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

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

5. Participation Rates Two separate rates for each State ä Overall rate -- success in engaging total caseload in work ä 2-Parent rate -- success in engaging 2- parent families in work

6. Overall Rate Participation Rates

7. 2-Parent Rate Participation Rates

8. All families with: ä 2 natural or adoptive parents of the same minor child, ä receiving assistance, and ä living in the home. Participation Rates Minimum Definition of 2-Parent Family

9. Caseload Reduction Credit

10. ä Reduces a State’s minimum participation rate for a year. ä Reduces the rate by: –the actual caseload decline from 1995 to prior year minus –net caseload decline due to eligibility changes and Federal requirements.

11. Caseload Reduction Credit ä The credit for the overall rate is based on the decline in the total caseload. ä 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.

12. Caseload Reduction Credit ä Calculation includes cases in separate State programs used to meet MOE requirement. ä No caseload reduction credit without case-record information for SSPs that provide assistance.

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

14. Caseload 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.

15. Caseload 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.

16. Caseload Reduction Credit “Netting Out” Example 1 FY95 Caseload = 100,000 FY97 Caseload = 75,000 Total caseload decline = 25,000 (25%) Reductions due to eligibility changes= 15,000 Increases due to eligibility changes = 10,000 Net reduction due to eligibility changes = 5,000 Total decline – net reduction = 20,000 cases (20%) FY 98 caseload reduction credit = 20% FY 98 target rate = 10% (30% –20%)

17. Caseload Reduction Credit “Netting Out” Example 2 FY95 Caseload = 100,000 FY97 Caseload = 75,000 Total caseload decline = 25,000 (25%) Reductions due to eligibility changes= 10,000 Increases due to eligibility changes = 15,000 Net reduction due to eligibility changes = 0 Total decline – net reduction = 25,000 cases (25%) FY 98 caseload reduction credit = 25% FY 98 target rate = 5% (30% –25%)

18. Caseload Reduction Credit States must submit a Caseload Reduction Report. It includes: State Information and Estimates ä a listing of each eligibility change since 1995 and its impact on the caseload; ä an estimate of total cases diverted due to eligibility changes; ä an estimated caseload reduction credit;

19. Caseload Reduction Credit Caseload Reduction Report (cont.) ä the # and distribution of case closures and denials, by reason ä description of the methodology it uses and any supporting documentation ä certification that it included all reductions and gave the public an opportunity to comment ä a summary of public comments.

20. Caseload 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. We may request additional information within 30 days.

21. Caseload Reduction Credit Due 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.

22. State 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.

23. Penalty Reduction

24. A State may qualify for a reduced work penalty based on the “degree of noncompliance.” (required reduction)

25. 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 Reduction 3 Steps

26. Penalty Reduction Failing only the 2-parent rate We reduce the maximum penalty based on the proportion of 2-parent families in the caseload.

27. Threshold tests Penalty Reduction ä achieve 50% of target rate (50% threshold) ä increase the number of work participants over the prior year To qualify for further reduction, the State must:

28. Penalty 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.

29. Penalty Reduction Adjustment 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%.

30. Penalty Reduction Consecutive 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.

31. Penalty Reduction Consecutive failures & Number of rates missed

32. Example (FY98) Caseload Credit: Overall Rate – 10%2-Parent Rate – 15% Average monthly # engaged in work:FY 97 = 5,000 FY 98 = 6,000 Rate achieved: Overall Rate – 18%2-Parent Rate – 32% Consecutive Years of Failure: 2 – State failed the 2-parent rate in FY 97 FY 97 Penalty Percentage: 0.175% Maximum Penalty Percentage for FY 98:2.175% Adjusted SFAG: $ 100,000,000 Penalty Reduction

33. Example (cont.) Calculations: Adjusted Target: Overall Rate – 20%2-Parent Rate – 60% 50% Thresholds: Overall Rate – 10%2-Parent Rate – 30% (Factor 1) Reduction above Threshold: (18 – 10)  (20 – 10) = 8/10 or 0.8 (Factor 2) Adjustment Factor for Working Recipients: 1,000  750 (i.e., 0.15  5,000) = 1.33 Does the State meet the threshold test? Yes, for both rates. Does the State meet the adjustment factor test? Yes, factor is greater than 0. Penalty Reduction

34. Reduction Calculation: 2.175%  0.8  1.33 = 2.314%  25% = 0.579% The penalty amount  factor 1  factor 2  adjustment for consecutive years Penalty Amount: 2.175% – 0.579% = 1.596% (maximum penalty percentage – penalty reduction) 1.596 %  SFAG = $1,596,000 (penalty in dollars) Penalty Reduction Example (cont.)

35. Penalty Reduction We may reduce penalty if failure because ä State meets criteria for being a “needy State” –high unemployment or –large Food Stamp population ä Noncompliance due to extraordinary circumstances such as natural disaster, regional recession, or large caseload increase Discretionary Reduction

36. Reasonable Cause ä General criteria apply. ä Two specific criteria related to the work penalty, if failure is due to: –providing federally recognized good cause domestic violence waivers; or –providing assistance to refugees in Fish- Wilson projects.

37. Corrective Compliance ä General corrective compliance plan criteria apply. ä Failure must be corrected by the end of the fiscal year that ends at least 6 months after we receive the plan.

38. Corrective Compliance Significant Progress We will only reduce the penalty further (i.e., after the compliance plan period) 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.

39. Other Penalties ä Inappropriate sanctions of individuals (over- or under-sanctions) results in a penalty on the State of 1% to 5%. ä We reduce the penalty amount based on –whether State has controls to ensure it reduces grants appropriately; –percentage of cases with sanction errors. Sanctioning Penalty

40. Other Penalties ä States determine when a family has a “demonstrated inability” to obtain child care. ä TANF agency must have procedures to: –allow a family to show it cannot obtain needed child care –inform families of the protection from sanction for lack of child care –inform them that the clock keeps ticking. Child Care Penalty

41. Other Penalties ä We impose a penalty of up to 5% on a State if it violates the sanction protection for lack of needed child care. ä We will impose a maximum penalty if: –the State does not have a statewide process to inform families of the protection and let them demonstrate they cannot obtain child care; or –or there is a pattern of substantiated complaints. Child Care Penalty

42. Two-Parent Families ä Choice on the basis of the caseload reduction credit for the 2-parent rate; ä Ability to “net out” eligibility changes that increase the caseload; ä 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: