Summary TANF Provisions of The Budget Reconciliation Act of 2005 S. 1932, Title VII, Subtitle A, Sections 7101 through 7103

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1 Summary TANF Provisions of The Budget Reconciliation Act of 2005 S. 1932, Title VII, Subtitle A, Sections 7101 through 7103 The information below summarizes the impacts of the TANF provisions of the Deficit Reduction Act of The major impacts of this legislation include: Reauthorization of the TANF Block Grant through fiscal year 2010 and the TANF Supplemental Grant through fiscal year Florida s annual TANF block grant is $ million and the Supplemental Grant is $60.4 million. Recalibration of the caseload reduction credit and inclusion of families in separate state programs in the calculation of work participation rates. This means that Florida must be prepared to meet an all-family work participation rate of 50% and a two-parent family participation rate of 90% beginning October 1, Approximately 17,000 families a month are subject to the all-family participation requirement. Of these, about 1,800 families are in the two-parent family category. Not meeting the work participation rates would subject the state to a penalty of up to 5% of the block grant. In addition, unless the state meets both the all-family and two-parent family participation requirements, the TANF maintenance of effort requirement is 80% of the state expenditures under the former AFDC program in fiscal year This would, in effect, raise the maintenance of effort requirement from $368.4 million per year to $392.9 million, an increase of $24.5 million per year. The State must establish and maintain work participation verification procedures by September 30, 2006 in accordance with new federal regulations to be promulgated by June 30, In each year from fiscal year 2006 through fiscal year 2010, $150 million per year is provided for healthy marriage promotion and responsible fatherhood grants. The healthy marriage promotion awards are to be made competitively for the purpose of conducting and supporting research and demonstration projects by public or private entities and providing technical assistance to states, Indian tribes and tribal organizations and other entities specified by the Secretary of HHS. Responsible fatherhood grants totaling up to $50 million per year (out of the $150 million total) may be awarded competitively to States, territories, Indian tribes and tribal organizations, and public and nonprofit community entities, including religious organizations. All awards require consultation and coordination with domestic violence organizations. Up to $2 million may be awarded for demonstration projects for coordination of child welfare and Tribal TANF program services. Note: The Conference Report on S. 1932, The Deficit Reduction Act of 2005, passed the House of Representative on December 19, It subsequently passed the Senate on December 21, 2006 with minor changes due to parliamentary challenges. Final passage is pending in the House of Representatives.

2 Summary TANF Provisions of The Budget Reconciliation Act of 2005 S. 1932, Title VII, Subtitle A, Sections 7101 through 7103 Provision Continued authorization of $16.5 billion TANF block grant through FFY Current Situation New Situation Impact Florida receives a TANF block grant annually in the amount of $562,340,120. Since FFY 2003 this authorization has come through a series of short-term extensions of the prior year authorization. The annual block grant will continue in the same amount with authorization extended through September 30, Provides stability in funding through a five year authorization rather than through short-term extensions. Continued authorization through FFY 2008 of $319 million annually for TANF supplemental grant for states with high population growth and low historic welfare payments.. Florida is one of 17 states receiving a supplemental grant. Florida s supplemental grant is $60,405,668 annually. In the 1996 legislation that created the supplemental grant, the initial authorization was for one year less than the authorization of the TANF block grant. The supplemental grant was subsequently extended through FY 2002 and further extended as part of the short-term extensions of TANF. The annual supplemental grant will continue in the same amount with authorization extended through September 30, Provides stability in funding for three years (through September 30, 2008). The authorization for a shorter time than the TANF block grant is a budget scoring mechanism. This is consistent with the approach taken in the original TANF legislation. 2

