to a caseload reduction credit.

Caseload Reduction CreditCaseload Reduction Credit Calculation includes cases in

separate State programs used to meet MOE requirement.

No caseload reduction credit without case-record information for SSPs that provide assistance.

Caseload Reduction CreditCaseload Reduction Credit

“Eligibility Change” includes full-family sanctions and behavioral requirements (e.g., applicant job search).

Caseload Reduction CreditCaseload Reduction Credit“Eligibility Change” does not include the calculable effects of enforcement mechanisms or procedural requirements (e.g., fingerprinting) enforcing existing criteria, to the extent that they identify or deter ineligible families.

Caseload Reduction CreditCaseload Reduction Credit“Netting Out”

Caseload declines due to eligibility changes do not count toward the credit, but

We will use the net effect of eligibility changes, adding back in caseload increases due to eligibility changes.

Caseload Reduction CreditCaseload Reduction Credit Steps in Calculating the Credit

1) We compare 1995 AFDC/UP data to prior year TANF and SSP-MOE data the State reports.

2) State submits Caseload Reduction Report with data on eligibility changes and their impacts.

3) We compare and analyze State’s methodology and estimates to determine if plausible; may request additional information within 30 days.

Caseload Reduction CreditCaseload Reduction CreditDue Dates

A State must submit the Caseload Reduction Report by December 31.

We will notify the State of its caseload reduction credit no later than March 31.

State AccountabilityState Accountability

A State that fails to meet participation rates is subject to a monetary penalty.

The base penalty is 5% of the grant, increased by 2% for each successive failure.

Penalty ReductionPenalty Reduction

A State may qualify for a reduced work penalty based on the “degree of noncompliance.”

(required reduction)

1) Reduce for failing only the 2-parent rate

2) Test for meeting 2 thresholds

3) Reduce based on severity of failure– degree of failure– adjustment factor– years of failure & number of rates failed

(multiply all 3 severity factors for reduction)

Penalty ReductionPenalty Reduction3 Steps

Penalty ReductionPenalty Reduction

Failing only the 2-parent rate

We reduce the maximum penalty based on the proportion of 2-parent families in the caseload.

Threshold tests

Penalty ReductionPenalty Reduction

achieve 50% of target rate (50% threshold)

increase the number of work participants over the prior year

To qualify for further reduction, the State must:

Penalty ReductionPenalty Reduction

Amount by which State failed

If the State meets the threshold tests, we make a proportional reduction for its achievement above the 50% threshold.

Penalty ReductionPenalty ReductionAdjustment factor

Adjusts for a State’s success in engaging more recipients in countable activities.

If a State meets the threshold tests, the adjustment rewards it for increasing the working recipients by at least 15%.

Penalty ReductionPenalty ReductionConsecutive failures &Number of rates missed

In 1st year of failure: miss one rate, receive full reduction; miss both rates, receive of reduction.In 2nd year of failure: miss one rate, receive of reduction; miss both rates, receive of reduction.In 3rd year of failure: no reduction.

Reduce based on proportion of 2-parent cases.

Test for meeting both thresholds.

Reduce on severity of failure– degree of failure– adjustment factor– years of failure & number of rates failed

Penalty ReductionPenalty ReductionSummary

Corrective ComplianceCorrective Compliance General corrective compliance plan

criteria apply.

Failure must be corrected by the end of the fiscal year that ends at least 6 months after we receive the plan.

Corrective ComplianceCorrective ComplianceSignificant Progress

We will only reduce the penalty further if the State fills at least half the gap between the rate it achieved in the penalty year and the rate required for the compliance period.

Two-Parent FamiliesTwo-Parent Families

Choice on the basis of the caseload reduction credit for the 2-parent rate;

Ability to “net out” eligibility changes that increase the caseload;

Penalty for failing just the 2-parent rate based on proportion of 2-parent families.

Provisions in the final regulations that help States with 2-parent families:

General Rules--Time LimitGeneral Rules--Time Limit

No Federal TANF funds for assistance to a family with an adult or minor-child head-of-household or spouse of the head of household who has received assistance for more than 5 years.

Lifetime limit

5 years = 60 cumulative months

State defines “family” and who receives assistance

Penalty is 5% of adjusted SFAG

Penalty does not apply to State’s shorter time limit

If Federal time limit inconsistent with State’s waiver, waiver policies continue

More General Rules--More General Rules--Time Limit Time Limit

Time Limit Time Limit Months Count When:Months Count When:

Family receives “assistance”

Federal TANF funds are used

Family includes an adult, minor-child, or pregnant minor head-of-household or spouse of the head-of-household

A noncustodial parent who is the spouse of the head-of-household, receives Federal TANF assistance

Time Limit Time Limit Months Do Not Count When:Months Do Not Count When:

Family does not receive “assistance” No Federal TANF funds are used Family is a “child-only” family Head-of-household and spouse do not

receive assistance Family lives in Indian country or a Native

Alaskan Village where at least 50% of the adults are unemployed

20% Exception to Time Limit20% Exception to Time Limit

Assistance may extend beyond 5 years for up to 20% of cases

Assistance may be extended based on:– Hardship, as defined by State, or– Battery or extreme cruelty, as defined in statute

Exceptions apply after family reaches 60-month limit

20% Exception to Time Limit 20% Exception to Time Limit (cont.)(cont.)

For a fiscal year, the 20% exception is:

(avg. mo. # of families with assistance > 60 mos.)divided by

(avg. mo. # of all families with assistance)

WtW Cash AssistanceWtW Cash Assistance

Affects whether clock on Federal assistance is running

Must be assistance Must be for basic needs Must be convertible to currency

Time LimitTime LimitTreatment of Months When Treatment of Months When

Only WtW Is ReceivedOnly WtW Is Received Months do not count when an adult receives

only WtW noncash assistance Months count when a family receives WtW

cash assistance WtW cash assistance can be provided after

the TANF time limit is reached.