Note: The following is a summary of the Personal Responsibility and Work Opportunity Reconciliation Act as it was signed into law. Current statutes and regulations are available on the Office of Family Assistance website.
Note: HHS Policy Announcement TANF-ACF-PA-99-1, dated June 18, 1999, provided guidance to state agencies concerning maintenance of effort, definition of assistance, use of Federal and state TANF funds and other provisions that clarifies some of the complex issues described below.
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 eliminates Aid to Families with Dependent Children's (AFDC) open-ended entitlement and creates a block grant for states to provide time-limited cash assistance for needy families, with work requirements for most recipients. The law also makes far-reaching changes to child care, the Child Support Enforcement Program, benefits for legal immigrants, the Food Stamp Program, and SSI for children. Modifications to the child nutrition program and reductions in the Social Services Block Grant (SSBG) are also included.
Title I: TANF Block Grant
Eliminates the AFDC program, JOBS, and Emergency Assistance (EA) and creates the Temporary Assistance to Needy Families (TANF) Block Grant. Annual TANF funding is $16.38 billion in FYs 1997-2003. States receive their allotment based upon previous expenditures in AFDC, EA, and JOBS. States can transfer up to 30% of their TANF funds into the child care block grant and SSBG.
States may use their TANF funding in any manner "reasonably calculated to accomplish the purposes of TANF." These purposes are: to provide assistance to needy families so that children can be cared for in their own homes; to reduce dependency by promoting job preparation, work and marriage; to prevent out-of-wedlock pregnancies; and to encourage the formation and maintenance of two-parent families. States have broad flexibility to determine eligibility, method of assistance, and benefit levels. Individual Development Accounts, restricted accounts which can only be used for education, homeownership, or other self-sufficiency activity, are specifically mentioned as a possible use of funds. The state plan must have "objective criteria" which are "fair" and "equitable" for eligibility and benefits and must explain appeal rights.
Restrictions on Use
Federal TANF dollars and state dollars that count toward the maintenance of effort must be spent on families that include a child or expectant mother. Several restrictions apply to federal TANF dollars. Restrictions on the use of federal funds include:
- Assistance cannot be provided to families who have already received assistance under the programs for a cumulative total of 60 months. Up to 20% of the caseload in any one year can be exempted from the five-year time limit. States can set time limits shorter than five years.
- Unmarried teen parents must stay in school and live at home or in an adult-supervised setting.
- Persons ever convicted of a drug-related felony are banned for life from TANF and the Food Stamp Program, although states can opt out of the ban or limit it.
- Persons who do not cooperate with child support enforcement requirements including paternity establishment receive a reduced benefit or may lose it entirely.
In addition, no more than 15 percent of a state's TANF grant may be used for administrative costs. State dollars which are a part of the federal TANF program are not subject to these restrictions, except for the child support enforcement requirements. Programs funded outside of TANF and funded by expenditures of State funds are not subject to any of these restrictions.
State Maintenance of Effort
To receive their full allocation, states must demonstrate they are spending on activities related to TANF 80% of the amount of non-federal funds they spent in FY 1994 on AFDC and related programs. If they meet minimum work requirements, their mandatory state effort is reduced to 75%.
There are several ways that states can supplement their block grant funding, including: a $2 billion (over 5 years) contingency fund for states experiencing economic downturns, an $800 million (over 4 years) fund to provide supplemental grants for states with high population growth and low welfare spending, a $1.7 billion federal loan fund, a $1 billion (over 5 years) appropriation to make performance bonuses, and a $100 million annual appropriation for bonuses to states that reduce the number of out-of-wedlock births and abortions.
States have until July 1, 1997 to submit their state plans and begin implementing TANF, although they can opt to implement earlier. The Department of Health and Human Services (HHS) reviews the plans only for completeness. States must allow for a 45-day comment period on the state plan by local governments and private organizations and consult with them. (TANF State Plan Submissions Chart)
The following work requirements are established under TANF:
- Unless a state opts out, non-exempt adult recipients who are not working must participate in community service two months after they start receiving benefits.
