Final TANF Rule as published in the Federal Register 4/12/1999

Federal Register / Vol. 64, No. 69 / Monday, April 12, 1999 / Rules and Regulations
families during the fiscal year for the
money to count toward the State’s MOE
for that fiscal year. (However, under
section 404(e), States may reserve
Federal TANF funds from any fiscal
year for use in any other fiscal year.)
(6) Administrative Costs
Administrative expenditures may
count toward a State’s MOE, but only to
the extent that they do not exceed 15
percent of the total amount of qualified
State expenditures for the fiscal year.
This limitation is the same as the limit
for Federal TANF administrative
expenditures. Therefore, we proposed
that the State apply the same definition
of administrative costs for MOE
purposes as for Federal TANF funds.
Section 404(b)(2) states that
expenditures of Federal TANF funds
with respect to information technology
and computerization needed for
tracking or monitoring activities are not
subject to the 15-percent TANF limit.
We are providing the same flexibility
with respect to the administrative cost
cap on MOE expenditures. Thus, the
rules do not include information
technology and computerization
expenditures under the administrative
cost cap; they allow such expenditures
to count toward meeting a State’s MOE
requirement, without being limited by
the 15-percent cap on administrative
expenditures.
Comments and Responses
Summary
We received numerous comments on
§ 273.2 of the proposed rule. Many of
the comments focused on the definition
of eligible family. One commenter
praised our broad interpretation of the
term ‘‘eligible family.’’ Others indicated
that it may not be broad enough.
Numerous commenters requested
clarification of the definition.
We also received comments regarding
some of the examples of qualified
expenditures mentioned in the
proposed rule as well as a few
comments on other examples of aid for
eligible families that commenters
believe could qualify. Although we
received only a few specific comments
regarding the 15-percent cap on
administrative MOE expenditures, we
received a substantial number of
comments on various aspects of the
proposed definition of administrative
costs. Since this definition applies to
the State as well as the Federal cap on
administrative expenditures, we refer
you to the beginning of this subpart, at
§ 263.0, for a fuller discussion of the
various issues raised and conclusions
reached regarding the final definition of
administrative costs.
Finally, a couple of the comments
concerned the cash management
principles governing the draw-down of
Federal TANF funds because the drawdown
of Federal TANF funds is tied to
MOE expenditures.
After carefully considering the
comments, we made some clarifications
and a few changes to the final rule. We
will address the comments following
the order of the NPRM preamble.
(a) Qualified State Expenditures
Comment: One commenter noted that
States have raised a number of questions
regarding application of the Cash
Management Improvement Act (CMIA)
to the TANF program and MOE funds.
The commenter recommended
incorporating the guidance currently
being developed jointly by the Financial
Management Service (FMS) of the U.S.
Department of Treasury and ACF in the
final rule, as appropriate.
Another commenter recommended
clarifying the final rule to specify that
States may draw down Federal TANF
funds without being required to show
that they met their MOE requirement by
the end of the year. The commenter
wrote that our rules impose a de facto
match requirement that is burdensome
on States and could cause cash flow
problems.
Response: The guidance the
commenter is referring to has not yet
been completed. We intend to release it
as a separate issuance once it is
completed. In the meantime, CMIA
Policy Statement Number 19, dated June
1, 1997, and issued by FMS provides
general cash management guidelines for
States in drawing down their Federal
TANF funds.
Federal TANF funds are subject to the
Cash Management Improvement Act
and the grant regulations at 45 CFR
92.20(b)(7). These rules restrict the
draw-down of Federal funds. The CMIA
Policy Statement Number 19 requires
that States must expend a proportionate
share of MOE funds for any period the
State draws down Federal TANF funds.
Thus, we have not made the
recommended clarification.
The MOE requirement is not a de
facto match requirement. However, it is
similar to a matching requirement in
one respect. It is a cost-sharing
requirement, as Congress recognized
that State financial participation is
essential for the success of welfare
reform.
To allow a State to expend Federal
TANF funds first, then later spend State
funds to fulfill the basic MOE
requirement, would convey to the State
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a benefit (interest income) that was not
authorized by the legislation
establishing TANF. PRWORA did not
provide for the TANF block grant
allocations plus interest. The
recommended action would also be in
violation of 31 U.S.C. 6503(c)(1), which
governs intergovernmental financing
and the U.S. Treasury-State (cash
management) Agreements signed by
each State and Territory.
Although States must meet their basic
MOE level for a fiscal year by the end
of that fiscal year, the guidance in CMIA
Policy Statement Number 19 does not
restrict a State’s ability to draw down its
full TANF grant. Once a State meets its
basic MOE requirement, the State may
draw down its remaining TANF funds
without contributing additional MOE
funds. However, the draw-down of
Federal TANF funds must be for
immediate cash needs. Under no
circumstances may a State draw down
funds that are not needed for a specific
program expenditure.
(b) Eligible Families
In addition to comments as discussed
below, we corrected an incomplete
citation in § 273.2(c) of the NPRM. This
paragraph addressed the circumstances
under which expenditures on families
that had exceeded the Federal time limit
would count as MOE. It should have
cited paragraphs (b)(1), (b)(2), and
(b)(3)—thus indicating that the families
receiving assistance had eligible alien
status, included a child living with an
adult relative, and were needy under the
financial criteria in the TANF plan.
However, it failed to include the
reference for this third provision. In the
final rule, we corrected this language.
Comment: A few commenters argued
that we should leave the definition of
‘‘eligible family’’ to each State. One
commenter said that the proposed
definition attempts to usurp the State’s
authority to define eligible family;
another indicated that Congress was
silent on this topic.
Response: We do not agree that
Congress was silent on the topic of
‘‘eligible families.’’ In fact, this issue is
addressed in the Conference Report
(H.R. Rep. No. 725. 104th Cong., 2d
sess., at 56, p. 296). In pertinent part,
the conferees agreed that ‘‘qualified
expenditures that count toward the
* * * spending requirement are all
State-funded expenditures under all
State programs that provide any of the
following assistance to families eligible
for family assistance benefits (TANF).
* * *’’ More importantly, section
409(a)(7)(B)(i)(I) of Act provides that
qualified expenditures count if made
with respect to eligible families. Section