3 Continues all-family participation rate at 50% Rebases caseload reduction credit from FFY 1995 to FFY % requirement minus caseload reduction credit of greater than 50% resulting in no all-family participation requirement. Current performance estimated at about 41% (preliminary FFY 2005 data). 50% requirement with little or no caseload reduction credit (effective October 2006) resulting in effective all-family work participation requirement of 50%. If required 50% rate not met, subject to penalty of up 5% of block grant, depending on severity of failure. If participation requirement not met, MOE increases from $368.4 million to $392.9 million (increase of $24.5 million). Retains separate two-parent participation requirement and makes participation requirement applicable to separate state programs. As with the all-family rate, the caseload reduction credit base year is changed from FFY 1995 to FFY The two-parent participation requirement of 90% is not applicable to separate state programs. Florida s two-parent program is a separate state program, making the requirement not applicable. Current performance using federal definitions has not been calculated but is likely between 30% and 40%. The 90% work participation requirement will apply to twoparent families whether or not in separate state programs. Failure to meet the 90% participation rate would make the state subject to a penalty that is proportional to the size of the two parent caseload in relation to the total caseload. If two-parent participation requirement not met, MOE increases from $368.4 million to $392.9 million (increase of $24.5 million). This provision would apply even if all-family participation requirement is met. 3

4 Requires Secretary of HHS to promulgate regulations not later than June 30, 2006 to ensure consistent measurement of work participation rates. Includes determining whether an activity may be considered a work activity, uniform methods for reporting hours of work, type of documentation needed to verify hours of work, and circumstances under which a parent residing with a recipient child should be included in the work participation rates. Work activities are listed in federal law, but states have flexibility in defining the activities. Verification of hours of work is left up to the state and states have flexibility in defining whether an adult in a child-only family (for example, SSI recipient parent, ineligible non-citizen parent or sanctioned parent) is counted in the participation rate. Secretary must promulgate regulations in areas previously left to state. Statute provides that regulations may be issued on Interim Final basis. Depending on issuance of regulations, the state may be required to meet new verification and documentation requirements related to work participation. Interim final regulations can be effective immediately. Not later than September 30, 2006, requires states to establish procedures in accordance with the regulations promulgated in accordance with the previous provision including establishment of internal controls to ensure compliance with the procedures. No such requirement Establishing procedures and establishment of internal controls required by September 30, Assuming interim final regulations are established by June 30, 2006, the state will have 90 days to establish procedures. Changes in requirements, reporting protocols and procedures may be required by October 1, 2006 to comply with new regulations. 4

5 Provides $150 million annually for competitive grants for healthy marriage promotion activities of which not more than $50 million annually may be awarded for activities promoting responsible fatherhood and not more than $2 million may be used for demonstration projects related to coordination of Tribal child welfare services with Tribal TANF programs. Healthy marriage promotion grants shall be awarded competitively and must address, as appropriate, domestic violence issues. States may use TANF funds for activities related to healthy marriage and responsible fatherhood. Some demonstration grants have been approved in the Child Support Enforcement Program for such activities, but there is no specific funding provided for Healthy Marriage promotion or Responsible Fatherhood activities. Current activities include demonstration and evaluations including participation in the ACFfunded Building Strong Families demonstration, receipt of $1.7 million from the ACF Children s Bureau for 3 of 7 national pilot sites to promote healthy marriage and family formation as mechanisms to achieve safety, permanency and well-being of children and families and potential participation in the ACF Supporting Healthy Marriage initiative. Through the Strengthening Families website, information is provided on initiative, service locations and links to community resources. Funds are authorized for FFY 2006 through FFY 2010 for healthy marriage promotion and responsible fatherhood activities. Florida is participating in the Building Strong Families initiative, has received funding for projects through the Safe and Stable Families program and is working to establish a pilot site under the federally funded Supporting Healthy Marriage demonstrations. Florida has established a strong network of community partners and is well-positioned to make application for the new federal funding. 5

6 Modifies the definition of qualified state expenditures to include total expenditures for all state programs related to the purposes of TANF related to prevention of out-ofwedlock births or formation and maintenance of two-parent families. To count as qualified state expenditures, such expenditures must be on behalf of eligible families. This essentially requires a means-tested eligibility determination before such expenditures are countable towards the state s maintenance of effort requirement. Expenditures by the State to prevent or reduce out-ofwedlock pregnancies and expenditures to encourage the formation and maintenance of two-parent families can be counted as qualified State expenditures towards the TANF maintenance of effort requirement. Will make it easier to count expenditures that are aimed at broad audiences such as public awareness and prevention activities towards the maintenance of effort requirement. Such activities will not have to include an eligibility determination. 6