- Adults are required to participate in work activities two years after they start receiving assistance under the block grant.
- States may exempt parents with children under 1 from work requirements, and may disregard them in calculating participation rates.
- States may not penalize parents with children under 6 for not working if child care is not available.
Each state must meet the following minimum work participation rates:
|Fiscal Participation Weekly Hours of All Families||Fiscal Participation Weekly Hours of Two Parent Families|
The law provides for a pro rata reduction in the participation rates for caseload reductions below FY 1995 levels that are not due to changes in eligibility or federal law.
The rules governing what activities count toward these work participation rates are complex. In general, participants must do real subsidized or unsubsidized work. Circumstances under which education (except in the case of teen parents), training or job search count toward meeting the requirements are limited.
Penalties: States can be penalized for misusing TANF funds and for failure to:
- Submit required reports
- Satisfy work requirements
- Participate in the Income and Eligibility Verification System
- Comply with paternity establishment and Child Support Enforcement requirements
- Repay a federal loan on time
- Meet state maintenance of effort requirements under either TANF or the contingency fund
- Comply with five-year limit on assistance
- Maintain assistance when parents cannot find child care for child under age 6.
States are generally given the opportunity to claim reasonable cause and develop a corrective compliance plan before they can be penalized. The total penalty amount assessed in a given year may not exceed 25 percent of a state's block grant allotment.
Medicaid eligibility is delinked from receipt of family assistance, except that states are required to provide medical assistance to individuals based on income and resource eligibility requirements under Title IV-A as in effect prior to passage of the new law. Up to $500 million is authorized for increased federal Medicaid matching for additional administrative costs related to this provision.
Federally-recognized Indian tribes may apply to operate a TANF block grant program. TANF allotments for Indian tribes are based upon previous State expenditures of Federal dollars in AFDC, EA, and JOBS in fiscal year 1994. Tribal TANF programs can be implemented as early as July 1, 1997. Like States, Indian tribes may use their TANF funding in any manner reasonably calculated to accomplish the purposes of TANF, and they have broad flexibility to determine eligibility, method of assistance, and benefit levels.
Title II: Supplemental Security Income
The law changes the definition of disability for children that requires a child, in order to be eligible for SSI benefits, to have a specific medically determinable physical or mental impairment which results in "marked and severe" functional limitations and which can be expected to last for at least 12 months or to result in death. The Social Security Administration (SSA) is required to remove the references to "maladaptive behavior" as a medical criterion for evaluating mental disabilities in children.
The new definition applies immediately to new claims for assistance, including claims that have not been finally adjudicated as of the date of enactment. SSA must redetermine the cases of children currently receiving SSI to determine whether they meet the new criteria, but the earliest that current recipients may lose benefits is July 1, 1997. SSA must notify all children potentially affected by the change by January 1, 1997. The SSA appeals process is available to individuals who are found ineligible.
Title III: Child Support
In order to receive the TANF block grant, states must operate a child support enforcement program. Applicants for and recipients of TANF assistance and Medicaid must assign support rights to the state and cooperate with child support enforcement efforts. States must deduct a minimum of 25 percent from a family's cash assistance grant (and may deny cash assistance entirely) for a failure to cooperate with child support without good cause. States that fail to do so will be penalized up to 5 percent of the TANF block grant in the next fiscal year. States are no longer required to pass through $50 of child support collected to recipients. States can pass through any amount they want to the family, but they are also required to reimburse the federal government for its share (about 50%) of any child support collected. Under the "Family First" policy, families no longer receiving cash assistance will have priority in the receipt of past-due child support payments.
Data Systems Requirements and Other Provisions
In order to make it more difficult for people who owe child support to evade collection efforts, the law requires a set of new data systems. By October 1, 1997, states must develop a state directory of new hires. By October 1, 1998, states must operate an automated central unit to collect and disburse support systems. The Federal Parent Locator Service is expanded to include a National Directory of New Hires and a Federal Case Registry of Support Orders. Automated systems shall be used to match information from these registries, so that automatic withholding orders may be implemented. Social security numbers shall be recorded on a variety of official documents, in order that parents who owe support may be tracked. States must adopt laws that allow them to suspend driver's, professional, occupational, and recreational licenses of individuals who owe overdue support.
The new law also provides for uniform rules, procedures and forms for interstate cases, and streamlines the legal process for paternity establishment.
Titlle IV: Restricting Welfare and Public Benefit for Aliens
Most legal immigrants will no longer be eligible for SSI or Food Stamp Program assistance when their eligibility is reviewed under a "redetermination" process. These redeterminations must be completed no later than August 22, 1997. The recent immigration bill provides that current Food Stamp Program recipients shall remain eligible until April 1, 1997, and shall have their eligibility recertified between April 1 and August 22, 1997. No later than March 31, 1997, SSA must notify SSI recipients, whose eligibility for such benefits may terminate, of the SSI redetermination provisions in the new welfare law.
States have the option to continue to serve most qualified aliens in Medicaid, TANF, and SSBG: Beyond SSI and the Food Stamp Program, states have the authority to decide whether or not qualified aliens will be eligible for Medicaid (except all immigrants remain eligible for emergency medical services), the new Temporary Assistance for Needy Families (TANF) block grant, which replaces AFDC, and the Social Services Block Grant (SSBG). States may not deny assistance to certain legal immigrants, including refugees during their first 5 years in the U.S., asylees and persons whose deportation has been withheld for 5 years from the date they received such status, permanent residents who have worked in the United States long enough to qualify for social security coverage (40 qualifying quarters), and veterans or active duty military service personnel or their spouses or unmarried dependent children.
Post-August 1996 qualified aliens are subject to a 5-year exclusion from means-tested benefits: Finally, qualified aliens entering on or after August 22, 1996 are ineligible for certain federal means-tested benefits for 5 years after entry. New affidavits of support scheduled to be promulgated in May, 1997 will be legally binding, and, pursuant to these affidavits of support, the income of the sponsor will be "deemed" as available to support the immigrant for purposes of determining the immigrant's eligibility for means-tested benefit programs. These deeming rules would apply to aliens who have signed new affidavits of support after the 5-year ban and until the immigrant is naturalized as a U.S. citizen or has worked for 40 qualifying quarters. Under the recent immigration law, certain battered and indigent immigrants are in large part exempted from these new deeming rules. Since the law does not define which programs are "means-tested," we are currently working to determine which federal programs would be covered by these new rules. Certain programs and services are specifically not covered by the 5-year ban and deeming provisions, including: certain public health services related to immunizations and communicable diseases, Head Start, job training (JTPA), and certain programs of student assistance.
Persons applying for federal public benefits (with certain exceptions) will be required to prove that they are either citizens or qualified aliens and therefore eligible for benefits. Not later than 18 months after enactment, the Attorney General, in consultation with the Secretary of Health and Human Services, shall issue regulations requiring verification for certain federal public benefit programs. States will have 24 months after federal regulations are issued in order to implement verification systems that comply with the regulations. Under the recent immigration law, nonprofit charitable organizations are exempted from these verification requirements.
Title V: Child Protection
Most prior law provisions are continued: Most provisions of prior law regarding child protection are retained. States are required to use the AFDC rules and requirements in effect as of June 1, 1995, under their state plan to determine eligibility for child protective services under Title IV-E. The law allows states to use IV-E dollars to pay for-profit providers to care for children in foster care, and requires states to give preference to relatives when deciding upon foster care placements, provided that the relative caregiver meets all relevant state child protection standards. The law also authorizes a national random sample study of children who are at-risk of abuse or neglect or have been abused or neglected.
