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
For each month of the fiscal year that
it meets the eligibility criteria in
§ 264.70, a State may receive up to 1 ⁄12th
of 20 percent of its annual SFAG
allocation. The actual amount of funds
that a State may realize from the
Contingency Fund will vary, depending
on the level of State expenditures, the
number of months that it is eligible, and
the total number of States receiving
contingency funds. States eligible in one
month may automatically receive a
payment for the following month.
We will provide contingency funds to
each State that requests them, in the
order in which we receive the requests,
until the available appropriated funds
are exhausted.
Section 264.72—What Requirements
Are Imposed on a State if It Receives
Contingency Funds? (New Section)
In order to be eligible for contingency
funds, a State must make expenditures
in its TANF program, from State funds,
at the required Contingency Fund MOE
level. The required Contingency Fund
MOE level is 100 percent of the State’s
historic State expenditures for FY 1994.
To keep any of the contingency funds
it received, a State must exceed the
Contingency Fund MOE level
requirement. A State may keep only the
amount of contingency funds that
match, at the applicable Federal
Medical Assistance Percentage (FMAP)
rate, countable State expenditures, as
defined in § 264.0, that are in excess of
the required Contingency Fund MOE
level, reduced by the proportionate
remittance required by the Adoption
and Safe Families Act of 1997. Because
of the reconciliation formula, it is
possible that a State may not be able to
keep any of the contingency funds it
received. Please refer to the discussion
of § 264.73 on the annual reconciliation
for more information.
You should note that the Contingency
Fund MOE requirement is different from
the basic MOE requirement. An obvious
difference is that the basic MOE
requirement is 80 percent (or 75 percent
if a State meets its participation rates) of
historic State expenditures, while the
Contingency Fund MOE requirement is
100 percent of historic State
expenditures. Another difference is that,
in determining the Contingency Fund
MOE level, expenditures for child care
must be excluded. Finally, expenditures
in separate State programs also must be
excluded in determining countable
expenditures.
This means that States cannot meet
the Contingency Fund MOE
requirement merely by increasing State
expenditures by 20 (or 25) percent. The
calculations for determining compliance
with the basic MOE requirements and
for determining eligibility for the
Contingency Fund are different. For
example, Contingency Fund MOE
expenditures must be expenditures
within TANF. Expenditures made under
separate State programs do not count for
this purpose. However, most MOE
expenditures that a State makes within
its TANF program for eligible families
may count as both Contingency Fund
MOE expenditures and as basic MOE
expenditures.
As we discuss in § 264.73, each State
that receives contingency funds is
required to complete an annual
reconciliation to determine what
portion of the contingency funds it may
retain and what portion it must remit.
The statute provides that a State need
not remit contingency funds until one
year after it has failed to meet either the
Food Stamp trigger or the
unemployment trigger for three
consecutive months. Thus, a State may
retain these funds for at least 14 months
after it receives them. (However, the
period of time between the annual
reconciliation and the remittance date
may be shorter.)
For example, if a State fails to meet
either trigger for the months of July,
August, and September, 1997, it has
until September 30, 1998, to remit the
funds. The State must include its annual
reconciliation for contingency funds
received in FY 1997 in its fourth quarter
Financial Report for FY 1997, due
November 14, 1997.
In general, contingency funds may be
used for the same purposes as other
Federal TANF funds. However,
contingency funds are available only for
qualifying expenditures made in the
fiscal year in which the State receives
the funds. States may not use funds
received in a given fiscal year for
expenditures made in either the
subsequent fiscal year or a prior fiscal
year. Unlike TANF funds under section
403(a), contingency funds are not
available until expended.
Since contingency funds are Federal
TANF funds, they are generally subject
to the same requirements as other
Federal TANF funds. For example, a
State cannot use contingency funds to
pay a family if the family has already
received Federal assistance for 60
months, unless the family has received
an exception under § 264.1. (See the
discussion in § 263.21 on ‘‘Misuse of
Federal TANF Funds’’ for additional
information.)
However, unlike the TANF funds that
they receive under section 403(a), States
cannot transfer contingency funds
(provided under section 403(b)) to the
Child Care and Development Block
17853
Grant Program (also known as the
Discretionary Fund of the Child Care
and Development Fund) and/or the
Social Services Block Grant Program
under title XX of the Act. Section 404(d)
of the Act permits the transfer of funds
received pursuant to section 403(a)
only.
Section 264.73—What Is an Annual
Reconciliation? (New Section)
The purpose of the annual
reconciliation is to determine the
amount of contingency funds that a
State is permitted to retain for a fiscal
year. The annual reconciliation involves
computing the amount by which the
State’s countable State expenditures
exceeds the State’s required
Contingency Fund MOE level, as
contingency funds match only these
excess expenditures. If the countable
expenditures exceed the required
Contingency Fund MOE level, then the
State may be entitled to all or a portion
of the contingency funds paid to it.
However, even if its countable
expenditures exceed its required
Contingency Fund MOE level, it is
possible that the provisions of the
Adoption and Safe Families Act of 1997,
amending section 403(b)(6), will have a
major impact on the amount of
contingency funds that a State is
permitted to retain. In fact, it may
prevent a State from retaining any
contingency funds.
Each State that received contingency
funds is required to perform certain
calculations to accomplish the annual
reconciliation. First, it must determine
whether it met its required Contingency
Fund MOE level. If it did not, it must
remit all of the contingency funds it
received.
If it met its Contingency Fund MOE
requirement, the State must also
perform the following steps to
determine how much of the contingency
funds it is permitted to retain:
(1) Calculate the sum of the amount
of the qualifying State expenditures plus
the amount of contingency funds that
the State expended, minus its required
Contingency Fund MOE level.
(2) Multiply the amount arrived at in
step (1) by the State’s FMAP rate
applicable for the fiscal year in which
contingency funds were awarded.
(3) Multiply the amount arrived at in
step (2) by 1/12 times the number of
months during the fiscal year for which
the State received contingency funds.
(4) Compare the amount arrived at in
step (3) with the amount of contingency
funds paid to the State during the fiscal
year, and determine the lesser amount.
(5) From the amount arrived at in step
(4), subtract the State’s proportionate