Title VI: Child Care
The Act consolidates multiple funding sources into single child care fund. Consolidates previous IV-A child care funding sources with the Child Care and Development Block Grant, as of October 1, 1996. States will automatically get about $1.2 billion in "Mandatory" funds (formerly IV-A) and appropriated "Discretionary" funds (CCDBG), authorized at $1 billion each year. In order to receive additional "Matching" funds, states must obligate all of their Mandatory funds and meet a maintenance of effort (MOE) requirement. Spending above the MOE level will be matched at the FY 1995 federal matching assistance percentage. Two percent of all funds will be reserved for Indian tribes.
Relationship to TANF
States must use at least 70 percent of Mandatory and Matching funds for families receiving assistance under TANF, families transitioning from TANF receipt, and families at risk of becoming dependent on TANF. However, the previous individual entitlements to child care for AFDC recipients and former recipients who have left AFDC for work are eliminated. States may not penalize single parents with children under 6 who cannot find child care for failure to participate in work activities.
Health and Safety Standards Preserved
Health and safety standards specified in the CCDBG program are maintained for all child care funded through the combined programs. States must use at least 4 percent of their combined grants to improve the quality and availability of child care.
Title VII: Child Nutrition Programs
The law establishes a two-tier system of reimbursements under the Child and Adult Care Food Program (CACFP). The current rates will continue for family or group day care homes located in areas in which at least 50 percent of the children are in households that are below 185 percent of the poverty level, or are operated by a provider whose income is below 185 percent of the poverty level. Other homes will receive reduced meal reimbursements. The law also reduces the maximum reimbursement rates in the Summer Food Service Program and for full-price meals in the school breakfast and school lunch programs and in child care centers.
Title VIII: Food Stamps and Commodity Distribution
The law sets maximum food stamp benefit levels at 100% of the Thrifty Food Plan and retains annual indexing. It also retains the cap on the excess shelter deduction and sets it at $247 through 12/31/96, $250 through FY 1998, $275 through FY 2000, and $300 for FY 2001 and beyond. The standard deduction was frozen at the FY 1995 levels without indexing.
New Work Requirement for Childless Adults
Able-bodied recipients age 18-50 with no dependents must be engaged in work or work programs (at least 20 hours per week) in order to be eligible for food stamps. Otherwise, their eligibility is limited to 3 months in any 36-month period. Recipients who find work and then lose their job may receive up to 3 additional months of benefits. Work programs include job training and workfare, but not job search or job readiness programs. At state request, individuals may be exempt if they live in an area with more than 10 percent unemployment. States will have greater flexibility in operating the Food Stamp Employment and Training Program.
Interaction with TANF
States may operate a "simplified Food Stamp Program" for households that include individuals receiving assistance under TANF. The simplified program allows for a single set of rules to determine eligibility and benefits. Such a program may not increase federal costs above what they would have been under the regular program. States may disqualify food stamp recipients who fail to cooperate with child support enforcement or who are delinquent in paying child support.
The law contains a variety of administrative provisions, including: increasing waiver authority, allowing administrative flexibility, allowing states to reduce allotments for collecting overpayments due to state agency errors, and increasing the penalties for fraud. All states must implement Electronic Benefit Transfer programs by October 1, 2002, unless waived by USDA.
See also: Title IV for restrictions on receipt of Food Stamps by legal immigrants.
Title IX: Miscellaneous
Teen Pregnancy Prevention Provisions
HHS is required to develop and implement a national strategy to reduce the incidence of teenage pregnancy. Beginning in FY 1998, a mandatory formula grant program is added to the Maternal and Child Health Block Grant to provide $50 million annually to states to operate abstinence education programs. Under TANF, HHS is also authorized to make annual bonus grants to the five states which reduce all out-of-wedlock births (not just to teens) by the greatest amount, without increasing the abortion rate.
Social Services Block Grant Provisions
The welfare law set funding for the Social Services Block Grant at $2.38 billion in FYs 1996-2002, and $2.8 billion in FY 2003 and thereafter. Non-cash vouchers for children that become ineligible for cash assistance under TANF time limits are authorized as an allowable use of SSBG funds. The omnibus spending bill changed the FY 1997 spending level for SSBG and appropriated $2.5 billion for that year.